The Key to Making Economic Development More Equitable Is Making It More Democratic
The Key to Making Economic Development More Equitable Is Making It More Democratic
At the watery edge of Sunset Park, a working-class neighborhood of Chinese, Latino, and Indian immigrants in Brooklyn...
At the watery edge of Sunset Park, a working-class neighborhood of Chinese, Latino, and Indian immigrants in Brooklyn, lies the South Brooklyn Marine Terminal, a vast plot of warehouses and docks managed by New York City’s Economic Development Corporation (EDC). The terminal is part of an ambitious plan to generate new industrial jobs, innovation, and economic development serving local residents and the city more broadly. The plan, which has been a top priority for the administrations of both Michael Bloomberg and Bill de Blasio, involves efforts to invest in infrastructure and create incentives for new manufacturing businesses while creating new parks for local community members.
But in early 2015, a brewing dispute over the management of the project threatened to derail it. City Council member Carlos Menchaca, who represents Sunset Park, raised concerns about EDC’s role in managing the land and project, blaming the agency for insufficiently involving the local community in shaping the vision for Sunset Park’s future. This 11th-hour snag led to an unusually public war of words between Menchaca and the EDC. After months of further negotiations, the administration agreed to create a planning-and-jobs task force to engage community members, in addition to reinvesting 5 percent of the site’s revenue into a community fund and improvements to the nearby Bush Terminal Park.
While that task force has engaged local residents in a series of town-hall meetings, private investment has rapidly poured into the area as developers snatch up property for new industrial and commercial uses. The influx has left local residents fearful that, despite the new task force, they are still being left out of the conversations about the neighborhood’s future. While many say they welcome the influx of investment and jobs, they worry that, without a voice in the process, they might be displaced or left out of the economic gains.
In the midst of our national conversation about economic inequality, these questions of local-level economic development are critical. Although easily overlooked in favor of more sweeping policy issues, the reality is that cities have a disproportionate stake in the inequality crisis. Urban areas house more than 80 percent of the US population—and within these urban areas, policy decisions about how to attract investment, development, and jobs play a defining role in who gains from the resulting benefits and who loses, often for years to come.
But, as the debate roiling Sunset Park suggests, the concerns over development go even deeper than job-creation numbers and zoning. Beneath the surface is a new and more persistent anxiety about governance—about who makes decisions and how those decisions get made. If economic policy is to address inequality, it must not only be the right policy; it must also be formulated and driven by the right people.
At the national level, a growing body of scholarship indicates that the economic policies that have helped exacerbate inequality are themselves rooted in political inequalities, as industry, business, and economic-elite interests have continued to sway elections, legislation, and policymaking. As scholars like Larry Bartels, Martin Gilens and Benjamin Page, Nicholas Carnes, and Jacob Hacker and Paul Pierson have argued, economic policies skew to favor the interests of wealthier citizens, whether as a result of more sophisticated and better resourced interest-group lobbying, the decline of unions, or more subtle forms of social and cultural influence. The implication is that greater democratic accountability may be a necessity to shift economic policies in a more equitable and inclusive direction.
This same diagnosis and prescription applies to cities. In this New Gilded Age, cities are on the front lines of the battle to address economic inequality and declining opportunity. And the way they fight these battles matters. From minimum wages, gentrification, and affordable housing to neighborhood development, job creation, and local hiring, the process by which cities pursue urban economic policy can mean the difference between economic growth that continues to exacerbate inequality, and a more equitable, inclusive form of economic growth. Achieving this more equitable growth requires not only the right policies but also systems to empower stakeholders to hold policymakers, developers, and industry elites accountable to these more equitable goals.
A growing body of scholarship indicates that the economic policies that have helped exacerbate inequality are themselves rooted in political inequalities.
At the same time, by operating at the local level, cities offer real potential for rapidly engaging and empowering a wide range of stakeholders to remedy some of these structural disparities in political power. Cities can pioneer a new mode of democratic governance, where we build processes that include the full range of stakeholders, and provide them with a meaningful voice in shaping and driving economic policy. From New York to California, some of the most exciting innovations in urban development involve pioneering new ways to empower grassroots organizations and citizens—and in so doing, channel the benefits of growth more equitably.
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This is not the first time economic inequality has led to greater efforts at political inclusion. Half a century ago, the War on Poverty took a similar tack. The centerpiece of President Lyndon Johnson’s domestic agenda, the 1964 Economic Opportunity Act, created expansive new programs to provide job training, early childhood education (in the form of Head Start), access to legal services, community health services, and more. But the most controversial and radical innovation of this agenda was its focus on grassroots political empowerment as a key to fighting poverty. The act called for local governments to form “community-action agencies” to oversee these programs, and to administer them to local communities of poor and minority constituents. Furthermore, these community-action agencies had a mandate to pursue “maximum feasible participation” of the poor, including through direct representation of poor and minority constituents on the boards administering community-action programs. The theory was that the only way to hold the War on Poverty accountable to its mission was by providing the poor with a role in designing and administering anti-poverty policies.
This influx of money into anti-poverty programs was important, but combined with these institutional forms of empowerment, the War on Poverty helped activate a huge wave of organizing and mobilizing at the local level as civil-rights activists jumped on the opportunity to demand representation on the community-action boards, and accountability for channeling funds and programs to their neighborhoods. As new historical accounts of the grassroots political mobilizations around the War on Poverty suggest, mayors and city officials, alarmed by these newly emboldened grassroots movements of poor and minority constituents, reacted with increasingly harsh measures, first attempting to coopt these movements by appointing representatives they could work with to the community-action boards, and then cracking down on protesters and activists, siphoning off funding for community organizations that were the most active in pressuring local leaders.
Even in Washington, DC, the participation mandate quickly came under fire. Local party officials pressured the Johnson administration to abandon the mandate, while Johnson himself had always been uneasy with the more radical political message of the War on Poverty, viewing the notion of “local action” as encouraging cooperation between Washington and local officials, not as a call for grassroots protest.
