“Tens of thousands of freight rail workers are prepared to go on strike on Friday at 12:01 am, which could have wide-ranging effects across the economy. It’s already causing some disruptions for rail passengers, freight companies, and others.
The cause is a dispute between the freight industry and the workers who make it run.
Most of the 12 unions representing the workers have already agreed to a proposal put together by a presidential emergency board established by the White House over the summer to try to help resolve the dispute. The proposal includes a 24 percent increase in wages for workers by 2024, but many workers have complained that it fails to address leave, on-call scheduling, and poor working conditions.
The holdout unions’ position is that pay increases aren’t enough to make up for some real downsides — and dangerous aspects — of the job.
The two most powerful unions involved in the negotiations, which represent engineers and conductors, are continuing to resist the proposal, putting both sides in a deadlock. If workers do go on the strike they appear to be hurtling toward, it would be the first such strike in 30 years.”
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“If a freight strike were to occur — and especially if it’s long-lasting — it could have disastrous effects across an already fragile economy still reeling from supply chain disruptions and inflation.
“Rail moves a lot of the foundational, basic goods that we don’t think about day-to-day,” said Rachel Premack, editorial director at FreightWaves, which covers supply chains. “They’ll move sand and gravel that would then be crushed into concrete for roads or for laying home foundations. Railroads move the chemicals used to purify water or to compromise fertilizer for crops, soybeans that could become food for humans or [animals] that are then food for humans. It’s a lot of early-chain-type goods.”
Many passenger trains also run on freight rails, and their service could be suspended. Amtrak has already warned of potential disruptions and canceled cross-country trains in anticipation of a strike, though so far its Northeast service will not be affected.”
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“Replacing freight with other forms of transportation is not easy if workers do walk out. Mike Steenhoek, executive director of the Soy Transportation Coalition, told Vox in an interview that one train has the freight capacity of 400 semi-trucks. “I don’t know of a shipper who just has 400 semis sitting in a garage ready to be accessed,” he said. He noted that for agriculture, the timing couldn’t be worse because of harvest season, adding more urgency for a deal.”
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“Under the Railway Labor Act, Congress has the ability to block or end a rail strike. Since 1963, it has passed legislation more than 10 times to intervene in rail disputes.
So far, though, Democratic leaders have been reluctant to commit to doing so, while Republicans have been eager to pressure workers into agreeing to the terms set by the presidential emergency board.
If Congress were to intervene, there are a few routes lawmakers could take. They could require the unions and carriers to accept the presidential emergency board’s conditions, which included a pay increase but no acknowledgment of other demands like sick leave. They could extend the existing cooling-off period so both sides have more time to negotiate. Or they could turn the talks over to independent arbitrators who would be tasked with finding a resolution.
For now, congressional Democrats are waiting to see what might come out of the talks the Labor Department is leading between unions and railroad carriers on Wednesday before they lay out a policy response.”
“On its face, the idea of increasing semiconductor manufacturing in the US seems like it would help address the global supply crunch for computer chips, which has made it harder to buy everything from cars and laptops to sex toys and medical devices during the pandemic. Senate Majority Leader Chuck Schumer (D-NY) has even suggested that the funding package could help fight inflation, presumably by making these goods cheaper.
But while it’s certainly fair to call the legislation a victory for bipartisanship, this plan is primarily focused on keeping up with China’s growing investment in its own domestic chip industry — not solving the present issues with the tech supply chain. The chip factories produced by this package won’t be complete for years, and the bulk of the funding won’t necessarily go toward basic chips, also known as legacy chips, which account for much of the ongoing shortage. And that shortage may be nearing its end anyway.”
“GDP measures the monetary value of goods and services produced in a country. It contemplates things like consumption, government spending, business investments, and net exports. But there’s also a lot it leaves out, such as unpaid work, sales of used goods, and, perhaps most important, general well-being. Generally, countries with stronger and growing economies have higher standards of living. But GDP is only a decent-ish indicator of how things are going for people.”
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“There’s a British economist, Kate Raworth, who once said in a book called Doughnut Economics that there’s one graph in economics that no economist ever wants you to talk to them about. And that is the graph of exponential GDP growth. A mainstream economist would probably consider a growth rate of about 3 percent GDP every year as a healthy, robust economy. At 3 percent, the economy would have to double in output roughly every 25, 26, 27 years or so. If I showed a 5-year-old this kind of graph, they would know that that’s patently insane. This is, however, precisely the reigning economic doctrine in every country in the world with the possible exception of Cuba and Bhutan.
It is destructive because it will plunder the world, it will destroy our ecosystem, because it works people to death, because it destroys economies, because it commodifies everything.
