PBS and the debate to economic growth

Recently PBS news hour reporter Paul Solman talked with a billionaire venture capitalist, Nick Hanauer, who supports a higher $15.00 minimum wage, and with a libertarian law professor and economics fundamentalist, Richard Epstein.  Epstein believes that government regulations are all to blame for poor economics. To read the transcript and better, to listen to the video presentation, it leaves one scratching your head and why people don’t get it that a strong middle class is necessary, and to be strong, that have to make a decent living wage to support their families and help the economy survive. Some excerpts point out the absurdity of top down economics.

PAUL SOLMAN: The central tenet of Hanauer’s economic philosophy, growth isn’t top-down or even bottom-up, but, as he puts it, middle-out.

NICK HANAUER: The fundamental law of capitalism is, if workers don’t have any money, businesses that — don’t have any customers. A thriving middle class is the source of prosperity in capitalist economies, not pouring money into rich people, right, which simply makes rich people richer.

PAUL SOLMAN: But trickle-down economics is true to some extent, right?  I mean, rich people get money, and then they have got to either spend it or, ultimately, like Buffett or Gates here in Seattle, give it away.

NICK HANAUER: But there is this upper limit on what we can spend. I drive a very nice car, but it’s only one car. I don’t own 1,000, even though I earn 1,000 times the median wage.

We have run a 30-year experiment in what happens to an economy when you structure it to benefit the few, at the expense of the many. And I would argue that for most people that experiment hasn’t gone very well.


RICHARD EPSTEIN: If it turns out that rich people hire poor people and both of them are better off in the exchange, you can start to call this a trickle down if you wanted. I would call it an overall social improvement whereby two people are made better offer and nobody else is going to be made worse of.

PAUL SOLMAN: But 80 percent, 90 percent of this country isn’t any better off than it was 30 years ago.

RICHARD EPSTEIN: This is not a function of market behavior. It is a function of the regulatory apparatus which makes it impossible to have these mutual gains.

PAUL SOLMAN: So your argument is that the reason incomes have stagnated in this country over the last 30, 40 years is largely due to increased regulation?

RICHARD EPSTEIN: Yes. You have to worry about family leave. You have to worry about anti-discrimination. You have to worry about explicit employment taxes. You have to worry about Obamacare. You have to worry about OSHA. And then throw on top of that a recession.

It turns out that the reduced demand coupled with the higher barriers to entry create the unemployment levels that we have had.

PAUL SOLMAN: But, to Epstein, perhaps the looniest regulation is the minimum wage, or, as he calls it:

RICHARD EPSTEIN: The guaranteed recipe to create massive unemployment.

PAUL SOLMAN: Don’t you have to pay people, workers enough so that there will be enough aggregate demand so that they can buy what other people are producing?

RICHARD EPSTEIN: The question, of course, is how you get to aggregate demand. I want people to be able to take jobs at 2 cents an hour if that is what it takes so that a year from now they can take $12 an hour.

PAUL SOLMAN: And if people are earning 2 cents an hour, how are they supposed to survive?

RICHARD EPSTEIN: Obviously, at some particular point, they are going to have to have two jobs.

PAUL SOLMAN: Or, at 2 cents an hour, several hundred. But isn’t that, well, absurd?

RICHARD EPSTEIN: No, it’s not. You assume that the only return that a worker gets from a job is the wage consideration. That’s just wrong. It is a whole variety of social skills that you acquire. Recommendations, connections, and network really matter.”


Another piece by Nick Hanauer talks about why capitalism has nothing to do with supply and demand.

Hanauer has argued in a popular 2012 TED Talk, and most recently in a Politico Magazine essay, addressing income inequality, through measures like a higher minimum wage, is not simply a moral issue; it’s an economic issue because prosperity originates from having a strong middle class, what he calls ‘middle-out-economics’.”

Hanauer explains: ”

So middle out economics is essentially a 21st century way of understanding how an economy works – not as this linear mechanistic system — but as an ecosystem, with the same kinds of feedback loops. The fundamental law of capitalism is if workers don’t have any money, businesses don’t have any customers; that prosperity in a capitalist economy is a consequence of a circle of feedback loops between customers and businesses, which means that a thriving middle class isn’t a consequence of prosperity. A thriving middle class is the source of prosperity in capitalist economies, which is why a policy focused on the middle class is and has always been the thing that drives prosperity and growth — not pouring money into rich people, which simply makes rich people richer.

And so middle-out economics is the idea that if you make a policy focused on the middle class and generate demand from the middle class, you’ll both create more entrepreneurs to drive innovation, and essentially, a sale cycle and a hiring cycle for business that generates a virtuous cycle of increasing returns that benefits everybody.”



