Posted at 10:25 AM ET, 06/02/2015

Don’t celebrate the low unemployment numbers. They’re masking a really big problem.

This Friday’s monthly jobs report will include an appealingly low unemployment rate, nearly halved since the Great Recession ended in 2009. If all goes well, it will likely earn economic analysis similar to last month’s: “reassuring,” “better off,” “progress,” “good enough” and perhaps even “healthy.”

These analyses are wrong. The true rate of unemployment in America has not declined at all since the recession’s end. In fact, critical trends have accelerated in the wrong direction.

America’s unemployment rate is calculated simply. It’s the gap between the number of employed Americans and the labor force of Americans that could be employed. Two phenomena can reduce the unemployment rate: job growth in excess of population growth, or a declining share of Americans telling a government survey that they are participating in the labor force in the first place.

Since the end of the last recession, in June 2009, the unemployment rate has appeared to drop from 9.5 percent to 5.4 percent. But the entire drop came from declining labor force participation. None came from the faster-than-population-growth job growth that is expected and required of an economic recovery.

Between 2009 and 2015, the number of Americans participating in the labor force dropped from 65.7 percent to 62.8 percent. This represents the statistical disappearance of seven million potential workers, who have given up looking for work or chosen to retire. If the June 2009 participation rate of 65.7 percent were used today —  if those seven million missing workers were counted among the unemployed rather than ignored entirely — the unemployment rate today would be 9.6 percent.

Looked at another way: Since June 2009, population has grown by 6.2 percent, but the number of jobs has grown by only 6.1 percent. Job growth has been slower than the population growth rate required simply to hold steady the miserable end-of-recession status quo that had just seen the loss of six million jobs.

Some economists argue that many of those seven million missing workers left the labor force not because of poor economic prospects, but rather because of demographic changes, namely the retirement of the baby boomers. The White House, for instance, suggests demographic changes account for half the decline.

But the federal government’s own predictions refute that excuse. Back in 2004, the Congressional Budget Office projected that the participation rate in 2014 would be 66 percent; the Bureau of Labor Statistics projected a 2014 rate of 65.6 percent. Obviously, the rate of aging has not accelerated in the interim. 

Other countries also undermine the claim. Between 2009 and 2012, World War II-Allied countries with baby booms most like America’s — Canada, Australia and New Zealand — saw little to no decline in participation.

One reason that retiring baby boomers cannot explain the declining participation is that a wave of retirements should trigger responses elsewhere. In a healthy economy, wages should rise and pull others into the labor force as baby boomers exit. Instead, wages have remained distressingly stagnant and the exit of other cohorts has itself accelerated.

The labor participation rate for people ages 25 to 54 has fallen faster in the six years since the recession ended in 2009 than it did in the prior 10 years since its 1999 peak. The rate of decline for those over age 25 with only a high school degree has more than tripled, falling five points in six years and continuing to accelerate year over year. The so-called “recovery” has compounded rather than alleviated the trends, leaving the labor market today in a crisis at least as severe as at the recession’s height.

This trajectory cannot be accepted as a new normal, as a recent Federal Reserve report tried to do. It will bring with it higher rates of poverty, expanding safety net programs and slower gross domestic product growth.

Because metrics dictate behavior, reports on the labor market must use the numbers that reflect reality. The official unemployment rate instead makes each dropout from the labor force as great a success as a new hire and depicts a “recovery” that never occurred. Only if held directly to the job growth rate, or to an unemployment rate that back-dates labor force participation to the end of the recession, will policymakers focus on the economic growth and job creation that the economy still needs. The unemployment rate today is nearly 10 percent; what are we doing about it?

By Oren Cass  |  10:25 AM ET, 06/02/2015 |  Permalink  |  Comments ( 0)

Posted at 09:11 AM ET, 06/02/2015

China is what Americans make of it… sort of

The hard-working staff here at Spoiler Alerts has devoted considerable efforts to telling Americans to calm down when it comes to China — which has shifted public debate approximately “not at all.” With China-watchers asserting that China will be a big issue for the 2016 campaign, this Sinophobia is not going to go away anytime soon.

Which was why I looked forward to reading James Palmer’s Outlook essay on what U.S. pundits are talking about when they talk about China. Hint: they’re not actually talking about China:

The people telling these tales aren’t interested in complexities or, really, in China. They’re making domestic arguments and expressing parochial fears. Their China isn’t a real place but a rhetorical trope, less a genuine rival than a fairy-tale bogeyman….

As someone who knows much less about China but listens a lot to smart China people reads a similar slice of stuff to Palmer, this rings very true — particularly on the Chinese economy. But I wonder if it’s true about all facets of China.

