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Financial skeptic

Notes on "neoliberalism enforced" cruise to Frugality Island for 401K Lemmings

News Neoliberalism as a New Form of Corporatism Recommended Links Peak cheap Energy and Oil Price Slump Secular Stagnation under Neoliberalism Rational Fools vs. Efficient Crooks: The efficient m hypothesis Casino Capitalism
Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Neoliberal Attacks on Social Security Unemployment Inflation vs. Deflation Coming Bond Squeeze Notes on 401K plans Vanguard
401K Investing Webliography Retirement scams Stock Market as a Ponzy scheme Financial Sector Induced Systemic Instability Neoclassical Pseudo Theories The Great Stagnation Investing in Vanguard Mutual Funds and ETFs
OIL ETNs Peak Cheap Energy and Oil Price Slump Notes on 100-your age investment strategy behavior in rigged markets Chasing a trade The Possibility Of No Mean Reversion Junk Bonds For 401K Investors Tax policies
John Kenneth Galbraith The Roads We Take Economics Bookshelf Who Rules America Financial Quotes Financial Humor Etc

“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Still I hope it plays a small but important role: to warn about excessive risk taking by 401K investors in neoliberal economic system. It designed to serve as a warning sign and inject a skeptical note into MSM coverage. There are not many such sites, so a warning about danger of taking excessive risk in 401K accounts under neoliberalism has definite value. The following cartoon from 2008 illustrated this point nicely

As far as I know lot of 401K investors are 100% or almost 100% invested at stocks. Including many of my friends. I came across a very relevant to this situation joke which nicely illustrated the ideas of this page:

Seven habits that help produce the anything-but-efficient markets that rule the world by Paul Krugman in Fortune.

1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
5. Overgeneralize
6. Be trendy
7. Play with other people's money

I would like to stress again that it is very difficult to "guess" when the next wave of crisis stikes us: "A thing long expected takes the form of the unexpected when at last it comes".

But mispricing of risk in 401K accounts is systemic for "overbullish" 401 investors, who expect that they will be able to jusp of the train in time, before the crash. Usually such expectations are false. And to sell in the market that can lose 10% in one day is not easy psychologically. I remember my feelings in 2001-2002 and again 2008-2009. That's why many people who planned to "jump" stay put and can temporarily lose 30 to 50% of value of their 401k account in a very short period of time (and if you think that S&P500 can't return to 1000, think again; its all depends on FED). At this point some freak out and sell their holdings making paper losses permanent.

Even for those who weathered the storm and held to their stock holdings, it is important to understand that paper losses were eliminated mostly by Fed money printing. As such risks remains as at one point FED might find itself out of ammunition. The fact that S&P500 recovered very nicely it does not diminish the risk of such behavior. There is no guarantee that the third crisis will behave like previous two.

Next crash will have a new key determinant: the attitude toward the US government (and here I mean the current government of Barack Obama) and Wall Street after 2008 is the lack of trust. That means that you need to hope for the best but prepare for the worst. Injection on so much money into financial system was a novel experiment which is not ended yet. So how it will end is anybody's guess. We are now in uncharted waters. I think when Putin called Bernanke a hooligan, he meant exactly this. Since Bernanke was printing money out of thin air to buy financial paper, his action were tantamount to shoplifting. In some way this probably is more similar to running meth labs inside Fed building. The system was injected with narcotics. Everybody felt better, but the mechanism behind it was not healthy.

The complexity of modern financial system is tremendous and how all those new financial instruments will behave under a new stress is unknown. At the same time in the Internet age we, the great unwashed masses, can't be keep in complete obscurity like in good old time. Many now know ( or at least suspect ) that the neoliberal "show must goes on" after 2008 is actually going strongly at their expense. And while open rebellion is impossible, that results in lack of trust which represents a problem for financial oligarchy which rules the country. The poor working slobs are told be grateful for Walmart's low (poverty-subsidized) prices. Middle class is told that their declining standard of living is a natural result of their lack of competitiveness in the market place. Classic "bread and circuses" policy still works but for how long it will continue to work it is unclear.

But nothing is really new under the sun. To more and more people it is now clear that today the US is trying to stave off the inevitable decline by resorting to all kinds of financial manipulations like previous empires; yesterday, it was the British Empire and if you go further back, you get the USSR, Hapsburg empire, Imperial Russia, Spanish empire, Venetian empire, Byzantium and Roman empire. The current "Secretary of Imperial Wars" (aka Secretary of Defense) Ashton Baldwin Carter is pretty open about this:

“We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game.”

For the US elite it might be a time to rethink its neocon stance due to which the US is exposing ourselves to the enmity of the rising economic powers, and blowing serious cash to maintain it hegemony via maintaining huge military budget, financing wars and color revolutions in distant countries. In a way the US foreign policy became a financial racket, and racket can't last forever because it incite strong opposition from other countries.

Neoliberalism (aka casino capitalism) as a social system entered the state of decline after 2008. Like communism before it stopped to be attractive to people. But unlike communism it proved to have greater staying power, surviving in zombie state as finanfial institutions preserved political power and in some cases even enhanced it. It is unclear how long it will say in this state. Much depends on the availability of "cheap oil" on which neoliberal globalization is based.

But the plausible hypothesis is that this social system like socialism in xUSSR space before entered down slope and might well be on its way to the cliff. Attempts to neo-colonize other states by the West became less successful and more costly (Compare Ukraine, Libya and Iraq with previous instances of color revolutions). Some became close to XIX century colonial conquests with a lot of bloodshed (from half million to over a million of Iraqis, by different estimates, died ). As always this is mainly the blood of locals, which is cheap.

Libya and Ukraine are two recent examples. Both countries are now destroyed (which might be the plan). In Ukraine population is thrown in object poverty with income of less that $5 a day for the majority of population. And there is no other way to expand markets but to try to "neo-colonize" new countries by putting them into ominous level of debt while exporting goods to the population on credit. That is not a long term strategy as Greece, Bulgaria, and now Spain and Portugal had shown. With shrinking markets stability of capitalism in general and neoliberalism in particular might decrease.

Several researchers points to increased importance Central banks now play in maintaining of the stability of the banking system. That's already a reversal of neoliberal dogma about free (read "unregulated") markets. Actually the tale about "free markets", as far as the USA is concerned, actually was from the very beginning mainly the product designed for export (read about Washington consensus).

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[Aug 08, 2016] Dont blame the masses

Notable quotes:
"... Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth. ..."
"... Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China. ..."
www.bostonglobe.com
Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth.
Enrique Ferro's insight:
Moments of change require adaptation, but the United States is not good at adapting. We are used to being in charge. This blinded us to the reality that as other countries began rising, our relative power would inevitably decline. Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China.

[Aug 26, 2016] In Trump We Trust E Pluribus Awesome! Ann Coulter

Notable quotes:
"... Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class. ..."
"... He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors ..."
"... Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages ..."
"... Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us: ..."
"... The RNC has been forcing Republican candidates to take suicidal positions forever…They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote. ..."
"... American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago. ..."
"... Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar! ..."
"... Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. ..."
"... The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade." ..."
Aug 26, 2016 | www.amazon.com

Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class.

Frank A. Lewes

No pandering! The essence of Trump in personality and issues , August 23, 2016

Ms. Coulter explains the journey of myself and so many other voters into Trump's camp. It captures the essence of Trump as a personality and Trump on the issues. If I had to sum Ms. Coulter's view of the reason for Trump's success in two words, I'd say "No Pandering!" I've heard many people, including a Liberal tell me, "Trump says what needs to be said."

I've voted Republican in every election going back to Reagan in 1980, except for 2012 when I supported President Obama's re-election. I've either voted for, or financially supported many "Establishment Republicans" like Mitt Romney and John McCain in 2008. I've also supported some Conservative ones like Newt Gingrich and Rudy Giuliani. In this election I'd been planning to vote for Jeb Bush, a superb governor when I lived in Florida.

Then Trump announced his candidacy. I had seen hints of that happening as far back as 2012. In my Amazon reviews in 2012 I said that many voters weren't pleased with Obama or the Republican Establishment. So the question became: "Who do you vote for if you don't favor the agendas of either party's legacy candidates?" In November 2013 I commented on the book DOUBLE DOWN: GAME CHANGE 2012 by Mark Halperin and John Heileman:

=====
Mr. Trump occupies an important place in the political spectrum --- that of being a Republican Populist.

He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors, who are recovering our fortunes in the stock market.

IMO whichever party nominates a candidate like Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages, will be the party that rises to dominance.

Mr. Trump, despite his flakiness, at least understood that essential fact of American economic life.

November 7, 2013
=====

Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us:

=====
The RNC has been forcing Republican candidates to take suicidal positions forever…They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote.

…when the GOP wins an election, there is no corresponding "win" for the unemployed blue-collar voter in North Carolina. He still loses his job to a foreign worker or a closed manufacturing plant, his kids are still boxed out of college by affirmative action for immigrants, his community is still plagued with high taxes and high crime brought in with all that cheap foreign labor.

There's no question but that the country is heading toward being Brazil. One doesn't have to agree with the reason to see that the very rich have gotten much richer, placing them well beyond the concerns of ordinary people, and the middle class is disappearing. America doesn't make anything anymore, except Hollywood movies and Facebook. At the same time, we're importing a huge peasant class, which is impoverishing what remains of the middle class, whose taxes support cheap labor for the rich.

With Trump, Americans finally have the opportunity to vote for something that's popular.

=====

That explains how Trump won my vote --- and held on to it through a myriad of early blunders and controversies that almost made me switch my support to other candidates.

I'm no "xenophobe isolationist" stereotype. My first employer was an immigrant from Eastern Europe. What I learned working for him launched me on my successful career. I've developed and sold computer systems to subsidiaries of American companies in Europe and Asia. My business partners have been English and Canadian immigrants. My family are all foreign-born Hispanics. Three of my college roommates were from Ecuador, Germany, and Syria.

BECAUSE of this international experience I agree with the issues of trade and immigration that Ms. Coulter talks about that have prompted Trump's rising popularity.

First, there is the false promise that free trade with low-wage countries would "create millions of high-paying jobs for American workers, who will be busy making high-value products for export." NAFTA was signed in 1994. GATT with China was signed in 2001. Since then we've signed free trade with 20 countries. It was said that besides creating jobs for Americans, that free trade would prosper the global economy. In truth the opposite happened:

American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago.

We ran trade SURPLUSES with Mexico until 1994, when NAFTA was signed. The very next year the surplus turned to deficit, now $60 billion a year. Given that each American worker produces an average of $64,000 in value per year, that is a loss of 937,000 American jobs to Mexico alone. The problem is A) that Mexicans are not wealthy enough to be able to afford much in the way of American-made product and B) there isn't much in the way of American-made product left to buy, since so much of former American-made product is now made in Mexico or China.

Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar!

Thus, free trade, except with a few fair-trading countries like Canada, Australia, and possibly Britain, has been a losing proposition. Is it coincidence that our economy has weakened with each trade deal we have signed? Our peak year of labor force participation was 1999. Then we had the Y2K collapse and the Great Recession, followed by the weakest "recovery" since WWII? As Trump would say, free trade has been a "disaster."

Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. Ms. Coulter says:

=====
The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade."
=====

Then there is immigration. My wife, son, and extended family legally immigrated to the USA from Latin America. The first family members were recruited by our government during the labor shortage of the Korean War. Some fought for the United States in Korea. Some of their children fought for us in Vietnam, and some grandchildren are fighting in the Middle East. Most have become successful professionals and business owners. They came here LEGALLY, some waiting in queue for up to 12 years. They were supported by the family already in America until they were on their feet.

Illegal immigration has been less happy. Illegals are here because the Democrats want new voters and the Republicans want cheap labor. Contrary to business propaganda, illegals cost Americans their jobs. A colleague just old me, "My son returned home from California after five years, because he couldn't get construction work any longer. All those jobs are now done off the books by illegals."

It's the same in technology. Even while our high-tech companies are laying off 260,000 American employees in 2016 alone, they are banging the drums to expand the importation of FOREIGN tech workers from 85,000 to 195,000 to replace the Americans they let go. Although the H1-B program is billed as bringing in only the most exceptional, high-value foreign engineers, in truth most visas are issued to replace American workers with young foreigners of mediocre ability who'll work for much less money than the American family bread-winners they replaced.

Both parties express their "reverse racism" against the White Middle Class. Democrats don't like them because they tend to vote Republican. The Republican Establishment doesn't like them because they cost more to employ than overseas workers and illegal aliens. According to them the WMC is too technologically out of date and overpaid to allow our benighted business leaders to "compete internationally."

Ms. Coulter says "Americans are homesick" for our country that is being lost to illegal immigration and the removal of our livelihoods overseas. We are sick of Republican and Democrat Party hidden agendas, reverse-racism, and economic genocide against the American people. That's why the Establishment candidates who started out so theoretically strong, like Jeb Bush, collapsed like waterlogged houses of cards when they met Donald Trump. As Ms. Coulter explains, Trump knows their hidden agendas, and knows they are working against the best interests of the American Middle Class.

Coulter keeps coming back to Mr. Trump's "Alpha Male" personality that speaks to Americans as nation without pandering to specific voter identity groups. She contrasts his style to the self-serving "Republican (Establishment) Brain Trust that is mostly composed of comfortable, well-paid mediocrities who, by getting a gig in politics, earn salaries higher than a capitalist system would ever value their talents." She explains what she sees as the idiocy of those Republican Establishment political consultants who wrecked the campaigns of Jeb Bush and Ted Cruz by micromanaging with pandering.

She says the Republican Establishment lost because it served itself --- becoming wealthy by serving the moneyed interests of Wall Street. Trump won because he is speaking to the disfranchised American Middle Class who loves our country, is proud of our traditions, and believes that Americans have as much right to feed our families through gainful employment as do overseas workers and illegal aliens.

"I am YOUR voice," says Trump to the Middle Class that until now has been ignored and even sneered at by both parties' establishments.

I've given an overview of the book here. The real delight is in the details, told as only Anne Coulter can tell them. I've quoted a few snippets of her words, that relate most specifically to my views on Trump and the issues. I wish there were space to quote many more. Alas, you'll need to read the book to glean them all!

Frank A. Lewes says: Bruce, I would also add that the Republican Establishment chose not to represent the interests of the White Middle Class on trade, immigration, and other issues that matter to us. They chose to represent the narrow interests of:

1. The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country."

2. Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC.

The Republican Establishment is in a snit because Trump beat them by picking up the WMC votes that the Establishment abandoned. What would have happened if Trump had not come on the scene? The probable result is that the Establishment would have nominated a ticket of Jeb Bush and John Kasich. These candidates had much to recommend them as popular governors of key swing states. But they would have gone into the election fighting the campaign with Republican Establishment issues that only matter to the 1%. They would have lost much of the WMC vote that ultimately rallied around Trump, while gaining no more than the usual 6% of minorities who vote Republican. It would have resulted in a severe loss for the Republican Party, perhaps making it the minority party for the rest of the century.

Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold.

Frank A. Lewes says:
It's funny how White Men are supposed to be angry. But I've never seen any White men:

1. Running amok, looting and burning down their neighborhood, shooting police and other "angry White men." There were 50 people shot in Chicago last weekend alone. How many of those do you think were "angry white men?" Hint: they were every color EXCEPT white.

2. Running around complaining that they aren't allowed into the other gender's bathroom, then when they barge their way in there complain about being sexually assaulted. No, it's only "angry females" (of any ethnicity) who barge their way into the men's room and then complain that somebody in there offended them.

Those "angry white men" are as legendary as "Bigfoot." They are alleged to exist everywhere, but are never seen. Maybe that's because they mostly hang out in the quiet neighborhoods of cookie-cutter homes in suburbia, go to the lake or bar-be-que on weekends, and take their allotment of Viagra in hopes of occassionally "getting lucky" with their wives. If they're "angry" then at least they don't take their angry frustrations out on others, as so many other militant, "in-your-face" activist groups do!

[Aug 25, 2016] Credentialism and Corruption Vile College Presidents Edition

Welcome to Neoliberal U!
Notable quotes:
"... The corruption I'm going to describe seems more along the lines of converting a public institution to serve private purposes (assuming higher education to be a public institution, which I do, because education is a public good)[3]. ..."
"... Now, human nature being what it is, a certain amount of empire-building and concern for one's rice bowl has always been inevitable, but when greed for one's self, or one's class, becomes the institutional driver, it's time for a thorough cleansing. ..."
"... New York University students carry some of the highest debt loads in the nation, a fact they are bound to remember through gritted teeth when they read the New York Times report about the school's loans to top faculty for vacation homes in places like Fire Island and the Hamptons. ..."
"... The house, which is owned by John Sexton, the president of New York University, was bought with a $600,000 loan from an N.Y.U. foundation that eventually grew to be $1 million, according to Suffolk County land records. ..."
"... I think this perfectly describes what I've observed with public school superintendents also. They are like 'The Music Man.' Selling dreams that our children will be smarter, better looking, and above average if we just get with the program. While our school district has a local in charge who appears to be here for the long term, a neighboring district had a 'Music Man' or rather, woman, who got the city to float a $10 million bond issue so every fourth grader could have an I-Pad. She then left to do the same (for a higher salary) in another state. Another, much poorer, district nearby wanted to get rid of a super who had allegedly threatened subordinates with bodily harm: they bought out her contract for $300,000. In a county with a population of 20,000 and ten percent unemployment. ..."
"... It is not only at the college level that those in charge are engaging is questionable behavior. It is a society wide problem. ..."
"... To a naive student with no experience in institutional politics, their stories of resentment, gossip, backbiting, and the politics of personal reputational destruction were like a glimpse into an unimagined world. ..."
"... It used to be that there was a saying in academe: the competition is so great because the stakes are so low. But, if there is a path to six or seven figures, now I see that there is serious cash to be banked to justify working in the university racket. ..."
Aug 24, 2016 | www.nakedcapitalism.com
By Lambert Strether of Corrente .

I haven't posted on higher education before, and a series of posts on credentialism really should focus on the institutions where those credentials are, in the main, granted. But rather than a serious analytical piece on the state of the university, this will be a light-hearted romp through some spectacular examples of executive malfeasance at NYU, Baylor, and Penn State.[1] (Tomorrow I'll look at the adjunct system, and potential effects of yesterday's NLRB decision . And there will be more posts to come on this topic, as I come to understand it better.)

Before I begin, though, let's recall Zephyr Teachout's definition of corruption. Not a quid pro quo - that's the Citizen's United doctrine, now supported by the Clinton campaign - but the use of public office for private ends. What does corruption look like in a university setting, given that some universities are private to begin with, and that "ends," in the ancient and tricky academe, may not always be immediately evident?

