It is a historic day. The governor of California (My governor!) Jerry Brown signed Assembly Bill 1522 (AB1522). It requires that employers provide at least three paid sick days for employees each year. It applies to pretty much all workers: anyone who works more than seven days in a calendar year. Employees must accrue at least one hour of sick pay for every 30 hours of work. It’s a very good law. But what’s pathetic is that California becomes the first state in the union to create such a law. We are not just the only advanced economy to be without such mandates — many second and even third world countries have us beat in this regard.

One thing amazes me when I talk to people of all political stripes. Most people think the forty hour work week is just a given. They may know that people in the 19th century worked really long hours, but they figure it all just worked itself out. Even worse, people think weekends have always existed — at least Sundays off. But even that is largely a myth. Regardless, we have the system we have today because workers demanded them. If we currently worked 80 hours per week and seven days per weeks, conservatives would be apoplectic if anyone argued that this was wrong. I know, because when I talk to people about reducing what we define as full time today, people treat me like I’m crazy. They just can’t understand it, even though many tribal communities worked only a couple of hours per day. Modern Americans have this idea that the forty hour work week was brought down by Moses on stone tablets.

Connecticut has a similar sounding law, but it does not apply to companies with less than 50 employees, nor does it apply to manufacturing companies. This is kind of like a law that specifically applies to no one — fine tuned to uselessness by the business community. (But I’m sure among those employees who do get it, it is much appreciated.) Not surprisingly, the business community is freaking out. They say it will be a “job killer.” But I guarantee you: this very minor requirement will not kill jobs at all. This is equivalent to raising the $9.00 California minimum wage by 30¢.

I’m glad that California brushed these concerns aside. I wonder when, as a country, we are going to get past the “job killer” claims of the business community. This is hauled out for any and every policy they don’t like. The best example of this is the business community’s claims over the last six years that environmental regulations would kill jobs. I discussed this last year, Environmentalism Good for Economy Right Now. We should never listen to businesses when they talk about creating jobs. Businesses are not interested in creating jobs. In fact, they work very hard to not create jobs, so they can maximize profits. If you have any questions, just check out Nick Hanauer’s TED talk:

Our country can’t seem to do even the smallest things for workers. And even New York is determined to elect a corrupt corporate tool as its governor. Again. It is good that we have California. In general, the states are laboratories of anti-democracy. But California continues to be an exception to that. And in 50 years, when even Fox News takes a week of sick leave as God given, remember who really gave it to you: California. And remember why: because the legislature has been overwhelmingly controlled by Democrats. And remember why: because the people voted for that. Some day the rest of the country may wake up.

In the middle of the 19th century, Horace Greeley wrote, “Go west, young man…” Had Greeley been alive a century and a half later, he would have written, “Go to college, young man…” But since he wasn’t available for the job, the rest of society took up the slack and told young Americans everywhere that the key to success was a college degree. I’m 50 years old now, and it was a crock even when I was told it. Pretty much everyone I grew up with — most of whom got college degrees — have found their middle years to be highly uncertain. If you want more details, I recommend reading Barbara Ehrenreich’s book Bait and Switch.

Now there is much concern about the quality of higher education. And it’s appropriateness. As Robert Reich pointed out last week at Salon, students assume that a college degree is the gateway to the middle class. It’s not. Reich points out that for a lot of people, a two-year technical degree is probably a better bet. He’s right. But the problem is so much bigger than this.

We have an economic and political system designed to funnel wealth from the poor to the rich. Over time, this is a recipe for a banana republic. And indeed, that is what we are seeing: lots of poor people, a tiny middle class that depends upon catering to the small group of extremely powerful rich people. Once you reach a certain level, there really is no going back because the rich can control the system and push ever more money and power toward themselves. I fear we passed the point of no return back in the early 1990s.

Those modern Greeleys who were (And still are!) pushing young people to go to college are no less delusional than the people who wax poetic about everyone starting their own businesses. If that ever happened, no one would have their own business; each person would be an independent contractor; and that would be an extremely inefficient system. Similarly, what is the point of everyone getting a college degree? Are we all going to be middle managers?

Look at the 2013 Census data on educational attainment. If you look at people in different age categories, you see that the percentage of people over 75 years old, less than 13% have Bachelor’s degrees. That actually overstates it, because the people with backbreaking jobs generally die younger. The percentage of people my age with degrees is 19%. The percentage of people in their late 20s is 26%!

