Beth Macy’s ‘Factory Man’ deserves every accolade

The beer is excellent, too.

The beer is excellent, too.

Beth Macy has received too many thumbs-up reviews of her new book “Factory Man” to count. We’re talking not one, not two, but three glowing mentions in The New York Times alone. This book is on fire.

And the attention is so well deserved. This is an important piece of journalism on many levels.

First, Macy tells the story of Bassett, a company town in rural Virginia whose trajectory was inevitably linked to the family who named it — and for a good part of its history owned everything from the bank to the hospital. That family at times rivaled the patriarchs of Dallas for soap opera-worthy drama, and Macy chronicles much of it, in note-perfect prose that preserves respect and dignity for every well-drawn character.

Next, Macy paints a rich, layered portrait of JBIII, the black-sheep son of the family denied his feudal right to the CEO’s chair. John Bassett III is a character whose story needed to be told. When speaking at the “Factory Man” launch at Parkway Brewery Co. in Salem, Bassett seemed to revel in  a former employee’s description of him: “He may be an asshole, but when he’s your asshole, that’s a very good thing.” Strong-willed, hard-working and much smarter than even his own family gave him credit for, JBIII didn’t fade away when his brother-in-law took over the company and made it clear that the prodigal son’s role would be as minor as he could make it.

Instead, John Bassett took over another company in nearby Galax, Va. He turned it around and, when the illegal dumping of Chinese exports threatened the entire domestic furniture industry, he fought back at the International Trade Commission. He didn’t stop there, though. He made sure his company and his factories were nimble and smart, and he did everything he could to maximize the advantages of domestic production. The portrait painted by Macy is every bit as complex as the man must be.

What drove him? Resentment over his treatment by his own family? A burning desire to prove himself? Concern for the hundreds of workers he felt responsible for? Or the stubborn, cantankerous inability to back down from a fight? A bit of all, most likely.

Finally, “Factory Man” is the story of free trade’s losers, from  factory workers nearing retirement when Bassett shut down most of its domestic production to workers in China who would see themselves priced out to cheaper labor in Vietnam and Indonesia. Macy makes much of the fact that she’s not a business writer. And she talks quite a bit about her own upbringing as the daughter of a factory worker in a town not unlike Bassett. It’s no secret where her sympathy lies, though she is clearly not naive about the stark, painful realities of a global economy.

But where she succeeds beautifully — and where a business writer steeped in years of conventional economic wisdom might have never tread — is her vivid look at those left behind by the “rising tide” of free trade: older workers who can’t afford to leave but can’t find new jobs; younger workers who hired on as call center workers, only to see those jobs also outsourced; parents who must watch their children move away, with nothing to keep them at home.

“Factory Man,” in its depiction of JBIII’s determination and drive, makes clear that not all of this pain was necessary. If other owners had found John Bassett’s faith in and compassion for their workers, and fought both harder and smarter to keep American factories working, the flood of imports might not have washed away so many jobs, and so many lives.

American manufacturing is dying, and, as Macy writes, many economists and other big thinkers believe that’s just fine. But it isn’t. Unthinking devotion to the bottom line has robbed America of a great strength, stolen the economic vitality of a broad swath of the middle class, and made the economy exceedingly vulnerable.

For the most part, this is not the fault of American workers, but of  business owners and shareholders who, for all their talk of being job creators, have overseen a decline we may never recover from.

JBIII is far from a perfect man. He and his entire family became enormously wealthy thanks largely to the sweat of others. But no one can doubt his own work ethic, and his drive to keep his business going, not just for his own sake, but for the sake of the hundreds of others whose livelihoods depend on it.

There’s a lesson there, if anyone out there is willing to learn it.

“Factory Man” is an enormously important book. May the accolades keep coming.

How safe is your marshmallow?

Study reenactment: Evelyn Rose, 4, of Brighton, N.Y. participates in a reenactment of the marshmallow experiment. The study found that children’s decisions to delay gratification is influenced as much by the environment as by their innate capacity for self-control. The study was conducted at the University of Rochester Baby Lab. Photo by J. Adam Fenster / University of Rochester

The scariest thing I’ve read lately about the future of America was about marshmallows.

Seriously.