Here's a story from the University of Maine, Maine's "flagship" university. Our last President, Robert Kennedy, gave the contract for sports broadcasting to ClearChannel, thereby moving the profits out of state, because he took the contract away from Stephen King's radio station (yes, that Stephen King). Naturally, this ticked King off, and King - up to that point the university's largest donor, and the funder of many good works round the state, like dental clinics and libraries - decided he would no longer give to the university. (Kennedy then rotated out to the University of Connecticut, for a hefty salary increase, where he was shortly axed by the Regents for a cronyism scandal . Dodged a bullet, there, Maine!)

Dollying back to the larger picture, King came up through the much despised and derided English Department, in the humanities, which powerful institution forces in the administration and the Board of Trustees are shifting resources away from, in favor of more pragmatic, "business-friendly," corporate majors (graduates, that is, that they themselves can hire[2]. Even though King was the university's largest donor.)

Is there corruption here? I would argue yes, but I'm not sure that Teachout's definition quite meets the case. The corruption I'm going to describe seems more along the lines of converting a public institution to serve private purposes (assuming higher education to be a public institution, which I do, because education is a public good)[3]. This is evident from the King story in two ways. First, Kennedy is only one of many university administrators who stay a couple years at an institution, punch their ticket, and move on to a higher salaried position elsewhere. Second, optimizing university curricula, grounds, personnel decisions, etc. for corporate ends is about as corrupt as you can get (as are the concomitant rationalizations and cover-ups that occur when scandal breaks). Now, human nature being what it is, a certain amount of empire-building and concern for one's rice bowl has always been inevitable, but when greed for one's self, or one's class, becomes the institutional driver, it's time for a thorough cleansing.

With that, let's look at the case of John Sexton, once President of NYU. (NYU is an important nexus for the Democrat nomenklatura , so we'll have more to say about NYU in the future.)

John Sexton, NYU

John Sexton (salary: $1.5 million ) was President of New York University from 2002 to 2015, and for a portion of that time doubel-dipped as Chairman of the Board of the Federal Reserve Bank of New York. For the connoisseur of corruption, his long tenure provides an embarrassment of riches - the union busting , the faculty no-confidence votes , the Abu Dhabi debacle (among other issues, the campus was built using slave labor ), the lavish compensation packages , the tacos made from endangered shark meat - but I'm going to focus on just one. The apartments. No, I don't mean the faculty apartment NYU remodeled for Sexton's son :

NYU gave president's aspiring actor son apartment on campus

Jed Sexton, whose sole affiliation with NYU was his status as the president's son, for years enjoyed a spacious faculty apartment while the university experienced a "severe" housing shortage, The Post has learned.

In spring 2002, NYU ordered that a pair of one-bedroom apartments normally reserved for law school faculty be combined into a lavish, two-story spread in the heart of Greenwich Village, property records show.

The Harvard-educated Sexton, who was a 33-year-old aspiring actor at the time, shared the new duplex with his newlywed wife, Danielle Decrette, for the next five years, according to documents and people briefed on the situation.

That's despite the fact that NYU officials, just weeks earlier, had warned in a written report of a "severe housing shortage" for faculty, "especially of larger units."

How cozy! No, I mean the vacation properties, plural, that NYU under Sexton doled out as perks to insiders :

NYU Offers Top Talent a Path to Beachfront Property

New York University students carry some of the highest debt loads in the nation, a fact they are bound to remember through gritted teeth when they read the New York Times report about the school's loans to top faculty for vacation homes in places like Fire Island and the Hamptons. The loans, which have gone to at least five faculty members in the medical and law schools as well as university president John Sexton, sometimes get forgiven over time as their recipients continue to work at the university. Mortgage loans apparently aren't unheard of as compensation packages for professors and executives in tight real estate markets, but they're usually for homes, not vacation properties.

From the New York Times , which broke the story, it seems that Sexton gifted himself a house, an "an elegant modern beach house that extends across three lots":

The house, which is owned by John Sexton, the president of New York University, was bought with a $600,000 loan from an N.Y.U. foundation that eventually grew to be $1 million, according to Suffolk County land records.

Others, too :

Since the late 1990s, at least five medical or law school faculty members at N.Y.U. have received loans on properties in the Hamptons or Fire Island, in addition to Dr. Sexton.

NYU's Chief Financial Officer Martin Dorph argued that arrangements like this are necessary to retain top personnel :

While that feeling is understandable, it is important to note the economic truth that the markets for different positions often dictate different levels of compensation, whether that is embodied in salary payments, loans, or an overarching agreement about terms of employment. And, when we commit to provide such compensation, we do so only when we are sure

that the benefit to the University far exceeds the cost.

First, CEO compensation and shareholder returns are inversely correllated ; even if we grant Dorph's premise, and a corporate model for the university, it's just not clear that top compensation means top talent. Second, why doesn't NYU simply pay its talent more? Why complicate matters by bringing in vacation housing? Why not just write a fatter check? The answer can only be arbitrage of some sort: NYU giving access to property that otherwise isn't on the market, tax advantages of some kind, a better rate on the mortgage, or whatever; some way in which NYU uses its muscle on behalf of the compensated. But that is, precisely, converting a public institution to serve private purposes. Not to mention Sexton openly using NYU facilities to house his son and for his own vacation home on Fire Island. Come on. Why is that not self-dealing? And the rest of looks suspiciously like powerful faculty members feathering their own nests. "Why not? We deserve it."

Naturally, NYU has learned nothing, and is in fact doubling down: " N.Y.U. President's Penthouse Gets a Face-Lift Worth $1.1 Million (or More) ." For Sexton's successor, Andrew Hamilton (salary: not disclosed):

The 19th and topmost floor of the building will be turned into a master-bedroom suite, where Dr. Hamilton will have private exits - one from the bedroom and one from the bathroom - onto a terrace overlooking Washington Square and, to the south, the financial district skyline, according to documents filed with New York City.

"Private exits." Perhaps he'll need them.

Ken Starr, Baylor University

We now turn to the simpler case of Baylor President Ken Starr (salary: $1 million ), last seen unloading a dumpster-load of lascivious footnotes onto the steps of Capitol Hill during the Lewinsky matter (thank you, Monica, for helping to save Social Security from Bill Clinton ). Former Manhattan assistant DA Bennett L. Gershman has a good summation, in full "What did he know, and when did he know it?" mode:

Baylor University, the country's largest Baptist university and a bastion of Christian values, has just been denounced in a blistering report by the University's Board of Regents for "mishandling" - covering up might be a more apt description - credible allegations of horrific sexual violence against female students, especially alleged assaults by members of the football team. The Board of Regents said it was "shocked," "outraged" and "horrified" by the extent of the acts of sexual violence on the campus, which covered years 2012 through 2015, and the failure of the University to take appropriate action to punish violators and prevent future violations. The Board issued an "apology to Baylor Nation," fired the football coach, and "transitioned" (the Regents' term) Baylor's President, Kenneth Starr, to the role of Chancellor. Starr also was allowed to retain his lucrative Chair and Professorship of constitutional law at Baylor's law school….

As Baylor's president from 2010 to 2016, the vexing question is the level of Starr's culpability for the "shocking," "outrageous," and "horrendous" sex scandal. What exactly did Starr know? The allegations of sexual violence on the campus were rampant and notorious, especially by the football players. Starr had to know something about the extent of the University's response to the complaints, and most likely the failure to address these complaints properly. Indeed, there were several Title IX investigations by the Justice Department at the time that Starr must have known about. Moreover, there are plenty of egregious examples of sexual violence on the campus that had to have been reported. In one egregious case, an All-Big 12 football player was accused in 2013 of sexual violence against a student. Although Waco police contacted university officials, nobody in the university investigated the case until two years later, after a Title IX investigation was underway, and media reports highlighted the case. This was after several other Baylor football players were indicted and convicted of sexual assaults. It was only then that the University hired an outside investigator. Notably, the headlines also prompted a public outcry, and a candlelight vigil at Starr's residence.

The Board of Regents Report describes the breadth of the independent investigation into the university's failure to properly address the University's dereliction. The investigators interviewed numerous University officials, but there is no mention whether they interviewed Starr, and if so, what he may have said. … Starr may have claimed to be unaware of the repeated failures of university officials to investigate these complaints, but is that contention credible? Starr presumably had to know that aggressively investigating these allegations - indeed, as aggressively as he investigated the sexual misdeeds of President Clinton - might have interfered with his intensive multi-million dollar fundraising efforts to build a new and lavish football stadium, which opened in 2014. And Starr may have believed that getting too deep into the mud of the roiling sexual scandal would undermine the public perception of Baylor's "Christian commitment within a caring community" - again the Board of Regents' description - as well as compromise the heroic efforts of the Baylor football team to win a national championship.

So Starr is no longer the university's president. To be sure, it's a demotion of sorts. He was allowed to keep his Chancellorship, which he just relinquished, but he still gets to keep his Chair and Professorship at the Law School. One might think this is not a very harsh result, certainly not if Starr knowingly violated federal law, or by his deliberate indifference allowed serious criminal conduct to take place at the university he led.

Alternet is, as one would expect, a bit more direct in connecting the dots :

Not to put too fine of a point on it, but Ken Starr is accused of ignoring sexual violence at Baylor University mostly because doing something about it would have jeopardized a cash cow.

(Note that the disgraced Baylor football coach's salay, $6 million , was six (6) times college President "Judge Starr." Starr will also retain his position on the faculty. Priorities!) The New York Times says what Alternet says , in its own more muffled language:

[Baylor] also fired the football coach, Art Briles, whose ascendant program brought in millions of dollars in revenue but was dogged by accusations of sexual assault committed by its players - an increasingly familiar combination in big-time college sports.

"Was dogged by." What we have here is a football team acting as a standalone, dominating entity , rather like a parasite controlling the behavior of the host univeristy:

Among the firm's findings was that football coaches and athletics administrators at the school in the central Texas city of Waco had run their own improper investigations into rape claims and that in some cases they chose not to report such allegations to an administrator outside of athletics.

By running their own "untrained" investigations and meeting directly with a complainant, football staff "improperly discredited" complainants' claims and "denied them a right to a fair, impartial and informed investigation."

Starr wanted the revenues. Briles wanted the revenues, the facilities, the salaries, the ticket to be punched, etc. Again, this is quite directly converting a public institution to serve private purposes. And like NYU, Baylor appears to have learned nothing. Starr still has a job, and was never censured. The full report was never released. And from an ad taken out by Baylor alumni : "Thank You Judge Ken Starr - For your integrity, leadership, character and humble nature."

Eric Barron, Penn State

Finally, we come to Eric Barron, President of Penn State (salary: $1.2 million with incentives ). I'm not going to focus on whether Penn State hiring Barron in the wake of his dubious handling of a festering rape scandal at Florida State was odd , or not. And I'm not going to focus on climatologist Barron's relationship with Koch Brothers funding . Or his conflation of "incredulous" with "incredible"; who among us, etc. No, I'm going to focus on this amazing piece of puffery. From an interview with Barron on "entrepreneurship" and "proactive leadership" :

ERIC J. BARRON: We actually have launched a whole program, which is titled " Invent Penn State ," and there are several different elements of this. One is to do more to incentivize people on campus to get their ideas out into the marketplace. We have many, many student events that are competitions and have scholarship funds at the end of it. The second part of it is to add more visibility to our intellectual property. A third part is to build an ecosystem around our campuses that promote startups and partnerships with communities.

A general view, in my opinion, is that many universities are focused on this topic as a source of revenue, not as educational experiences for students and opportunities for them to do startups. We have a lot of effort on the student side. The minors have expanded. I think we have six or seven entrepreneurship minors now that are embedded in curriculum for different colleges if you want. Last year, we started having any student with any major to be able to get all the credits equivalent to a minor in business. There's a lot on that side plus startup weeks and other activities with a scholarship side of it.

We have funded but have not yet cut the ribbon on a total of 20 incubators and accelerators around the state of Pennsylvania associated with our campuses. In March, we cut the ribbon on what's called Happy Valley Launch Box, which is here in State College, with the idea of having 30 startups in there at any one time. I think we had about 15 before even 30 days. All of these have gone through some sort of vetting process or competition for which they were winners. It's growing just left and right. Many of them, we've given them seed money and they've gotten many times more money from their community and other partners that want to enable the students.

Never mind converting an entire student population into "winners" and "losers." Never mind that 90% of start-ups fail . Never mind that when startups succeed, it's as much a matter of luck, and especially the luck of having been born into the right social network. Thomas Frank has already described Barron's program, and where it leads. This is the innovation cult ! Quoting Frank once more:

I just finished Thomas Frank's excellent Listen, Liberal , and he has a great rant about "innovation," of which I will show a great slab here, from p 186 et seq. Frank even helpfully quotes the more egregious bullshit tells, so I don't have to highlight them! Do read it in full. After visiting hollowed out mill town Fall River, Frank goes to Boston:

And:

1_frank
2_frank

Let's also leave aside the issue of whether "innovation" culture increases "income inequality." Suppose Penn State structures its curriculum to optimize for startups (and not for education as such; critical thinking skills, the construction of narratives, the sciences, research, even (relatively) humdrum majors like accounting). What happens to the students when 90% of their startups fail, as history tells us they will? What will they have to fall back on, if everything has been optimized for startups, and the rest of the university's assets have been stripped?

The future lies ahead on that question. For now, I'm uncertain whether "the innovation" cult is corrupt as such, or not. Certainly it provides almost limitles opportunities for backscratching, logrolling, bezzle creation, and so forth. And Barron seems to conceive of it as a big revenue generating opportunity for Penn State (rather like the football team, if it comes to that). If the program fails, and is seen to fail, will Penn State learn from the experience? It's hard to know, but Barron's handling of the fallout from the Sandusky matter does not inspire confidence .

Conclusion

So, what we've got here is an NYU President handing a New York apartment, meant for faculty, to his son, and what looks rather like powerful faculty members feathering their own nests with cheap housing; we've got a Baylor President not wanting to cross a powerful and wealthy football team, even to the extent of failing to handle a rape scandal; and at Penn State we've got a President who's a member of the "innovation cult," when it's not at all clear this will benefit the student body as a whole. Have any of these institutions learned from these experiences? No. Are these college Presidents personally responsible for corruption at their universities - for converting a public institution to serve private purposes? Sexton and Start, yes. For Barron, the jury is still out.

And these are the institutions of higher education that are granting credentials. Not a good look. More examples from readers welcome!

NOTES

  • [1] I should disclose my priors and/or prejudices: I'm a university brat with a humanities background. Family tradition mandates that I instinctively distrust college administrators, Big Football, fraternities, and sororities (and, my parents would urge, for very good reasons). Only the first two will be at issue here.
  • [2] That is, they're creating hires, as opposed to creating graduates some of whom might be creative enough to come up with businesses that compete with their own.
  • [3] If you think that implies that neoliberalism is intrinsically corrupt, since it will put everything up for sale, including itself, you're not wrong.
pretzelattack, August 24, 2016 at 1:11 pm

iirc starr's work as independent counsel helped (was the biggest factor maybe) in getting the job at baylor.

Anonymous, August 24, 2016 at 1:12 pm

Lambert:

'First, Kennedy is only one of many university administrators who stay a couple years at an institution, punch their ticket, and move on to a higher salaried position elsewhere.'

I think this perfectly describes what I've observed with public school superintendents also. They are like 'The Music Man.' Selling dreams that our children will be smarter, better looking, and above average if we just get with the program. While our school district has a local in charge who appears to be here for the long term, a neighboring district had a 'Music Man' or rather, woman, who got the city to float a $10 million bond issue so every fourth grader could have an I-Pad. She then left to do the same (for a higher salary) in another state. Another, much poorer, district nearby wanted to get rid of a super who had allegedly threatened subordinates with bodily harm: they bought out her contract for $300,000. In a county with a population of 20,000 and ten percent unemployment.

It is not only at the college level that those in charge are engaging is questionable behavior. It is a society wide problem.

trent, August 24, 2016 at 2:47 pm

'The Music Man.'

so fraud?

Anonymous, August 24, 2016 at 3:06 pm

For willing dupes.

Jagger, August 24, 2016 at 8:51 pm

It is not only at the college level that those in charge are engaging is questionable behavior. It is a society wide problem.

That is my impression as well-corruption is a society wide problem from top to bottom. The small town mayors, courts, police, newspapers, insiders, etc may be playing with small potatoes but corruption is corruption whether it is $1000 or a $1,000,000. I know it can't be everyone with a little power but way too many. Makes you doubt the whole system.

Arizona Slim, August 24, 2016 at 1:12 pm

Greetings from one of those coworking spaces that Mr. Frank took to task in Listen, Liberal .

Let me tell you a dirty little secret about this place. And, no, I'm not talking about who left a lunch in the fridge for too long. This is an even dirtier secret. Here it is:

Most of us are not innovators.

That's right. I said it.

The truth is, most of us are working on things that are, well, pretty run of the mill. Guy behind me is doing digital marketing work for his out-of-state employer, an ad agency. Lady over there is doing marketing for a resort in Mexico. Oh, and the guy who's my best friend here? We're both photographers. His other main hustle is graphic design and mine is writing for business.

We have a handful of what could be described as startups, but those businesses are definitely in the minority.

a different chris, August 24, 2016 at 1:43 pm

Well we don't need a sh&t pot full of "innovators"…. we need people that can do what they do well. Does everybody have to create something "new"?? I don't think so.* Edison wasn't the greatest guy in the world overall, but as he said getting something up is 99% perspiration and only 1% inspiration – I think he would have spit at the word "innovation", btw.

In fact, he has another lesson for the "innovators" in that a lot of his perspiration was generated due to his efforts in stealing ideas from other people. Which is going to happen to almost all of the (if we take their optimistic slices) 10% that do come up with something anybody cares about.

*For a good example, I love the improvement of the American pub scene over the past few decades. But the best beer and grub isn't the best because it is "innovative" - sometimes it is a bit different, sometimes not - but because it is very, very well done.

Wait, we pay you enrich yourself?, August 24, 2016 at 2:32 pm

Slim, in your home town town there is one of the perfumed princes that could have fit nicely into Lambert's post. Us AZ residents are paying neoliberal scumbag a premium price for their "talents" of enriching themselves.

Super scum: https://www.azpm.org/p/featured-news/2016/4/6/85310-arizona-lawmakers-call-for-ua-presidents-resignation-following-board-appointment-to-for-profit-college-company/

Oh, and if you are referring to the same work space, I worked for a total pump and dump "startup", there.

Arizona Slim, August 24, 2016 at 4:00 pm

Oh, brother. Ann Weaver Hart. Don't get me started.

Okay, I am started. So, here goes …

A couple of summers ago, I was meeting with a longtime acquaintance and potential client on the University of Arizona campus. Madame Presidente was about to move her office into Old Main, which is the UA's oldest building. It's revered as this sacred space. Or something like that.