Let me give you an analogy. Say we’re passengers on a train racing toward a cliff, and the only metric that matters in that train is its increase in speed. Whether that train has an unfair distribution of income matters not at all, what we’re destroying on the journey does not matter, whether the train is comfortable does not matter. And, in fact, not even the destination of the train matters.”
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“The vast majority of people would agree we should care about the greatest well-being of the greatest number within the biophysical limits of the planet, for the most part. The problem is that we are currently operating in a system called capitalism, which requires growth. We are at this tragic moment in history in which we can say both that if we continue to grow, we will kill ourselves, and if we stop growing, we will suffer greatly within capitalism.
Capitalism requires growth. The economy doesn’t require growth, development doesn’t require growth, and welfare doesn’t require wealth. Since we are living in a global capitalist economy, when capitalism doesn’t grow, you and I know exactly what to call that: a depression, a recession, a crisis.
But the opposite is also true. If we continue to grow exponentially, that is a massive crisis. It is the reason why we are unable to address climate change successfully, why we don’t know how to address rampant inequality.”
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“If you are starving, and you’re on 200 calories a day, and I as a doctor set you on 400 calories, and then on 800, and then on 1,600, you will get well. But if I say I have the key to your health and well-being, I will continue to double your calorie intake, what will you look like pretty soon? You will get very sick, and you will die. Absolutely no question. The exact same thing is true for the economy at large.
Was it good and necessary at some point? Probably yes. Although there are lots of caveats there, too. Is that still necessary? Absolutely not. Certainly not in developed countries like the US or Germany or France or Denmark.”
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“I have done interviews with corporate CEOs who very frankly admit that the business model they’re currently operating under is not sustainable, that it will hurt the world and the planet in ways that are irreversible. But they don’t know how to change it. They say, “If I stop giving return on investment to my stockholders, they will fire me, that’s the end of that.””
“In our federalized system, it may make more sense to blame your state and local government or even your neighbors, not President Biden, for out-of-control costs in housing and energy or supply chain pain in our logistics infrastructure. That’s because most of the time, the US tasks lower levels of government with responsibility for infrastructure and land use — and the decisions made at those levels in the past are contributing to rising prices today.
State and local jurisdictions, not the Fed or the feds, determine how much housing is built and where, when to permit cheap clean energy sources and vital energy transmission lines, and whether to expand ports and logistics infrastructure. Across the country, local legislators, executives, and public authorities have declined to spend more to improve economic capacity, or placed additional hurdles in the way of badly needed new development.”
“Tariffs aren’t merely making summer fun more expensive—they are also making it potentially more dangerous too.
“Life Saver is not a misnomer,” writes Neil Mooney, an attorney representing Life Saver Pool Fence Systems, Inc., in testimony submitted earlier this month to the U.S. International Trade Commission (USITC), which later this week will hold a hearing on the economic impact of the multitude of tariffs imposed by the Trump administration in 2018.
For a company like Life Saver, which manufactures fencing meant to keep children away from unsupervised pools where they might accidentally drown, the tariffs have hiked the cost of raw materials imported from China. In his written testimony, Mooney estimates that the company has paid about $1.2 million in tariffs over the past four years—and has twice had to raise prices “specifically because of the tariffs.”
“The imposition of the Section 301 tariffs has forced Life Saver to raise its prices which inevitably has led to lower sales volume and therefore fewer protected pools,” writes Mooney. “The economic impact of the Section 301 tariffs is not only felt by Life Saver and other similar businesses and their employees, but also by the end consumers—American families.”
Are higher taxes on Chinese-made imports worth leaving American children marginally less safe?
Apparently so, at least for the past two presidential administrations. Former President Donald Trump used Section 301 of the Trade Expansion Act of 1974 to impose tariffs on a wide range of goods imported from China in several phases during 2018 and 2019. As a result, the average tariff rate applied to goods from China effectively doubled. Cumulatively, Americans have paid about $136 billion in higher costs as a result of those import taxes—that’s about $1,000 per household, according to research by the National Taxpayers Union, a nonprofit that opposes the tariffs.
Tariffs are adding to inflation, too. A study by the Peterson Institute for International Economics, a trade-focused think tank, found that repealing tariffs could reduce overall inflation by about 1 percentage point. Despite that, the Biden administration has so far been unwilling to do more than talk about repealing the tariffs imposed by Trump.”
“Tariffs on seafood have hit Alaska in particular, Alaska’s fishing industry generates over $5 billion dollars in economic activity and creates nearly 70,000 jobs in the state, making it a vital lifeline for the state. Over 40 percent of U.S.-caught Alaskan salmon and one-third of all seafood from Alaska is exported to China each year. Much of it is processed in China and then re-imported to the United States for sale in grocery stores.