All this extra education would be a good thing if it were free. But it isn’t. Mostly, it is paid for by the students themselves. So what exactly has happened? Companies have gotten far better trained employees without having to foot the bill. And better than that: because there is such a great supply of such well trained employees, the business community can pay them less! It’s funny how policies we seemingly stumble into — like the cutting of state funding to higher education and the increased reliance on student loans — just so happen to be the policies that further enrich the rich and increase inequality.

The problem is not our educational system. The problem is that young people are desperate. Recently, John Oliver did a segment on the vile for-profit colleges. But they only exist because we have allowed our entire economic political system to get so out of whack that it only tends to the desires of the rich. What else are young people to do? Become electricians as Reich recommends? I suppose that will work for some. But I’m afraid that’s working the margins.

What we require is bold action. We need a wealth tax so that corporations and other representatives of the rich have an incentive not to sit on piles of cash. We need a massive increase in the estate tax so that America stops being the hereditary aristocracy it has become. And most of all, we need a guaranteed minimum income so that businesses have to make working worth while. Is this class warfare? Absolutely. But there’s been a class war for decades with the rich against the unaware middle and lower classes. We must not go gentle into that good night. (Note literary reference — product of a liberal education!)

Image is reduced, cropped, and rearranged from an original by John Fewings.

Associated Press is reporting that Andrew Cuomo has won the New York Democratic governor’s primary. He got 60% of the vote and Zephyr Teachout got 36% of the vote. That’s actually a pretty pathetic showing by Cuomo, given that Teachout had no name recognition and not much of a budget. Cuomo’s win depends entirely on the fact that most voters just go along with what they know, even though what they know sucks.

Cuomo is the ultimate New Democrat. He’s modestly liberal when it comes to social policy. And by that, I mean he is basically in favor of social policies that have majority support in the United States. But when it comes to economic policy, he’s easily as conservative as Ronald Reagan. To give you some idea of just how conservative he is, he’s even worse than Bill Clinton and Barack Obama.

Back in 2011, Eric Alterman summed up Andrew Cuomo perfectly, Governor Cuomo Is Still Governor One Percent:

Yes, Mario Cuomo is a great man and was a great politician. Andrew Cuomo is a privileged brat who thinks he deserves money and power. I can’t imagine that his father is anything but secretly ashamed of his son. I don’t mean ashamed as in, “My son is a drunk…” I mean, “My son is a selfish bastard who doesn’t care about anyone but himself…” And the fact that Cuomo the Lesser would fluff himself up as a brave truth-teller when what he is doing is to his political and economic advantage is truly offensive.

But the most disturbing thing from that quote is the statistic that 72% were in favor of the millionaire’s tax. It must have been much higher for Democrats. That was only three years ago. But these same Democrats marched to the polls to vote for a man who is only a liberal using the most generous definition. As Alterman noted, this is a man willing to “stick a thumb in the eye of his own party on behalf of the interests of multimillionaires.” If only Cuomo were as loyal to Democratic voters as they are to him.

Also on the ballot was Timothy Wu running against another New Democrat and all around offense to liberalism Kathy Hochul. He did better, gathering 41% to her 59%. But there was much discussion that he might even be able to win that race. So this is a real disappointment. And it is a reminder that there is no level of betrayal that a Democrat can show the base that will stop them from winning a nice, well-funded primary campaign.

With “liberals” like Cuomo and Hochul… Well, here’s Dead Kennedys doing “Kill the Poor”:

For the record, if Andrew Cuomo ever runs for president, and I’m sure that is his plan, I will not vote for him. In fact, if the Democrats nominate him, I’m leaving the party.

Update (9 September 2014 9:01 pm)

Associated Press has updated the numbers and it is even better for Cuomo and Hochul. Hooray! Democracy loses again!

Also, earlier today, Jonathan Bernstein wrote :

Yes, I am one of those liberals! And I think this is important for Democracy. The moderation of the Democratic Party, always pushing to the right, is what got us the crazy Republicans. If this were offset by actual liberalism, we would end up with more moderate parties. But as long as the Democrats insist upon being Republican Lite we are going to be stuck with a political system where there is no limit to conservative extremism because there is effectively no alternative to it.