In the late ’60s and early ’70s, a Stanford University psychology professor conducted a series of experiments on delayed gratification using 4- to 6-year-olds and marshmallows. In the experiment, the researcher would give a child a marshmallow and a choice: Eat the marshmallow now, or wait 15-minutes before eating it and get a second marshmallow to enjoy.

Fifteen minutes for a 5-year-old with a marshmallow is an eternity. The point of research was to see at what age the ability to delay gratification to receive greater rewards kicked in. Follow-up studies discovered something interesting: Children who were  able to delay gratification and get the second marshmallow tended to do better later in the life, scoring better on SATs, getting further in school, having healthier body-mass index scores. The thought was that an increased ability to exercise self-control at a young age led to better outcomes as the child grew.

But another study last year called that conclusion into question. Self-control, it turns out, isn’t as important as trust when it comes to delaying gratification.

Researchers repeated the marshmallow study, but this time the children were divided into groups: One group had a “reliable” researcher; the other, an “unreliable” researcher. Before the marshmallow study, the children were given used art supplies, but promised that the researcher would return in a bit with newer, better supplies for them to complete a task. In the “unreliable” group, the researcher failed to deliver.

Those children, taught not to trust the word of the researcher, were far more likely to eat the first donut without waiting for the second. They waited a mean time of a little over three minutes, while children in the other group averaged a 12-minute delay.

A recent article in Pricenomics discussed this study in relation to Silicon Valley’s ability to keep pumping out new technologies and new companies, even though they have a high failure rate. But the author, Alex Mayyasi, also hinted at the darker ramifications for the rest of the nation:

This is also why Americans’ pessimism and distrust is of such concern. Every patriotic immigrant story and feel good ode to American identity points to the American Dream: the belief that hard work will be rewarded with a good life. But confidence in the media, government, and financial system are all decreasing (something represented quantitatively in the “Trust in Institutions” barometer) and social mobility is falling. A major premise of Occupy Wall Street was that the rules of capitalism seemed rigged in one group’s favor and President Obama’s “fair shot” speeches during the election played off the idea that people no longer believed in an America “where hard work paid off, and responsibility was rewarded, and anyone could make it if they tried.”

That is dangerous because, as we’ve seen, people decide whether to work hard, take initiative, and invest for the future based on whether they trust that it will be rewarded.

The kids in the group with an unreliable researcher learned not to trust, so they ate the marshmallow they had instead of delaying gratification and waiting for the second marshmallow.

The way things are now, can Americans trust corporate America to give them a promised second marshmallow? Ask Patriot Coal’s retired miners about that. The real question is whether we can trust corporate America not take away the marshmallow we already have.

I came across the Priceonomics article on one of my favorite websites, MetaFilter. Just two posts down from that, I saw this article: “The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed.” The ProPublica article details the rise of the use of temp workers by corporate powerhouses such as Wal-mart, Nike and Frito-Lay. These workers, employed indirectly by some of the most profitable corporations in the world, have no job security, no benefits and low pay. According to Labor Department statistics quoted in the article, nearly one-fifth of overall job growth in the economy since the end of the Great Recession has been in temporary employment. America now has more temporary workers — 2.7 million — than ever. And the conditions they work under are worse than ever.

Other low-income workers are being forced to pay fees to get access to their wages, a lucrative arrangement for both banks and employers that can cost workers a significant portion of their already low pay.

The Pricenomics article discussed how cultures Americans once wrote off because of their “lazy” workers — South Korea, China, Japan — were actually just mired in poverty. When those same workers trusted they had the opportunity to succeed, their work ethic improved dramatically.:

All these “lazy” people were perfectly willing to work hard, study long hours, and plan for the future, but only when opportunities existed and they trusted that hard work would pay off. This lesson, that people work hard when they are confident that it will pay off, is simple. But it is one that is often eclipsed behind perceptions of culture, innate ability, or other explanations.

And this is why marshmallows have me worried about the future of America. As corporations shred decades-old social contracts in pursuit of an ever-better bottom line, as corporate profits soar while the median income of Americans stagnates or declines, as promised retirement benefits vanish and those left with few opportunities for stable employment are derided as “takers,” the trust that hard work can pay off is going to evaporate in the light and heat of available evidence. That trust is the core motivator to work hard, better yourself and work for the future. What happens when a broad swath of America decides such trust is misplaced?