On the economy, for example, the internationalization of the remninbi has been a trend noted by those who see a threat to the dollar’s status as the world’s reserve currency. One element of that internationalization has been the proliferation of central bank swap lines. In the past six years, “China has signed bilateral currency swap agreements with thirty-one counterparties,” according to a recent Council on Foreign Relations study.

That same study, however, found something else about those swap lines:

What is most interesting about this effort so far is that whereas everyone seems interested in having a swap line with China, almost no one has thus far had any interest in using it.  And when they have used it the amounts accessed have been tiny….

So swap lines are another dimension where there’s just enough ambiguity for American commentators to exaggerate Chinese actions.

That said, I might be guilty of this as well, what with my last-few-years thesis of “don’t panic.” I do wonder if Palmer’s vivisection of American pundits has limits. In looking at China’s internal characteristics, Palmer is mostly correct about most pundits (though it’s hard to read this story about NGO registration in China without having some qualms). When one turns to disputes like the South China Sea, however, there are Chinese changes to facts on the ground that are hard to ignore:

Just before the dialogue, American officials reported that satellite pictures showed that China introduced two mobile-artillery batteries to the man-made islands. Mr Carter expressed concern about the “militarisation” of the sea. China’s delegates countered that the building work was for the international common good: to contribute to maritime search and rescue; disaster prevention and mitigation; meteorological observation; ecological conservation; navigation safety and fishery services.

This dust-up suggests two qualifiers to Palmer’s argument. First, while it’s always possible for American hawks to exaggerate Chinese revisionism in the security sphere, it doesn’t mean that they are always wrong. And second, it’s also possible others can misread American actions as well.


By Daniel W. Drezner  |  09:11 AM ET, 06/02/2015 |  Permalink  |  Comments ( 0)

Posted at 06:00 AM ET, 06/02/2015

We don’t need fewer lawyers. We need cheaper ones.

In 2014, a Louisiana woman, J., landed in court after a dispute with her landlord over a $25 parking fee. J., 52, was suffering from cancer and did not have an attorney. The court ruled against her, and ordered her to vacate her home within 24 hours.

J.’s case, which was later taken on by Southeast Louisiana Legal Services, sounds extreme, but for someone who can’t afford legal counsel, the outcome isn’t surprising. The sad reality is that many Americans facing the loss of a home, family or livelihood are going it alone in civil court, and they’re losing.

In well over two thirds of critical cases in America’s civil courts, people appear without a lawyer, even though the stakes are often just as high as in criminal proceedings. Many people suffer crushing losses in court not because they’ve done something wrong, but simply because they don’t have legal help.

The future of the legal profession is unclear. Student loan debt for law graduates now averages $84,000 for public law schools and $122,000 for private law schools, reflecting the dramatic rise in the cost of attending law school in the past three decades. Despite the growing costs for students, long-term job prospects have become less certain. One study found that among 2010 law school graduates, 20 percent hold jobs that don’t require a law degree. Only 40 percent are employed by law firms, where the financial returns are highest.

Some say that the recent decline in law school enrollment simply marks a natural correction in the legal industry, because law schools are producing more lawyers than the country needs. But the latest studies, and J.’s story, show the opposite: Americans need legal help more than ever.

Rather than a shortage of people who need lawyers, what we are seeing is a disgraceful failure of our legal system to meet the serious legal needs of most Americans, who are increasingly priced out of the market for legal services. In 70 to 98 percent of cases in America’s civil courts today, one or both parties are not represented by a lawyer. One report found that civil legal aid programs must turn away almost two-thirds of the people who seek their assistance in critical civil cases, despite research showing that in many such cases, access to legal help makes all the difference. In evictions, for example, two-thirds of tenants who go to court without a lawyer lose their homes, while two-thirds of those represented by an attorney are able to keep them. In complex areas of the law, legal help is essential to enable people to understand and defend their rights. But legal help has become so expensive — about $200 to $300 an hour on average and drastically higher at the largest law firms — that it’s unaffordable, not just for those struggling to make ends meet, but even for most middle-class Americans.

Even in seemingly straightforward situations in which people are clearly on the right side of the law — as with one Cleveland couple with a disabled adopted child whose application for federal benefits to help families exactly like theirs was inexplicably denied — Americans are often unable to overcome roadblocks on their own without the help of a lawyer to navigate the legal and bureaucratic maze. Like the woman in Louisiana, the couple ultimately found relief through one of the nation’s civil legal aid programs: The Legal Aid Society of Cleveland, which provides free legal assistance to people who can’t afford it, took on their case. But with limited resources for programs and staggering student loan debt for law school graduates, not enough lawyers are able to do civil legal aid work to help everyone who needs it.