Update (9 September 2014 10:54 pm)

I found this nice rundown on Cuomo from earlier today by Ed Kilgore. It actually includes all three things I hate about him. But give me some time, and I suspect I can come up with others. Well, maybe I have. His sense of privilege wasn’t mentioned. But this lays it out pretty well:

He also mentioned that Alan Greenblatt said that if Cuomo didn’t get at least 70% of the vote, it would be seen as a healthy rebuke. Well, Cuomo got only 62% of the vote. That isn’t quite as good as Cuomo finding that he has learned something that requires him to spend more time with his family, but I’ll take it.

Update (10 September 2014 12:11 am)

Andrew Prokop reported at Vox:

Classy, Cuomo. Real classy!

The consistently great Michael Hiltzik pointed out a really important thing today, Free Speech, “Civility,” and How Universities Are Getting Them Mixed Up. The specific issue is that brouhaha about UC Berkeley Chancellor Nicholas Dirks’s remarks about the fiftieth anniversary of the Free Speech Movement, “We can only exercise our right to free speech insofar as we feel safe and respected in doing so, and this in turn requires that people treat each other with civility.” Let me translate: free speech will only be allowed if it doesn’t upset anyone.

This is a big part of how the power elite keep their power. They would never stop anyone from expressing themselves, as long as they only talk about things that don’t upset the status quo. So if you want to wax poetic about motherhood, have at it! But if you want to criticize the Israeli attacks in Palestine, as Steven Salaita did, be prepared to lose your job offer — not because of what you said, of course, but because of how you said it. The University of Illinois would never have admitted to stifling unpopular opinions. And that’s the whole point of the “civility” complaint: it provides cover for doing what would not be considered socially acceptable.

A big part of being powerful is having the luxury to take the “high ground,” even as they use it to cudgel the weak. I was recently in an argument with a neighborhood kid about the Israel-Palestine conflict. I try not to take sides, but he was arguing that Israel was in the right because they abide by the rules of war and Hamas does not. I was shocked that an otherwise smart boy could be so dense. Hamas doesn’t fire rockets at random because that’s the best theoretical tactic; they do it because they see it as the best tactic available to them. They do not have a modern army like Israel and so aren’t able to fight a more “civilized” war.

So the argument he was making was simply that he supported Israel because they had all the power in the situation. And the argument that those who support the University of Illinois are making is the same. Those who have power and want to keep things as they are can take the high ground by claiming the mantel of civility. But the act itself is a reflection and use of that power. So to support calls for civility is to support the status quo.

Hiltzik summed up the issue well, “Insistence on ‘civility’ is a weapon, and it’s almost always wielded by those in power against those whose free speech needs protection.” What we have to decide as a civilization is whether we are going to have public discourse that simply reinforces the existing power structure or not. If we are then we should give up the pretense that we have, much less value, free speech. I don’t like listening to the ravings of Bill O’Reilly either. But it is part of the price I pay to protect my own speech.

Every three years, the Federal Reserve puts out a Survey of Consumer Finances, and they just released their newest one that covers the period up through 2013. Neil Irwin provided a good overview of it at The Upshot, How Are American Families Doing? A Guided Tour of Our Financial Well-Being. The short answer to the question is: American Families are doing really poorly.

It would be nice to note that the picture isn’t completely bleak. But that isn’t true. It is true for certain segments of the population. The top 20% of income earners have seen their incomes go up by 4.3% over the last four years. And people with college degrees have seen their incomes go up a whopping 1.1% over the same period. But families over all have seen their incomes go down by almost 5% over the last four years. That’s shocking. According to FRED, during the same period, the economy grew by 8%.

This always makes me wonder about Milton Friedman. Whenever anyone would complain about income inequality, he would counter that although the vast majority of productivity gains went to the very rich, the poor were nonetheless seeing their standard of living increase. What would he say now? I can’t say in terms of details. But I know that as the conservative ideologue that he was, he would have come up with a new apologia for why it wasn’t true or didn’t matter. He may have just fallen back on the old libertarian crutch, “The practical effects don’t matter because… Freedom!”

Regardless, you may be wondering how it is that the economy grew by 8% when even the top 20% of income earners only saw their incomes go up by half that much. It’s that economic gains are just as unequally shared within the top quintile as they are overall. I suspect that those at the bottom of the top 20% didn’t see much if any increase in income. The vast majority of the economic growth went to enriching the already rich 1% and above.

