Eric Cantor Lost The GOP Primary And Won A High Paying Job On Wall Street

Eric Cantor was one of the GOP envoys to Wall Street.  His new job is do the same thing with a much higher salary.  One of boutique Wall Street banks has hired him to represent its interests to his friends in Washington.  This is a predictable version of the revolving door in which government employees end up in high paying private jobs after serving their time in government building a contact base within the government.  

The voters in Eric Cantor's district voted against him because they did not appreciate his links to the elites on Wall Street.  They don't seem to understand that Eric Cantor was only implementing the mission of the political party to which he belongs.

What Happens To The Furniture Workers In North Carolina?

Joe Nocera reviews a book about a small company town in North Carolina where a furniture factory employed most of the town's population.  The jobs went away when they were exported to China where furniture could be manufactured at lower cost.  That is what happened in Michigan when furniture manufacturing moved from a state with more expensive labor, and more government regulation, to a more "business friendly" Southern state.  The same thing will happen to China.  The furniture jobs will move to a location that is more "business friendly" than China.

One of the characters in the book is an economist who argues that this is exactly what should happen in the global economy.  The workers in North Carolina who lost their jobs should be retrained so that they can take high skilled jobs that pay more than the jobs that were lost.  After all, that is what happened in the US when  most of the jobs were in agriculture.  They were replaced by higher skilled jobs in manufacturing that paid higher wages.

The economist who proclaimed the good news for the workers in North Carolina, who would be able to move up to higher skilled jobs after they were retrained, was simply restating conventional economic theory.  That is how free trade is supposed to work.  One of the problems with this theory is that 5 million factory jobs were lost over the last 20 years.  Where are the 5 million higher skilled jobs that have replaced the lost manufacturing jobs?  The sector with the fastest job growth has been the low wage service sector.  Furthermore, we have done a poor job of retraining workers who have lost their manufacturing jobs.  There is a wide gap between economic theory and the reality of the labor market.

Sales Of Russian Made Weapon Surge In US Following Sanction Against Russia

Conservatives in the US, most of whom view Russia and Putin with scorn, have responded to President Obama's sanctions against Russia in a predicable way.  They have rushed to purchase the banned AK-47 assault weapon.  The National Rifle Association portrayed the ban as a liberal gun control plot.  The right wing Internet blogs followed the NRA's lead and warned their followers to buy them now while they are still available.  Many were purchased for resale by conservatives who took advantage of other conservatives who feared a shortage of the AK-47. Many were sold for hundreds of dollars over list price.  The fear of being without an assault rifle,  and the desire to overcome a liberal conspiracy against the use of assault rifles, was stronger than their dislike for Putin or for Russia, which is also inspired by conspiracy theories. 

Public Opinion In Russia About Ukraine

Putin's popularity in Russia has risen dramatically as a result of his policies in Ukraine.  He has been able to use the media to tell his side of the story, often at the expense of truth.  President Obama must be envious of the Russian President.  The media have not been his friend for most of his presidency.  That is primarily the result of the two party system in the US.  The media likes nothing better than to describe the battles between the two parties.  The truth often suffers from this battle as well but less so than in does in Russia.  During the cold war with Russia, the media turned a troubled Russia into a military and ideological threat that was greatly exaggerated.  Putin is doing something similar today.  He blames Western conspiracies for the troubles in Ukraine. 

Europe's Russian Connections

Everyone mentions the conflict in Ukraine as one of the major problems in the European economy.  The details about the connections between Russian and the rest of Europe are not often made explicit.  This article describes the web of relationships between Russia and Europe.  The countries most affected by the conflict are Eastern European economies that export to Russia and are dependent upon Russian imports.  Dependence upon Russian energy and raw material imports is fairly well understood but many banks in Europe are also dependent upon relationships with Russia. 

Europe's Descent Into Deflation

Monetary policy in in Europe is constrained by legal and political constraints on the ECB.  The ECB has not been able to use policies like those used by the US Federal Reserve to restore growth.  The head of the ECB stated that fiscal policies were needed to prevent deflation.  However, he has the wrong idea about which fiscal policies are needed.  He supports structural changes that would increase flexibility in labor markets;  he also would like to see educational reform.  Such changes might be useful in Europe that they take a long time to work their magic.  Europe suffers from a continuing decline in aggregate demand.  That requires fiscal policies that will stimulate growth in the short term.  That kind of fiscal policy is not on the agenda in Europe. 

Monetary policy is effective in controlling inflation.  It is less effective in reversing a deflationary trend.  If Europe falls into deflation it will be due to policies that limit the use of fiscal policy. 

NYT Editorial On Labor Day In US

The last paragraph of this editorial declared that US policy over the last 35 years has served the interests of Corporate America at the expense of workers.  The editorial board connected the dots and arrived at the understanding that there is a relationship between record breaking corporate profits and depressed wages.  It called for a full employment agenda but it left that agenda up to our imagination.  It will probably stay there.  US labor policies have been as they are for a reason.  The political agenda is controlled by Corporate America and its friends in the media that depend upon corporate advertising revenues.