Eat your marshmallow now. You know the second one isn’t coming, and you can bet someone in a boardroom somewhere is trying to figure out a way to take a bite out of the first one.

The spending ‘surge’ under Obama

Here’s federal spending during President Obama’s first term.

 

 

Here’s federal spending during President Bush’s two terms.

 

 

Note the scales on the left are not identical. For Bush’s two terms, the scale covers a range of $1.8 trillion. For Obama’s, it covers just under $400 billion.

Any questions?

A conflict of law, and how to resolve it

Yesterday, I went after Best of the Web columnist James Taranto for what I gathered was him intentionally confusing the debate over the debt ceiling increase, making it appear that President Obama wanted to add to the debt as opposed to ensuring that the United States could pay the obligations Congress had already made on the nation’s behalf.

But there is a point in he makes in the column that is intriguing:

What would happen if Congress failed to raise the debt limit is that the government would be unable both to pay off existing bondholders and to spend all the money Congress has ordered. That would create a conflict of law.

That got me thinking. If the GOP does the unthinkable and refuses to increase the debt ceiling, there will be a conflict of law, as Taranto says. On the one hand, you have the law passed in the early 20th century that set up an arbitrary ceiling on the debt the Treasury Department could hold in order to pay the government’s bills. On the other hand, you have every other single law ever passed that either raised revenue or spent money.

One very awkward solution — though not as awkward as minting a trillion dollar coin or pretending the 14th Amendment says something it does not — would be for the president to go on live TV and say something along these lines:

I have something important to say to my fellow Americans, to the global economic community and to anyone who ever bought a Treasury bond. Because of the gross irresponsibility of congressional Republicans, I am faced with a difficult choice. Either decision I make will break the law and undermine the Constitution. I can either accept the law setting the debt ceiling at the current level, which we have reached, or I can ignore that law.

If I accept that law, I must break literally hundreds of others. I must renege on obligations Congress made to the people of this nation. I must shut down essential services authorized by Congress. I must risk defaulting on the full faith and credit of the United States because, frankly, the federal government is an enormous machine and ensuring that some of our creditors get paid while others get stiffed is an order of magnitude more complex than most people appreciate.

Not only that, however, I will be putting the executive branch in the position of making what are clearly legislative branch decisions. I do not have the authority to decide what programs to fund and what programs not to fund. That’s Congress’ job, not mine. By refusing to pass an increase on the debt limit, Republicans in Congress have unconstitutionally shifted that responsibility, that power, to me. I don’t want it, and it is not my power to exercise.

Therefore, I’ve decided that if I must break the law and undermine the Constitution, I will do so in a way that is least disruptive to the global and American economies and to the American people, and in the way that involves less executive overreach: I have instructed my Secretary of the Treasury to ignore the statutory debt limit and to issue bonds in the amount necessary to keep the government functioning and to honor the legislative intent of every other law passed by Congress.

Let me be clear: This is not a choice I make lightly. But it is a decision that has been forced upon me. If Congress does not approve, then it can either cut the spending it has approved, raise more revenue or increase the debt ceiling.

In other words, Congress can do its job.

Thank you, good night, and may God bless America.

Update: Just to be perfectly clear, I realize such an announcement by the president is completely unrealistic. It would roil the bond markets. Who would buy Treasury bills under such a cloud? It’s just a thought I had in reaction to Taranto’s point. If you have conflicting laws, who says the law that causes the most turmoil and destruction ought to win? A constitutional law scholar could probably tell me a dozen ways this scenario is unworkable. Of course, equally unworkable is the Republican willingness to refuse to increase the debt ceiling if they don’t win spending concessions. Unfortunately, that isn’t imaginary.

James Taranto thinks you’re stupid, too

The Wall Street Journal’s Best of the Web columnist James Taranto is smarter than this, I thought. From today’s column: “The 14th Amendment clearly does not authorize the executive branch to incur more debt without congressional approval.” The debt ceiling debate is NOT about incurring more debt. It is about paying the debt Congress has already incurred. Taranto knows that. Republican officeholders know that — even if they sometimes pretend they don’t. They just think you’re stupid and don’t know any better.