As it is, the total income coming from wages is down from 68.1% in 2010 to 62.4% now — almost six percentage points. The biggest change is that capital gains is up almost four percentage points. And who makes money from capital gains? Well, if you listen to the ranters on CNBC, you will hear that everyone makes money from capital gains through their retirement programs and other investments. Such claims show a shocking disconnect between the power elites and the average family. Many poorer families have been forced to liquidate retirement plans just to get through this crisis. Here is the change in the households who own stocks for the period 2007 through 2013:

Notice in this graph that even households at the bottom of the top quintile (80% – 90%) have seen a large sell off of stocks. This is indicative of a power elite that has totally lost its way. This is exactly the group that is supposed to act as the safety value for society. It is what is supposed to protect the power elite from the poorer classes picking up torches and pitchforks. This is what Chris Hedges wrote about in Death of the Liberal Class. But now we have a power elite that is so greedy that it isn’t even willing to allow this group to do okay. (Of course, as Hedges discussed, that class gave up doing it’s job long ago and so hardly deserves to be protected.)

So how is America doing? Terrible. But certain Americans — those who were doing great before the bursting of the real estate bubble — are continuing to do great. And since they are the ones who drive public policy, nothing is not going to change. They don’t care about same sex marriage. That doesn’t have an effect on how much money they have, so sure, let’s the prols have that one. But economic policy that would have a widespread positive effect? Forget it! Or at least forget about them providing it out of some sense of fairness. Remember what Frederick Douglass taught us a century and a half ago, “Power concedes nothing without a demand. It never did and it never will.” We must demand our birthrights.

Thomas Frank wrote an excellent article this last weekend, Finally, Wall Street Gets Put on Trial: We Can Still Hold the 0.1 Percent Responsible for Tanking the Economy. I’ll give you a basic rundown and some thoughts here, but you should read the whole thing. It calls into question the administration’s claims that they couldn’t go after the bankers because “financiers simply could not have committed fraud, since you would expect fraud to result in riches and instead so many banks went out of business.” This is nonsense, of course.

As I have admitted before, I find finance and the whole idea of money to be mystifying. But this is very clear. We know only too well that from the CEOs on down, people at banks were able to enrich themselves in the short run by doing things that were bad for the banks in the long run. Of course, because the administration has shown so little interest prosecuting the bankers, it’s worked out for them in the long term too. And it mostly hasn’t been bad for the banks because the government was there to bail out the whole industry.

As you may recall, after the financial crisis, the conservative narrative was that the problem wasn’t the banks. No, it was those greedy poor people who bought houses they couldn’t afford. It was Rick Santelli’s neighbor who made an addition to his house. It was Freddie and Fannie and Barney Frank pushing “those people” to buy homes they couldn’t possible afford because everyone knows that “those people” don’t have jobs! But as Frank noted, “Sure enough, when taking on ordinary people who got loans during the real-estate bubble, the president’s Department of Justice has shown admirable devotion to duty, filing hundreds of mortgage-fraud cases against small-timers.” When it comes to the people giving out the loans, Mitt Romney could hardly have been more forgiving.

One of these cases of the federal government going after those mean poor people occurred recently in Sacramento. It concerned a “group of eastern European immigrants” who bought houses in 2006. They got what are called “liar’s loans” where those applying didn’t have to prove their income. All they had to do was state it on the loan application. The bank would not check. That was the main selling point of the loan:

The way the government sees it, the banks have been victims in all of this. Of course, there is a case to be made for this. But the banks were not victims of people taking these loans; the banks were victims of their own people who were selling these loans. But the government prosecutors apparently haven’t even considered this. In these cases, they haven’t even talked to the management at the banks. When a federal agent was asked if he was concerned about the conduct of those loaning the money, he replied, “No. I would consider — they’re the victims in this case. That’s how I consider them.” Note how the conduct of Trayvon Martin and Michael Brown are very much of interest to prosecutors.

Regardless, there is this thing in the law that states that fraud must be “material.” That means that it has to have been part of the decision process. So if you told your loan officer that you never cheated on your wife when you had, that would not be material because it wouldn’t be part of deciding if you got the loan. Well, with these “liar’s loans” it is clear that the banks didn’t care if the borrower was telling the truth or not. They were going to give out the loan because they were going to make money regardless.