The federal government has taken an important step to encourage law students to pursue civil legal aid careers by offering a loan forgiveness program for graduates who work at a civil legal aid program for a minimum of 10 years. Some law schools also offer their own loan forgiveness programs that enable graduates to do civil legal aid work. A soon-to-be-released survey by the National Legal Aid and Defender Association found that 70 percent of civil legal aid lawyers and public defenders depend on loan forgiveness to support themselves while doing their jobs. Additionally, legal fellowship programs like those offered by Equal Justice Works — and supported by both private and government resources — increase the pool of law jobs that address the serious legal needs of ordinary Americans.

But too often, these programs find themselves without the resources to make the largest impact. And while fellowships are a powerful tool for bringing more graduates into the fold of civil legal aid, they’re short-term opportunities — most offer only one- or two-year placements — that don’t always lead to long-term careers. We should find ways to expand these programs, not limit them, so that they can serve as long-term, comprehensive solutions.

This is not a matter of the government subsidizing the education of graduates headed for lucrative jobs in corporate law. It’s about making it possible for graduates to do the much-needed legal work that comes without much financial reward, like preventing evictions, defending battered spouses and helping veterans secure the benefits they’ve earned. Studies show that these vital public services not only help individuals and families, but save taxpayers money by reducing the costs that spread beyond a family in crisis to the local, state and federal government. For example, providing a lawyer to prevent an unlawful eviction and keep a family in their home costs much less than placing them in a homeless shelter.

Some states are also finding innovative ways to make sure legal services are available for Americans who need it. Across the country, legal jobs are concentrated in populous urban centers and wealthier communities, leaving areas that are rural, sparsely populated and often low-income without access to legal services. To address the problem, South Dakota gives young attorneys who move to counties where lawyers are scarce $12,000 per year for five years — an amount that offsets about 90 percent of the tuition at the state’s law school. Other states with the same problem, like Maine, Arkansas, Georgia, Missouri and Arizona — where only 6 percent of the state’s lawyers practice outside of the two most populous counties — should follow suit.

More universities should also launch legal incubator programs, as many in California and New York have. In partnership with law schools, legal incubators allow recent graduates to develop practical legal skills while serving low- and middle-income people at more affordable rates. In New York, a young lawyer named Fred Rooney took a two-year leave from his private practice to train new lawyers in civil legal aid work through a program run by CUNY School of Law. He has never looked back, dedicating the rest of his career to helping more than 40 law schools create similar programs nationwide. With the right resources and training, more lawyers could follow a similar path.

We must also consider once-unthinkable changes to our approach to legal education and legal counsel. Eliminating the third year of law school would lessen the burden of student debt and make it easier for lawyers to take on more pro bono work. Expanding the use of educated, licensed legal technicians would provide assistance with certain kinds of legal problems, akin to nurse practitioners in the medical industry. But we also must face the fact that we’ll never completely eliminate the cost of a legal education — or Americans’ need for qualified, fully trained lawyers in complex and potentially life-changing areas of the law.

As we confront these challenges, there is also a need for a culture shift within our law schools and the legal profession at large. We must recognize that providing expert legal help is not just charitable. It is rewarding work that should be as coveted as the associate positions at large corporate law firms. And it’s essential work to meet our collective, professional obligation as guardians of our nation’s commitment to justice. It’s hard to see how a legal system that meets only the needs of the wealthy, while leaving most everyone else by the wayside, is a vital resource for society.

We must do a better job of ensuring our country’s promise of “justice for all.” The future of the legal profession — and millions of Americans — depends on it.

By Martha Bergmark  |  06:00 AM ET, 06/02/2015 |  Permalink  |  Comments ( 0)

Posted at 06:00 AM ET, 06/02/2015

Joe Biden’s wise words about death helped me understand the realities of life

Just before Christmas 1972, I pulled a sheet of paper from my new stationery box and penned a letter to Joe Biden in an awkward cursive: “Dear Senator Biden, I was very sorry to read about the passing of your wife and daughter…” the note began.

I was 15 years old.

Why would a teenager write a sympathy note to a United States senator? I think it was a combination of the fact that as an aspiring young politico, I already had a sense of Biden as an idealistic, emotional man — and that I was deeply upset by the shocking deaths of his wife Neilia and daughter Naomi in a car accident while on a trip to buy the family’s Christmas tree.

I was also struggling to explain the unexplainable.