Despite these difficulties, the War on Poverty was enormously successful in reducing the poverty rate and creating new models for economic programs. More important, it laid a foundation for greater political empowerment of community groups and the poor as a vehicle for improving economic equity, in the process helping catalyze a wave of community organizing. It also established, or dramatically expanded, initiatives like legal-defense and tenant-advocacy programs to address economic disparities by politically empowering their constituencies.
This is not the first time economic inequality has led to greater efforts at political inclusion. Half a century ago, the War on Poverty took a similar tack.
This participatory aspect of the War on Poverty is compelling today because of how it contrasts with the specter of top-down, heavy-handed urban renewal of the sort championed by Robert Moses to the detriment of many minority and poor communities. Today the concern is somewhat different—not that officials will ram through policies, but that they will skew too far towards privatization and overly friendly collaboration with developers, industry, and the economic elite. By providing representatives of often-overlooked constituencies with a real seat at the table to shape, implement, and monitor economic development policies, grassroots participation offers the hope of a more equitable approach to economic development.
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In a number of cities, efforts to empower stakeholders in economic-development projects have led to a more constructive and collaborative environment, which in turn has helped ensure a more equitable sharing of the gains. From housing to parks to infrastructure development, the economic and geographic environment within cities can undergo radical transformations, driven not by natural “market forces” but by an array of public policies—and by particular coalitions of political actors. These policies are often opaque to most residents. But empowering grassroots stakeholders in the nitty-gritty work of planning neighborhood redevelopment can help ensure that benefits of development are shared more equitably.
Consider the experience of Oakland. Rapid development and gentrification in the East Bay—in part fueled by the dramatic rise of housing prices in San Francisco—are creating both opportunities for economic growth and the threat of displacement of poorer and minority communities.
In 2000, the Oakland City Council designated the public land from the recently closed Oakland Army Base as a major redevelopment site, opening the way for construction of new public infrastructure, and laying the groundwork for new businesses and greater public access to the waterfront. Traditionally, community groups will seek a “community benefits agreement” (CBA) for redevelopment projects of this sort. A CBA is a three-way bargain between government, developers, and community representatives. In exchange for various tax and other incentives from the government, developers are required to provide some investments in neighboring communities, for example by hiring local workers in the construction projects, and setting aside funds for local parks and public spaces. The challenge with CBAs is that they can be time-consuming to negotiate and often lack meaningful grassroots community engagement. Moreover, they are rarely fully enforced, with the benefits failing to materialize long after developers have already cashed in their tax and other incentives.
The Oakland Army Base project, however, has been different. After lengthy negotiations that involved community groups, unions, developers, city government, and other stakeholders, the resulting CBA not only included provisions for local hiring and public investment in community needs such as parks, it also forged a deep collaboration between these different players. This agreement has proved remarkably effective and durable, in large part because of the effort to empower and include community representatives more directly in the negotiations, planning, and monitoring of the project.
In the buildup to the CBA, for example, a number of influential community organizations—from the East Bay Alliance for a Sustainable Economy (EBASE) to the Alliance of Californians for Community Empowerment to Oakland Rising—formed a broad coalition engaging thousands of voters in the low-income areas to support an inclusive economic development agenda. This grassroots movement helped change the debate around the project to focus more directly on how the redevelopment would serve local residents and the local community. In the end, the campaign brought together city officials and developers around an agreement on the local-hire and public-investment demands now baked into the CBA.
More important, the goals of the CBA are being implemented and monitored through an innovative, inclusive process in which community members are participating not only as sources of input but also as actual partners. To implement the local-hire provisions, the city created the West Oakland Job Resource Center, operating it in close collaboration with EBASE and other community organizations. The CBA requires developers to work with the Job Center to hire local residents; the Job Center helps make this possible by enabling employers to find qualified local workers, while also providing services, support, and referrals to job seekers looking to transform their engagement with the army-base project into longer-term careers.
This collaborative and inclusive process surrounding the Oakland army-base redevelopment is perhaps best exemplified by the Community Jobs Oversight Commission, a new body chartered by the city, which is comprised of representatives of the developers and community organizations. These representatives are appointed by the mayor and charged with the task of overseeing the redevelopment project.
The commission serves as a unique focal point for civic engagement, operating as a forum for airing grievances, a mechanism for ensuring that local-hire and public-investment provisions are in fact being met, and a vital point of leverage for community members to continue to have a voice in the ongoing implementation and development of the army-base project. By providing a public process for monitoring outcomes and airing grievances—and by including representation from all the major stakeholders, including community members—the commission has helped create an extraordinarily effective process; the redevelopment project is not only meeting its local-hire targets but exceeding them, according to members of Revive Oakland.
The Oakland experience is a good example of how a commitment to political inclusion can help drive economic inclusion. But this isn’t just a product of greater advocacy; it required a number of different actors to commit to an inclusive process. Government officials had to create institutions like the Commission and Job Center—and imbue them with real authority. Community leaders had to decide to shift from an advocacy stance to a collaborative one, joining in and investing scarce human and financial resources to make these institutions function. And labor leaders had to see that their interests in winning good jobs on the development projects were aligned with the community groups’ interest in access to those jobs.
Empowering grassroots stakeholders in the nitty-gritty work of planning neighborhood redevelopment can help ensure that benefits of development are shared more equitably.
Similar models of inclusion in planning and implementation can help create a more democratic approach to equitable development. EBASE itself is part of the Partnership for Working Families, a national network of community organizations that is attempting similar strategies in a number of other cities.
On the implementation side, a number of cities are considering more participatory approaches to monitoring and enforcing wage-theft policies. San Francisco’s Department of Labor, for example, provides grants and partnerships with community groups to expand their capacity to monitor and report violations. The national network of progressive local officials, Local Progress, has helped share lessons from this model, as other cities from Seattle to New York are now considering similar approaches.