Jack Hatch and Monica Vernon visit Siouxland

Iowa Democratic candidate Jack Hatch and his running mate, Monica Vernon, visited Woodbury County Democratic headquarters Sunday afternoon to speak with supporters. Hatch and Vernon want to move Iowa and Iowans forward. His opponent is satisfied with his record, including questionable circumstances that have come up the last couple of years involving the dismissal of employees and hush money that people in his administration approved.

Sen. Hatch and Vernon, currently serving a second term on the Cedar Rapids city council and as mayor pr tempore, both are small business people. And they want to help Iowans get ahead with their business. Hatch keeps asking why his opponent gave away so many millions in subsidy dollars to the Egyptian firm, Orascom Construction Industries, that is building the fertilizer plant in southeastern Iowa. Rather than looking for Iowans, a large number of them and offering these subsidies to grow their own home-based businesses in this state. Recently it was stated the CEO of Orascom Construction Industries, Nassef Sawiris purchased a $70 million penthouse in New York City. He could have purchased a very nice home in Iowa for that amount.

Hatch and Vernon want to get elected to help Iowans get back to helping Iowans. To again make the state a shining example of common sense people working together to achieve meaningful lives.

Congressman Ryan’s compassion for the poor

In an opinion piece by the Washington Post’s E.J. Dionne over the weekend concerns Congressman Paul Ryan’s recent proposal to help the poor, titling his proposal as the “Opportunity Grant”.

Dionne writes, “The problem is that this “pilot program” amounts to little more than the stale conservative idea of wrapping federal programs into a block grant and shipping them off to the states. The good news is that Ryan only proposes “experiments” involving “a select number of states,” so he would not begin eliminating programs wholesale. Thank God for small favors.”

He continues, ”

Ryan surrounds his retread idea with the language of innovation. “The idea would be, let states try different ways of providing aid and then to test the results — in short, more flexibility in exchange for more accountability,” he declared. “My thinking is, get rid of these bureaucratic formulas.”

Who can possibly like those “bureaucratic formulas”? The phrase is another disguise. Among the programs Ryan would block grant are food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP). Food stamps are one of our most valuable initiatives because people are automatically eligible for them when they lose a job or their income drops sharply. Studies have amply documented how important food stamps are to the well-being of children.

SNAP isn’t the only program that would get wrapped into the grant. Housing vouchers would go there, too, which could lead to more homelessness. So would money for child care. Ryan says there would be rules barring states from using funding from his Opportunity Grant for purposes other than helping the needy. But it’s not clear from his outline how he’d stop states from using their new flexibility to move spending away from the needy indirectly by substituting block grant money for existing expenditures.

Ryan might reply: You just don’t trust the states! And my answer would be: You’re absolutely right, there are some states I don’t trust to stand up for their poor people. I’d point specifically to the 24 states that are depriving roughly 5 million Americans of health insurance because they refuse to participate in the Medicaid expansion under the Affordable Care Act.”


Come greet Iowa candidates visiting Sioux City

                                        Upcoming Events

  •               Sunday, July 27, 1:30 PM
    •          Fundraiser for Jack Hatch, Featuring special Guest
    •        Maryland Governor Martin O’Malley
    •      You are invited to the home of Al Sturgeon, 615 Shady Lane, Sioux City. Governor O’Malley will be there to support the campaign of Jack Hatch for Governor of Iowa. Suggested contribution, $25 per person — but any voluntary contribution is appreciated!
  •               Sunday, July 27, 2:15 pm
    •       Meet & Greet Governor Martin O’Malley
      and Iowa  Democratic  candidate for Governor Jack Hatch,  at the Democratic Headquarters, 401 S. Lewis Boulevard, Sioux City.

      • Democrats are invited to come to Democratic Headquarters for a brief ‘meet and greet’ with Governor O’Malley and Jack Hatch.
  •                              Thursday, August 7, 5-7pm
    • Drinking Liberally meetup, Indigo Palette, 1012-4th St, Sioux City
      • Have a cold soda or beer and enjoy the fellowship of your local Liberal and Progressive friends.
  •                              Thursday, August 14, 5:30 to 7pm
    • Fundraiser for Brad Anderson for Secretary of State
      • You are invited to the home of Kathy and Tim Bottaro, 1915 Heights, Sioux City to meet Brad Anderson, Democratic candidate for Iowa Secretary of State (if you care about voting rights and fair elections this maybe one of the most important races in Iowa.) Suggested minimum donation is $25 per person; heavy hors d’oeuvres will be served. Please RSVP to Tim Bottaro

Iowa Republicans, listen up, and check out Kansas

Recently a story came out of Kansas, again, concerning Gov. Sam Brownback, but this time concerning his re-election. His Democratic opponent, Paul Davis, received endorsements of 100 or more former and current state Republicans. Gov. Brownback and his state Republican controlled legislature passed some major tax reduction bills for the wealthy, every conservative Republican’s wet dream.