I’d yet to experience a death in my own family and the bubble of certitude I had been born into was pretty much intact until I heard about the Biden deaths. In time I’d learn that lesson more fully, but back then I had only a glimmer that in life, to borrow from Dashiell Hammett, we live only while blind chance spares us. Or, as the vice president himself said at Yale’s commencement only last month: “Reality has a way of intruding” into one’s life.

After I put my sympathy note into the mail, I forgot about it until several months later when a cream-colored envelope arrived for me from “Joseph R. Biden, Jr. Delaware United States Senate Washington D.C.”

“Dear Mr. Petrow,” read the letter inside:

Dear Mr. Petrow: I offer a belated thank-you for your kind words of condolence. I deeply appreciate your sentiments. I owed so very much to Neilia. She had a talent for making not only her own life worthwhile but also the lives of those around her. She was both a loving mother and a loving wife. In addition, she was my political confidant, in whose judgment I had implicit and utmost trust. Neilia looked forward to our coming to Washington. Now our life has been completely torn apart by an event I shall never completely understand. Neilia deserved better. Thanks so much for your note. It was deeply appreciated. Best wishes, Joe Biden

Written on a manual typewriter, Biden’s letter has withstood four decades in my home filing system. It’s also become an artifact of my teenage years, a hard-copy touchstone to an era long gone.

letter courtesy of Steven Petrow

The envelope also contained two Mass cards, one each for Neilia and Naomi. On the back of Neilia Biden’s card came a quote from Romeo and Juliet: “Death lies on her like an untimely frost upon the sweetest flower of all the field.” His infant daughter’s card read: “Dear God, What greater thing can be said of Amy than Ezekiel’s words: ‘As is the mother, so is her daughter.'”

Above all, I was struck by Biden’s reflection that there might never be an explanation of this tragedy that he — or anyone — would completely understand. The certainty of his uncertainty astounded me, having come of age in a black and white world, both on TV and in real life.

So this past weekend, after reading the news that Biden had lost yet another child — his son, Beau Biden, who as a 4-year-old survived that awful car accident, died Saturday of brain cancer — I took out pen and paper to write him again.

“Dear Mr. Vice President, I am very sorry to hear about the loss of your son, Beau,” I started. I made note of his namesake son’s many accomplishments, professional and personal, adding: “Forty-three years ago you wrote to thank me for a condolence note I had sent you as a teenager on the passing of your wife and daughter. If anything your letter taught me that life’s complexities can’t always be understood and that they must be accepted, with the prayer that something good will follow.”

After mailing it, I thought to myself, “How infrequently do I take pen to paper these days?” I realized that the tactile act of writing by hand allows me time to think before I commit to words; such a lost art can also be a deliberate way of feeling and remembering. Not because it’s more “proper” to hand write a note than to use e-mail or post thoughts on social media, but because a death is so concrete and so permanent and so, too, should be the means of how we express our loss so that, at the very least, we’ll always have that hard copy of our feelings — if not our loved ones or those we’ve never met, but whom we want to always remember.

By  |  06:00 AM ET, 06/02/2015 |  Permalink  |  Comments ( 0)

Posted at 09:28 AM ET, 06/01/2015

Egypt sentenced me to death. The U.S. is ‘concerned,’ but that’s not enough.

On May 16, an Egyptian court sentenced me to death in absentia in a highly politicized case, along with more than 120 other defendants, including the former president, Mohamed Morsi. The U.S. and E.U. have expressed their “grave concern” regarding these recent mass death sentences in Egypt. This is good, but it’s not enough.

The Middle East is witnessing the undoing of the popular uprisings of 2011 and the dashing of hopes for free and democratic societies that those events promised. Some states are plunging into civil wars, counter-revolutions, and disintegration. The region is morphing rapidly and reverting to primitive affiliations. Once nation states, they are now turning into sectarian, tribal, or ethnic entities fighting each other. This situation is not in the interest of any power, local, regional or international. It is a breeding space for extremism, “ISISisation” and barbarity.

Though many seem “concerned,” no one has offered a vision, a solution or an answer. The optimistic democratic narrative of 2011 has given way to the severe discourse of security. The rhetoric has reintroduced the false dilemma of security and stability versus democracy and principles. The fallacy behind this dichotomy consists in perceiving security and democracy as mutually exclusive rather than complementary.

Dictatorship and tyranny do not produce security. The preference for security at the expense of genuinely promoting democracy and democratic values in the Middle East and North Africa region over the past 60 years has not prevented the emergence of al-Qaeda, 9/11, and now Islamic State. Nor has it made the United States more secure.