Beyond their particular urban contexts, these examples indicate a broader potential. Participation and community engagement in these examples involve more than just town-hall meetings or comment periods. Rather, they involve empowering stakeholders to actually shape the strategy and vision for development plans, and to engage in the work of executing, implementing, and monitoring. This deeper engagement helps shapes policies at an early stage to make them equitable. If engaged early and in good faith, these community representatives can become important partners in implementing development policies and project goals.
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These examples echo the War on Poverty attempt to empower a wider range of stakeholders, especially within poor communities and communities of color, by providing them with institutionalized points of leverage. The difference this time is that there is a greater potential for governments themselves to invest in and support this kind of engagement. In Oakland, New York, and elsewhere, the active efforts of city officials to create opportunities for early and active engagement makes participation genuine.
Equitable development is about more than getting the policies right; it is also about empowering stakeholders to outline the vision, implement the strategy, and monitor outcomes. Achieving this requires an ecosystem of actors committed to political inclusion and democratic participation. As a start, it requires government officials to create and manage an inclusive process that provides a meaningful voice to stakeholders, including institutionalized forms of representation or leverage—as with the War on Poverty Community Action Boards, or with the more contemporary efforts at participatory planning and monitoring. Next, it requires civil-society actors and other stakeholders willing to engage not just as advocates but as partners in implementing and enforcing standards. Finally, it also requires transparency and data. Beginning with stated public commitments to goals—such as the local-hire commitments in Oakland’s CBA—and metrics for monitoring compliance and impact through objectively trackable metrics.
We now have all the ingredients to do this; it is up to us to make the most of this opportunity.
By K. Sabeel Rahman
Source
American Legislative Exchange Council lobbyist being exposed
American Legislative Exchange Council lobbyist being exposed
Niccolo Machiavelli would have been proud of the folks who support the American Legislative Exchange Council (ALEC). At...
Niccolo Machiavelli would have been proud of the folks who support the American Legislative Exchange Council (ALEC). At the end of September the U.S. Department of Education approved another $245 million in grants to eight states under the federal Charter School Program. That brings to nearly $4 billion in charters in the last two and a half decades.
The Center for Popular Democracy spelled out in its report “Charter School Black Hole” how tax dollars have gone to “ghost schools,” charters that never opened. In the case of schools that did open only to fail, there was no accounting for money spent or assets purchased.
There was no accountability to the school children affected by charter fraud, waste, and incompetence. Virtual charters like the K12 operation performed markedly worse. They are similar to fantasy football games — those that are bet on but are never physically played.
Scores of major companies have abandoned ALEC after protests from their stockholders and clients. Recently the American Federation of State, County & Municipal Employees wrote to the CEO of AARP urging that group to get out of the lobbying group. They asked that the senior citizens group stop “endorsing an organization that brings corporate lobbyists and elected officials from around the country together to write anti-senior, anti-family legislation in a process that locks out the public and subverts our democratic process.” Among other things ALEC has pushed for is repeal of the Affordable Care Act.
Enterprise, the largest car rental company in the world, owns Enterprise Rent-A-Car, National and Alamo, has moved away from the lobbying juggernaut. Part of the push to accomplish that divorce came from a petition by a petition with 89,000 signatures.
The company’s membership in ALEC, which has poured considerable resources into denying and minimizing scientific efforts to quantify climate change, was brought to the Guardian’s attention by the watchdog group the Center for Media and Democracy.
Growing concern about climate change has led many high-tech companies such as eBay, Expedia, Facebook, Google, Microsoft, and Yahoo to abandon the ALEC ship. In 2015, environmental concerns pushed energy-industry giants, Royal Dutch Shell and BP, as well as the American Electric Power and the Canadian National Railway to quit.
A laundry list of model bills proposed in many state legislatures is very long — and very threatening.
For a listing of bills sponsored by ALEC, go to the website for the Center for Media and Democracy: www.alecexposed.org. Download the zip files of ALEC model bills for agriculture, energy, and the environment. Consider one such bill aimed at land use controls.
One bill would repeal all land use planning and zoning in rural counties by both county and state governments. Under the bill property could be put to any use, without regard for single-family, agricultural, or industrial zoning, or environmental land use restrictions. Under that restraint, no one could prevent a nude bar or body shop next to a school. Nor could local government prevent polluting industries from building in their jurisdiction.
If you want more information about the machinations of this cabal, simply contact Senator Josh Harkins and Representative Jim Beckett, who are chairmen of the Mississippi chapter.
In closing, consider these words from the ALEC website: “When states resort to tax carve-outs in a misguided attempt to grow their economies, they are ignoring the bigger problem — an uncompetitive tax climate. More fundamentally, government should budget for outcomes. This means identifying the core functions of state government and measuring results.”
Reviewing their handling of budgets and tax give aways in the past year, one can only wish they had taken their own advice.
TJ Ray is a retired professor of English at Ole Miss.
By Oxford Eagle Contributors
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Education Department Releases List of Federally Funded Charter Schools, though Incomplete
The U.S. Department of Education has released a list of the charter schools that have received federal funding since...
The U.S. Department of Education has released a list of the charter schools that have received federal funding since 2006.
The move comes in the wake of requests by the Center for Media and Democracy (CMD), dating back to 2014, for public disclosure of who had received federal taxpayer money. CMD had submitted requests for this and related information to the Department and several states.
In October 2015, CMD released its report "Charter School Black Hole: CMD Special Investigation Reveals Huge Info Gap on Charter School Spending," discussing the more than $3.7 billion dollars the federal government had spent on charters and the gaps in what the public could see about which charters received taxpayer money.
Two months later, the Department of Education issued a news release on the subject, titled "A Commitment to Transparency: Learning More about the Charter School Program." The data was released to the public on the eve of Christmas Eve.
According to the Department, "The dataset provides new and more detailed information on the over $1.5 billion that CSP [the Charter School Program] has provided, since 2006, to fund the start-up, replication, and expansion" of charters.
It includes information on which grant program funded each of the charter schools listed and how much. That is more information than the public has ever been given about the true reach of the CSP program into their communities, fueled by federal tax dollars.
