As dialogue opens on the second day of the much anticipated peace negotiations between the Colombian government and longstanding rebel group the Revolutionary Armed Forces of Colombia (FARC), citizen inclusion and participation in the process have been sought as part of an expressed commitment from both sides to incorporate input from Colombian civil society, a main tenet of the General Agreement for the Termination of Conflict and the Construction of a Stable and Lasting Peace. The country’s bicameral congressional Peace Commissions, with the support of the Office of the High Commissioner for Peace and technical support from the United Nations, have called for the “extensive participation in the conversations between the Colombian national government and the FARC”, inviting Colombian civil society to present proposals to be included at the negotiating table.

To facilitate this process, various platforms have been provided for citizen engagement in proposing solutions to the conflict based on the five-point agenda of the peace process, including regional meetings and a forthcoming online forum for submitting proposals. The regional roundtable meetings were designed to “guarantee the extensive participation of different regional social sectors, including organizations of farmers, indigenous peoples, afro-Colombians, women, union workers, students, human rights defenders, youth, environmentalists, LGBTQ communities, peace initiatives, churches, guilds, businesses, academics, social researchers and victims of the conflict.”

These regional meetings have been held throughout the country, offering a space for civil society leaders to present their organizations’ proposals on the first three agenda items to be discussed at the talks: agrarian development policy, illicit crop substitution, and political participation (future roundtable meetings to be held in 2013 are set to include issues related to victims, a fourth subject area of the peace agenda). Similarly, an electronic forum is said to be in the works as a mechanism to receive additional citizen input, the technical finalization of which delayed negotiations four days from their initially planned start date of November 15. With these participatory mechanisms in place, the stage now seems to be set for the desired inclusion of Colombian civil society in the peace talks as part of the larger process seeking an end to half a century of civil conflict.

If there is one thing about the Hostess failure that everyone can agree on, it’s that – in the words of Term Sheet’s Dan Primack – the bakery company’s management was ‘dunderheaded.’ When Ripplewood Holdings bought Hostess out of bankruptcy in February 20

Dean Baker
Truthout, November 19, 2012

The evidence presented in Thomas Friedman's column today would lead readers to believe that the economy's biggest problem is that companies are being run by executives who are so ignorant of economics that they don't know that the way to attract more workers is to raise wages. The column begins with the story of Traci Tapini, who with her sister is co-president of Wyoming Machine. For some reason Friedman assures us Tapini "is not your usual C.E.O."

According to Friedman, back in 2009, when the economy was collapsing and unemployment was soaring Tapini had to struggle to find 10 welders that she needed to meet an order from the military. She could not find workers with the right skills, which now includes not only the ability to make a good weld, but also a knowledge of metallurgy. Eventually she found a welder who had passed the American Welding Society Certified Welding Inspector exam and was able to train the other welders.

Friedman tells readers:

"Welding 'is a $20-an-hour job with health care, paid vacations and full benefits,' said Tapani, but 'you have to have science and math. I can’t think of any job in my sheet metal fabrication company where math is not important. If you work in a manufacturing facility, you use math every day; you need to compute angles and understand what happens to a piece of metal when it’s bent to a certain angle.'

Who knew? Welding is now a STEM job — that is, a job that requires knowledge of science, technology, engineering and math."

The obvious problem in this story is that Tapini apparently doesn't understand that you have to pay more money to get highly skilled workers. If the minimum wage had risen in step with inflation and productivity since the late sixties, it would be almost $20 an hour today. Back in the late sixties, a typical minimum wage worker would have a high school degree or less. Now, according to Friedman, we have CEOs who think that they can get highly skilled workers at the some productivity adjusted wage as someone who would have had limited literacy and numeracy skills 45 years ago. If we applied the same standard to doctors, they would be averaging around $100,000 a year today (instead of around $250,000). If employers really do have such poor understanding of how markets work then it will certainly be a serious impediment to economic growth in the years ahead.

There have been a number of news stories about the closing of Hostess’ factories and plans to liquidate the company in the wake of the refusal of one of its unions to accept reductions in pay and benefits and other concessions. It appears as though this will leave Hostess’ 18,000 workers without a job by the end of the year.

While this is certainly a bad story for the workers, it is not clear that they had a better route available to them. It is important to understand a bit about the history of Hostess in assessing whether the workers and their union made the right call.

Hostess has been relying on pretty much the same mix of products for decades. While other companies have sought to adjust to changing consumer tastes, Hostess still gets the vast majority of its revenue from a relatively small number of products that it has been selling in largely the same form since the sixties. This failure to innovate was the main reason that the company first went into bankruptcy in 2004.

Hostess remained in bankruptcy for five years until it was brought out of bankruptcy in February of 2009 by Ripplewood Holdings, a private equity company. Remarkably, it exited bankruptcy with nearly $670 million in debt, almost 50 percent more than the $450 million it owed when it went into bankruptcy.

Usually companies use bankruptcy to shed debt. With Hostess the opposite was true. This meant that Ripplewood was taking a heavily leveraged gamble. If the company survived, it would get a very high return on its investment. However there was a strong likelihood that the company would not be able to make it given its extraordinary debt burden and the weakness of the economy.

