Adam Levitin of Georgetown Law and Credit Slips calls out the banking lobby for an “incredibly dishonest” attempt to mislead people into thinking debit-card interchange fees haven’t been going up:
Here’s the slight-of-hand (sic): while the text of the ABA report make very clear that it is referring to debit cards, the graph shows average debit + credit interchange rates (plus network fees, etc.). The Nilson Report, the ABA’s source, does not break down interchange into credit and debit. For MasterCard and Visa and Discover, it just reports a blended number.
The blending of debit and credit interchange masks what’s really been going on. Both debit and credit interchange rates have risen pretty significantly since 2000. But the percentage of payment card transactions and dollar volume performed on debit has also increased significantly over this time period (see graphs below, data from Nilson Reports), and debit has lower interchange rates than credit. So even though debit and credit interchange rates are both rising, the average rate has been more or less steady because of the increase in debit’s market share.
In other words, cheaper debit fees, which are lower than credit-card fees, have been making up an increasing proportion of overall transactions and that lowers average overall interchange fees. All that does is obscure the fact that both debit fees and credit-card transaction fees have been rising significantly.
ProPublica’s Marian Wang has more here.
— The Los Angeles Times reports on the difficulty the United Auto Workers is having organizing auto workers in the South:
The Southern battle is shaping up at a time when the labor movement is facing new assaults from anti-labor governors and legislatures in traditionally friendly environs such as Wisconsin and the industrial Midwest. King is hoping his pitch — that the union is the defender of middle-class jobs and upward mobility — will resonate with the rank and file.
But Southerners, at least the ones the LAT talks to, aren’t too keen on organizing:
But the UAW is having trouble making its case to workers who have an intense loyalty to the automakers who brought high-paying blue-collar employment to these small towns and cities starved for jobs.
“I don’t want to give any more pieces of the pie to anyone else. I need it for myself,” said Kevin Carroll of La Grange, Ga., who was unemployed when hired by Kia Motors Manufacturing last year.
Same as it ever was.
— At Salon, the New America Foundation’s Michael Lind makes a case for why shareholder capitalism, the dominant model here for three decades, has failed. First, on the basis of, you know, benefiting shareholders (non-executive shareholders, of course):
Shareholder value capitalism in the U.S. since the 1980s has even failed in its primary purpose — maximizing the growth in shareholder value. As Roger Martin, dean of the Rotman Business School at the University of Toronto points out in a recent Harvard Business Review article, between 1933 and 1976 shareholders of American companies earned higher returns — 7.6 percent — than they have done in the age of shareholder value from 1977 to 2008 — 5.9 percent a year.
I’d note that picking 1933 as a starting point is convenient since that was an extremely low point for stocks, but it’s fair in that it was also a turning point toward a more regulated financial system that shared more profits with workers.
By cutting taxes, slashing wages and destroying unions, the U.S. was supposed to lead the world in high-tech industry. But a recent study by the Asian Development Bank found that the majority of the added value of iPhones assembled in China come from high-tech companies in Japan, Germany and South Korea, whose inputs dwarf those from American companies. For a generation we’ve been told that the European and Asian capitalist countries were doomed by statism and high wages. Instead, they dominate global high-tech industrial production, while the U.S. continues to be deindustrialized.
Oh, well, who needs manufacturing, anyway? Let the rest of the world make things; we’ll invent them and live off the royalties. Right? Wrong. The tech sector employers only a tiny number of Americans — and offshoring the production of goods invented here will only shrink that number further.
Most Americans work in the nontraded service sector. In the last decade, as the economist Michael Mandel has pointed out, almost all of the new jobs have been created in health, education and government, which share one characteristic in common: low productivity and rapidly escalating costs. The other big growth area, before the 2008 crash, was in the largely unproductive FIRE (finance, insurance, real estate) sector, where high salaries enticed smart young Americans who might have manufactured useful goods and services into manufacturing the toxic financial products that brought down the world economy.