It lists more 4,831 charter school with the amounts received in that period, but it does not indicate which of them closed. CMD has sought to assess the number of closed charters using other data as a proxy but ambiguities have impeded that effort.
In its December release, the agency noted that more than half of the charter schools in its list of nearly 5,000 were "operational" as of the last school year with complete data: "CSP planning and startup capital facilitated the creation of over 2,600 charter schools that were operational as of SY 2013-14; approximately 430 charter schools that served students but subsequently closed by SY 2013-14; and approximately 699 'prospective schools.'”
The fate of each of the more than 2,000 charter schools in the difference between 4,831 and 2,600 is not definitively known, although CMD's initial analysis indicates that far more than 430 charters have closed over the past two decades. The agency has not released a complete list of closed charters that received federal funds and how much.
The dataset also does not go back to the beginning of federal charter school funding in 1993, though it does cover the more recent period CMD sought information about. Accordingly, the dataset does not include all the charter schools that received federal tax monies but closed since the inception of the federal charter school program.
The list released in December also did not include the names of "prospective schools" that received federal funds but never opened, which CMD has called "ghost" schools--as with the 25 it found that never opened in Michigan in 2011 and 2012 but that received at least $1,7 million dollars, according to a state expenditure report.
So on January 13, 2016, CMD filed a new set of open records requests with the Department of Education asking that it fill in those gaps and also provide information about communications regarding closed charters and prospective charters.
This is part of a long-term investigation of charter schools that CMD started nearly five years ago.
In 2011, CMD began examining the close relationship between charter school businesses and legislators after a whistleblower provided it with all of the bills secretly voted on through the American Legislative Exchange Council (ALEC) where corporate lobbyists vote as equals with lawmakers on bills that are then pushed into law in statehouses across the country.
That award-winning investigation shed new light on an industry that had grown from an "experiment" in 1992 (in Minnesota) into an influential network with a league of federal and state lobbyists seeking increasing redistribution of funds from traditional public schools to other entities under the watchword of "choice."
Over the past nearly five years, CMD has documented the impact of the policies on American school children, despite the PR claims of the industry, which has an increasing number of allies within education agencies who are devoted to charter expansion at the expense of traditional public schools. CMD has written about numerous aspects of the charter school industry as well as corporations, non-profit groups, and policymakers involved in the effort to privatize public schools in numerous ways. CMD has also documented how budget difficulties following the Wall Street meltdown under George W. Bush have been seized on by some in the industry as opportunities to try to displace school boards and local democratic control of schools and spending. CMD has also documented how billionaire funders of ALEC, such as the Koch brothers, have pushed their hostility toward the idea of public schools under the guise of choice.
In 2014, CMD sought to determine how much money the federal government had spent on charters, through State Education Agencies (SEAs) or Charter Management Organizations (CMOs) or other vehicles and discovered that this information was not publicly available. Instead, key data about how Americans' tax dollars were being spent on the charter school experiment and its failures was largely hidden from public view.
When CMD sought the identities of the charter authorizers or CMOs that had been essentially designated via ALEC bills to determine which charters were eligible to receive federal funds, the feds suggested asking the CMOs, even though many of them are private entities not covered by Freedom of Information Act (FOIA) rules or state open records laws.
CMD was told to ask NACSA, the National Association of Charter School Associations, a private group created as a result of this new industry, but NACSA also did not maintain a public list of all the charters that had received federal funding and how much each had received.
Additionally, the states through their SEAs--where pro-charter staffers work within state education departments--varied greatly in how much information was provided to the public about which charters had received funds and how that taxpayer money had been spent--despite mounting news accounts of fraud and waste by charters, including numerous criminal indictments, as tallied at more than $200 million by the Center for Popular Democracy.
Under ALEC-style charter bills, charters were exempted from most state regulations including key financial reporting and controls, and a number of charters refused requests by the press under open records laws for such information.
Although some charters were managed by school districts, many were not, and with this deregulation has emerged an array of questionable practices, such as "public" or non-profit charters that outsource their administration to for-profit firms--in addition to the advent of for-profit charters, like K12's "virtual schools," another conduit for redistributing taxpayer dollars through yet another ALEC bill.
When CMD sought information on how much money had even been spent on charters, no one knew. So CMD calculated the figure the federal government has spent fueling the charter school industry and the current tally stands at more than $3.7 billion.
But, that revealing figure did not provide the public with the information it has a right to know about where all that money actually went, as noted in CMD's report "Charter School Black Hole."
So CMD requested information about which charters received such funds and how much.
In releasing the new dataset, the Department of Education is providing new transparency about charter school grantees, although significant gaps remain.
Source: PR Watch
Former Fed Staffer, Activists Detail Plan to Overhaul Central Bank
Former Fed Staffer, Activists Detail Plan to Overhaul Central Bank
A former top Federal Reserve staffer joined with activists on Monday to lay out the mechanics of a plan to overhaul the...
A former top Federal Reserve staffer joined with activists on Monday to lay out the mechanics of a plan to overhaul the structure of the U.S. central bank.
Dartmouth College’s Andrew Levin, who was a top adviser to former Fed Chairman Ben Bernanke, Jordan Haedtler of the left-leaning Center for Popular Democracy’s Fed Up campaign and the Economic Policy Institute’s Valerie Wilson say in a paper that their proposals amount to an important modernization of the Fed.
“The Fed’s structure is simply outdated, and that makes it harder for its decisions to serve the public,” Ms. Wilson said in a press call. “We are well aware we can’t create a dramatic shake-up” of the Fed, she said, explaining what she and her colleagues are calling for is “pragmatic and nonpartisan.”
The linchpin of the overhaul is bringing the 12 quasi-private regional Fed banks fully into government. The paper’s authors also repeated calls for bankers to be removed from regional Fed bank boards of directors, while proposing nonrenewable terms for top central bank officials and greater government oversight over Fed actions.
The paper Monday fleshed out the specifics of how the overhaul would happen, building on ideas first made public in April. “We had a ‘why,’ and now we have a ‘how,’” Mr. Levin told reporters.