In previous blog posts we’ve commented on the rampant political violence in Honduras since the country’s 2009 military coup, as well as the alleged involvement of Honduran security forces in extrajudicial killings and other human rights violations. Sadly, recent reports from Honduras suggest that the situation continues to deteriorate. Today we’ll provide an update on some of the troubling recent events in Honduras - the recent killing of an unarmed boy allegedly carried out by U.S.- vetted military troops; the targeted killings of opposition politicians – as well as efforts by non-governmental groups to hold Honduran authorities accountable for the ongoing attacks and the country’s pervasive climate of impunity.

U.S.-vetted soldiers allegedly murder unarmed boy

Breaking news this week reveals that soldiers vetted by the U.S. chased after, shot and killed a 15-year-old boy, Ebed Yanes, who supposedly ran through a check point on a motorcycle in Tegucigalpa on the night of May 26. The Associated Press’ Alberto Arce and Martha Mendoza reported that, according to a soldier involved in the incident who came forward:

The boy, he said, did not stop at the checkpoint, but raced through it. They followed him in the Ford pickup, chasing him through the dark alleys for at least five minutes. The boy turned into an alley too narrow for the truck, so the driver stopped. The lieutenant sitting in the front passenger seat ordered the unit to open fire as he jumped out of the truck and started shooting. Two other soldiers got out and fired from 30 meters away, with soldier Eleazar Abimael Rodriguez dropping to his knee in the firing position, said the soldier, who is now a protected witness. The motorcyclist was shot.

AP notes that the soldier alleged to have fired first, Josue Sierra, was trained last year at the Western Hemisphere Institute for Security Cooperation (WHINSEC), formerly known as the School of the Americas (SOA), at Fort Benning, Georgia, and has been charged with attempting to cover up a crime and violating official duties. Lt. Col. Reynel Funes, who allegedly oversaw a cover-up of the murder (in part by having the soldiers switch out their weapons) also attended the SOA in 1984, and went to the Naval Postgraduate School in Monterey, California, in 2006, AP reports.

The revelations behind Yanes’ murder – only brought to light through the brave investigative work of his father - further demonstrates the rampant impunity and corruption within the Honduran military and police, even by officers “vetted” by the U.S. Despite recent misleading comments by U.S. Ambassador to Honduras Lisa Kubiske in the Honduran press, the U.S. Congress is already withholding funds to the Honduran police over the national police chief’s past ties to death squads, and counternarcotics operations and radar support to the Honduran police and military has been suspended following Honduras’ shooting down of airplanes, and the May 11 shootings of several local villagers in a counter-drugs operation in the Moskitia region. A State Department official cited in AP’s report yesterday says that “the withholding may reach $50 million, including $8.3 million in counter-narcotics aid, and $38 million under the Central America Regional Security Initiative.”

Dean Baker
The Guardian Unlimited, November 16, 2012

Mark WeisbrotNewsday (NY), November 16, 2012McClatchy Tribune Information Services, November 15, 2012Providence Journal (RI), November 15, 2012Bellingham Herald (WA), November 15, 2012Anchorage Daily News (AK), November 15, 2012Bradenton Herald (FL), Nove

Alan Barber
Debate Club (U.S. News & World Report), November 16, 2012

I'm not kidding, that's the headline of a blog post:

"this graph should scare you."

The Post reports on a new study from the Congressional Budget Office (CBO) which shows that GDP growth in this recovery has been considerably weaker than the average of prior recoveries. It's not entirely clear why the graph from CBO is supposed to be scary. After all, don't most people already know the economy stinks?

And the reason is pretty simple, we don't have any source of demand to replace the $1 trillion or so of annual construction and consumption demand that was generated by the housing bubble. So CBO's graph doesn't seem to be giving us any new information.

Perhaps we are supposed to be scared by CBO's assessment that two-thirds of the reason for slower growth is slower potential GDP growth, with only one-third is due to slower demand growth. This could be seen as somewhat scar. After all, if the economy really has much less growth potential that would be bad news, but on closer inspection there is not much "there" there.

Half of CBO's estimated slowing of potential GDP growth is due to slower labor force growth. This is the story of the retirement of the baby boom cohorts. As a baby boomer who one day expects to retire, this never struck me as especially scary and it certainly is not news. Everyone other than former Senator Alan Simpson (who seems to have first discovered the baby boom cohort when he sat on President Obama's deficit commission) knew that we would have a big wave of baby boomer retirements about 50 years ago.

We have two stories here. One is slower population growth. This pays us all sorts of dividends in reduced crowding and less pollution which are mostly not picked up in GDP measures. While some folks around this town (Washington) go nuts over slower population growth or, even worse, declining populations, I consider this outcome as 100 percent positive. (It is not good if people who want children feel that they are unable to afford them.)

The other story is a rising ratio of dependents (retired and young) to workers. This is somewhat of a drag on living standards, but hardly a disaster. The graph below shows the projected negative impact on after-tax wages of the increase in the ratio of retirees to workers compared with the positive impact of various rates of productivity growth.

Source: Social Security Trustees Report and author's calculations.

Are you scared yet?

Dean Baker
Caixin Online, November 14, 2012