Any-hoo, I was in a pretty spacious office in a building near Old Main. But my meeting host told me that Ann Weaver Hart's Old Main *bathroom* was bigger than that office.

Yeesh.

Oh, as for the work space, were you involved in the one that had a pirate theme? Because that place was - and is - full of pump -n- dump startups.

Lambert Strether Post author , August 24, 2016 at 4:46 pm

I considered writing Anne Weaver Hart up, but the other ones were worse. There's only so much one can do to shovel back the tide…

Jim Haygood, August 24, 2016 at 1:23 pm

'King came up through the much despised and derided English Department, in the humanities.'

Although not a product of the English department at my alma mater, Whatsamatta U., I knew some professors in the department.

To a naive student with no experience in institutional politics, their stories of resentment, gossip, backbiting, and the politics of personal reputational destruction were like a glimpse into an unimagined world.

Lambert Strether Post author , August 24, 2016 at 2:50 pm

I know, I know. So totally unlike the corporate environment.

Wait, we pay you to enrich yourself?, August 24, 2016 at 3:04 pm

It used to be that there was a saying in academe: the competition is so great because the stakes are so low. But, if there is a path to six or seven figures, now I see that there is serious cash to be banked to justify working in the university racket.

Lambert Strether Post author , August 24, 2016 at 3:41 pm

And if you're an administrator, you can redistribute the budget to your own advantage by screwing the faculty, especially adjuncts.

Uahsenaa, August 24, 2016 at 5:12 pm

Nowadays I bristle when someone describes me as "faculty," even though it's technically correct, because it papers over the fact that some of the people doing the exact same job as me have full employment, a full salary, and fringe benefits, where the people in my position get paid per credit with no benefits. We are "permitted" to buy into university health insurance, at full cost, but that's the extent of our bennies.

If you're getting to the employment situation in a further post, I'll save my more extensive comments for that.

DanB, August 24, 2016 at 2:05 pm

Update: one of the articles cited in this essay says Ken Starr resigned from Baylor Law School and severed all ties with the university this past Friday.
As someone who has a university background, as a grad student in three different universities, and short stints as a faculty member and an administrator (I was shoved out/left in disgust from administration)- I attest that this kind of neoliberal thinking, which automatically generates converting public responsibility to private advantage, is commonplace. As readers here know, the university is a place where one must strive to present oneself - and simultaneously fool oneself - as creative and independent-minded within the confines of the matrix. This is most pronounced in the professional school because they are most beholden to corporate money. A final note: you will find the best to the worst of humanity in universities.

Lambert Strether Post author , August 24, 2016 at 2:51 pm

So, karma works. Thanks for the update.

Torsten, August 24, 2016 at 6:45 pm

David Riesman: "I would never advise anyone to go into teaching because the people are so nice."

allan, August 24, 2016 at 2:35 pm

One more for the honor roll: West Virginia University's former president Michael Garrison, who ordered the granting of an M.B.A. to moral leper Mylan CEO and Epi-Pen price optimizer Heather Bresch in 2007,

even though she had fewer than half the credits required.

Lambert Strether Post author , August 24, 2016 at 2:53 pm

Blue Dog Joe Manchin's daughter . All things work together for good, don't they?

trent, August 24, 2016 at 3:04 pm

seems like she's only where she is because of daddy

DrBob, August 24, 2016 at 4:17 pm

This particular CEO (and Senator's daughter) has a history of using Congress for favorable outcomes:

https://theintercept.com/2016/08/24/epipen-uproar-highlights-companys-family-ties-to-congress/

allan, August 24, 2016 at 4:37 pm

To paraphrase Harry Reid, Joe's with us on everything except the war basic human decency.

KurtisMayfield, August 24, 2016 at 3:21 pm

You forgot to mention she was a Senator's daughter. That one is a combo of both government, corporate, and university corruption. Well done!

Torsten, August 24, 2016 at 2:39 pm

I have to repeat my favorite historical anecdote here (h/t the late, great Paul Goodman, from his Compulsory Miseducation, I believe).

It seems that in the summer of 1650, while the faculty was away helping in the fields, Henry Dunster sold Harvard to a group of Boston businessmen, creating the first Corporation in the New World, and making himself "President" thereof.

Now Wikipedia claims that Dunster "set up as well as taught Harvard's entire curriculum alone for many years, graduating the first college class in America, the Class of 1642". So perhaps Dunster was simply ahead of his time in creating the prototype for Trump University.

Ulysses, August 24, 2016 at 3:48 pm

Administrators in academia hold themselves to the same high ethical standards as officials in government. In other words, they do whatever they can get away with, and then sputter about future "transparency," and "doing better," when their misdeeds come to light.

This blather from Austin, Texas, could just as well have come from Washington, D.C.:

"I've read the report a half-dozen times in totality, and I found no willful misconduct , no criminal activity on the part of any of the folks at the University of Texas at Austin, and have told the Board of Regents that I intend to take no disciplinary action," he said.

"Can we do things better? You bet," he continued. "Should we have been more transparent? Absolutely. Are we going to get this fixed? No doubt about it."

Mr. Powers pushed back against the report's suggestion that he had not been forthcoming, saying he had been "truthful and not evasive" in his dealings with investigators.

Investigators took a different view…. "

http://chronicle.com/article/Admissions-Report-Chips-at/190021/

ekstase, August 24, 2016 at 4:11 pm

Just a hypothetical question: what would one do if they felt they were losing some of their idealism?

Lambert Strether Post author , August 24, 2016 at 4:48 pm

I very rarely laugh out loud; thanks, it's good for the health!

Foppe, August 24, 2016 at 4:22 pm

My $2c; apologies that they're a bit unpolished: One question you/we might ponder is how (a desire for) obvious nepotism engenders privatization, versus more "principled" demands for privatization of public goods/services. To give a very brief summary of the developments since WWII inspired by my reading of David Harvey's The Enigma of Capital : privatization became important once western economies 'matured', because of how this meant that there were ever fewer (obvious) opportunities for growth. And secondly because, once more and more people started getting degrees, there was an explosion in the number of people who were "trained" (only) for middle/upper management positions; for who there was fairly little demand in public institutions, probably because workers had decent unions/voice, so that the people who ran those places couldn't easily justify managerial metastasis and the taking away of job-related autonomy (to create demand for "decision-makers") by creating cultures of institutionalized distrust (via yammering about the importance of "accountability"). (Though the latter was/is still an issue, it gets worse the more neoliberalized the organizational mode gets, because of neoliberalisms implicit (rational-actor) misanthropic world view.) Those developments strike me as separate from the more narcissistic ( professional class/meritocratic-reasoning )-related forms of corruption/grift/etc. that you discuss above, though.

Foppe, August 24, 2016 at 4:44 pm

(To clarify, Harvey doesn't talk about professionalization; that's just me combining observations made by Graeber with those made by Tom Frank in Listen, Liberal .)

Lambert Strether Post author , August 24, 2016 at 4:50 pm

Graeber, or Harvey? The Harvey book looks interesting.

Foppe, August 24, 2016 at 5:22 pm

Harvey's book is great; as for Frank & Graeber, I was thinking of Graeber's remarks about what he (in Debt) calls the crisis of inclusion (which he's also talked about elsewhere, e.g. in the Army of Altruists essay in Revolutions in Reverse ). Graeber there (as I assume you recall) only talks about the fact that those who don't belong to what Frank calls the professional class (and those who self-identify with them), only have the army and the church open to them if they wish to pursue goals other than accumulating money/power; yet the higher-ed explosion must've also had enormous consequences for the supply of people with managerial and similar training. But I only started pondering that question recently, after reading Frank woke me up to the obvious.

petal, August 24, 2016 at 4:28 pm

Ugh can we tack The World Bank's Jim Kim(former Dartmouth pres) on there, too?

Lord Koos, August 24, 2016 at 4:37 pm

How about Cooper Union president Jamshed Bharucha - who managed to screw up the school's endowment that had been in place since 1859. Check out the movie "Ivory Tower".

Lambert Strether Post author , August 24, 2016 at 4:51 pm

See here .

Fool, August 24, 2016 at 4:38 pm

NYU is a school run by money, and it's so transparent that for a board populated by billionaires, run by a press-shy guy who helped a lot of them become billionaires, that they prop up the flamboyant Sexton's supposed fundraising abilities and "imperial" presidency. Fortunately for Sexton and NYU, he's paid enough money to take the press's lashings like a good boy.

But surely such a mediocre pedant isn't the mastermind behind the bloated, technocratic, real estate development company and vanity project (which also offers classes, which are taught by #publicintellectuals).

Lambert Strether Post author , August 24, 2016 at 4:54 pm

New York real estate is a clean business, right? No story there….

Michael Fiorillo, August 24, 2016 at 6:47 pm

NYU: a real estate development company with a tax-exempt higher education subsidiary.

relstprof, August 24, 2016 at 7:41 pm

http://columbiaspectator.com/spectrum/2016/04/07/concerned-residents-push-back-against-jts-uts-plans-sell-property-developers

Carolinian, August 24, 2016 at 5:43 pm

Pam Martens has written several posts at Wallstreetonparade talking about NYU's corruption, connections to Wall St, and Jack Lew. Don't have links handy but easy to Google.

Anon, August 24, 2016 at 6:37 pm

I would like to point out that Chancellors Linda Katehi (UC Davis)and Nicholas Dirks (UC Berkeley) have both recently resigned under pressure from UC Top Honcho Janet Napolitano. It seems Administrator transgressions (impunity and self-dealing) are finding its way into the "sunlight".

relstprof, August 24, 2016 at 6:44 pm

Good stuff. Really looking forward to future posts.

Knute Rife, August 24, 2016 at 8:56 pm

Some people starting up can get "small loans" of $1,000,000 from the old man and have those kinds of resources to fall back on if they flop. The other 99.99% of us? Not so much. How is this innovation dogma supposed to work for those of us who can't buy our way into the Creative Class?

[Aug 25, 2016] Trump University Was a Massive Scam

Aug 25, 2016 | www.nationalreview.com
Mitt Robmey

Yes, Trump University Was a Massive Scam

Many people believe that higher education is a de facto scam. Trump University, Donald Trump's real-estate institution, was a de jure one.

First thing first, Trump University was never a university. When the "school" was established in 2005, the New York State Education Department warned that it was in violation of state law for operating without a NYSED license. Trump ignored the warnings. (The institution is now called, ahem, "Trump Entrepreneur Initiative.") Cue lawsuits.

Trump University is currently the defendant in three lawsuits - two class-action lawsuits filed in California, and one filed in New York by then-attorney general Eric Schneiderman, who told CNN's New Day in 2013: "We started looking at Trump University and discovered that it was a classic bait-and-switch scheme. It was a scam, starting with the fact that it was not a university."

Trump U "students" say the same. In his affidavit, Richard Hewson reported that he and his wife "concluded that we had paid over $20,000 for nothing, based on our belief in Donald Trump and the promises made at the [organization's] free seminar and three-day workshop." But "the whole thing was a scam."

In fact, $20,000 is only a mid-range loss. The lead plaintiff in one of the California suits, yoga instructor Tarla Makaeff, says she was "scammed" out of $60,000 over the course of her time in Trump U.

How could that have happened? The New York suit offers a suggestion:

'The free seminars were the first step in a bait and switch to induce prospective students to enroll in increasingly expensive seminars starting with the three-day $1495 seminar and ultimately one of respondents' advanced seminars such as the "Gold Elite" program costing $35,000. At the "free" 90-minute introductory seminars to which Trump University advertisements and solicitations invited prospective students, Trump University instructors engaged in a methodical, systematic series of misrepresentations designed to convince students to sign up for the Trump University three-day seminar at a cost of $1495.'

The Atlantic, which got hold of a 41-page "Private & Confidential" playbook from Trump U, has attested to the same:

'The playbook says almost nothing about the guest speaker presentations, the ostensible reason why people showed up to the seminar in the first place. Instead, the playbook focuses on the seminars' real purpose: to browbeat attendees into purchasing expensive Trump University course packages.'

To do that, instructors touted Trump's own promises: that students would be "mentored" by "handpicked" real-estate experts, who would use Trump's own real-estate strategies.

But according to the New York complaint, none of the instructors was "handpicked" by Trump, many of them came from fields having nothing to do with real estate, and Trump "'never' reviewed any of Trump University's curricula or programming materials." The materials were "in large part developed by a third-party company that creates and develops materials for an array of motivational speakers and seminar and timeshare rental companies."

Furthermore, Trump's promises that the three-day seminar ($1,495) would include "access to 'private' or 'hard money' lenders and financing," that it would include a "year-long 'apprenticeship support' program," and that it would "​improve the credit scores"​ of students were empty.

Those empty promises are the subject of a new series of anti-Trump ads by superPAC American Future Fund. According to Bob, "I never heard from anybody about giving me a list of hard-money lenders". Kevin, another Trump U "student," says Trump University "ruined" his credit score. And according to Sherri, a single mother who participated in Trump U: "It was all supposedly supervised by Donald Trump, run by Donald Trump. All of it was just a fake."

In fact, Sherri isn't alone. No student ever met the Donald. Despite hints from Trump University instructors that Trump was "going to be in town," "often drops by," or "might show up," he never did. As Matt Labash recounted in The Weekly Standard: "At one seminar, attendees were told they'd get to have their picture taken with Trump. Instead, they ended up getting snapped with his cardboard cutout." Bob, above, had such an "opportunity".

There could be many more ads to come. The New York lawsuit alone represents some 5,000 victims.

Meanwhile, Trump - who maintains that Trump University was "a terrific school that did a fantastic job" - has tried to bully his opponents out of the suit. Lawyers for Tarla Makaeff have requested a protective order from the court "to protect her from further retaliation." According to court documents, Trump has threatened to sue Makaeff personally, as well as her attorneys. He's already brought a $100 million counterclaim against the New York attorney general's office.

But it's not working. Trump himself will have to take the witness stand in San Diego federal court sometime during the election season - and because of the timeline of the cases, a "President Trump" would be embroiled in these suits long after November.

Meanwhile, if there is any doubt that Trump U was designed to be a scam, The Atlantic puts that to rest with a few other choice tidbits from that "Private & Confidential" playbook used by Trump presenters:

'Every university has admission standards and Trump University was no exception. The playbook spells out the one essential qualification in caps: "ALL PAYMENTS MUST BE RECEIVED IN FULL." Basically, anyone with a valid credit card was "admitted" to Trump University. . . . If a member of the media happened to approach the registration table, Trump staffers were instructed not to talk to him or her under any circumstance. "Reporters are rarely on your side and they are not sympathetic," the playbook advises.'

And: At one point, the playbook advises Trump staffers: "If a district attorney arrives on the scene, contact the appropriate media spokesperson immediately." Sounds legit.

Read more at: http://www.nationalreview.com/corner/432010/trump-university-scam

[Aug 25, 2016] If shock market crashes we will get Trump in November, otherwise probably Hillary

Aug 25, 2016 | jessescrossroadscafe.blogspot.com
This market looks precarious. It may continue on higher as long as real, versus manufactured, volume remains unusually low.

There are enough corporate buyback programs and sovereign entities, including central banks, willing to buy US equities at these levels. The general public and institutions seem to be sitting this one out.

I suspect that when an event of sufficient magnitude or type occurs, as they do from time to time, a slide will be triggered, and the wash and rinse of the general public, their pensions and their savings, will begin once again.

The longer this goes on, the broader the set of events that can trigger the unlikely slide of consequence seems to grow.

Still, an outright crash would favor the orange-haired presidential contender, and not the poster child for the financial establishment. So that may be an unlikely bet to make before November. They seem to be going all out to sustain the unsustainable.

This is exciting only if you can see the tensions growing beneath the surface, which is dullsville to the casual observer to say the least. I have to admit I have been growing jaded on this nonsense of late. But a whiff of Autumn is in the air, and after many a Summer, dies the swan.

So let's see what happens.

Have a pleasant evening.

[Aug 24, 2016] Good jobs disaappered and middle class had shruk dramatically in the USA