Mr. Levin and Fed Up have seen successes in their campaign to overhaul the central bank. Earlier this year, congressional Democrats and the campaign of Democratic presidential nominee Hillary Clinton endorsed their push to remove bankers from the boards overseeing the 12 regional Fed banks. Fed Up’s effort to promote diversity in a central bank that is still dominated largely by white males, not withstanding the current leadership of Chairwoman Janet Yellen, also has gained traction among Democrats.
The regional Fed banks are unique among major central banks for being owned by local banks. Some fear this structure gives financial institutions undue sway over policy decisions. Fed bank presidents have countered this isn’t the case.
Regional Fed officials have acknowledged that more diversity within the central bank system would be welcome, but they have been reluctant to tinker with the current structure. The paper also proposes auditing the Fed’s monetary-policy-making functions, and that has been something officials have fought hard against, believing it will lead to bad economic outcomes.
The authors say regional Fed banks can easily be made public by canceling the shares of the member banks and refunding the capital these banks were required to keep with the Fed.
The money to do this can be created by the Fed, and the paper says the fact that the central bank no longer would have to pay dividends to the banks would help it return more of its profit to the government. Over the next decade, that could mean the Fed might return as much as $3 billion more in excess profit, helping reducing the government’s budget deficit.
A number of regional Fed bank leaders have pushed back at being made fully public. In May, New York Fed President William Dudley said “the current arrangements are actually working quite well, both in terms of preserving the Federal Reserve’s independence with respect to the conduct of monetary policy and actually leading to pretty, you know, successful outcomes.”
The paper’s authors said making the Fed fully public also would allow it to remove bankers and other financial-sector members from the boards that oversee each regional Fed bank. The authors said directors should be nominated by either a member of Congress or a state governor, subject to approval by the Fed boards.
None of these directors should be from the financial sector, to prevent the conflict of interest created by a member of a regulated financial institution overseeing the operations of their own regulator.
This, too, has drawn pushback from some on the Fed. Philadelphia Fed leader Patrick Harker said in July that “the banker from a small town in Pennsylvania provides incredibly important insight,” and he wants people like that on his board.
New bank leaders should be selected by an open process in which candidates are named publicly, with a formal mechanism for public input. All Fed officials also should serve single staggered seven-year terms, which the paper says would help insulate central bankers from political interference. The selection process of regional Fed bank leaders has long been a secretive affair. Meanwhile, the leaders of the Dallas, Minneapolis and Philadelphia Fed banks, who all took their posts since 2015, have had connections to Goldman Sachs, which has drawn criticism from the Fed Up campaign. Mr. Dudley at the New York Fed was once that firm’s chief economist.
The authors also would like to subject Fed monetary policy decisions to Government Accountability Office audits. To ensure this oversight doesn’t interfere with Fed decision-making, the paper calls for the audits to be done annually and not at the request of a member of Congress, and the GAO shouldn’t be able to comment on any given interest-rate decision.
The paper calls for the Fed to release a quarterly monetary policy report that describes officials’ views on policy, the economy’s performance relative to the Fed’s official price and job mandates, forecasts and a description of risks, and a description of any models driving policy-making.
Any changes to the Fed are ultimately up to elected officials. In February, Ms. Yellen told legislators “the structure could be something different and it’s up to Congress to decide that—I certainly respect that.”
By Michael S. Derby
Source
Why You Should Care About the Federal Reserve’s Secrecy and Elitism
New Republic - Last weekend, Cee Cee Butler, a 34-year-old McDonald’s worker from Washington D.C., became sick with the...
New Republic - Last weekend, Cee Cee Butler, a 34-year-old McDonald’s worker from Washington D.C., became sick with the flu, or at least something that resembled the flu. Her phone had been cut off and she missed work Friday, Saturday and Sunday. “I did a ‘no-call, no-show’ for three days and I’ve never done that in over the year and a half I’ve been working here at McDonald's,” she said. “They terminated me Tuesday morning. So I lost my job, my rent is going up in December, I have two kids—19 and 5, a girl and boy—and I can’t afford to take care of them.”
On Friday, Butler gathered outside the Federal Reserve building with around two dozen activists from labor unions and progressive groups before an afternoon meeting with Fed Chair Janet Yellen. The groups are part of a new campaign called “Fed Up” that is pressuring Yellen and her colleagues to keep interest rates at zero until the recovery strengthens and wages rise. “The economy is not working for the vast majority of people,” said Ady Barkan, a lawyer from The Center for Popular Democracy, which is the lead organizer of the campaign. Fed Up wants to rectify that problem by putting direct pressure on the Federal Reserve itself—a quest that may not captivate the public’s attention but could have a very real effect on the lives of working Americans.
In August, for instance, members of Fed Up staged protests outside of the Federal Reserve’s annual monetary policy conference in Jackson Hole, Wyoming. Many reporters there said it was the first time they could remember protestors at the conference—but their tactics must have worked, because Yellen agreed to meet with the protesters Friday afternoon in the boardroom where the Federal Open Markets Committee (FOMC) meets eight times a year to set monetary policy. Three other Federal Reserve governors—Vice Chair Stanley Fischer, Jerome Powell and Lael Brainard—joined the meeting and the activists said that Yellen was engaged throughout and was moved by the stories she heard. They hope that this meeting was just the first of many in the future.
The message the Fed Up campaign delivered is the same one voters sent loud and clear last week: The recovery is not being felt by millions of Americans. Exit polls indicated that 45 percent of voters considered the economy the most important issue of the midterms. Wage growth for low-income workers, like janitors and fast food workers, are barely keeping up with inflation. “That’s not an economic recovery,” said Jean Andre, who does location support for film production and is a member of New York Communities for Change. “That’s not the way thing should be.”