Using this fact, the defendants were acquitted of the fraud charges. It’s very good news. And now other people are going to use the same defense. The problem, however, is that there are many (probably most) judges who won’t even allow the behavior of the banks to be considered in the trial. These are poor people: we can’t allow them to get away without punishment! And dragging the behavior of the rich bankers through court will be so unfair! But this is at least a little bit of great news.

Of course, the Obama administration has no intention of easing up:

Wow was I excited when I saw that Jonathan Chait had written a new article with a promising title, Why the Worst Governments in America Are Local Governments. Chait was been writing a lot about Education Reform recently, an issue he knows little about. So this sounded great, especially since for years, I have been harping on the nonsense about local government always being better. In fact, it is usually local governments that are most abusive and corrupt.

But Chait decided to partake of a healthy dose of false equivalence with an argument so facile it barely occupies a single dimension. Chait claimed that after Ferguson, “The problem, Democrats and Republicans concurred, was militarized police.” Really?! Because I don’t remember that. I remember Rand Paul going on about it. And I remember some liberals talking about it as one of many problems. But that was it. As is sometimes the case, Chait was really stretching to make his “I am the great centrist!” argument connect. And that was his second sentence!

After pointing out the “Orwellian monstrosity” in Ferguson, where the government bleeds the poor dry with fines as a way to fund the government, he went on to equate it to small minded politicians in cities who won’t agree to increase zoning or get rid of licensing requirements for barbers or dental hygienists.[1] There are a couple of problems with this. First, of course: they really aren’t equivalent. What is going on in Ferguson (and to one extent or another, everywhere) is not nearly as bad as disallowing people to start barber shops in their apartments.

Second, what liberals are against getting rid of these laws? Unlike the “local is always better” argument on the right, there is not widespread agreement about these policies on the left. I’ve been talking about housing density and stupid regulations for a long time. As a small businessman myself, I hate all the stupid regulations that are far more of a burden on me than they are on larger businesses. I especially hate inventory taxes, which have made me completely stop selling things like books and computer equipment. I know a lot of liberals haven’t figured out some of this stuff yet. But it is largely because they are too focused on cops shooting kids in the street.

Another thing is that Chait was swinging wildly in the article. Although licensing and housing do add to inequality, they are minor parts of it. The major aspects of inequality are due to systemic policies at all levels of government that take from the poor and give to the rich. Allowing anyone to start their own barber shop is a good idea, but it would simply redistribute money among people who are relatively poor. It would do nothing about the major inequality that is at the very top of the income scale. What Chait has offered is similar to conservatives saying that inequality is all about education. It isn’t. And allowing more people to be barbers or dental hygienists isn’t going to revolutionize our macro-economy.

What’s more disappointing about Chait’s article is that he’s just using Ferguson as an excuse to push his pet policy changes. He noted that licensing requirements exist because they protect people who are already in a particular field. But he made no mention of why Ferguson is effectively running a con on its poorest citizens: because they just won’t raise taxes. This is just a way of taking the local taxes that are generally pretty flat and making the poor pay far more than their fair share. These kind of fee and penalty based systems exist because it would never fly to have such an outrageously regressive tax.

I’m really beginning to wonder if it is even worth reading Jonathan Chait anymore. Over the last month, he seems determined to claim some kind of middle ground of practical-libertarianism. But as in this article, he doesn’t provide any details. There’s a lot more to changing the barber profession than licensing! But instead, it’s just, “Yeah, those Republicans are bad; but look at the Democrats!” And there are any number of other columnists I already avoid for that reason. I read the better conservative writers. I don’t need someone who is trying to thread the needle without trying very hard.

[1] Chait apparently doesn’t know any more about dentistry than he does education. The major cost premium with hygienists is not their licensing, it is that they have to work under the “supervision” of a dentist. But it shows a shocking lack of understanding of what hygienists do to think that the job is equivalent to cutting hair. If you aren’t going to have licensing requirements for hygienists, I don’t see the need for licensing requirements for dentists. And, in fact, I don’t see the need for licensing requirements for dentists. But I doubt Chait would agree, and regardless, that would never happen because dentists have lots of money. It is typical of what Chait calls “modern Democrats” to do this kind of surface level analysis that will end in — Get ready for a big surprise! — more competition added to a market except where it might hurt the profits of the already rich.