Notable quotes:
"... That said, what I believe is needed in the USA is a doubling down on Corporate Boards of Directors and CEOs to create a crisis, an American intervention, if you will, that demands companies bring back the idea that Profits alone are not all that matters. Serving the Nation you are born in, raised in, educated in, and then making a profitable income from certainly needs to be focused in on. ..."
"... An additional factor in the financial woes of the falling middle class is the changing demographics here in the US - the growing numbers of single mothers, who are far more likely to struggle financially than a two income household. I make no judgment regarding how people form their family units, but life is especially hard for single mothers. ..."
"... Its even more difficult for journalists in Guardian. They have to destroy chances of only candidate addressing inequality and climate change (Bernie), completely surrender their integrity to corporations, lament over those issues post factum, and yet be paid miserably only in hundreds of thousands for such colossal betrayal of humanity. Its worth at billions to actively participate in destroying future of your kids. Or is it? ..."
"... We need a new Federal Minimum Wage, and the wealthiest need to start paying up. Trump claims that business in the US pay the highest tax rate. That's just not true. I'm not talking about putting the burden on small business, but the multi-nationals and Wall Street. ..."
"... And we can blame Billary and Hussein for it. Their "free-trade" decisions, along with their shameful endorsement of open-borders, have lowered wages for everyone, except for financiers. Interestingly, it was those who've suffered the brunt of the elites' decisions who voted for Britain to leave the EU. Ironically, those who professed to stand for the middle and lower classes, revealed their hypocrisy when they joined the Mandarins in opposing for Britain to leave the totalitarian EU. ..."
"... Like the Trojans fearing present-giving presents, so should the working man loath the elites who promised to have their best interests at heart. That is the same promise communism gave the workers, only to turn on and enslave them. Today the workers don't stand a chance: the Marxists and bankers are on the same side sneering at the working classes who are demeaned as being racist, jingoistic xenophobes. ..."
"... An article in Forbes that explains why Obamacare is a scam. ObamaCare Enriches Only The Health Insurance Giants and Their Shareholders ..."
"... I agree with you that he never did. Obama is a corporatist and globalist. If you think Obamacare is bad wait until his trade deals are past. He sold Americans out for the profits of multinational corporations. Hillary will continue his work. I understand the true meaning of his words now. ..."
"... The US middle class has been disintegrating for decades as inequity grows ..."
"... Clinton is in hiding. I can't find her in the Guardian today. She is a habitual liar and the whole world has all the evidence it needs. All of her promises are bullshit. Bernie has been right the whole time and he is smart not to endorse. Bernie has always known what she is and Bernie's supporters have no reason to support her. ..."
"... It means she is corrupt, dishonest, and unqualified to be anything but an inmate. ..."
"... the middle class has been decimated.. This financial category is only about 35% of was it was in the early 70's.. additionally the definition of middle class has changed drastically as well.. believe it or not your middle class if your earn more than 50k a year!.. this is part of the reason we are as a nation borrowing a trillion dollars a year.. when will the silenced majority wake up and start voting and stop spending on products that are vastly over priced. ..."
"... My kid had a persistent tummy ache. Doc said intestinal blockage; take him to the ER immediately. Seven hours and one inconclusive CAT scan later, he's home again with symptoms unchanged. Two days later the pain went away. Cost: $12,000 with about $10,000 covered by union health insurance. So that's at least $2,000 out of pocket to me for seven hours in hospital, zero diagnosis and zero relief from symptoms. Medicine as a criminal enterprise? So what? Who's gonna stop it? The press? The law? ..."
"... I sympathize. I also agree with you. The US medical system is criminal. It is cruel, discriminatory, ruthless, often ineffective, and often incompetent. The only reason the administrators ("health" maintenance corporations) aren't in jail is because they use some of their obscene profits to buy Congress -- which passes laws like Obama's ACA or Bush's big Pharma swindle. I have no idea what to do about it though -- maybe if everyone refused to pay their premiums and medical bills, the money managers would notice. A sort of strike. ..."
"... SIngle-payer is the answer. Of course, the insurance companies and big pharma use scare tactics to stop that from happening. They talk about government waste, completely ignoring their own waste. They ignore the billions of dollars that they skim off of the top each year before applying any money for actual medical care. Wake up, people. Medical care should be run by the government or non-profit organizations, not by for-profit corporations. ..."
"... Despite the financial situation in middle-and lower income families that has been steadily declining under the past 8 years of the Obama administration, most in that group will support Hillary and propagate the Same problems for 4 more years. They stand no hope unless they break from the knee-jerk support of the "Democratic" Party. ..."
"... So they should support Donald Trump and the conservative party? Last time I checked raising taxes on the middle class while lowering taxes on the rich didn't really help anyone but the rich. The Republican party never gave two shits about middle and lower class, and there's no point believing they will start now. ..."
"... Isn't choosing to have three children very selfish if you cannot support them financially. People always find someone else to blame. ..."
"... "Race" card!!?? Where the hell did I mention anything about race or are you really as dumb as your reply suggests. Plus, you don't require a test to decide if you can afford children or not. It basic family planning. It's people like you in society that has the place in a mess with your "blame anyone but meself attitude" If I'm considered horrible, at least I'm not totally dumb and irrisponsible like you. ..."
"... Bill Maher recently (July 1, 2016; Overtime) editorialized about the state "laboratories" where new ideas are tested and evaluated. Maher compared the divergent fates of California and Kansas plus Louisiana. ..."
"... It's interesting. According to my household income I'm in the "upper" tier for the DC-metro region. But it really doesn't feel that way. Even those of us who make a good income are more and more stretched. In comparison to most of the country, I am well off. I own a car, just bought a house, I can afford to go out to eat a couple times a week. But, I even get to the end of the month with only $100 in the bank. That's because other downward pressures on pay aren't taken into account, such as student debt. My expensive undergraduate and graduate education didn't come cheap, and while that education affords people higher pay, if you end up taking less of it home. It kinda equals out. ..."
"... Sometimes my husband and I think about having kids, and then we realise that even with our good paying jobs, we can't afford day care in our area. I get paid the most, so I can't quit my job but if my husband quit to care for a child, we would really be strapped. Can I really be considered an upper tier household if I can't afford to have kids? If I can't afford to go on vacation once a year? If I haven't bought new clothes in two years? If I have no savings and a freak medical bill might just tip me over the edge? ..."
"... Suggest you give Andrew Tobias' book a read to think outside the box a good education often constructs for us: https://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0544781937?ie=UTF8&ref_=asap_bc ..."
"... You can cut student debt in the U.S. by attending a good community college for two years and then transferring to a state university. Most kids are unwilling to do this--no frats or prestige in community colleges! ..."
"... Beginning in the 1970s, a majority of the middle class began to resent the taxation needed to continue support for these liberal policies, and they began to vote for conservative politicians who promised to remove them as they "only helped the undeserving poor." White racism played a role in this as the lower class was invariably portrayed in political speeches and advertising as group of lazy black people. ..."
"... No, it was created in response to the Bolshevik revolution, in particular, to that genius who said "Let's just shoot the royal family and be done with this." ..."
"... All of these things have come under attack since the USSR fell apart, probably on that exact day. And who overthrew the USSR? Overeducated middle class, not the poor or the rich. Who was Occupy Wall Street, Arab Spring... the recent protests against the French labor law tightenings, ALL the middle class. ..."
"... The greatest threat to governments has, and always will be, from within. And this threat is from the middle class, almost exclusively. Therefore, we are to be crushed and controlled tightly ..."
"... funny how this media outlet didn't publish these types of reports while the primary was hot. It was all "Hilary is inevitable and supporting Bernie is supporting Trump" type garbage. ..."
"... Probably he means to say Americans habitually ask new acquaintances, "What do you do for a living?" That's absolutely a query about income and personal worth, though slightly disguised, and it's a question I have never widely encountered anywhere else in the world, nor while living overseas the last ten years. ..."
"... This article is extremely dishonest. First, it claims that she has 'three other jobs'. Second, she has children, for whom she presumably gets child support. So what's her *real* income? ..."
"... When those in poverty or on the verge of it are single mothers, you tend to wonder if there are some other issues as well. I don't recall a time in American history where a single mother of several children could take care of herself when completely on her own. ..."
"... I teach in inner city schools. There are so many problems, money is one of them but all the money won't solve the problem of poor learning attitudes, disaffection, poor discipline and nonexistent work ethic . ..."
"... A lot of the students get no discipline at home and their parents don't expect them to learn anything. They are resistant to the whole process of focus on new knowledge , absorb, drill, recall , deploy newly learned thing. ..."
"... I don't know what solution there is to this. My nieces and nephews did well in school, studied hard, and went on to university. They didn't do drugs, rape or be raped, and stayed away from unsavory kids. BUT--they went home to two parents every night, a father and mother, which I think would have made them successful at school no matter what their income. ..."
"... The US economy isn't competitive anymore. It started with the labor cost being too high, so factories moved out. Then the entire supply chain moved out. Now the main consumer market is also moving out. Once that is gone, we will have no more leverage. ..."
"... The US education is good, but students are lazy, undisciplined, and incurious. In silicon valley, more than 75% of highly paid technical personnel are foreign born. Corporations making money with foreign workers here and abroad, on foreign markets. Taking these away and you will see the economy crash. ..."
"... Labor costs were too high. Have some more kool-aid. The elite didn't want labor to have any bargaining power whatsoever . They wanted to dictate the terms to labor believing that they were the only ones who should have any say in matters. The elite wanted to maximize their profits at the expense of their own citizens. They wanted slave labor . They wanted powerless people to dance to their tune. How could an advanced nation's labor possibly compete with slave labor . ..."
"... Sadly ..... thee isn't any hope for these people in the foreseeable future . Their economic decline has been happening for quite some time now and shows no sign of abating whatsoever . The economic foundations of their lives have been steadily pulled out from under them by the financial elite and their subservient political cultures , the Republican and Democratic Parties . The Republicans have never really given a damn about them and the Democrats have long abandoned them . These poor people of North Carolina are adrift on a sinking raft on easy ocean of indifference by the political cultures of America . To those in power , they don't exist . They don't count . They don't matter . ..."
"... The trend in the U.S, along with almost every other major nation in the world over the past 35 years has been to exclusively serve the interests of the financial elite and only their needs . All sense of fairness , justice and decency have been totally discarded . ..."
"... Tax breaks after tax breaks , tax shelters , free movement of capital , etc., etc. would sum up the experience of the financial elite over the past 35 years . They have become incredibly wealthy now and are still not satisfied . They want more . They want it all . They want what little you have and their political servants which help them get . ..."
"... Political discourse pertaining to the plight of those like these folks in North Carolina is all window dressing . In the end , you can be certain that it will amount to nothing . Just like it has for decades now . The financial elite are in control and they are not going to give any of that control up . As a matter of fact , they are going to tighten their grip . They will invent crisis to have their agendas imposed upon an increasingly powerless and bewildered public . They will take advantage of every naturally occurring crisis to advance their agenda . ..."
"... The problem is the job exporting American elite class. NAFTA was an economics, political, and social experiment with all the downside on the former, mostly lower middle class. Non-aligned examination of the available data shows how disastrous NAFTA has been to America's bubbas. Thanks to Bush 41 and Bill Clinton. WTO was all Bill. Of the mistakes Obama has made TPP would be the worst. The question is, really, do we favor global fairness (an even playing field for all earth's peoples) and a climate-killing consumerist world, or our own disadvantaged (courtesy of our financial and political elite) citizens. Not an easy choice. Death by poison or hanging. No treaty can benegotiated fairly in secret. ..."
"... The tragic irony is that the anger against rule by the 1% manifests in things like support for Trump, a typical example of the greed and excess of the 1%. Americans need to question outside their desperately constrained paradigms more. It will help focus their anger more strategically, and possibly lead to solutions. Don't hold your breath, the inequality gap is accelerating the wrong way. ..."
"... I think the US is heDing for trouble. It is the middle class that maintains civil society and gives a sense of hope. This is an interesting open letter by a zillionaire to his peers warning them what happens without a string middle class. A thought provoking read. http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014 ..."
"... The elite of the USA have done exactly what the Romans did and what the Pre-Revolutionary French did.... drain the lower classes while enriching themselves. "Taxes are for little people" is not just a pithy quote, it has become the reality as the elite rig the system so they benefit and the lower classes pay. They need to wake up or they will get exactly what the Romans Got (collapsed empire) or the French got (Violent Revolution). Wake up America! It is time to choose your side in the class war the elite continue to execute while telling us there is no "Class War" - you can't pull yourself up by your boot straps while they are pulling the rug out from under you! ..."
"... My wife used to employ recent graduates from Georgetown University with poli. sci., psychology, sociology degrees, to stack books for $10/hr. It took them on average 2-3 years, before finding work in their field. ..."
"... Education is NOT about finding a job! It's about learning ways to seek wisdom and rationality, and to assimilate (not deny) new knowledge throughout your life--and that's exactly what's lacking in the US! Our schools are factories to turn out standard robots to be used by the owners of this country, whether they practice law or flip burgers. ..."
Aug 24, 2016 | www.theguardian.com
HopeWFaith, 9 Jul 2016 16:04

I was stumped by the very idea that someone has the $money, the time, the energy to go out and study for 3 bachelor degrees. This woman doesn't look old enough to have had time to get 3 degrees.

That said, what I believe is needed in the USA is a doubling down on Corporate Boards of Directors and CEOs to create a crisis, an American intervention, if you will, that demands companies bring back the idea that Profits alone are not all that matters. Serving the Nation you are born in, raised in, educated in, and then making a profitable income from certainly needs to be focused in on.

Why on earth isn't Main Stream Media doing this, along with all of CONGRESS and the President? What is their excuse? Even if you brought back all the robotic jobs to US soil, you would also end up bringing a large number of administrative jobs back here, too, just to keep up with the business at hand. It is critical that we rebuild our infrastructure, yet we see NO immediate or Long-term plans to do so. How can we, without the support of the Business Class to support the whole nation through Paying their Taxes to the US Tax System? There is no excuse that will do, in my book. Profits to the top tier need to be STOPPED so long as businesses are going outside of the United States Borders. Period.

SluethforTruth , 2016-07-07 12:39:08

Typical of what's happening around the world. The trillions of dollars lurking in tax havens is the reason why economies are stagnating. Money makes the world go round, however detouring to the Cayman Islands, the flow stops and the poverty begins. Spend locally and reject multi national corporations. Give your local communities a chance to prosper,
Snaggletooth718 , 2016-07-07 12:40:07
An additional factor in the financial woes of the falling middle class is the changing demographics here in the US - the growing numbers of single mothers, who are far more likely to struggle financially than a two income household. I make no judgment regarding how people form their family units, but life is especially hard for single mothers.
saladbowl , 2016-07-07 12:46:52
"The 2016 presidential race has superficially been dominated by talk of this declining middle. First from Bernie Sanders, then Hillary Clinton and even Donald Trump's promise to Make America Great Again"

"And even"??? What a laugh. Even if you hate Trump its clear The Guardian has written every article possible to prevent his rise and they have failed miserably. Hillary amd Sanders are dominating conversatiin. Trump is by far.

One thing us for sure. 15 million illegals and thousands more every month is not making the middle class more secure.

They are shrinking, and you expect them to tolerate "Make America Mexico Again"? In these times?

Donor money is ruining the country. They hate Trump because he doesnt need these arrogant donors who have never heard "no" their whole lives.

peonyrose , 2016-07-07 12:47:08
If ordinary people have to work three jobs to make ends meet, then you need to say that wages in the US are too low.
Slavenko Sucur -> peonyrose , 2016-07-07 14:29:52
Its even more difficult for journalists in Guardian. They have to destroy chances of only candidate addressing inequality and climate change (Bernie), completely surrender their integrity to corporations, lament over those issues post factum, and yet be paid miserably only in hundreds of thousands for such colossal betrayal of humanity. Its worth at billions to actively participate in destroying future of your kids. Or is it?
SusanPrice58 , 2016-07-07 12:53:59
It isn't immigration that costing jobs - it's employers who know they can pay these people less for their work. We need a new Federal Minimum Wage, and the wealthiest need to start paying up. Trump claims that business in the US pay the highest tax rate. That's just not true. I'm not talking about putting the burden on small business, but the multi-nationals and Wall Street.
RaceOfStalwarts -> SusanPrice58 , 2016-07-07 14:06:02
You can see in western Europe at the moment that a minimum wage desn't work without a whole host of other protective legislation. A minimum wage doesn't reach to the self employed, and it doesn't prevent the use of flexible or non-guaranteed hours contracts making use of a larger than is required labour pool. Not to mention the black market / cash in hand trade.
BritainFirst2016 , 2016-07-07 12:55:21
And we can blame Billary and Hussein for it. Their "free-trade" decisions, along with their shameful endorsement of open-borders, have lowered wages for everyone, except for financiers. Interestingly, it was those who've suffered the brunt of the elites' decisions who voted for Britain to leave the EU. Ironically, those who professed to stand for the middle and lower classes, revealed their hypocrisy when they joined the Mandarins in opposing for Britain to leave the totalitarian EU.

Like the Trojans fearing present-giving presents, so should the working man loath the elites who promised to have their best interests at heart. That is the same promise communism gave the workers, only to turn on and enslave them. Today the workers don't stand a chance: the Marxists and bankers are on the same side sneering at the working classes who are demeaned as being racist, jingoistic xenophobes.

pawildcat -> BritainFirst2016 , 2016-07-07 13:51:28
You realize most of the votes in favor of NAFTA were Republican and most against were Democratic, right? You know that "free trade" has been an item in the Republican platform (and increasingly the Democratic one) for years before Clinton and Obama were ever in office, right? Know some elementary facts about U.S, politics before posting nonsense.
daWOID -> Ed Thurmann , 2016-07-07 13:47:41
Ed Thurmann: it's not teacher-bashing, it's just the old recycled "black family values" spiel that was introduced into the poverty debate in the '60s by Daniel Patrick Moynihan. Moynihan, not so BTW, is Hillary Clinton's intellectual hero. So you can expect a hell of a lot more of these cliches after January of next year.
Juillette , 2016-07-07 13:26:03
An article in Forbes that explains why Obamacare is a scam. ObamaCare Enriches Only The Health Insurance Giants and Their Shareholders

Robert Lenzner , CONTRIBUTOR
I'm trying to wise up 300 million people about money & finance

So far in 2013 the value of the S& P health insurance index has gained 43%. Thats more than double the gains made in the broad stock market index, the S & P 500. The shares of CIGNA are up 63%, Wellpoint 47% and United Healthcare 28%. And if you go back to the early 2010 passage of ObamaCare, you will find that Obama's sellout of the public interest has allowed the public companies the ability to raise their premiums, especially on small business, dramatically multiply their profits and send the value of their common stocks up by 200%-300%. This is bloody scandalous and should be a cause for concern even as the Republican opponents of the bill threaten the close-down of the government.

We warned you back on December4, 2009 in my blog " The Horrendous Truth About Health Care Reform" that the Obama White House was handing a " free ride for the health insurance industry" that would allow premium hikes of 8%-10% a year by CIGNA, Humana HUM +1.56%, Aetna AET +0.45%, UnitedHealth Group UNH +0.58% and Wellpoint, and as well a $500 billion taxpayer subsidy, a half trillion dollars without any requirement that the health insurers had to spend the subsidy on medical care. Several US Senators including Jay Rockefeller of West Virginia spoke to me openly of the outrageous sellout being foisted on the nation's uninsured citizens.

At the time I wrote, Goldman Sachs research operation estimated that the 5 giants would increase profits by 10% a year from 2010 to 2019, sending their shares up an average of 59%. In truth, the shares of CIGNA and some others are up a multiple of several times since the contest was resolved by a very tight vote in early 2010. One startling reason for this amazing performance was that Obama took off the table "proposals to significantly reduce health care costs" as the giveaway in getting the bill through, according to Ron Susskind's best-selling book ,"Confidence Men," which I wrote about in a blog on September 24, 2011. ( "Obama's Incoherent Policy-Making") Some 3 years later, UnitedHealthCare Group(UNH) was rewarded by being added to the elite list of the Dow 30 industrials.

I understood belatedly that there would have been no Affordable Care Act of 2010 if the White House had not given into demands from the giant profit-making health insurance companies. Had he not done so, I am being assured that there would have been no bill passed, a priority goal that Obama promised in his 2008 Presidential campaign. How the profits have risen so impressively requires further investigation as the bill is meant to limit the profits earned to 20% of the revenues.

One of the other downsides to the supposed reform bill was the surprisingly unfair treatment of small business owners who faced even larger potential premiums for their employees. It has been the fear of these higher health costs that has resulted in the overwhelming trend toward hiring part-time employees whom the employers need not offer healthcare insurance.

So much for the reforms embedded in the mis-labeled Affordable Care Act of 2010. It may not die a bloody demise this month, but it is certain to be reformed itself, let's hope for the benefit of the 300 million, not just the millions of lucky shareholders who may have understood the ramification of ObamaCare, which was to multiply the profits of five giant insurance companies, just as the major bank oligopoly was rewarded by the federal bailouts and Fed monetary policy.

Juillette -> Andrew Kac , 2016-07-07 14:16:34
I agree with you that he never did. Obama is a corporatist and globalist. If you think Obamacare is bad wait until his trade deals are past. He sold Americans out for the profits of multinational corporations. Hillary will continue his work. I understand the true meaning of his words now.