But the slow recovery isn’t always noticeable in leading economic indicators. The unemployment rate, for instance, has fallen 2.1 percentage points since the start of 2013 and is now at 5.8 percent, its lowest point in more than six years. As a result, some economists inside and outside the Fed, including inflation hawk Charles Plosser, have called for a hike in interest rates in the near future. “Beginning to raise rates sooner rather than later reduces the chance that inflation will accelerate and, in so doing, require policy to become fairly aggressive with perhaps unsettling consequences,” Plosser, the president of the Federal Reserve Bank of Philadelphia, said Wednesday.
Plosser’s worry about rising inflation, even though it is nowhere to be found, could prove dangerous. If the FOMC listens to the hawks, it will prematurely raise rates and choke off the recovery before workers see wage growth. So far, Yellen has done a good job ignoring Plosser and Co. And, luckily, Plosser and Richard Fisher, the president of the Dallas Federal Reserve Bank and another hawk at the FOMC, announced that they would retire in the spring of 2015, opening up two positions that have a significant impact on monetary policy. Fed Up sees their retirements as a boon—and is keen to have a say in the selection process.
Under the current rules, Plosser and Fisher’s replacements will be chosen by the board of the Philadelphia and Dallas reserve banks, respectively. Each board has nine members, three from banks and six from nonbanks—companies and organizations that are not financial institutions. Because of Dodd-Frank restrictions, only the six non-bank members are involved in selecting the replacements. But of those six members, three are chosen by banks and three are chosen by the Fed board in Washington. Workers and consumers are supposed to be represented on the board, but of the 108 members, 91 are from financial institutions and corporations. Just two are leaders of labor groups and another 15 represent non-profit organizations.
Fed Up has a list of demands to make the replacement process more transparent and to ensure the public has adequate representation within the central bank. They want a public schedule of the process, a list of criteria for how the replacements will be chosen, a chance for members to question the candidates, and public forums where citizens can discuss monetary policy with candidates and the search committee. These reforms, they hope, will keep presidents like Plosser and Fisher—who activists say are disconnected from the daily struggles of their constituents—out of office. “We need a president in Philadelphia who will listen to working people,” said Kati Slipp, the director of Pennsylvania Working Families. “Charles Plosser hasn’t been or he would not believe that our economy has really recovered.” In fact, Fed Up is already getting results. On Friday morning, the Philadelphia Fed announced that it was setting up an email to receive inquiries about the search process. “That would never have happened if this campaign hadn’t happened,” Slipp said. The campaign said it expected the same things from the Dallas Fed.
After Republicans destroyed Democrats in the midterms, many liberal commentators argued that a fresh agenda for raising wages could help the Democratic Party win back voters, particularly those in the white working class. But the problem isn’t that Democrats’ ideas—raising the minimum wage, investing in infrastructure and strengthening the safety net—won’t help middle- and lower-class Americans. It’s that the weak recovery has destroyed those ideas’ political salience. It’s a political problem much more than a policy one.
Such arguments almost always ignore monetary policy. After all, no one but Ron Paul fanatics care about the Federal Reserve. And the Fed is independent from the federal government. If a Democratic candidate’s economic message was to fill the FOMC with economists committed to keeping interest rates low or even adopting a different monetary policy regime altogether, voters would likely roll their eyes. It would be a political disaster. But given congressional gridlock, it might also be far more effective at boosting the recovery.
The Fed Up campaign isn’t going to change that. Millions of Americans will not suddenly realize that the most important economic actor in the United States is not the president or Congress but the Federal Reserve. They will not understand that some inflation is needed, especially right now, to convince businesses to invest and consumers to spend money to get the economy back going again. But the campaign may convince some Americans of the Fed’s importance. That’s why Cee Cee Butler, the former McDonald's worker who was fired Tuesday, and Jean Andre, the man who scouts out locations for films, spent a cold Friday morning outside the Fed.
“I just got out of the shelter two years ago and here I am about to be back in one. I’m not trying to go back there,” Butler said. “My daughter will never walk in my shoes. She doesn’t need to. That’s why my voice needs to be heard.”
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Urban Outfitters heeds call to end on-call shifts
WELL, THAT was fast! Yesterday I wrote about an "on-call" scheduling practice at Urban Outfitters that's...
WELL, THAT was fast!
Yesterday I wrote about an "on-call" scheduling practice at Urban Outfitters that's unbelievably abusive to its lowest-wage workers. Within hours of the column hitting print, Urban announced it was killing the practice for good.
Coincidence? You decide.
Here's yesterday's statement from the Philly-based billion-dollar retailer, which also owns the brands Anthropologie, Free People, Terrain and Bhldn.
"We are always looking for ways to improve, and as such we have decided to end on-call scheduling for all [Urban] brand associates throughout North America. We look forward to continuing to find ways to better fulfill our mission of providing fashion and lifestyle essentials to our dedicated customers."
This is amazing news for employees at Urban's 518 North American stores.
For years, they'd been receiving their work schedules only a few days in advance, with some shifts designated as "on call." But they wouldn't be told, until three hours before the shift was to begin, whether they'd actually be needed to work. If they weren't, they wouldn't be paid, even though they'd been required to hold that time for the company.
The unpredictability had wreaked havoc on workers, who are mostly young and female.
They were unable to schedule classes if they were in school. Or to schedule hours at a second job if they needed a full-time income. Or to reliably arrange day care or pay their bills, since their cost to do both was fixed even though their working hours weren't.
What a crappy way to treat members of the demographic that Urban targets so heavily.
"It's pretty messed up," one worker, a college student, told me. She was paying her way through school, but Urban's scheduling meant she couldn't schedule other work to help pay tuition. "It's hard to plan."
Readers reacted with disgust to the column.
"Retail needs to be called on the carpet!" wrote emailer rgrassia. "We need more people with the ability to do something to pressure these companies to change the ways they conduct themselves."
Reader Madeleine Pierucci excoriated Urban for "co-opting the '60s struggles and playing it to the detriment of its 2015 workers. Not cool." She also planned to picket Urban's Center City store next week.
