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Labor in a (Jackson) Hole

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The Federal Reserve of Kansas City puts on the big event every year – and why not throw a big party when your territory includes Jackson Hole, Wyoming? This year’s production concluded after presentations and official pronouncements from all the top central bankers of the world – Mario Drahgi of the European Central Bank (ECB), Haruhiko Kuroda of the Bank of Japan (BOJ), and our own Janet Yellen. It’s a must-see event if you want a front row seat for the big show of policy changes among the most powerful people in the world.

This year, the theme was “Re-Evaluating Labor Market Dynamics”, and the power players from around the world made it clear that nothing is going to change in the near future. If that sounds like the biggest let-down for a big show ever, you’re right. The Fed never intended for this to be a huge theatrical spectacular. It’s a place for central bankers to get together and agree on things. And what they agreed on, more than anything, is that in the developed world there is nothing more important than figuring out just how much “slack” there is in labor markets and how to take it up.

But it’s more exciting than it seems if you want to predict what will happen in the next year.

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Union, Yes! (maybe)

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The workers at the plant are voting on whether or not to join a union. The vote is controversial, setting the company and local politicians at odds with each other in a bitter struggle playing out in the press and even on billboards around town. If you think you’ve seen this story before, hold on a moment.

In Chattanooga Tennessee the workers are finishing up voting to possibly join the United Auto Workers (UAW) today. Volkswagen, the owner of the plant, has no official position on the vote but were the ones who initiated the process last October. The opposition comes from local officials who are terrified of unions coming in. They’ve made it clear that if the UAW successfully organizes the plant they will cut off all future tax breaks and generally make life difficult for VW. Welcome to a new world of global companies meeting the strange cultural war of the USA in 2014.

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The Economy of People

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The economic teachings of Pope Francis are a hot topic. People feel a need to weigh in on what he said whether they understand it or not. But it’s the simple fact that so many don’t understand where this comes from that is probably the most important point in the public debate.

To sum it up: Money should work for people, and not the other way around. That shouldn’t be controversial, but having forgotten this way of looking at things is may be at the heart of economic and social cycles. The simple answer is that it’s time we remembered. More to the point, that philosophy is at the heart of American tradition going back to our earliest days.

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The Immigration Solution

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Barataria has noted before that there are three great forces weighing on the economy today: business cycles, globalization, and demographics (the retirement of the Baby Boom, already starting). Business cycles don’t last forever, and this particularly destructive one should end about the same time the heart of the Baby Boom starts to retire in 2018. The latter is a genuinely double-edged sword, providing opportunities for young people to fill the jobs that open as the burden of retirees on public assistance grows. There is still the potential for a great period of economic expansion in the 2020s if we can manage the downside effectively.

As with everything in economics, a growing economy makes everything easier. But how can we grow the economy through this period if there is a shortage of workers? The missing part of this Managed Depression is, as always, the important policy changes that will set us up for the next economy once this phase of the business cycle is over. One part of this pending in Congress, held up by partisanship, is immigration reform.

In other words, the challenges of globalism present one solution to the challenges of demographics.

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Work Creates All Wealth

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On a bizzy day, it’s time for another repeat.  This one is from October 2010, just before the Republicans took the US House.  I’m going to leave it just the way it is because I think the message is still important – but we’d be in a much stronger position if we too this to heart, IMHO.

As Democrats contemplate holding the minority position in Congress yet again, there are many ways we can handle it.  We could all sit in the back and throw stuff, much as the Republicans did for the last few years.  We could turn on each other and rip our own guts out in a festival of shame and blame.  Or, if we’re intent on really standing up to our principles, we can use this time away from being the responsible ones and understand what it is that we, as a party really stand for.

We have a lot to offer if we can only get it together for once.  But I, for one, think it’s going to take a much deeper understanding of our core values and what is really happening around us before we can make it happen.

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