Speaking of the 14th Amendment gambit he described in the quote above and of another out-there idea — to have the Treasury Secretary take advantage of a poorly written law to mint two $1 trillion coins, deposit them in the Treasury and put that money on the books, thus enabling the United States to continue paying its debts — Taranto also says this: “Democrats, for their part, are again suggesting two ways of working around the debt limit.”

That’s just wrong. Democrats don’t want to work around the debt limit. They want to increase it, as a Republican Congress did without drama 19 times during the Bush administration. It is the Republican refusal to increase the debt limit without onerous preconditions (which they don’t have the votes to win through the normal political process) that’s forcing Democrats and other sane people to think way outside the box. This isn’t, as a friend of mine liked to say, rocket surgery. If Republicans refuse to vote to increase the debt limit unless they get their way on spending cuts and President Obama sticks firm to his vow not to negotiate with terrorists again on the debt ceiling limit, the effects on the global and national economies will be catastrophic.

If minting trillion dollar coins can avoid those consequences, then mint the damn coins.

Even better, slap some sense into those Republicans who believe hostage-taking is a legitimate form of political negotiation. Or arrest them for economic treason and terrorism, which is exactly what they would be committing if, in the end, they actually pull the trigger and refuse to vote for a clean limit on the debt ceiling.

Republicans think you’re stupid

Sen. Mitch McConnell has been in the U.S. Senate a long time. He’s the minority leader, and he has been Senate president when Republicans held the majority. I assume he knows fundamental principles of how the U.S. government works. So when he says, “By demanding the power to raise the debt limit whenever he wants by as much as he wants, [President Obama] showed what he’s really after is assuming unprecedented power to spend taxpayer dollars without any limit,” McConnell knows he is spouting bullshit. He knows that President Obama can’t spend a dime that’s not authorized by Congress. He knows that raising the debt ceiling is necessary to pay obligations already made by Congress.

If he knows better, and he must, why would McConnell say something so ludicrous? Because he thinks you’re stupid. He thinks that the American public doesn’t understand that all federal spending originates in Congress. He thinks he can blow smoke about the debt ceiling and most people won’t know better.

Sadly, he’s probably right. If the American people understood what recent debt ceiling fights have actually been about, not a single congressional Republican would have been re-elected to office last month after last year’s debt-ceiling fiasco. The debt ceiling is a self-imposed restraint that dates back nearly a century. Most nations don’t operate that way, and now we know why. For most of that hundred years, raising the debt ceiling when necessary was uncontroversial because Congress realized that the decision to spend the money had already been made and the vote to increase the debt ceiling was simply a vote to honor our obligations and ensure the government had the money to pay its creditors.

Then a band of Tea Party Republicans took over the House in 2011, and they decided that they would use the debt ceiling to hold the nation hostage. If they didn’t get the specific spending cuts they wanted, but didn’t have the votes to impose, then they wouldn’t vote to increase the debt ceiling. Failure to do so, they knew, would put the nation into default on its debts, plunge the global economy into chaos and drastically increase future borrowing costs. They. Did. Not. Care.

We survived that manufactured crisis last year. Barely. It did lead to the historic downgrading of our national credit rating, which increased the deficit. And the uncertainty stalled the economy, nearly pushing it back into recession. But a deal was worked out to get through the election without needing another vote. Now, though, the time is coming when another vote will be needed, and House Republicans are promising once again to hold the nation’s full faith and credit hostage to their demands.

President Obama, wisely, is having none of it. He wants to make permanent the arrangement McConnell cobbled together to resolve the issue last time: The president would have the authority to raise the debt ceiling when needed. Congress could vote to block, but would have to have a two-thirds majority to successfully overcome a presidential veto. So, unless two-thirds of both houses of Congress goes insane, the nation’s credit would remain safe.

Rather than debating this issue on the merits — or lack thereof — of their positions, Republicans like McConnell are trying to paint this as a power grab by the president so he can spend more money. They know the president can’s spend any money Congress doesn’t authorize, but they’re hoping you don’t.

Who won the election again?

In the fiscal cliff negotiations so far, President Obama has pretty much started with the plan he campaigned on: Tax increases for the top 2 percent. Structural reforms for Medicare that will result in significant savings. An extension of payroll tax cuts and unemployment benefits.