And a furious churchgoer named Samantha C. vowed to spread the word throughout the National Baptist Convention to have its 100,000 church members boycott Urban's stores in protest.
"It's time for slavery to stop," she declared.
Urban's change of heart is a testament to the power of the press, says Carrie Gleason. She's director of the fair-workweek initiative at the Center for Popular Democracy and has been working for a very long time to get employers to end on-call staffing.
"The media has helped shift the public opinion in terms of what is acceptable around employers' expectations of their employees' time," she told me. "I think Urban's announcement is a direct response to the fact that the public is now holding the whole retail industry to higher standards."
I'd like to take credit for Urban's reversal, but the truth is, another media outlet has been hammering at on-call scheduling by retailers - and not just Urban - for a while now.
The online news site BuzzFeed has chronicled the issue so doggedly that the New York state attorney general in April called companies on the carpet for the practice, following his investigation into the legality of on-call staffing at 13 retailers whose New York stores employ thousands of low-wage workers.
As a result, huge chains like Victoria's Secret, Bath & Body Works, Abercrombie and Gap announced plans to discontinue the practice not just in New York but nationally, improving hundreds of thousands of workers' lives.
Urban, though, had said it would discontinue the practice only in New York. Everywhere else, it would be exploitation as usual.
It turned my stomach that Philly-based Urban - a company that so many of us grew up with and feel affinity for - would treat its workers so shabbily. And I said as much in my column, which we - ahem - pushed on the Daily News front page and on Philly.com.
If that helped nudge Urban into doing the decent thing, then yesterday was a good day.
Not just for Urban's workers. But for Urban's shareholders:
As news hit that Urban would end its on-call scheduling, CNBC reported, the company's stock rallied 4.68 percent.
You're welcome, Urban.
And thank you.
Source: Philly.com
Pro-Yellen Ad Hits the Air
The Wall Street Journal’s Michael Derby reports. “The Center for Popular Democracy’s Fed Up campaign broadcast a 30-...
The Wall Street Journal’s Michael Derby reports. “The Center for Popular Democracy’s Fed Up campaign broadcast a 30-second TV spot urging Mr. Trump to offer Fed Chairwoman Janet Yellen a second term. The ad ran during 'Fox & Friends,' a morning show the president watches and often reacts to on Twitter.” The group is behind Twitter ads bashing Kevin Warsh, another candidate for the chairmanship, that have popped up in my feed over the past couple of weeks, too.
Read the full article here.
Fed Splits Evident Amid Wait for Yellen: Jackson Hole Journal
Bloomberg News - August 22, 2014, by Jeff Kearns, Simon Kennedy and Michael McKee - Divisions within the...
Bloomberg News - August 22, 2014, by Jeff Kearns, Simon Kennedy and Michael McKee - Divisions within the Federal Reserve over how long to keep easy monetary policy are already in evidence in Wyoming as investors prepare for Chair Janet Yellen’s keynote speech.
Fed Bank of St. Louis President James Bullard told Bloomberg Radio that the U.S. central bank may begin tightening monetary policy earlier than officials previously expected.
“The evidence is leading toward an earlier increase than would have been in the works earlier this year,” said Bullard. “Labor markets have improved quite a bit relative to what the committee was thinking.”
Bullard spoke after Kansas City Fed President Esther George told Bloomberg Television that broad-based employment gains suggest the U.S. economy is strong enough to withstand higher interest rates. Philadelphia Fed President Charles Plosser, who voted against the Fed’s policy statement last month, told CNBC he’s concerned about the Fed not adjusting policy appropriately.
By contrast, Atlanta Fed President Dennis Lockhart urged more patience, warning in a separate interview with Bloomberg Radio against “moving prematurely and snuffing out some progress.”
* * *
Robots don’t steal jobs, the U.S. labor market is less flexible than it was and workers haven’t suffered unprecedented periods out of work.
Photographer: Bradly Boner/Bloomberg
Fed Chair Janet Yellen arrived at the dinner to be greeted by about 10 people wearing bright green T-shirts emblazoned with “What Recovery?” and carrying placards with labor market data. Close
Those are among the conclusions of papers being presented at the symposium. Here is a review of their contents, which can be read in full on the Kansas City Fed’s website.
Robots and computers don’t steal as many jobs as some believe, and automation actually benefits many workers, Massachusetts Institute of Technology Professor David Autor said in his paper.
A key reason humans aren’t obsolete yet is that simple tasks such as visually identifying a chair, which any child can do, aren’t so easy for engineers to teach to computers, Autor said.
“Journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities that increase productivity, raise earnings, and augment demand for skilled labor,” he wrote. “Challenges to substituting machines for workers in tasks requiring flexibility, judgment, and common sense remain immense.”
* * *
The U.S. labor market became less fluid in recent decades partly because of an aging workforce, a shift to older businesses, and the spread of occupational licensing and certification, economists Steven J. Davis and John Haltiwanger wrote in their paper.
The economists define labor market fluidity as “flows of jobs and workers across employers.” The paper found the U.S. “underwent a large, broad-based decline in the pace of labor market flows in recent decades.”
“An aging workforce is a factor behind the slowdown of worker reallocation,” the paper said.
* * *
U.S. workers in the aftermath of the 2007-2009 recession haven’t experienced unprecedentedly long bouts of non-employment, according to a paper by economists Jae Song and Till von Wachter.
Their findings “suggest that the potential for hysteresis in the aftermath of the Great Recession is moderate,” the paper said. Hysteresis posits that people out of work for too long have a harder time finding work, leading to a persistent decline in the employment-to-population rate
* * *
Policy makers would benefit from a better understanding of labor markets, economist Giuseppe Bertola argued in a paper that weighed the impact of rules making those markets rigid or flexible.
Rules that protect workers from job losses and provide more generous unemployment benefits can soften and smooth shocks to the economy, said Bertola.
* * *
George opened the symposium late yesterday by putting the presenters on the spot.
The last conference devoted to labor markets was 20 years ago, George told the group of almost 200 as they ate steak and salmon dinners beneath elk antler chandeliers.