"We are a nation of immigrants" meaning he prefers cheap illegal labor when 46 million Americans live in poverty. Soon cheap foriegn will be unlimited and legal in the US with worker mobility. Even for professional jobs. Can you imagine competing with foreigners in the US who make 30 cents an hour? It's depressing really. Here are some of the highlights of the TPP that will throw Americans further into poverty.

http://www.citizen.org/TPP

Also research Tisa.

barbkay , 2016-07-07 13:49:42
My heart goes out to these beleaguered families. In the late 1970s/80s I held down a full-time job in DC and freelanced feverishly to make ends meet. I lived below the official poverty line in an expensive, yet thoroughly crappy, flat. That recession-riddled era of energy chaos, leading into Reagan's 'voodoo' economics regime (the risible idea of 'trickle-down', the US becoming the world's largest debtor), was another hot mess.

The US middle class has been disintegrating for decades as inequity grows, thanks in large part to the poor governance of Republican presidents (Nixon's stagflation, the disastrous shifts under GW Bush).

FugitiveColors , 2016-07-07 13:53:22
Clinton is in hiding. I can't find her in the Guardian today. She is a habitual liar and the whole world has all the evidence it needs. All of her promises are bullshit. Bernie has been right the whole time and he is smart not to endorse. Bernie has always known what she is and Bernie's supporters have no reason to support her.

Her disapproval ratings will top Trump now. The voters are now going to show her what the meaning of is, really is.

It means she is corrupt, dishonest, and unqualified to be anything but an inmate.

MasonInNY -> FugitiveColors , 2016-07-07 16:08:57
Her disapproval ratings are high, but not up with Trump's and they never will be. You can vote for Jill Stein, the Green Party candidate, in November. Or Gary Johnson, the Libertarian. But Bernie will not be a candidate, and he will eventually endorse Clinton -- after he is sure he's won certain concessions in the Democratic platform. That's your reality in July 2016, not in February.
brianBT , 2016-07-07 14:16:48
the middle class has been decimated.. This financial category is only about 35% of was it was in the early 70's.. additionally the definition of middle class has changed drastically as well.. believe it or not your middle class if your earn more than 50k a year!.. this is part of the reason we are as a nation borrowing a trillion dollars a year.. when will the silenced majority wake up and start voting and stop spending on products that are vastly over priced..Turn off your phone, stop buying all but essentials.. we need to force prices down until we complain and start voting with our dollars little will change
MtnClimber -> ojeemabalzitch , 2016-07-07 15:37:37
What about the millions of married couples with kids..when the parents lose their jobs? That happens very frequently. Should we take the kids away? Are you suggesting that poor people not be allowed to have children?

Then we have the religious nutcases that are against contraception and abortion, yet demonize poor women for having children.

NYbill13 , 2016-07-07 14:34:59
My kid had a persistent tummy ache. Doc said intestinal blockage; take him to the ER immediately. Seven hours and one inconclusive CAT scan later, he's home again with symptoms unchanged. Two days later the pain went away. Cost: $12,000 with about $10,000 covered by union health insurance. So that's at least $2,000 out of pocket to me for seven hours in hospital, zero diagnosis and zero relief from symptoms. Medicine as a criminal enterprise? So what? Who's gonna stop it? The press? The law?

Hahahahahahahaha.

ojeemabalzitch -> NYbill13 , 2016-07-07 14:58:00
So? If your car breaks down it will cost a fortune to repair. Same if you have to replace the roof on your house. Life ain't fair, is it?
MiltonWiltmellow -> NYbill13 , 2016-07-07 15:14:26

Medicine as a criminal enterprise? So what? Who's gonna stop it? The press? The law?

I sympathize. I also agree with you. The US medical system is criminal. It is cruel, discriminatory, ruthless, often ineffective, and often incompetent. The only reason the administrators ("health" maintenance corporations) aren't in jail is because they use some of their obscene profits to buy Congress -- which passes laws like Obama's ACA or Bush's big Pharma swindle. I have no idea what to do about it though -- maybe if everyone refused to pay their premiums and medical bills, the money managers would notice. A sort of strike.

MtnClimber -> MiltonWiltmellow , 2016-07-07 15:35:28
SIngle-payer is the answer. Of course, the insurance companies and big pharma use scare tactics to stop that from happening. They talk about government waste, completely ignoring their own waste. They ignore the billions of dollars that they skim off of the top each year before applying any money for actual medical care. Wake up, people. Medical care should be run by the government or non-profit organizations, not by for-profit corporations.

Corporations have only one goal...to make as much money as possible for themselves. Health care is just a necessary nuisance.

Ykuos1 , 2016-07-07 14:37:56
Despite the financial situation in middle-and lower income families that has been steadily declining under the past 8 years of the Obama administration, most in that group will support Hillary and propagate the Same problems for 4 more years. They stand no hope unless they break from the knee-jerk support of the "Democratic" Party.
Sam Ahmed -> Ykuos1 , 2016-07-07 14:45:51
So they should support Donald Trump and the conservative party? Last time I checked raising taxes on the middle class while lowering taxes on the rich didn't really help anyone but the rich. The Republican party never gave two shits about middle and lower class, and there's no point believing they will start now.
KMdude , 2016-07-07 14:43:46
This article mentions Latonia Best and her three children. Is there a Mr Best around? It has always been tough to raise a family on the salary of a single parent.

The breakdown of the American family is a probably the biggest reason for the supposed struggles of the middle class. People have to take responsibility for their lives.

Elephantmoth -> KMdude , 2016-07-07 14:56:57
Sure, because every misfortune can be blamed on the individual. You have no idea why Mr Best isn't around so please spare us your moralising.
rebeccazg -> KMdude , 2016-07-07 14:57:51
traditionally, the middle class had the guy going out to work, and his wife staying at home to look after the kids. Once children are in school and childcare is reduced, I don't see how a woman working and raising her kids alone, is any more expensive than a man supporting himself, his wife and their kids.

It used to be possible. It used to be doable. wealth disparity ind income inequality mean that is no longer the case, at least certainly not for the average middle class. In the UK anyway, it's now a sign of wealth. This has nothing top do with the family and everything to do with income disparity.

Liverpooljack1 , 2016-07-07 15:02:53
Isn't choosing to have three children very selfish if you cannot support them financially. People always find someone else to blame.
MtnClimber -> Liverpooljack1 , 2016-07-07 15:27:08
Ah. I was waiting for some "bubba" to pull the race card. Congratulations. Maybe we should make everyone take a test to prove that they can afford children. No children for poor people. Nice.

You are a horrible person.

Liverpooljack1 -> MtnClimber , 2016-07-07 16:05:10
"Race" card!!?? Where the hell did I mention anything about race or are you really as dumb as your reply suggests.
Plus, you don't require a test to decide if you can afford children or not. It basic family planning. It's people like you in society that has the place in a mess with your "blame anyone but meself attitude" If I'm considered horrible, at least I'm not totally dumb and irrisponsible like you.
Quesera -> Donald Inks , 2016-07-07 16:00:32
$3,333.33 is actually not a lot of money to raise a family of four on. Let's do some math, shall we?!

Taxes: $800 (rough estimate)
Health Insurance: I'm going to estimate $300 because she probably has dependents on her coverage and that's what I paid one dependent a while back.
Car: I'm going to estimate $150. My car payment is $300, but let's say she got a cheaper, used car.
Rent: Let's say $1,000/month (I did a quick search and found that this seemed like a good price for a two bedroom)
Bills: Let's round up to $150/month for gas, electricity, water, sewage
Food: Let's say she spends $80/week, so roughly $320 a month (you know, she's a thrifty shopper)

All of that leaves about $313 left for gas, phone, college tuition, maybe internet and cable at home. I don't know how she does it.

MiltonWiltmellow , 2016-07-07 15:04:56

Worst of all was the town of Goldsboro – one of three metropolitan areas in North Carolina at the bottom of the national league table.

North Carolina, Michigan, Kansas, Louisiana, Oklahoma ... more ...

Sad stories in states run by Republicans. Toxic rivers, shootings, poisoned tap water, bankruptcy, daily earthquakes ...

Bill Maher recently (July 1, 2016; Overtime) editorialized about the state "laboratories" where new ideas are tested and evaluated. Maher compared the divergent fates of California and Kansas plus Louisiana.

Kansas is going bankrupt under the Republican governor and legislature, the Louisiana economy is a basket case thanks to Republican Bobby Jindal while just a few years ago, under Republican Arnold Schwarzenegger, California was billions in debt.

In California they threw out the Republicans, put Democrats in charge, raised taxes on the rich and voila -- now with a surplus, California is ranked as the sixth largest economy in the world:

Only five countries produced more last year than California: the U.S., China, Japan, Germany and the United Kingdom.

So -- North Carolina with fouled rivers, a collapsing middle class, discriminatory laws -- or a thriving California?

Goldsboro remains far from the sort of economic catastrophe seen in parts of the rust belt, but these are signs of financial stress that are hard to ignore. The strain on the middle class across much of the country may not have gone unnoticed by politicians, but locals here fear there is little talk of the investment in skills, high-paying jobs and civic infrastructure needed to arrest the slide.

Republican shills will have to admit -- finally that Republican policies ruin lives, ruin the economy and ruin the environment. Truth appears more powerful than slogans and slanders. Who knows? They might even acknowledge climate change.

Profhambone -> MiltonWiltmellow , 2016-07-07 15:47:30
I believe it is the wars and needs of the military-industrial-banking complex that sap far too much from the economy. Both parties are guilty of supporting them.
ehmaybe -> MiltonWiltmellow , 2016-07-07 15:52:52
North Carolina with fouled rivers, a collapsing middle class, discriminatory laws -- or a thriving California?

Since 2013, North Carolina has the fastest GDP growth of any state. The NC economy is not in bad shape. This lady lives in one of the poorest areas in the state, she should move 45 minutes north to thriving Raleigh or Durham - the population in that area is booming, they need teachers.

The dumping of coal ash into the Dan river was a corporate crime, not a policy decision. Neither party is responsible for criminal actions by individuals or corporations, that's just silly. (The republicans have been too lax in holding Duke Energy to account but the damage done is not a political issue)

HB2 is a disgrace but the legislature is in the process of correcting it and the Governor is likely to lose the election in the fall which bodes well for anti-HB2 people. Don't forget that California voters voted to ban gay marriage not even 10 years ago. It's not a paradise of wealth and enlightenment, no place is.

Voltaire21 , 2016-07-07 15:16:57
Why should we feel sorry for the American middle class they have elected for all the misery that has befallen them!

If America was a fascist state I could sympathise but it's not. Americans have let their social rights being eroded by a mendacious and cunning establishment.

One good example of how Americans don't give a shit is the very expensive wars in Iraq and Afghanistan which have cost gazillions to the US taxpayer and not a whimper from the US population.

If one can compare that to the Vietnam war which created its own critical cinema genre, protest songs, large demonstrations etc...you know that todays average Americans responsibility for the mess they find themselves in is non existent. They just bend over and take it and have little whine about it from time to time.

Quesera -> Voltaire21 , 2016-07-07 15:48:37
What about the people that didn't vote for the "misery" as you call it?

What about the fact that whichever way you vote in the US you're screwed?

And I don't know about you, but you must not know many Americans. The number of my friends who have been tear gassed during marches against the Iraq war flies in the face of your argument. Have you, yourself, even uttered a whimper against it?

Bardolphe , 2016-07-07 15:20:20
I will support proper child-support and healthcare and everything that can be done to make this woman's life easier and secure her kids' futures BUT

Three kids is a LOT for two people to handle, let alone one.

To paraphrase Lady Bracknell, to raise one child alone may be regarded as a misfortune; to attempt to raise three looks like carelessness. To try to raise three alone in the United States is MADNESS.

I live in the USA. I'm in a stable long-term relationship. I don't make much money. I can't afford kids.

2 + 2 = 4

Poor me. I don't say I have a right to kids because I need them or I have so much love to give or blah, blah, blah. I just can't. Not here. This is a cruelly individualistic country. It is built to serve those who serve themselves. Namely, the young, healthy, smart, motivated and single. There is no political foundation or tradition of altruism here. Maybe back in Ireland where there's a system to support me and some healthcare and family. Not here. Madness.

Happyduckling -> Bardolphe , 2016-07-07 15:36:41
But she's got the kids now. What is she supposed to do? Hand them back to someone? If she and the childrens' father had them when life was looking more stable and she didn't have to work 4 jobs to make ends meet, she can hardly be blamed now for their existence.

You are living in the now and choose not to have children because you feel you can't afford them. However, in the future, you may find that you can afford them, and therefore choose to conceive. If your circumstances change after that and you are no longer able to afford to care for them without working excessive hours and living in poverty, there's not a lot you can do other than get on with it. No point blaming her for something that is irreversible.

Bardolphe -> OinkImSammy , 2016-07-07 15:41:05
That is not my point and you absolutely know it is not my point.

Stop pretending that birth control doesn't exist. It exists.

Quesera , 2016-07-07 15:42:11
It's interesting. According to my household income I'm in the "upper" tier for the DC-metro region. But it really doesn't feel that way. Even those of us who make a good income are more and more stretched. In comparison to most of the country, I am well off. I own a car, just bought a house, I can afford to go out to eat a couple times a week. But, I even get to the end of the month with only $100 in the bank. That's because other downward pressures on pay aren't taken into account, such as student debt. My expensive undergraduate and graduate education didn't come cheap, and while that education affords people higher pay, if you end up taking less of it home. It kinda equals out.

Sometimes my husband and I think about having kids, and then we realise that even with our good paying jobs, we can't afford day care in our area. I get paid the most, so I can't quit my job but if my husband quit to care for a child, we would really be strapped. Can I really be considered an upper tier household if I can't afford to have kids? If I can't afford to go on vacation once a year? If I haven't bought new clothes in two years? If I have no savings and a freak medical bill might just tip me over the edge?

There's something very, very wrong. How rich do you need to be before you don't feel like you're struggling?

Scott Plantier -> Quesera , 2016-07-07 15:55:19
Thanks for the great post, but whatever will be, will be, unless you get in front of it and plan.

Suggest you give Andrew Tobias' book a read to think outside the box a good education often constructs for us: https://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0544781937?ie=UTF8&ref_=asap_bc

Spunky325 -> Quesera , 2016-07-07 20:31:21
You can cut student debt in the U.S. by attending a good community college for two years and then transferring to a state university. Most kids are unwilling to do this--no frats or prestige in community colleges!
Nash25 , 2016-07-07 15:48:56
The huge middle class in the USA was created by the liberal economic polices of the 1930s, which were designed to help the lower class.

Beginning in the 1970s, a majority of the middle class began to resent the taxation needed to continue support for these liberal policies, and they began to vote for conservative politicians who promised to remove them as they "only helped the undeserving poor." White racism played a role in this as the lower class was invariably portrayed in political speeches and advertising as group of lazy black people.

What the middle class did not understand was that their continued existence depended on these liberal programs, as most of the benefits went to the middle class, not the lower class as they assumed. As the liberal programs began to disappear, so did the economic security of the middle class.

One would think they would have figured all of this out by now, but they have not, and they continue to vote for conservatives.

pbalrick -> DrSallyWinterton , 2016-07-07 17:21:27
No, it was created in response to the Bolshevik revolution, in particular, to that genius who said "Let's just shoot the royal family and be done with this." When that happened, the ruling class got scared, and said "OK, minimum wage, vacation, sick pay, 40 hr work week, no child labor, great schooling, etc"

All of these things have come under attack since the USSR fell apart, probably on that exact day. And who overthrew the USSR? Overeducated middle class, not the poor or the rich. Who was Occupy Wall Street, Arab Spring... the recent protests against the French labor law tightenings, ALL the middle class.

The greatest threat to governments has, and always will be, from within. And this threat is from the middle class, almost exclusively. Therefore, we are to be crushed and controlled tightly.

Scott Plantier , 2016-07-07 15:49:55
" squeezed middle class tell tales of struggle " Too bad they voted for the big squeeze herself -- Bernie could have set them free from the path of exploitation she has planned for them immediately after her election by imposing the TPP upon the very fools who will elect her. Stop watching the Kartrashians and read about actual policy implications for your family and especially your children, if you had, none of you would have supported Clinton.
pbalrick -> Scott Plantier , 2016-07-07 17:15:29
funny how this media outlet didn't publish these types of reports while the primary was hot. It was all "Hilary is inevitable and supporting Bernie is supporting Trump" type garbage.
biglio , 2016-07-07 15:58:38
Education in the US...oh boy....

I lived in Pittsburgh for 8 years, being European I sent them to public school...well, after a year in which my six years old son was suspended twice for running around at lunchtime when he shouldn't (six years old tend to do that), numerous recesses where they were put in front of a TV (we cannot send them outside, insurance doesn't cover if they get hurt and we got sued before), and notes from teachers full of spelling mistakes......I had to send them to private school perpetuating a cycle of poor people in public system and rich people (or middle class as i was at the time) to private schools....

i don't know what needs to be done to fix the issue but it's the whole society that is really divided along money lines and race lines and inequality is getting worse. But money trumps everything, the US is the only place int he world where it's not considered unpolite to ask people :"what's your worth?" meaning how much you make, what are your assets, etc.....instilling in people a mentality of self worth based on money and consequentially a cutthroat environment where the more you have the more you are worth, so at the top they squeeze the lower end, to make more money but also because they think they are really not that worthy....its a perverse cycle that history taught us doesn't bring any good because at a certain point the poor reach a critical mass that will just revolt......I'm waiting for that, good luck...

biglio -> ehmaybe , 2016-07-07 16:24:09
I'm afraid my friend we disagree on that, excellent public schools are exceptions, there are some but they are a minority (International statistics on education quality validate that), I don't live in the US anymore but travel a lot there for business (at least 20 times a year). As for the worth question I had it asked to me quite a few times and kind of everywhere, maybe it's unpolite, I believe it's unpolite, but it happens regularly and only in the US (let me rephrase, in the rest of the world it wouldn't be considered unpolite, that's too mild of a term, it would be considered inconceivable). Said that I hope the US makes it and the "American Values" that you talk about prevail, but i am afraid those values have changed and being substituted by less noble ones...
jsaralan -> ehmaybe , 2016-07-07 16:33:16
Probably he means to say Americans habitually ask new acquaintances, "What do you do for a living?" That's absolutely a query about income and personal worth, though slightly disguised, and it's a question I have never widely encountered anywhere else in the world, nor while living overseas the last ten years. The question is so ingrained, though, that Americans who ask it don't think of it as a query about net worth. They do, however, react with overflowing respect toward those who answer in certain ways, and something akin to sympathy to those who answer in other ways. All my foreign friends have noticed it, and all think it's weird.
DrSallyWinterton , 2016-07-07 16:45:46
This article is extremely dishonest. First, it claims that she has 'three other jobs'. Second, she has children, for whom she presumably gets child support. So what's her *real* income?
Michael Williams , 2016-07-07 17:50:39
I do not know how things stand today, but I went to school in the UK and in the US in the 70s and 80s.