And Republicans have countered with something more radical than what Mitt Romney campaigned on: The promise of $800 billion in revenue from unspecified changes to the tax code that don’t include any rate increases and may well include rate reductions. Immediate, painful cuts to Medicare and Social Security. Ending the payroll tax cut and extended unemployment benefits.

Now might be a good time to remind Republicans that they lost the last election. Obama beat Romney soundly. Republicans lost seats in the House and the Senate, and probably would have lost control of the House if not for the success of gerrymandering in creating safe seats for incumbents.

It might also be a good time to remind them that the public overwhelmingly prefers President Obama’s approach to deficit reduction, including reverting tax rates for the wealthiest Americans to what they were during the Clinton years. The extraordinarily prosperous Clinton years.

Obama’s policies haven’t been enacted

Remember this? Senate Minority Leader Mitch McConnell in a rare outburst of candor after the 2010 midterm elections explained what Republican priorities ought to be. Not the economy. Not jobs. Denying Obama a second term. How best to do that? As Paul Krugman wrote in his column today:

Think of it as a two-part strategy. First, obstruct any and all efforts to strengthen the economy, then exploit the economy’s weakness for political gain. If this strategy sounds cynical, that’s because it is. Yet it’s the G.O.P.’s best chance for victory in November.

Over and over and over again, we’ve heard Republicans say Obama’s policies have failed. That was especially true when the jobs numbers for August came in at a disappointing 96,000 net gain.

“After 43 straight months of unemployment above 8 percent, it is clear that President Obama just hasn’t lived up to his promises and his policies haven’t worked,” Romney said.

That is, of course, demonstrably untrue. When Obama took office, the nation was losing hundreds of thousands of jobs a month. August was the 31st straight month of private-sector job gains. While it’s true that 96,000 new jobs isn’t good enough, it’s also true that August’s disappointing numbers beat George W. Bush’s median monthly job growth of 95,000 a month.

But the other fact is that most of Obama’s policies haven’t been enacted. He got the stimulus passed, and that had a clear and quick impact. But as the stimulus money ran out, the European debt crisis dampened the global economy and Republicans’ inexcusable brinksmanship on the debt ceiling all took a toll on the recovery. Obama offered up a series of policy proposals, including the American Jobs Act, which credible economists say could have created as many as 2 million additional jobs in 2012 had it passed last year.

As with most of Obama’s policies, there was nothing radical in the act. It contained a mix of tax cuts for small businesses and infrastructure spending – both things Republicans ordinarily favor. It would have provided aid to states to prevent the layoffs of teachers, police and firefighters.

House Republicans have refused to even consider it, and Senate Republicans filibustered it. Remember McConnell’s words in the clip above. Remember what congressional Republicans stated priority has been.

So the next time you hear a Republican claim that President Obama’s policies failed, ask how his policies could have failed if Congress never implemented them?

The current faltering recovery could be doing much better if Obama’s policies had been put in place. They were not, because Congress got in the way. Republicans would rather have a bad economy right now than a good one because it makes winning back the White House more likely. That’s more important to them than the millions of people who remain out of work. Americans should never forget that. Democrats should be running that McConnell clip nonstop between now and election day.

The Republican Lie Machine

The Big Lies continue from the Republican Party.

In a Wall Street Journal commentary ironically titled “The Truth about Ryan and His Critics,” Rep. Tom Coburn lays out what should be a stunning series of lies and half-truths. They would be stunning, if such lies from GOP officials weren’t so routine these days.

“First, Paul Ryan didn’t force President Obama to abandon the budget recommendations of his own 2010 deficit commission, known as Bowles-Simpson,” Coburn wrote.

Well, no. But Ryan himself rejected the recommendations of the deficit commission, of which he was a member.

“Second, even though I served on the president’s debt commission and supported its recommendations, I recognize that we already have a debt commission. It’s called Congress. No one in Congress has done more to offer specific solutions to our fiscal challenges than Paul Ryan. He also has demonstrated the rarest and most important trait in politics—moral courage.”

Ryan’s budget wouldn’t achieve balance until 2040. He would add trillions upon trillions to the debt. Yes, he would cut spending, drastically, but not a penny of that would go to debt reduction. It all goes to pay for even more tax cuts for the wealthy, even while middle class taxpayers get hit with a tax increase. Don’t believe me? Maybe you’d believe Fox News:

A June study from the Joint Economic Committee — which is chaired by a Democrat — claims middle-class married couples could pay at least an extra $1,300 under Ryan’s plan, while those earning more than $1 million a year could see a nearly $290,000 cut.