The U.S .and E.U. foreign policy in the MENA region should relinquish the old formula of siding with authoritarianism to achieve security and embrace a new one that sees democracy, not autocracy, as the basis for stability. As some pivotal states have been disintegrating politically and socially (Syria, Iraq, Libya Yemen), the need for national reintegration and reconstruction are more urgent than ever. The only formula to achieve reintegration and inclusion of more elements of society is the genuine embrace of democracy, not authoritarianism.

As the world watched …

The latest death sentences in Egypt came as an astounding shock to many. The indecisiveness of the U.S. and the E.U., their inability to resolve their “democracy versus security” dilemma, are part of the problem, not the solution, to the ongoing mess. Specifically, they have made three serious mistakes. The first is not calling a military coup a coup. They attempted to pressure a duly elected civilian president to accept the coup as a de facto reality, when they should have taken a firm stand against the side that thwarted the democratic process and committed unprecedented massacres in the early days of the coup.

The second is acting as an accomplice to the coup leaders by accepting a phony road map for restoring the political process in Egypt. General Abdel Fatah al-Sissi road map included undertaking constitutional amendments, parliamentary elections to precede presidential ones, inclusion and a code of ethics for the media. The E.U. and the U.S. validated a skewed constitutional drafting process and recognized the fake election of the coup leader who claimed victory with 97 percent of the vote.

Top western diplomats, including Secretary of State John Kerry have repeatedly praised Sissi for “restoring democracy” in Egypt — this despite the general’s crimes against humanity, including killing and injuring thousands of protesters, arresting more than 40,000 dissidents and acquiescing in the rape of female university students.

… Democracy was crushed

Almost two years after the coup, Sissi has postponed the parliamentary elections and has been issuing laws as decrees. The media code of ethics has yet to see the light of day and, more alarmingly, Sissi has been pursuing an exclusionary approach, eradicating his opponents and crushing any dissent. For this, Sissi was even rewarded recently when the Obama administration lifted the arms freeze that had been in place for two years.

Finally, the U.S. and the E.U. failed to extend adequate and much needed support for Tunisia and Egypt during their initial, rough transitions. Washington did not show as much enthusiasm for the new democratically-elected governments as it has for the old authoritarian regimes.

The U.S. tolerated the dictators Hosni Mubarak in Egypt and Zine el-Abidine Ben Ali in Tunisia for many decades and is tolerating Sissi’s repressive and autocratic regime in Egypt. Contrast this with the speed with which Washington’s patience wore thin with Morsi — who, let’s not forget, was the first democratically and freely elected president in Egypt’s history. Neither Tunisia nor Egypt received any special financial packages that could help them stem the economic deterioration during their bumpy transition.

New approach needed

As the repression, bloodshed, and crimes against humanity continue unabated, expressing concern is not enough. The U.S. and the E.U. should have a new vision and a consistent policy for the promotion of democracy and securing stability in the region. Sissi’s crushing of democracy and the mass death sentences against political opponents vindicate the extremist narrative: democracy is futile and violence is the only viable way to meet “state terror” and resist its violence.

Sissi’s raison d’être has been based on eradicating his political opponents and undoing the January 25 (2011) revolution. Instead of allowing room for national reconciliation and a political opening, he insists on polarization, dehumanization and escalation of violence, thus radicalizing large segments of disgruntled and alienated youth and eventually undermining the West’s efforts to fight IS and radicalism.

The U.S. and the E.U. need to consider a new approach to this born-again authoritarianism in Egypt. It is not too late to call the coup a coup, boldly treat it as such, and make the coup leaders pay a price for subverting democracy and violating human rights. This, and not appeasement, will provide an incentive to Egypt’s military establishment to reform itself and take a step back from direct control.

The U.S. and E.U. should not reward the coup leaders — neither with rhetoric, nor with financial or military aid. The U.S. cannot have it both ways: arm repression and advocate democracy. It must make up its mind and either admit its support of Sissi and like-minded autocrats or support democracy, human rights, and rule of law.

The U.S. and E.U. need to also accept the fact that the reality of demography will bring new democratic forces to power in Egypt and throughout the region — and Western policymakers have to deal with this new reality no matter how unpredictable or risky it might seem.

If they don’t, the price to be paid will be heavy — the proliferation of yet more Islamic State-like groups, with possibly decades of civil wars, terrorism, and instability. This dark scenario is not a fantasy. It is already becoming a reality. This will affect not only the Middle East but the world.

As for me, I am in a better position than thousands of Egyptians who are languishing in Sissi’s jails and are being exposed to torture and rape. I’m currently living in the United States where I research and teach and have embraced new hope in exile. But I will continue to strive for the just cause of democracy and rule of law in Egypt.

By Emad Shahin  |  09:28 AM ET, 06/01/2015 |  Permalink  |  Comments ( 0)


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