The schools in the UK were so superior to the US that I thought I had been placed in a remedial class when I returned to the States.

At the time, I would have bet that the average 16 year old in the UK was better educated than most American college graduates.

I would like to hear what you all think.

biglio -> Michael Williams , 2016-07-07 18:22:25
Agree, I did my last year of high school in the US, in North Carolina of all places, in a top private school, i was a middling student in Europe with flashes of brilliance in some subjects but definitely far from the top of the class. When I arrived (it was in the 80s) I didn't speak English. Well, I graduated with high honors int he top 5% and got my high school diploma, honestly without having to study that much, school was not totally comparable but definitely way less challenging.
eastbayradical -> biglio , 2016-07-07 18:33:35
Contrary to conventional wisdom, a lot of private schools in the United States are severely lacking in the rigor department. This is even true for many--not all--private schools that cater to well-to-do families.
LelouchVIBrittania , 2016-07-07 18:13:10
When those in poverty or on the verge of it are single mothers, you tend to wonder if there are some other issues as well. I don't recall a time in American history where a single mother of several children could take care of herself when completely on her own.

I know of single mothers who are doing fine, but they employed and are also being helped by siblings and parents who already have some wealth and free time to take care of the child. Maybe the issue is the fact that these people are having kids at the wrong time or without enough thought. Divorce rates are incredibly high in the US, and the percentage of children who have non-birth parents is very high as well. What this all means is that the USA isn't teaching its citizens about having kids and the responsibility.

The USA is also not teaching men and women about birth control, or about being holding potential partners to higher standards (and I don't mean looks). A lot of people in the USA are too shallow and focus too much on aesthetics over reliability and now we have single mothers with fathers who refuse to pay child support at all costs. There are too many problems with the USA, but I feel that personal hygiene and responsibility with sexual partners should be on the top.

PlatosNave , 2016-07-07 18:35:03
I teach in inner city schools. There are so many problems, money is one of them but all the money won't solve the problem of poor learning attitudes, disaffection, poor discipline and nonexistent work ethic .

A lot of the students get no discipline at home and their parents don't expect them to learn anything. They are resistant to the whole process of focus on new knowledge , absorb, drill, recall , deploy newly learned thing.

Americans have a religious reverence for individualism and learning new things is a humbling experience and many people don't like it. Sure the adults bang on about education but they aren't serious about it. They think all you need is to spend more money , not do any actual work.

Spunky325 -> PlatosNave , 2016-07-07 20:18:08
The problems in the inner city are so intransigent that I doubt anything can fix it. I have three friends, all dedicated teachers, who taught in inner city schools in New Jersey and the stories they have told me make my mind reel: a mother who punched a teacher (and gave her a concussion) who "disrespected" her kid (by failing him, deservedly, in algebra), 15-year-olds who had pagers so their pimps could call them, children who had five brothers and sisters--all with different fathers. You couldn't make this stuff up.

I don't know what solution there is to this. My nieces and nephews did well in school, studied hard, and went on to university. They didn't do drugs, rape or be raped, and stayed away from unsavory kids. BUT--they went home to two parents every night, a father and mother, which I think would have made them successful at school no matter what their income.

thomasmccabe , 2016-07-07 18:49:47
The Pew survey you cited noted that "...the share living in middle-income households fell from 55% in 2000 to 51% in 2014. Reflecting the accumulation of changes at the metropolitan level, the nationwide share of adults in lower-income households increased from 28% to 29% and the share in upper-income households rose from 17% to 20% during the period." In other words, most of the decline in the middle class was due to their moving into the upper class.

The article was mostly about a declining rural area. The Guardian grinding its usual axes and reaching the conclusion it intended to reach?

NoSerf , 2016-07-07 19:24:28
Middle class job death inflicted by cronie capitalism entertained by the political establishment (examples): Private equity is not scrutinized by anti-trust legislation, buys any company and sends jobs overseas. Cronie supporters of politicians get help in that some industry gets indicted (e.g. more or less entire coal industry) or regulated into oblivion, for fake reasons, so that cronie (solar panel) company gets subsidies. Of course, the latter goes under, no company on IV survives without IV. Banks get bailed out, others not. GM gets bailed out, to maintain jobs, then outsources.

The old members of middle class are not tolerated by our government and the cronies. Who is tolerated as middle class is any kind of civil servant, and new immigrants. Revenge from 2 sides. Or call it cultural revolution Mao style: Take their habitat.

Curtis Gomez , 2016-07-07 19:49:24
Growing up in the SF Bay Area during the 70's there was a large disparity in academics between schools even in the same district. At 11 years old the school district was rezoned and the new school that I attended had much lower standards. So much so, that I came home the very first day and complained to my mother that I had been assigned to a class for slow learners. Being so bored, my grades started to drop. At 13 years, I tested out of mathematics and eventually tested out of high school altogether and joined the military.

There my intelligence was appreciated (believe it or not). The military provided a valuable work ethic and training in technology that have provided a decent career and lifestyle since. It's too bad that America can't seem to provide adequate learning to the vast majority.

jacknbox , 2016-07-07 19:54:54
The US economy isn't competitive anymore. It started with the labor cost being too high, so factories moved out. Then the entire supply chain moved out. Now the main consumer market is also moving out. Once that is gone, we will have no more leverage.

The US education is good, but students are lazy, undisciplined, and incurious. In silicon valley, more than 75% of highly paid technical personnel are foreign born. Corporations making money with foreign workers here and abroad, on foreign markets. Taking these away and you will see the economy crash.

Then you have Hillary wanting to sub divide a rapidly diminishing pie, and Trump wanting to return to 1946. Good luck to them both.

enodesign -> jacknbox , 2016-07-08 01:25:43
Get real .

Labor costs were too high. Have some more kool-aid. The elite didn't want labor to have any bargaining power whatsoever . They wanted to dictate the terms to labor believing that they were the only ones who should have any say in matters. The elite wanted to maximize their profits at the expense of their own citizens. They wanted slave labor . They wanted powerless people to dance to their tune. How could an advanced nation's labor possibly compete with slave labor .

This is the same argument that slave owning , southern plantation owners used to fight against the freeing of slaves . They to said that they would not longer be competitive and the overall economy would suffer .

Are you telling us that an economy needs slave labor to exist ?

enodesign , 2016-07-07 20:02:24
Sadly ..... thee isn't any hope for these people in the foreseeable future . Their economic decline has been happening for quite some time now and shows no sign of abating whatsoever . The economic foundations of their lives have been steadily pulled out from under them by the financial elite and their subservient political cultures , the Republican and Democratic Parties . The Republicans have never really given a damn about them and the Democrats have long abandoned them . These poor people of North Carolina are adrift on a sinking raft on easy ocean of indifference by the political cultures of America . To those in power , they don't exist . They don't count . They don't matter .

The trend in the U.S, along with almost every other major nation in the world over the past 35 years has been to exclusively serve the interests of the financial elite and only their needs . All sense of fairness , justice and decency have been totally discarded .

Tax breaks after tax breaks , tax shelters , free movement of capital , etc., etc. would sum up the experience of the financial elite over the past 35 years . They have become incredibly wealthy now and are still not satisfied . They want more . They want it all . They want what little you have and their political servants which help them get .

Political discourse pertaining to the plight of those like these folks in North Carolina is all window dressing . In the end , you can be certain that it will amount to nothing . Just like it has for decades now . The financial elite are in control and they are not going to give any of that control up . As a matter of fact , they are going to tighten their grip . They will invent crisis to have their agendas imposed upon an increasingly powerless and bewildered public . They will take advantage of every naturally occurring crisis to advance their agenda .

There will be an end to their abuse , greed and domination until one day when everything changes . The day when people have had enough . When people can't take it any more . History has demonstrated this fact so often before . The mighty do fall . They always fall ..... but their fall is nowhere to be seen at this time .

There is going to a great deal more pain for average folk before things get better .

A Presidential election featuring Donald Trump and Hillary Clinton is clear evidence of this fact.

Hopefully , these two bottom feeding , utter human failures represent the bottom of the barrel but I doubt if they do .

Good luck to the good folks of North Carolina and countless others like them .... they / we / myself are going to need it .

enodesign -> DrSallyWinterton , 2016-07-08 01:18:46
On the contrary .... it's money that the elite have not paid out in wages .

It's money that the elite have illegally hidden from the taxman . It's money the the elite need to pay for the infrastructure that makes it possible to do business in the first place . It's money that has been made from insider trading and backroom deals . It's money from the wealth that labour has basically created in the first place .

It's money that contributes to the social maintenance on a safe , civil society . It's money that the wealthy do not need .... they have all they could ever need now .

It is money that when distributed fairly keeps money in motion creating it's transfer into additional hands which further circulates that money creating even more spending by people and the consumption of goods and services which result in the creation of even more wealth .

Static capital kills economies .

I know that the elite like to think that they are the exclusive ones to create wealth but wealth creation is the marriage between capital and labour . You can have all of the capital in the world but without labour transforming it into greater wealth it can not possibly grow .

If anyone is guilty of stealing money it is the elite who steal from the economy causing the economy's ill health .

The last 35 years are more than testimony to this fact .

Economies are dying wherever the elite have gotten their way .

The elite are the real killers of wealth and economies . Just look at any economy in the world throughout history where the elite had all of the wealth to themselves . Their economies are highly dysfunctional and their societies are full of social problems and crime .

This is an indisputable fact .

Greed kills wealth development .

Wealth development is directly tied to the well being of labour which allows for mass consumption of goods and services .

You would have to be a complete idiot not to see this fact .

So my good doctor .... the money in any given economy really belongs to everyone , not just the greedy elite .

You need to get a real perspective instead of constantly eyeing you own pile of wealth .

Matt C , 2016-07-07 20:32:07
so the woman chose to have 3 daughters, is now choosing to foot the bill for their college education, and wants me to feel sorry because she has to work her ass off to do all these things? how about this.... don't have children you can't afford. a little personal responsibility in one's life goes a long, long way.
Bajanova -> Matt C , 2016-07-07 21:03:04
She is taking personal responsibility! She is working!
DrSallyWinterton , 2016-07-07 20:35:37
Everybody here is debating the life of a person who probably doesn't even exist.
JudeUSA -> DrSallyWinterton , 2016-07-07 23:20:41
Go to the website of the school she works for. Her picture is on the website and the NC pay for a 3 year teacher is about 40K. I think she exists.
jecoz , 2016-07-07 20:59:28
We need to redefine middle class. I grew up middle class. We had one TV. Not a lot of clothes. Took short, cheap vacations. Had no credit cards. Our lives were perfectly enjoyable. Many people here in the US live way beyond their means.
Turrialba -> jecoz , 2016-07-07 21:36:59
We piled into the station wagon and headed out on short trips in the region. We visited historic sites and were enriched by the experience. None of this $1000s on the trip to Disneyland. We didn't feel deprived or entitled.
jacknbox -> jecoz , 2016-07-07 23:26:14
The key is not money but optimism. America is still richer, cleaner, and better run than most other places. But the gap is rapidly closing. Scaling back the spending would not help here. It would only further reduce the drive.
skwawshbug , 2016-07-07 22:08:36
As a North Carolinian, there are two major issues. One, the right to bear arms and also, teacher tenure and working conditions. Republicans have already taken away tenure from my younger colleagues, but as an older teacher, I still have mine. Secondly, democrats want to take away gun rights on the federal level, but state dems are usually more pro-gun in the conservative state.

SO for me, I will vote for a democratic state government and a republican federal government. I will be proudly putting a Roy Cooper bumper sticker on my car. But due to the peaceful liberals, I would be afraid to put a TRUMP sticker on my car because of recent violence against Trump supporters.

DrSallyWinterton -> skwawshbug , 2016-07-07 22:30:35
Teachers who can't be thrown out, no matter how incompetent they are, are a major reason why the US educational system is in such a mess.
Shillingfarmer , 2016-07-07 22:15:18
The problem is the job exporting American elite class. NAFTA was an economics, political, and social experiment with all the downside on the former, mostly lower middle class. Non-aligned examination of the available data shows how disastrous NAFTA has been to America's bubbas. Thanks to Bush 41 and Bill Clinton. WTO was all Bill. Of the mistakes Obama has made TPP would be the worst. The question is, really, do we favor global fairness (an even playing field for all earth's peoples) and a climate-killing consumerist world, or our own disadvantaged (courtesy of our financial and political elite) citizens. Not an easy choice. Death by poison or hanging. No treaty can benegotiated fairly in secret.
SocratesP , 2016-07-07 22:30:13
The tragic irony is that the anger against rule by the 1% manifests in things like support for Trump, a typical example of the greed and excess of the 1%. Americans need to question outside their desperately constrained paradigms more. It will help focus their anger more strategically, and possibly lead to solutions. Don't hold your breath, the inequality gap is accelerating the wrong way.
DrSallyWinterton , 2016-07-07 22:40:20
Fake, fake fake. A woman with $40k and three children would *not* be paying 1/3 of her income in tax. This woman does *not* live on $40k net or gross - she has three other jobs. And her name looks *very* made up.
Bronwyn Holmberg , 2016-07-07 22:41:01
I think the US is heDing for trouble. It is the middle class that maintains civil society and gives a sense of hope. This is an interesting open letter by a zillionaire to his peers warning them what happens without a string middle class. A thought provoking read. http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014
Chris Westcott , 2016-07-07 22:41:01
The elite of the USA have done exactly what the Romans did and what the Pre-Revolutionary French did.... drain the lower classes while enriching themselves. "Taxes are for little people" is not just a pithy quote, it has become the reality as the elite rig the system so they benefit and the lower classes pay. They need to wake up or they will get exactly what the Romans Got (collapsed empire) or the French got (Violent Revolution). Wake up America! It is time to choose your side in the class war the elite continue to execute while telling us there is no "Class War" - you can't pull yourself up by your boot straps while they are pulling the rug out from under you!
veloboldie , 2016-07-07 22:41:01
My wife used to employ recent graduates from Georgetown University with poli. sci., psychology, sociology degrees, to stack books for $10/hr. It took them on average 2-3 years, before finding work in their field. I keep telling my kids you need to earn a degree that has a skill for life and will always be in demand, i.e. doctor, dentist, vet, engineer, scientist. Additionally, include work oversees in your career.
Ardnas1936 -> veloboldie , 2016-07-07 22:41:01
Education is NOT about finding a job! It's about learning ways to seek wisdom and rationality, and to assimilate (not deny) new knowledge throughout your life--and that's exactly what's lacking in the US! Our schools are factories to turn out standard robots to be used by the owners of this country, whether they practice law or flip burgers.

I was lucky that my parents were born and raised before that happened. They went to what used to be called "country schools"--my dad to a 1-room schoolhouse. Some of the so-called "knowledge" was patriotic trash, serving only the rich elites, but they learned to be sturdy and to think for themselves, so I was lucky and learned a lot at home. Without parents who practice the empathetic, rational morality needed in a democracy, all the jobs in the world--especially if most are for flipping burgers--won't save this dreary country.

nataliesutler -> veloboldie , 2016-07-07 22:41:01
You make an excellent point. Thinking about your life rather than just going for a crip major in college would be an excellent way NOT to wind up stacking books for $10 an hour with a degree. I can't count the number of my kids friends who select communications majors, or sociology or women's studies and then are completely surprised when there are no jobs demanding their educational background. What is it that they think they will be qualified to do after college?
mikegood , 2016-07-07 22:41:01
From the article.... "Some lucky families saw themselves promoted to the upper income bracket." Here in a nutshell we see the author's underlying worldview. Getting to the upper income bracket has nothing to do with effort. Rather it's the result of luck. It's something that is done to you by an outside force.

[Aug 24, 2016] Trump campaign is a similar to Brexit crusade by grassroots activists against "big banks and global political insiders". by those who feel disaffected and disenfranchised

Notable quotes:
"... Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton. ..."
"... "I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it." ..."
"... It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom. ..."
www.theguardian.com

...the British politician, who was invited by Mississippi governor Phil Bryant, will draw parallels between what he sees as the inspirational story of Brexit and Trump's campaign. Farage will describe the Republican's campaign as a similar crusade by grassroots activists against "big banks and global political insiders" and how those who feel disaffected and disenfranchised can become involved in populist, rightwing politics. With Trump lagging in the polls, just as Brexit did prior to the vote on the referendum, Farage will also hearten supporters by insisting that they can prove pundits and oddsmakers wrong as well.

This message resonates with the Trump campaign's efforts to reach out to blue collar voters who have become disillusioned with American politics, while also adding a unique flair to Trump's never staid campaign rallies.

The event will mark the first meeting between Farage and Trump.

Arron Banks, the businessman who backed Leave.EU, the Brexit campaign group associated with the UK Independence party (Ukip), tweeted that he would be meeting Trump over dinner and was looking forward to Farage's speech.

The appointment last week of Stephen Bannon, former chairman of the Breitbart website, as "CEO" of Trump's campaign has seen the example of the Brexit vote, which Breitbart enthusiastically advocated, rise to the fore in Trump's campaign narrative.

Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton.

"I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it."

"I am being careful," he added when asked if he supported the controversial Republican nominee. "It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom."

[Aug 23, 2016] How Abusive Employers Combined With Job Insecurity Lead to Suicides

Notable quotes:
"... During the 15 months that I worked at Pitt, I felt the brunt of this lady's abuse. She'd call me into the office, launch into a blistering tirade, and I would sit there, stunned. And, to her, that was another cause for anger. Why was I just sitting there and not reacting? ..."
"... The authors fail to get to the real fundamentals of this phenomenon. The two ends of the spectrum that they delineate can be housed under a single umbrella, that of neoliberalism. And it is obvious that neoliberalism can kill. And Durkheim would have agreed readily that ideas can kill, and not just via suicide. ..."
"... Give yourself a break inode_buddha. Thirty years ago, you, and myself as well, made a rational decision as to what direction to take. At the time, construction and the associated trades were honourable and respectable. A decent living could be made, and a future was in sight. Neo-Liberalism has, since then, destroyed most things that benefited anyone other than the criminal management classes. Humanity has had to stand up and fight for decency and equality throughout history. ..."
"... I have to tell you, as a small business owner myself, this "regulations are burdensome" argument is a crock. Lobbyists in DC learned decades ago that the best way to put a sympathetic face on their efforts to get waivers for big businesses is to have small business owners act as their mouthpieces. And there are enough extreme libertarians everywhere that it's not hard to find someone to screech that the regulations he is subject to are horrible irrespective of how much a burden they really are. ..."
"... "Perhaps this world is another planet's hell." – Aldous Huxley. Yes, it is definitely. Perhaps pretty soon they will start strip search employees when they come to work. ..."
"... Increasing numbers of suicides are one outcome of these environments. But as the writers point out, there are a number of other symptoms associated with these toxic workplaces, none good. They range from physical and mental health issues, to various forms of addiction, burnout, and secondary effects on employees' personal lives and those of their family members or partners. ..."
"... I agree that neoliberal ideology, globalization, and the basic structures of our debt-based economy all play a key role in enabling the intentional development of these organizational environments. ..."
"... I believe the roots of the problem lie in a broader and deeper systemic failure. ..."
"... market failure ..."
"... This article highlights suicide, but drug and alcohol abuse are just as much a result of poor employment outcomes as suicide and for the same reasons. ..."
Aug 22, 2016 | naked capitalism

Yves here. It's hardly a secret that employers have become more abusive towards employees because they can get away with it. The difficulty of finding new employment, particularly for mid and senior level jobs, combined with the fact that most workers (even comparatively well paid ones) are only a paycheck or two away from financial desperation, means bosses have tremendous leverage over workers. And more and more firms embrace coerciveness as a virtue. In the past, it's more often taken the form of cultishness, which is a very effective business model, as Goldman and Bain attest, but more recently, outright mistreatment is becoming common. For instance, Amazon has so successfully cultivated a "culture of fear" that t he overwhelming majority of employees cry at work .