According to an Aug. 1 study released by the Tax Policy Center, Romney’s tax plan would also include cuts that “predominantly favor upper-income taxpayers.”

It projected taxpayers making more than $1 million would see tax cuts averaging $175,000. Those making between $75,000 and $100,000 would see an average tax cut of $1,800. And those making under $30,000 would see an average increase of $130, according to the report.

Coburn goes on to write, “At any point in the past four years, President Obama could have called Republicans John Boehner, now House speaker, and Rep. Ryan, now House Budget Committee chairman, over to the White House and cut a budget deal.”

Ahem. Obama offered Boehner a budget deal, one so conservative that New York Times columnist David Brooks called it “the deal of the century.” More than two thirds of the debt reduction the deal achieved would have come from spending cuts, almost a mirror image of the three debt-reduction agreements signed by President Reagan. Boehner wanted to accept the deal, but radicals in his caucus – like Paul Ryan – rejected it. They would accept nothing that contained any tax increase whatsoever.

Coburn’s defense of Ryan’s Medicare plan is no less dishonest. To excuse Ryan’s radical plan, which would do nothing to lower health care costs but shift the burden more fully onto the shoulders of seniors, Coburn wrote: “Medicare Part A—the Hospital Insurance Trust Fund—could run out of money within five years. The massive amount of borrowing necessary to keep the safety net intact will trigger a debt crisis (higher interest rates, inflation, lower standards of living and higher unemployment) sooner rather than later.”

Actually, no. Thanks to changes in the Affordable Health Care Act, which Coburn derides as “fiscally flawed,” the Medicare Trust Fund is solvent through 2024. Only if Romney/Ryan get their way and undo the savings of Obamacare will Medicare be at risk of insolvency as soon as Cockburn warns.

That aside, if the problem is so urgent, then why does Ryan insist that the system won’t change for current retirees or anyone over 55. That means that any changes Ryan proposes won’t have any impact for at least a decade, which according to Coburn himself is too late – yet he complains about “the left’s election-year war on math.”

Paul Ryan’s budget isn’t a serious document. Anyone who claims it is, or claims that no one has “has done more to offer specific solutions to our fiscal challenges than Paul Ryan” is either misinformed or lying.

Ryan has a short memory, or an odd definition of ‘worse’

“When Obama came into office, it was tough,” Republican vice presidential candidate Paul Ryan said in Roanoke today. “He inherited a difficult situation. Here’s the problem: He made it worse. He can’t run on accomplishments. It’s a failed record.”

Yes, what part of record could Obama possibly run on? When he took office, the economy was shedding jobs at the rate of hundreds of thousands a month. We’ve now had 30 months of continuous private-sector job growth. The Dow was in a free-fall; it just hit a four-year high. Detroit is still in business. Osama bin Laden is not. The Affordable Care Act will cover 30 million Americans and help rein in the spiraling costs of Medicare. Obama got Congress to pass the Lilly Ledbetter Fair Pay Act, helping women get justice for decades of unequal pay. He got the middle men out of student loans, saving the federal government billions of dollars that had been going to banks for making risk-free (to them) loans. He’s lowered taxes for every American. According to Ryan, that’s what “worse” looks like. Where was Romney in 2008 and early 2009? And why has he apparently lost all memory of that chaotic time?

If Republicans in Congress weren’t hellbent on denying Obama any legislative success, his American Jobs Act would help create millions more jobs, according to independent economists.

Ryan’s right. With a “failed record” like that, why is Obama even bothering?

Amusingly, Ryan repeated Mitt Romney’s vow to create 12 million jobs in the next four years if they’re elected. Despite the fact that Romney has called job growth under Obama “disappointing,” the nation is already on track to gain that many jobs in the next four years, according to Moody’s Analytics. The kicker, according to Moody’s senior analyst Hopkins? “In effect, therefore, Romney is essentially promising no more jobs than we currently expect to gain under proposals similar to those advanced by the Obama administration. There’s not enough in Romney’s plan to estimate how many jobs it would create. If he’s saying the net change will be 12 million jobs, that’s exactly what we’re estimating without Romney’s plan.”