W21st NYC's List: The Issue

• And a key implication of that new understanding is that public policy can do a  lot to help workers without bringing down the wrath of the invisible hand.
• Until the Card-Krueger study,  most economists, myself included, assumed that raising the minimum wage would  have a clear negative effect on employment. But they found, if anything, a  positive effect. Their result has since been  confirmed using data from many episodes. There’s just no evidence that  raising the minimum wage costs jobs, at least when the starting point is as low  as it is in modern America.
• How can this be? There are several answers, but the most important is probably  that the market for labor isn’t like the market for, say, wheat, because workers  are people. And because they’re people, there are important benefits, even to  the employer, from paying them more: better morale, lower turnover, increased  productivity. These benefits largely offset the direct effect of higher labor  costs, so that raising the minimum wage needn’t cost jobs after all.

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• in Outliner: 113th Congress<!-- react-text: 266 --><!-- /react-text --><!-- react-text: 267 --><!-- /react-text -->

• As of this week, Citicorp, JPMorgan Chase, Barclays and Royal Bank of Scotland  are felons, having pleaded  guilty on Wednesday to criminal charges of conspiring to rig the value of  the world’s currencies. According to the Justice Department, the lengthy and  lucrative conspiracy enabled the banks to pad their profits without regard to  fairness, the law or the public good.
• To properly determine accountability for criminal conspiracy in the currency  cases, prosecutors should now investigate low-level employees in the crime —  traders, say — and then use information gleaned from them to push the  investigation up as far as the evidence leads. No one has thus far been named or  charged. Nor has there been any explanation of how such lengthy and lucrative  criminal conduct could have gone unsuspected and undetected by supervisors,  managers and executives. The plea deals leave open the possibility of further  investigation, but the prosecutors’ light touch with the banks makes it doubtful  they will follow through.
• The plea deals mimic previous civil settlements. In all, the banks will pay  fines totaling about $9 billion, assessed by the Justice Department as well as  state, federal and foreign regulators. That seems like a sweet deal for a scam  that lasted for at least five years, from the end of 2007 to the beginning of  2013, during which the banks’ revenue from foreign exchange was some $85  billion.

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• The ruling came in a closely  watched case brought by the government against the Japanese bank Nomura Holdings  and Royal Bank of Scotland. They were the only two of 18 financial firms that  took their case to trial, arguing that it was the housing crash, and not  deceptive loan documents, that caused the bonds to collapse.

   

  The other firms — including  Goldman Sachs and Bank of America — settled, together paying nearly $18 billion  in penalties but avoiding a detailed public airing of their conduct.
• Judge Cote’s ruling described a dangerous and toxic period in the American  economy. As house prices were soaring, Wall Street banks were purchasing  high-risk mortgages and then bundling them into bonds that were sold around the  world. As this huge mortgage machine churned on, the quality of the loans  plunged.
• Some financiers and housing industry analysts have since asserted that, while  Wall Street was acting out of greed and with a cavalier disregard for risk, it  did not act deceptively. But Judge Cote, in her order, took a dim view of the  banks’ conduct. She said that loan guidelines were “systematically disregarded”  and found “disturbing examples” showing that Nomura was willing to package and  sell defective loans.
• “The origination and securitization of these defective loans not only  contributed to the collapse of the housing market, the very macroeconomic factor  that defendants say caused the losses,” she wrote, “but once that collapse  started, improperly underwritten loans were hit hardest and drove the collapse  even further.”

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• One thing that worries me is that I’m not at all sure that policy makers have  fully taken the implications of a rising dollar into account. The Fed, still  eager to raise interest rates despite low inflation and stagnant wages, seems to  me to be too sanguine about the economic drag. And the  most recent Fed minutes suggested that some members of the committee that  governs monetary policy were thoroughly clueless, apparently believing that  inflows of capital would make the U.S. economy stronger, not weaker.

• Less than four miles to the northwest, in Calverton Park, court fines and fees  accounted for over 40 percent of the city’s general operating revenue last year.
• Across the country, a mounting number of investigations and lawsuits have  focused attention on the justice system’s heavy burdens on the poor. In Alabama,  which has tried to make up for deep cuts to court funding by imposing fees like  $35 for posting bail, half a dozen lawsuits contend that local courts perpetuate  a cycle of steep fines for minor offenses and jail for those who cannot pay. And  as early as 2009, Florida became a model for aggressive collection of court fees  and fines.
• According to a report from Better  Together, a nonprofit group, Ferguson does not even rank among the top 20  municipalities in St. Louis County in the percentage of its budget drawn from  court fines and fees. The small city of Edmundson, five miles away, brings in  nearly $600 a year in court fines for every resident, more than six times the  amount in Ferguson.

• Brendan Roediger, a professor at  Saint Louis University School of Law, said the only solution was to discard the  county’s municipal court system and replace it with something else.

   

  “I don’t think that it could  possibly be fixed,” said Mr. Roediger, who, along with Arch City Defenders, a nonprofit  legal group, is suing several municipalities over their court practices. “The  system is absolutely rotten from the core.”

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• No one seriously believes that Hillary Clinton will ever put the interests of  Main Street before those of her  donors from Wall Street, do they? At least not unless she’s pushed, and  hard.
• But this kind of change must begin with an agreement about principles,  specifically principles of human rights and well-being rather than principles of  making a favorable business climate.
• Soft systems, like agriculture and economics, are more complex. We don’t all  agree on goals, and we don’t agree on whether things are working or in need of  repair. For example, is contemporary American agriculture a system for  nourishing people and providing a livelihood for farmers? Or is it one for  denuding the nation’s topsoil while poisoning land, water, workers and consumers  and enriching corporations? Our collective actions would indicate that our  principles favor the latter; that has to change.
• Sadly, even if we did agree, complex systems are not subject to clever fixes.  Rather, changes often have unexpected results (that shouldn’t happen with a  clock), so change necessarily remains incremental. But without an agreement on  goals, without statements of purpose, we are going to continue to see changes  that are not in the interest of the majority. Increasingly, it’s corporations  and not governments that are determining how the world works. As  unrepresentative as government might seem right now, there is at least a chance  of improving it, whereas corporations will always act in their own interests.

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