Note the claim in the article about elevated suicide rates at Apple supplier Foxconn is contested; some contend that statistically, its rate of suicides is no higher than for other employers. However, many of the dorms apparently had mesh canopies to prevent suicides, so one wonders if direct comparisons are apt.

By Sarah Waters, a Senior Lecturer in French Studies, University of Leeds and Jenny Chan, a Departmental Lecturer in Sociology and China Studies, University of Oxford. Originally published at The Conversation

A Paris prosecutor recently called for the former CEO and six senior managers of telecoms provider, France Télécom, to face criminal charges for workplace harassment. The recommendation followed a lengthy inquiry into the suicides of a number of employees at the company between 2005 and 2009. The prosecutor accused management of deliberately "destabilising" employees and creating a "stressful professional climate" through a company-wide strategy of "harcèlement moral" – psychological bullying.

All deny any wrongdoing and it is now up to a judge to decide whether to follow the prosecutor's advice or dismiss the case. If it goes ahead, it would be a landmark criminal trial, with implications far beyond just one company.

Workplace suicides are sharply on the rise internationally, with increasing numbers of employees choosing to take their own lives in the face of extreme pressures at work. Recent studies in the United States, Australia, Japan, South Korea, China, India and Taiwan all point to a steep rise in suicides in the context of a generalised deterioration in working conditions.

Rising suicides are part of the profound transformations in the workplace that have taken place over the past 30 years. These transformations are arguably rooted in the political and economic shift to globalisation that has radically altered the way we work.

In the post-war Fordist era of industry (pioneered by US car manufacturer Henry Ford), jobs generally provided stability and a clear career trajectory for many, allowing people to define their collective identity and their place in the world. Strong trade unions in major industrial sectors meant that employees could negotiate their working rights and conditions.

But today's globalised workplace is characterised by job insecurity, intense work, forced redeployments, flexible contracts, worker surveillance, and limited social protection and representation . Zero-hour contracts are the new norm for many in the hospitality and healthcare industries , for example.

Now, it is not enough simply to work hard. In the words of Marxist theorist Franco Berardi, "the soul is put to work" and workers must devote their whole selves to the needs of the company.

For the economist Guy Standing, the precariat is the new social class of the 21st century, characterised by the lack of job security and even basic stability. Workers move in and out of jobs which give little meaning to their lives. This shift has had deleterious effects on many people's experience of work, with rising cases of acute stress, anxiety, sleep disorders, burnout, hopelessness and, in some cases, suicide .

Holding Companies to Account

Yet, company bosses are rarely held to account for inflicting such misery on their employees. The suicides at France Télécom preceded another well-publicised case in a large multinational company – Foxconn Technology Group in China – where 18 young migrant workers aged between 17 and 25 attempted suicide at one of Foxconn's main factories in 2010 (14 of whom died ).

The victims all worked on the assembly line making electronic gadgets for some of the world's richest corporations, including Samsung, Sony and Dell. But it was Apple that received the most criticism, as Foxconn was its main supplier at the time.

... ... ...

upstater , August 22, 2016 at 10:36 am

One of our son's best friends from high school was a funny, bright kid that got a BS/MS in Computer Science from Rochester Institute of Technology (RIT) a few years ago. He did his first coop at a software firm in Boston that dealt with electricity demand management.

Then he went to work for Apple, first as a coop then as an employee.

Last April the poor kid killed himself in a conference room at Apple's HQ .

By the time his name was announced to the media, everything about him on Facebook, LinkedIn, etc had disappeared. They scrubbed him off the internet. We don't know if he posted anything before his death, but our son said his pages were pretty generic for a 25 year old.

Let it suffice to say something went terribly wrong in the libertarian paradise of Silicon Valley, really just a ritzier version of FoxConn. Having known him through high school and occasional visits thereafter, one never would have thought such an end would have been possible.

RIP, Ed.

Swendr , August 22, 2016 at 2:10 pm

It's happening on the job, at school, and damn near any other social institution where the stakes can be ratcheted up in intensity. Suicide is one end of the spectrum of dysfunction. Going postal is another. Our elites don't like wet work much, so they find other ways to get rid of the undesirables. I doubt they planned it this way, but isn't it sweet that all you have to do is stop being fake-nice as a boss and the problem takes care of itself?

nobody , August 22, 2016 at 11:40 am

It's not only corporations, of course, that have problems with endemic abuse and need to be taking responsibility, nor is the issue restricted to institutions where profits take precedence über alles. Here is the link for the site "Academia Is Killing My Friends," which is described in the "About" section like this:

I am a final year PhD student in the Social Sciences. Last year a fellow PhD student committed suicide after being harassed by a lecturer. I got angry and made this site. This site is a response to the cultures of violence, fear and silence I have witnessed and experienced in my academic community. Sexual harassment, mental illness and unpaid labor are the accepted and expected norms. Abusive academics are well known and yet remain in the community. We are powerless and afraid of backlash, unemployment and failure. All of this gets worse as public spending is cut and universities become increasingly neoliberal institutions. This site is a 'fuck you' to the silence and fear. It is, I hope, a space where we can share our stories of abuse, exploitation and suffering in academia.

There are now 104 stories and counting. An excerpt from a recent post (#103):

I started out an idealistic and hopeful student. Worked to pay for college, good grades, got into a good PhD program. Worked hard, had a good mentor, published, moved on to postdoc. I thought that I could keep working hard, publish and move into some reasonable career trajectory. Right?

Well, we all know why we're here. I can't even go into the details. It's a familiar story – sexism, racism. Abuse by an advisor, with nowhere to turn. Rampant discrimination and harassment. When I looked for help (from the wrong people, apparently), I was told to suck it up, work harder. Constant financial worries. Every little setback used up my savings. I got sick and never really recovered… stress and overwork guaranteed that. I was good at living modestly, but that wasn't enough to sustain me. Now, I'm just trying to pick up the pieces. I feel floored by the lack of opportunities and support through most of my career. I had no idea how much a career in academia would rely on having money to begin with. I feel like this work has stolen my life away. And I'm not the only one – I know plenty of people who have had a similar experience. The best people leave early.

Worst of all, I don't even feel that I can tell my story. Nobody wants to hear it. Nobody would lift a finger to protect me from retribution. Nobody wants to address problems like this. I feel so much grief for the good I might have done in another profession, the life I could have lived. I don't know what to do with this grief.

nobody , August 22, 2016 at 12:06 pm

Where did the link go? Well, here it is:

http://academiaiskillingmyfriends.tumblr.com/

Arizona Slim , August 22, 2016 at 12:47 pm

Some of the worst abuse I ever experienced was in academia. Here's an example:

During the mid-1980s, I was on the staff of a journal at the University of Pittsburgh. My boss, the departmental librarian, must have come from the Attila the Hun School of Management, because that's how she treated people. Shortly after I started my job, I got on her bad side. I have no idea why this happened. Thirty years late, I still can't figure it out.

It may have had something to do with the introductory meeting we were supposed to have with the journal's publisher.

Well, being the good little employee that I thought I was, I had my office clock set to the correct time. I didn't know it at the time, but the library clock was 10 minutes fast. Yep, the same trick that bars pull on their customers. Getting them out the door before the official closing time.

So, I got to the library a few minutes before 9 a.m. Plenty of time to for the boss and me to walk over to the publisher's office. Bossola was SEETHING. I was LATE! Just look at that CLOCK! It was already after nine!

Over to the publisher's office we walked, and guess what. They weren't even ready for us. So we sat in the waiting area for a while.

The publisher and his staff couldn't have been nicer. The polar opposite of my boss.

During the 15 months that I worked at Pitt, I felt the brunt of this lady's abuse. She'd call me into the office, launch into a blistering tirade, and I would sit there, stunned. And, to her, that was another cause for anger. Why was I just sitting there and not reacting?

During her final tirade, when she told me to start looking for another job, I'd had enough. I told her that I was going to start looking for another city.

Well, guess who sat there, stunned.

She insisted that I didn't have to do anything THAT drastic. But my mind was made up. I was done with her, done with Pitt, and done with Pittsburgh.

Three and a half months and several wonderful bicycling miles later, I landed in Tucson, and I'm still here. Without that nasty boss, I probably wouldn't be in this wonderful city.

As for Ms. Nasty, she left Pitt and went on to become the head librarian at Chatham College, which was nearby. Small women's college. Known for its caring, friendly, and supportive environment. Ms. Nasty didn't last very long there.

And she didn't last very long at St. Michael's College in northern Vermont. I think that she was fired from that institution, but I'm not sure. Let's just say that I hope she was, because she deserved a taste of her own medicine.

Softie , August 22, 2016 at 2:55 pm

Here is a story that scared shit of Academia's organized crime ring for a little while in the early 90s.

"The University of Iowa shooting took place at the University of Iowa in Iowa City, Iowa on November 1, 1991. The gunman was Gang Lu, a 28-year-old former graduate student at the university. He killed four members of the university faculty and one student, and seriously wounded another student, before taking his own life."

https://en.wikipedia.org/wiki/University_of_Iowa_shooting

Nelson Lowhim , August 22, 2016 at 4:11 pm

Damn. Thing is I've heard this from Actuarials and docs. It's everywhere the "well, just work harder". But some of it is on the employees. None have the frame of mind to kick back, to unionize, and hard (when was unionizing ever easy?). None. All have the neoliberal view that: work hard and you'll be fine. And so when that button is pushed, they go for broke until burned out. It's that or be labeled lazy. Well, being unemployed is also an issue, but there's also the matter of having the language to fight back, to not feel guilty for working less than 100 hours a week etc.

PlutoniumKun , August 22, 2016 at 5:15 pm

I think an important point about Unions which people forget is that they provide an opportunity for people to vent and let off frustration. I've been a Union rep at various places and many times I would have people come in to have a rant about a certain manager or policy. At the end I would say 'do you want to make a formal complaint?' and the answer would be no – the person just wanted to get it off their chest in a confidential manner.

And to know that if they needed it, there was back up. Non-union places I've worked in, even good ones, lack that safety valve.

FluffytheObeseCat , August 22, 2016 at 7:14 pm

The last post on this tumblr is from February of 2016. It's been inactive for half a year. The links may be valuable however.

inode_buddha , August 22, 2016 at 12:16 pm

I'm in the process of paying a personal price for this BS as I type this, having walked off the job a few months ago. I'm not gonna drive 30 miles each way for 1/2 of what I should be making only to be treated like shit by management brown-nosers. Bad news is, I'm mid-career and not a spring chicken. Considering leaving the field altogether or doing my own startup. But if I had known then what I know now, I would have had the voice recorder app on my phone, recording everything….

thump , August 22, 2016 at 12:36 pm

Thanks for posting about the blog "Academia is Killing My Friends," but I couldn't find the link, so here it is:

http://academiaiskillingmyfriends.tumblr.com/

larry , August 22, 2016 at 12:36 pm

The authors fail to get to the real fundamentals of this phenomenon. The two ends of the spectrum that they delineate can be housed under a single umbrella, that of neoliberalism. And it is obvious that neoliberalism can kill. And Durkheim would have agreed readily that ideas can kill, and not just via suicide.

PQS , August 22, 2016 at 1:01 pm

Ugh. After twenty years in commercial construction, I thought our industry was an outlier for abuse, psychotic management, and general HR mayhem. Apparently not. Arizona Slim, I could have profiled Mrs. Nasty at any number of firms I worked for…she's not unusual.

I stay at smaller companies with good people for less money because I just can't handle the high pressure and abusive environment of Big Time Construction Firms. I also have zero interest in big projects anymore – too many psycho Owners who appear to delight in torturing the contractor as a hobby. The men I work with think I'm nuts to turn down some work. I tell them, there's no reward for it. No pot of gold at the end of the rainbow, no big promotion – just health problems and more commuting for the same old, same old.

inode_buddha , August 22, 2016 at 1:59 pm

You too? Abuse, and psycho management is why I'm considering leaving the trade altogether, too bad I've invested 30 years and a few schools into it…. but of course, nobody *made* me invest in myself and believe in the american dream /sarc

ambrit , August 22, 2016 at 2:11 pm

Give yourself a break inode_buddha. Thirty years ago, you, and myself as well, made a rational decision as to what direction to take. At the time, construction and the associated trades were honourable and respectable. A decent living could be made, and a future was in sight. Neo-Liberalism has, since then, destroyed most things that benefited anyone other than the criminal management classes. Humanity has had to stand up and fight for decency and equality throughout history.

redleg , August 22, 2016 at 8:20 pm

The decent living in the construction trades, for me anyways, has started and (so far) ended as a contract employee. I'm at the cusp of 50 and am looking at disaster if I can't find something permanent. My spouse has her dream job (that unfortunately comes with mediocre pay) so moving the fam for a job is our of the question. I'm one dropped contract away from my professional expiration date – too old for entry level, not experienced enough for management, unable to move to a better job market if such a thing existed.

But at least I paid off my student loans, so that's not hanging over my head like the sword of Damocles.

ambrit , August 22, 2016 at 2:01 pm

Living on the road, out of town, at the jobsite, etc. etc. There's a reason why so many of the Superintendents and Foremen I've encountered on big jobs drink to excess.

I've had my share of Mz/Mr Nasty bosses. The worst thing one can do to one of these persons, as I learned one afternoon, is to laugh at them when they "put you in your place." The program is going south anyway. If the wherewithall is available for a drive home, go ahead and let 'them' know you're not going to put up with abuse anymore. (Easier said than done, I'll agree, but, as long as you and yours aren't starving, why not? You'll sleep better at night. Take my word for it.)
Smaller outfits are, from my experience, easier to get along with because the manager is often the owner or family and not divorced from the ground floor experience. Reason is used instead of formula.

I used to hold the same belief about construction being the bilge of the work world. Then I worked for the USPS for almost three years. Then the dreaded Lowes Home Improvement set its avernal brand sizzling on my soul.

Ah my, what a picaresque novel all this would make.

PQS , August 22, 2016 at 3:01 pm

Picaresque novel or hilarious TV show. I've written the scripts in my head a thousand times….clueless architects, raging Owners, ridiculous Inspectors, overfed upper management/sales staff, etc. etc.

I agree that laughter is truly the best medicine in this business. As a friend once told me, "Sometimes you gotta let the crazy people be crazy."

Jim Haygood , August 22, 2016 at 8:42 pm

'what a picaresque novel all this would make"

Charles Bukowski [lowbrow NC spell checker don't know him] has covered the USPS bit.

Over to ambrit for the Lowe's sequel. :-)

ambrit , August 22, 2016 at 10:09 pm

Hmmm..

Some titles: "Faking, Inc.," "Department of Imaginary Tools," "Bargain Employee of the Month," and the annual winner, "Going Out of Business Sale: Season Three."
Since I'll need to go back to work for a few years, until my miniscule SS kicks in, I might do a Home Depot Equal Opportunity for Exploitation Edition.

(When I grow up I want to be a Day Trader! Maybe I'll take a flutter in pork bellies on the Chicago Exchange.)

Arizona Slim , August 22, 2016 at 3:51 pm

In her own strange way, Ms. Nasty had quite a positive effect on my life. As our relationship deteriorated, I started piling up the savings. I was planning my escape, even before that final tirade.

My last six weeks at Pitt were amazing. After I tended my resignation (on Friday, February 13, 1987), the whole department was impressed with how relaxed and happy I was. It was as if a different Slim had moved into my body.

Yes, there was that farewell luncheon where Ms. Nasty refused to raise her glass in a toast, but you know what? I was going to be out the door in a few hours, so I no longer cared. In fact, I found her refusal rather amusing.

What came next was even better. That pile of savings was deployed for something I really enjoyed. Long-distance bike touring! Rode thousands of miles in a little over three months! And then I settled here in Tucson!

Where I found a job similar to my Pitt job, but with a nice boss. That was my last FT job. I've been a freelancer since 1994.

So, Ms. Nasty, thanks for the motivation. And I do hope that you learned how to be nice to people who are, ahem, beneath you.

Synoia , August 22, 2016 at 1:18 pm

That's what Labor (or socialist) political parties used to do, and Corbyn's trying to re-institute in the UK.

One cannot be pro-trade (as currently defined) and pro democratic not pro citizen, not pro-labor.

The US has never permitted socialism, and prefers crony capitalism, which is actually close to fascism.

The whole defense Military Industry Complex of Government and Industry is a definition of fascism in the US. I place no regard on Ike's warning about the MIC as he did noting until the end of his reign, and then made a speech.

Roquentin , August 22, 2016 at 1:49 pm

At long last I've finally managed to get out of a job I couldn't stand after working there for nearly a decade. The pay was ridiculously low, even relative to the industry standard. Management routinely promoted narcissistic, ignorant cronies who never told them the word "no." I couldn't be happier it's finally over. They've had so much turnover in the past couple of years entire departments are composed of entirely new people. The CEO cares about nothing except looking good to the shareholders and owners, and that's pretty much the attitude from the top on down. Look good to the people with power and to hell with the rest.

I'd be surprised if the company still existed 5-10 years from now.

DarkMatters , August 22, 2016 at 2:20 pm

Soooo glad I'm retired. I was starting to see more and more of this over the last couple of decades, and it escalated as times worsened. I wish libertarians and free-marketers would contemplate the situations described here, and consider what kind of a world it would be if financial oligarchs held even more power. What hope would there be to counter this sort of abuse?