As the National Fisheries Institute points out, this split processing stream has contributed to rising seafood costs for U.S. consumers, as China’s retaliatory tariffs hit seafood when imported for processing and the original U.S. tariffs hit products upon their return to American shores.”
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“For consumers, meanwhile, these costs are discouraging consumption of fish, according to a February study published by data analytics firms IRI and 210 Analytics. That month alone, sales of frozen seafood products decreased by 9.4 percent, while fresh seafood sales decreased by 12 percent.”
“Known as the Farm Workforce Modernization Act, the measure was sponsored by Reps. Zoe Lofgren (D–Calif.) and Dan Newhouse (R–Wash.) and passed the House twice last year. It aims to improve the immigration mechanics behind the U.S. agricultural workforce, expanding legal pathways available to foreign workers and the domestic farmers who hope to hire them.
The ability to hire more agricultural workers translates into more helping hands for farmers and increased production of goods, which then means fewer food shortages and lower prices at the grocery store.”
“You don’t have to believe that the market produces perfect outcomes to understand that government can rarely outperform private enterprise. Political decisions aren’t driven by any market signals, profit motive, or consumer preferences. These decisions are inherently political, suffer from a serious knowledge problem and are mostly untied to any accountability regimes when they fail. Government often proves to be biased against large, successful companies that provide new technology that legislators often don’t understand well but consumers love. This is why government so often fails, and this policy is no exception.”
“For nearly 90 years, the Export-Import Bank of the United States has subsidized foreign purchases of goods produced by politically connected American businesses. Now it will start loaning money to U.S. companies that do little or no business overseas.
In April, the Ex-Im Bank’s board of directors voted unanimously to launch a new “Make More in America” initiative aimed at subsidizing American manufacturers instead of their foreign customers. Rather than unwinding and abolishing the Ex-Im Bank, as some fiscal conservatives have been trying to do for years, this new program is likely to further entrench the bank’s role in federal industrial policy.
“This is worse than mission creep,” says Sen. Pat Toomey (R–Pa.), the top Republican on the Senate Banking Committee and a longtime skeptic of the Ex-Im Bank. “There is no reason that taxpayers should have to back domestic financing when we live in a highly developed market economy in which promising businesses have access to capital on competitive terms.”
Toomey submitted a series of questions to Ex-Im Bank President Reta Jo Lewis about the new program. The answers he received are telling.
In response to Toomey’s request for evidence that a new domestic loan program is needed, Lewis wrote that “it is difficult” to identify a financing shortage, noting that “U.S. capital markets are deep and liquid.” Where there are “gaps,” she said, they exist among “non-investment grade or unrated borrowers.”
Applicants for the new loans, Lewis said, “will need to demonstrate that the required financing is not otherwise available from the private sector.” In other words, these loans will go to projects that private capital markets have deemed too risky to finance.
The Ex-Im Bank’s low-interest loans to overseas buyers of American goods have long benefited companies like Boeing, which can undercut foreign competition with the U.S. government’s help. But there is little evidence that the Ex-Im Bank has actually boosted American exports.
From 2014 to 2018, the bank was effectively shut down when conservatives in Congress temporarily suspended its lending authority. American exports nevertheless grew from $2.3 trillion to a then-record $2.5 trillion during that period.
Former President Donald Trump signed a bill reauthorizing the bank in 2018. President Joe Biden now plans to expand its mandate. Having failed to prove its worth in the global marketplace, the Ex-Im Bank will waste taxpayer money here at home.”
“”Data on overall traffic trends supports the notion that the average flier has not been negatively affected by consolidation,” the Eno Center for Transportation, a research nonprofit, found in 2017. “As the industry has consolidated and grown throughout the decades, the number of seats that are available for passenger use—available seat miles—has increased multiple times over. By some measures, the cost of domestic air travel has remained level since 2006, adjusting for inflation.”
However, there is some evidence that certain mergers have led to price increases. As a 2016 data analysis by travel writer JT Genter found, “On average, airfares between former Delta and Northwest hubs increased substantially—much more than the national average—demonstrating that the Delta-Northwest merger wasn’t good for hub-based flyers.” Genter continued, “However, airfares between United and Continental hubs have seen much more modest increases over the last five years, and the fares have actually decreased on average over the last four years.”
Current evidence, though not uniformly supportive of all mergers, points toward them being generally good for consumers. Larger airlines tend to mean more flights at similar or lower prices—especially when traveling through hubs. Even when evidence points to some mergers resulting in price hikes for consumers, Warren and Padilla’s assertions that airline consolidation “routinely heaps inconvenience and abuse on consumers” are exaggerated.”