But not everyone was happy about it. “The newly formed Republicans for Kansas Values would like to …. oust Brownback. ‘He said just very recently, he’s going to ‘double down’ on the tax cuts. He brings in an extremist like Rick Santorum to Kansas, who is as far right as you can get. And Kansas has not had that kind of tradition. We value higher education. We value K-12. And we’re abandoning that in the name of some kind of extreme policy.’ ”

So maybe the moderate Iowa Republicans in the Congressional 4th District should listen up, and check out Kansas. Maybe they should become vocal and put their support behind Jim Mower, a Democrat, but a moderate. A person who will work with everyone to get things done. Who has been in challenging places and doesn’t throw out the verbiage that Bagdhad is safer than Washington, D.C.

These Republicans should realize that now is the time to remove Congressman King and put someone into office that wants to help the people of Iowa, rather than offend people. And not create a great fanfare, but then never follow through. Mr. King could move forward with his life, go to work for a think tank organization and create bombastic content to his heart’s content and carry whatever banner he thinks appropriate. Meanwhile Jim Mower could quietly go about helping all Iowans pursue their dreams and actually work through some tough issues trying to fine real solutions.

Cutting taxes to prosperity, not in Kansas

The New York Times today published an editorial concerning the state of Kansas and its current fiscal situation. Current Gov. Sam Brownback and the Republican legislature pursued the Republican dream in their state and slashed taxes for the wealthy. As always, stating that doing so would grow the state’s prosperity. Some salient observations from the editorial: “Moody’s cut the state’s debt rating in April for the first time in at least 13 years, citing the cuts and a lack of confidence in the state’s fiscal management.”

Also: “Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy,” he wrote in 2012. “It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business. But the growth didn’t show up. Kansas, in fact, was one of only five states to lose employment over the last six months, while the rest of the country was improving.”

The Republican dream of making growth through taxcuts for the wealthy may be a hard lesson learned by the state of Kansas.

Understanding some of what probably led to this moment is a book by journalist and author Thomas Frank, “What’s the Matter with Kansas? How conservatives won the heart of America”, published in 1995.

Florida judge voids state congressional districts

Iowans, although divided by political parties and ideologies have not given in to the political hacks who would gerrymander congressional districts to favor one party or the other. It’s probably safe to assume though some on either side of the aisle would enjoy that very much.  Recently published column in the Washington Post and a story in the New Your Times talks about Florida and tells about a story in which a greedy party and a greedy individual seemed to mutually benefit from from a weirdly drawn congressional map. So a Florida judge struck two congressional districts and so the process begins again.

Here in Iowa there is a particular process in place to achieve fairness and to benefit the voters, not the political parties or particular individuals. Midwest fairness maybe, and hopefully that will continue.


It states:

“Redistricting, the redrawing of congressional and legislative district boundaries, has always been a political process which has generally been fought at the state level.1 For both congressional and legislative districts, constitutional and statutory provisions generally required the drawing of district boundaries based in part upon population.2 However, until 1962 most states generally ignored any requirement to redistrict congressional and legislative districts based upon changes in the state’s population.

In 1962, however, the U.S. Supreme Court ruled that a person could challenge, and seek judicial redress for, an allegedly improper redistricting plan.3 As a result, state legislatures were forced to draw redistricting plans consistent with constitutional and statutory requirements or else be subject to having their congressional and legislative districts drawn by the courts.

This Legislative Guide is intended to provide some basic information concerning the process of redistricting in Iowa. Specifically, this Guide will discuss the relevant constitutional, statutory, and case law requirements that apply when establishing congressional and legislative district boundaries in Iowa. Code citations, unless otherwise noted, are to the 2007 Iowa Code and Iowa Code Supplement.”

It is also stated:


Iowa Standards.

“Code section 42.4(1) requires that a congressional redistricting plan contain districts which have a population as nearly equal as practicable to the ideal population for a congressional district in the plan. Specifically, the Code provides that the deviation percentage variance for any congressional district in a redistricting plan shall not exceed 1 percent unless necessary to comply with constitutional requirements as provided in Article III, section 37, of the Iowa Constitution.36 Article III, section 37, of the Iowa Constitution provides that counties shall not be split between more than one congressional district and that a congressional district containing more than one county shall not be entirely separated by a county belonging to a different congressional district. Important to note, however, is that the Code provides that if a redistricting plan is challenged in court based upon an excessive population variance among districts, the General Assembly has the burden of justifying any deviation percentage variance in excess of 1 percent for any district in the plan.