The presenters and discussants back then included five future Nobel Prize winners and two academics who would go on to be central bankers: Bank of England Deputy Governor Charles Bean and Stanley Fischer, the Bank of Israel governor who became Fed vice chairman in June. Fischer sat at one of the front tables last night.
“So for those of you that will be on the program,” George said to laughter, “We’re either setting you up for a blessing or a curse.”
This year’s topic is “Re-Inventing Labor Market Dynamics.” In 1994 it was “Reducing Unemployment: Current Issues and Policy Options.”
George said she went through the 1994 proceedings only to find central bankers and economists are still grappling with some of the same basic issues today.
“I saw that the discussion included things like the decline in demand for low-skilled workers due to technology and the challenge of the long-term unemployment,” George said. “And questions were raised by that symposium, as they are today, about the usefulness of the unemployment rate as a measure of economic slack.”
It reads like a list of the most vexing issues the Fed faces now and will be attempting to tackle today and tomorrow.
* * *
Fed Chair Janet Yellen arrived at the dinner to be greeted by about 10 people wearing bright green T-shirts emblazoned with “What Recovery?” and carrying placards with labor market data.
The protesters had traveled to Wyoming to highlight the plight of “struggling workers from around the country” who want the Fed to pursue “full employment that reduces poverty and expands the middle class,” according to the Center for Popular Democracy, a Brooklyn-based organization. The backs of their T-shirts had a graph comparing the performance of wage growth among the top 1 percent and the rest.
Ady Barkan, a staff attorney with the group, spoke briefly with Yellen at the door of the lodge’s Explorers Room. “She said she understands the issues we’re talking about and is doing everything they can,” he said, after she had entered the room.
Yellen has regularly cited weak labor markets as a scourge of the economy she’s trying to boost with easy monetary policy.
Shemethia Butler, who works part time at a McDonald’s Corp. restaurant in Washington, was one of those to make the trip. The 34-year-old said that while she isn’t up on monetary policy, she wants policy makers to know she fears higher interest rates for her and her community. She said she works 25 to 35 hours a week for $9.50 an hour at a job she’s had for just over a year. Before that she was unemployed for two years.
“There’s no recovery,” Butler said. “The economy is broken because there aren’t enough jobs for people like me.”
* * *
Yellen’s speech will be the main event of the first full day of the conference. She will speak at 8 a.m. Mountain Time today.
Her address will be followed by the presentation of the paper by Davis and Haltiwanger.
Autor will then discuss job polarization before a panel on demographics featuring Karen Eggleston of Stanford University, David Lam of the University of Michigan and Ronald Lee of the University of California, Berkeley.
European Central Bank President Mario Draghi will deliver the keynote luncheon speech.
Tomorrow, Von Wachter and then Bertola will present their papers.
The final panel will provide an overview of labor markets and monetary policy. It will include Bank of England Deputy Governor Ben Broadbent, Bank of Japan Governor Haruhiko Kuroda and Brazilian central bank chief Alexandre Tombini.
* * *
The conference is lacking Wall Street participants for the first time.
An exception is Jacob Frenkel, chairman of JPMorgan Chase International, who is attending in his capacity of chairman of the board of trustees of the Group of 30, a private-sector group of mainly former policy makers which advises central banks and governments. Tim Adams, president of the Institute of International Finance, is also present.
Draghi, Kuroda and Bank of Canada Governor Stephen Poloz provide international central banking firepower.
Among academics in attendance are Alan Blinder of Princeton University, Harvard University’s Kenneth Rogoff and Martin Feldstein, and John Taylor of Stanford University. President Barack Obama’s administration is represented by Jason Furman, chairman of the Council of Economic Advisers and Jeffrey Zients, director of the National Economic Council.
* * *
The backdrop for the symposium and Yellen’s speech was set by the release of the minutes from the Federal Open Market Committee’s July discussions.
Fed officials in July raised the possibility they might raise rates sooner than anticipated, as they neared agreement on an exit strategy. Some participants were “increasingly uncomfortable” with the pledge to keep interest rates low for a “considerable period,” the minutes said.
At the same time, “many participants” still saw “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization.”
* * *
* * *
Some recent stories on the U.S. labor market:
* * *
The opening day of Jackson Hole has been associated with stock-market gains in each of the past seven years. The Standard & Poor’s 500 Index rose an average 1.3 percent on each of them from 2007 to 2012, following speeches by then-Chairman Ben S. Bernanke, who skipped last year’s conference.
The biggest climb was the 1.9 percent of 2009, when Bernanke said the economy appeared to be “leveling out.” Gains also followed his signals of 2010 and 2012 that fresh asset-purchases were imminent.
The bar is therefore set high for Yellen who identifies slack labor markets as a reason for easy monetary policy. Economist Ed Yardeni says the “Fairy Godmother of the Bull Market” won’t let us down.
Still, Steven Englander of Citigroup Inc. says that because “dovishness is increasingly anticipated,” Yellen may have to intensify her support for low interest rates if risk-assets such as stocks are to rally anew.
Source
Seis meses después de “María”, Puerto Rico sigue en lucha por reconstrucción
Seis meses después de “María”, Puerto Rico sigue en lucha por reconstrucción
“Tuesday, March 20th from organizations across the nation take to the streets in DC to make sure that @fema, Congress,...
“Tuesday, March 20th from organizations across the nation take to the streets in DC to make sure that @fema, Congress, and the Trump Administration hear our demands.”
Read the full article here.
More states adopt tough paid sick-leave laws
PHOENIX — A new paid sick-leave law took effect Saturday in Arizona, which joins a cluster of other states in...
PHOENIX — A new paid sick-leave law took effect Saturday in Arizona, which joins a cluster of other states in continuing momentum on an issue that has seen broadening political support.
Measures adopted across the nation typically require a minimum number of paid sick hours or days each year and often mandate other guidelines in terms of permissible reasons for leave and record-keeping duties for employers.
Read the full article here.
3 days ago
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