Since the U.S. Supreme Court has specifically rejected authorizing a particular percentage variance, however calculated, as constitutionally permissible, strict reliance on the 1 percent deviation percentage variance threshold provided by the Code does not guarantee that a particular Iowa congressional redistricting plan would withstand a court challenge. To ensure that a congressional redistricting plan in Iowa meets constitutional requirements, a proposed congressional plan should attempt to meet the strict equality requirements established by the U.S. Supreme Court with deviations from that requirement specifically tied to identified state objectives as provided in the Iowa Constitution and the Code.”

Federal Constitutional Requirements.

The Equal Protection Clause of the 14th Amendment to the United States Constitution has been interpreted to establish the basic requirement that state legislative districts be apportioned to achieve substantial equality of population among the various districts.

Iowa Standards.

Article III, section 34, of the Iowa Constitution provides that state senatorial and representative districts be apportioned on the basis of population. This constitutional provision further provides that Iowa law may, consistent with the United States Constitution, establish other factors for apportioning senatorial districts, but only if the law does not result in a senatorial redistricting plan whereby a majority of senators could represent less than 40 percent of the state’s population.

After the 1970 census, controversy arose as to whether the Iowa General Assembly properly created a legislative redistricting plan in compliance with United States and Iowa constitutional requirements. The Iowa Supreme Court rejected the legislatively drawn redistricting plan45 and subsequently adopted its own redistricting plan for Senate and House districts following the 1970 census. The legislatively drawn plans rejected by the Iowa Supreme Court had an overall range percentage variance for the Senate of 3.2 percent and for the House of 3.8 percent. In finding these percentage variances excessive, the Iowa Supreme Court rejected establishing a certain de minimis standard regarding percentage variances which, if met, would justify any basis for how the individual districts were drawn. Instead, the court found that the percentage variances were excessive and avoidable, and were created for the unjustifiable purposes of protecting incumbents, preserving present districts, avoiding joining part of a rural county with an urban county, and ensuring the passage of the redistricting plan. Furthermore, the court found that the proposed legislative redistricting plan failed to meet the Iowa constitutional requirement of establishing districts of compact territory. After rejecting the legislative redistricting plan, the Iowa Supreme Court adopted its own plan based primarily on providing substantial voting equality of population in each district while endeavoring to create compact districts of contiguous territory. The plan provided for overall range percentage variances of approximately .05 percent for the Senate and .09 percent for the House.

In 1980, Code chapter 42, which includes provisions establishing standards for governing population equality, was enacted. Code section 42.4(1) provides that each Senate and House district in a redistricting plan shall have a population as nearly equal as practicable to the ideal population for a Senate or House district in that plan. Specifically, the Code provides that the mean deviation percentage variance for a Senate or House redistricting plan shall not exceed 1 percent and that the overall range percentage variance for a Senate or House plan shall not exceed 5 percent.

In addition, the Code provides that if a redistricting plan is challenged in court based upon an excessive population variance among districts, the General Assembly has the burden of justifying any deviation percentage variance in excess of 1 percent for any district in the plan.

In contrast to congressional redistricting, population equality standards for legislative redistricting as established by Code chapter 42 and as articulated by the Iowa Supreme Court in 197253 are generally stricter than those established by federal case law. As such, Iowa legislative redistricting plans that meet the population equality standards provided in Iowa law should be sufficient to withstand a federal or state court challenge based upon population equality.”






New conservative descriptors, same old politics

In a column today a Brookings Institution professor became a bit enamored by new word descriptors for conservatives.  He mentions a pundit who titled these conservatives as Liberty Conservatives and Freedom Conservatives then began explaining the difference. But what stood out was that essentially, they are still the same old conservative politics, just haggling over which direction and which criteria to pursue that still would affect middle class and lower enconomic workers adversely.

Trifling over how to label conservatives is well, just that, trifling. And it doesn’t get the business of politics any closer to solving real world, real problems for those individuals caught in this idealogue war.

The Tea Party still pursuing scorched earth politics

From a Democrat’s point of view, watching Republicans eat their own  can give one a sense of glee. Watching the Tea Party adherents attacking those conservative Republicans they consider too “liberal” in their viewpoints. Basically believing that standing on principles is the end all of everything. Never worried about the collateral damage inflicted by their scorched earth stance. But Democrats should also realize that our moment of glee doesn’t create any new partisanship dow the road or future possibility than the “other siblings” will come to their senses and work to actually resolve problems.

Opinion write Dana Milbank touches on the this writing about Mississipian Chris McDaniel’s pursuit of the Senate seat that sitting Senator Thad Cochran recently won in the Republican primary. Believing the election was a fraud and the fact that more people turned out to vote for Cochran than for him was simply not true.  And so he continues to persist in his attempt to wrest away what he sees as rightfully his.

Woodbury County Democrats, promoting democratic ideals and greater participation.