Nelson Lowhim , August 22, 2016 at 4:19 pm

This works perfectly into their view of "weaker" elements being discarded. Pretty fascist at the end of the day.

kareninca , August 22, 2016 at 7:56 pm

I wouldn't exactly call myself a libertarian (I'm not sure what I am), but I think that the libertarian response would be that if there were fewer pointless regulations people would be much more readily able to work for themselves, and not for an abusive boss. It is unbelievably hard to start a business now, even a solo one, due to regs. And I'm not talking about reasonable regs (don't dump toxins in waterways). I'm talking about regs that have been invented by big existing businesses to keep upstarts from starting.

A number of years ago there was an article about someone who tried to start a storage company in the CT/RI area and how they eventually gave up because the regs made the process insane; there's not much that's simpler than a storage company. Most small business owners I know tell me they could not start now because it has all gotten too complicated; they have been able to cobble together responses to the new regs as they go, but starting at this point would be impossible for them.

Picture what it would be like if you could look at your skill set, and go out and work for yourself without a huge amount of extremely complex taxes and paperwork. A strange thought, isn't it?

I'm not saying this would be an option for most people ( not at all ), but it does not now even exist as an escape valve. Now you have to have millions in start-up funds to start some BS company (e.g. one more stupid company that delivers food to patron's homes) that isn't actually meant to make money (it just exists to get money from investors), and you need that much to deal with the paperwork.

And, if someone wants to pop up and say "the paperwork is not so bad and complicated," please remember that you are a NC poster and are in the top ten percent of the population for ability to deal with paperwork.

Yves Smith Post author , August 23, 2016 at 5:41 am

I have to tell you, as a small business owner myself, this "regulations are burdensome" argument is a crock. Lobbyists in DC learned decades ago that the best way to put a sympathetic face on their efforts to get waivers for big businesses is to have small business owners act as their mouthpieces. And there are enough extreme libertarians everywhere that it's not hard to find someone to screech that the regulations he is subject to are horrible irrespective of how much a burden they really are.

Specifically, regarding a storage business, I can't fathom your view that storage companies should not be regulated. If I am putting my valuable stuff in the hands of someone else, I sure as hell want protection that they won't cut all the locks and run off with everything, or find more legitimate ways of stealing, like create excuses to jack up my storage costs by 10X and hold my goods hostage. And what about requiring them to have adequate fire protection and security? Even if they aren't crooks, cheap and reckless will also result in my property being stolen or damaged.

In general, entrepreneurship is way oversold in America to legitimate the bad treatment of workers: "If things are as bad as you say, why put up with it? Go start your own business!" That's ridiculous since staring your own business requires that you be both a good salesman and a good general manager, and good salesmen are almost without exception terrible managers, as anyone in Corporate America will tell you. And it's extremely hard to make partnerships work unless the principals worked together in the same company for years (ie, they grew up with the same training and rules, and so will default to the same assumptions as to how things are done). Even in consulting, I've seldom seen people who come of of different large firms work well together absent a strong organization around them.

The proof that pretty much no one should go into business for themselves is 9 out of every 10 businesses fail within three years. The percentabe is no doubt higher if you extend the time frame to five years. I've started two successful businesses in the US and one that didn't work out in Oz, but an overseas launch is much harder and it seemed too dodgy to go beyond the two years I'd invested (as in I might have made it a go had I kept on, but I decided it was more prudent to cut my losses).

And I don't know where you get your information about new business from. It's pretty clear you aren't in that world. You don't need millions in funds. The overwhelming majority of new ventures are funded from savings, credit cards, and loans from friends and family.

And if you aren't able to handle regulatory filings (or find a lawyer or accountant who can help) you aren't competent to be in business for yourself. Running a business means you run into obstacles all the time and need to find ways around them. Do you not think that private firms also require paperwork, like vendor approval processes and documenting your invoices? If you can't handle paperwork, you need to stay on a payroll.

cyclist , August 23, 2016 at 10:47 am

While I agree with Yves that there is too much libertarian bitching about regulations, there are a lot of really stupid laws on the books that we could easily do without. As an example, I was recently looking at an RFP from a public agency in the state of MI. One of the requirements for bidders responding was to provide a notarized affidavit that the company was not controlled by the Republic of Iran! Apparently this is Michigan Public Act 517 of 2012. BTW, the winning bidder, a large US corporation, certified they are not secretly controlled by the evil Ayatollahs.

jrs , August 22, 2016 at 8:39 pm

yes but most people won't be able to work until they are dead, because they aren't able to or because noone is going to hire them (it's why people collect social security at 62, it's not because this is the smartest financial plan, it's clearly not) and I hope most don't take the "therefore middle aged or senior aged suicide" route.

If you are able to work until you die a natural death good for you I guess (even better to be able to choose to retire of course), but it's not going to be an option for many people even if they want it to be, health or the job market WILL force them out.

Softie , August 22, 2016 at 2:46 pm

"Perhaps this world is another planet's hell." – Aldous Huxley. Yes, it is definitely. Perhaps pretty soon they will start strip search employees when they come to work.

ambrit , August 22, 2016 at 10:13 pm

"Out of the Silent Planet" by C. S. Lewis.

Chauncey Gardiner , August 22, 2016 at 4:12 pm

Excellent and timely article. As the writers observe, the problem is global in nature. If you work in or have worked in corporate America, you likely have personally experienced or seen the results of the deliberate creation of a stressful professional climate and workplace environment, abusive psychological bullying, and intentional destabilization of employees.

Increasing numbers of suicides are one outcome of these environments. But as the writers point out, there are a number of other symptoms associated with these toxic workplaces, none good. They range from physical and mental health issues, to various forms of addiction, burnout, and secondary effects on employees' personal lives and those of their family members or partners.

Although it seems that individuals with psychopathic characteristics often rise in management in many of these organizations, I believe the roots of the problem lie in a broader and deeper systemic failure. I agree that neoliberal ideology, globalization, and the basic structures of our debt-based economy all play a key role in enabling the intentional development of these organizational environments.

nobody , August 22, 2016 at 6:13 pm

It may be a global problem, but it seems particularly acute in the US. Ian Welsh's observations ring true to me:

One of the most striking things about much of American culture is the simple meanness of it. The cruelty… There is also a culture of punching down… America has a high-violence, high-bullying society… [Y]ou can have a high-violence society in which it is considered unacceptable to attack the weak (doing so is viewed as cowardice), but that's not the case in America. In American culture, the weak are the preferred target. Failure is punishable by homelessness, suffering, and death… You'd better get down on your knees and do whatever your boss wants, because if you're fired or let go you may never work again, and if you do hang on at a bottom-wage job, well, your life will suck… Having learned that the right way to treat anyone who is weaker than them is with demands for acquiescence and dominance displays, to many Americans, to interpret any sign of weakness as requiring them, as a moral duty, to dominate and hurt the weak person. People become what is required of them. They learn from authority figures how to behave… The entire process makes America a far more unpleasant place to live or visit than is necessary. The structure of dominance, meanness and cruelty is palpable to the visitor, and distressing; even as it warps the best inhabitant.
Tony Baloney , August 22, 2016 at 7:02 pm

You nailed it "nobody".

James Kroeger , August 22, 2016 at 10:01 pm

I believe the roots of the problem lie in a broader and deeper systemic failure.

Yes, a systemic failure, but to be more precise, it is ultimately a particular kind of market failure that gives employers an incentive to abuse their employees.

The best way to understand what I mean is to imagine a labor market where there are always more jobs available than there are people to fill them. In an economy that is experiencing a chronic labor shortage, employers would have a market incentive to actually start treating their employees with respect.

In markets where labor surpluses are carefully maintained (virtually every market you've ever known), business owners/managers feel free to express anger at any employee shehe feels a 'power advantage' over. They sense they have this advantage when/if they believe the employee fears losing hiser job more than the employer fears losing the employee.

It really would force a profound change in employer-employee relations, generally. Employers would be compelled by the marketplace to not only find ways to motivate their employees to work hard, but also to find ways to make them feel content , psychologically.

In an economy that is experiencing a sustained labor shortage, the crudest and least sympathetic methods of motivating employees would be gradually phased out.

'Bottom feeders' in the competition for scarce labor would have a constant incentive to try to retain employees, and to 'go the extra mile' to work with people who are having problems. Individuals who are having personal problems would not be simply cast aside, as they are now.

The national government could do something to help those businesses that are struggling within very [price-] competitive markets, providing counseling services, etc., to help those employees who are struggling with various problems outside of the job environment.

In our current labor surplus economy, lawsuits may give some employers an incentive to treat their people with respect, but it won't get anywhere close to providing THE solution to the problem that we would experience if we were to create and indefinitely maintain a labor shortage in the economy.

so , August 22, 2016 at 7:05 pm

humans sure do have a long way to go.

Jim Haygood , August 22, 2016 at 8:53 pm

Low end, dead end, godsend, pretend
it don't matter anyway

Perfect chorus of a country song.

perpetualWAR , August 22, 2016 at 10:06 pm

Quiet desperation. Isn't that the life of most Americans?

ambrit , August 22, 2016 at 10:17 pm

And to think that Pink Floyd recorded the verse; "Hanging on in quiet desperation is the English way." Back in 1968.
Quiet desperation is a characteristic of a declining society.

redleg , August 23, 2016 at 12:08 am

As far as I can tell quiet desperation is the life of most people.
This article highlights suicide, but drug and alcohol abuse are just as much a result of poor employment outcomes as suicide and for the same reasons.
When people stop being quietly desperate is when change happens.
I refer to CCR's Effigy although as a Gen-X -er I Prefer the Uncle Tupelo version

veganjules , August 22, 2016 at 10:17 pm

Guys. You're also forgetting that if the U.S. took in the Nazi Scientists and Death Specialists and used them and their techniques to crush real democratic, fair, egalitarian societies in Latin America (Chomsky) and then learned to transmute overt war (+nazi techniques) and colonialism into Finance (Hudson)–then we are currently dealing with something 'worse than Nazi Germany' (my 90 year old neighbor).

[Aug 20, 2016] Trump predicts landslide support from black voters if he gets to seek a second term as president

Aug 19, 2016 | latimes.com

"You're living in poverty, your schools are no good, you have no jobs, 58% of your youth is unemployed. What the hell do you have to lose" by voting for Trump? the candidate asked. "At the end of four years, I guarantee I will get over 95% of the African American vote."

The statement – highly unlikely given how poorly Republicans fare among black voters – continues a theme the GOP presidential nominee has pounded this week as he courted African American voters. He said Democrats take black voters for granted and have ignored their needs while governing cities with large African American populations.

"America must reject the bigotry of Hillary Clinton, who sees communities of color only as votes, not as human beings worthy of a better future," he said of his Democratic opponent.

... ... ...

Trump argued that Democratic presidential nominee Hillary Clinton's policies on issues such as immigration and refugee resettlement harm African Americans.

[Aug 20, 2016] Trump is afraid the neoliberal imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs.

Notable quotes:
"... I think Trump is afraid the imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs ..."
"... Much has been written about the internet revolution, about the impact of people having access to much more information than before. The elite does not recognize this and is still organizing political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush, Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the point of being counterproductive. ..."
"... I don't think something as parochial as racism is sustaining Trump, but rather the fear of the loss of empire by a population with several orders of magnitude more information and communication than in 2008, even 2012. ..."
"... No one has literally argued that people should be glad to lose employment: that part was hyperbole. But the basic argument is often made quite seriously. See e.g. outsource Brad DeLong . ..."
"... The same thing has happened in Mexico with neoliberal government after neoliberal government being elected. There are many democratically elected neoliberal governments around the world. ..."
"... In the case of Mexico, because Peña Nieto's wife is a telenovela star. How cool is that? It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni. ..."
"... To the guy who asked- poor white people keep voting Republican even though it screws them because they genuinely believe that the country is best off when it encourages a culture of "by the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people in order to give the money to the supposedly less fortunate as the anti thesis of this, because it gives people an easy out that let's them avoid having to engage in the hard work needed to live independently. ..."
"... The extent to which "poor white people" vote against their alleged economic interests is overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot to represent their interests. And, yes, they are misinformed systematically by elites out to screw them and they know this, but cannot do much to either clear up their own confusion or fight back. ..."
"... The mirror image problem - of elites manipulating the system to screw the poor and merely middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who do you recommend they vote for? ..."
"... I think you're missing Patrick's point. These voters are switching from one Republican to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush. ..."
"... They've figured out that the mainstream party is basically 30 years of affinity fraud. ..."
"... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
"... Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole point is that there is very little difference between the racism of Trump and the mainstream party since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than Bush for reasons other than race? ..."
"... Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among the defining characteristics of a coherent group is an explicit boundary which determines whether an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage together; it is a crowd.) The boundary helps provide social cohesion and is so important that groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone must play the role of outsider. ..."
"... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
crookedtimber.org

Lupita 08.04.16 at 4:23 am 167

I think Trump is afraid the imperial global order presided by the US is about to crash and thinks he will be able to steer the country into a soft landing by accepting that other world powers have interests, by disengaging from costly and humiliating military interventions, by re-negotiating trade deals, and by stopping the mass immigration of poor people. Plus a few well-placed bombs .

Much has been written about the internet revolution, about the impact of people having access to much more information than before. The elite does not recognize this and is still organizing political and media campaigns as if it were 1990, relying on elder statesmen like Blair, Bush, Mitterrand, Clinton, and Obama to influence public opinion. They are failing miserably, to the point of being counterproductive.

I don't think something as parochial as racism is sustaining Trump, but rather the fear of the loss of empire by a population with several orders of magnitude more information and communication than in 2008, even 2012.

Layman 08.04.16 at 11:59 am

Rich P: "Neoliberals often argue that people should be glad to lose employment at 50 so that people from other countries can have higher incomes…"

I doubt this most sincerely. While this may be the effect of some neoliberal policies, I can't recall any particular instance where someone made this argument.

Rich Puchalsky 08.04.16 at 12:03 pm

"I can't recall any particular instance where someone made this argument."

No one has literally argued that people should be glad to lose employment: that part was hyperbole. But the basic argument is often made quite seriously. See e.g. outsource Brad DeLong .

engels 08.04.16 at 12:25 pm

While this may be the effect of some neoliberal policies, I can't recall any particular instance where someone made this argument

Maybe this kind of thing rom Henry Farrell? (There may well be better examples.)

Is some dilution of the traditional European welfare state acceptable, if it substantially increases the wellbeing of current outsiders (i.e. for example, by bringing Turkey into the club). My answer is yes, if European leftwingers are to stick to their core principles on justice, fairness, egalitarianism etc…

http://crookedtimber.org/2005/05/31/talking-turkey-over-welfare/

Lupita 08.04.16 at 2:42 pm

Large numbers of low-income white southern Americans consistently vote against their own economic interests. They vote to award tax breaks to wealthy people and corporations, to cut unemployment benefits, to bust unions, to reward companies for outsourcing jobs, to resist wage increases, to cut funding for health care for the poor, to cut Social Security and Medicare, etc.

The same thing has happened in Mexico with neoliberal government after neoliberal government being elected. There are many democratically elected neoliberal governments around the world.

Why might this be?

In the case of Mexico, because Peña Nieto's wife is a telenovela star. How cool is that? It places Mexico in the same league as 1st world countries, such as France, with Carla Bruni.

Patrick 08.04.16 at 4:32 pm

To the guy who asked- poor white people keep voting Republican even though it screws them because they genuinely believe that the country is best off when it encourages a culture of "by the bootstraps" self improvement, hard work, and personal responsibility. They view taxing people in order to give the money to the supposedly less fortunate as the anti thesis of this, because it gives people an easy out that let's them avoid having to engage in the hard work needed to live independently.

They see it as little different from letting your kid move back on after college and smoke weed in your basement. They don't generally mind people being on unemployment transitionally, but they're supposed to be a little embarrassed about it and get it over with as soon as possible. They not only worry that increased government social spending will incentivize bad behavior, they worry it will destroy the cultural values they see as vital to Americas past prosperity. They tend to view claims about historic or systemic injustice necessitating collective remedy because they view the world as one in which the vagaries of fate decree that some are born rich or poor, and that success is in improving ones station relative to where one starts. Attempts at repairing historical racial inequity read as cheating in that paradigm, and even as hostile since they can easily observe white people who are just as poor or poorer than those who racial politics focuses upon. Left wing insistence on borrowing the nastiest rhetoric of libertarians ("this guy is poor because his ancestors couldn't get ahead because of historical racial injustice so we must help him; your family couldn't get ahead either but that must have been your fault so you deserve it") comes across as both antithetical to their values and as downright hostile within the values they see around them.

All of this can be easily learned by just talking to them.

It's not a great world view. It fails to explain quite a lot. For example, they have literally no way of explaining increased unemployment without positing either that everyone is getting too lazy to work, or that the government screwed up the system somehow, possibly by making it too expensive to do business in the US relative to other countries. and given their faith in the power of hard work, they don't even blame sweatshops- they blame taxes and foreign subsidies.

I don't know exactly how to reach out to them, except that I can point to some things people do that repulse them and say "stop doing that."

bruce wilder 08.04.16 at 5:50 pm

The extent to which "poor white people" vote against their alleged economic interests is overblown. To a large extent, they do not vote at all nor is anyone or anything on the ballot to represent their interests. And, yes, they are misinformed systematically by elites out to screw them and they know this, but cannot do much to either clear up their own confusion or fight back.

The mirror image problem - of elites manipulating the system to screw the poor and merely middle-class - is daily in the news. Both Presidential candidates have been implicated. So, who do you recommend they vote for?

There is serious deficit of both trust and information among the poor. Poor whites hardly have a monopoly; black misleadership is epidemic in our era of Cory Booker socialism.


bruce wilder 08.04.16 at 7:05 pm

Politics is founded on the complex social psychology of humans as social animals. We elevate it from its irrational base in emotion to rationalized calculation or philosophy at our peril.


T 08.04.16 at 9:17 pm

@Layman

I think you're missing Patrick's point. These voters are switching from one Republican to another. They've jettisoned Bush et. al. for Trump. These guys despise Bush.

They've figured out that the mainstream party is basically 30 years of affinity fraud.

So, is your argument is that Trump even more racist? That kind of goes against the whole point of the OP. Not saying that race doesn't matter. Of course it does. But Trump has a 34% advantage in non-college educated white men. It just isn't the South. Why does it have to be just race or just class?


Ronan(rf) 08.04.16 at 10:35 pm

"I generally don't give a shit about polls so I have no "data" to evidence this claim, but my guess is the majority of Trump's support comes from this broad middle"

My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income.

This would make some sense as they are generally in economically unstable jobs, they tend to be hostile to both big govt (regulations, freeloaders) and big business (unfair competition), and while they (rhetorically at least) tend to value personal autonomy and self sufficiency , they generally sell into smaller, local markets, and so are particularly affected by local demographic and cultural change , and decline. That's my speculation anyway.

T 08.05.16 at 3:12 pm

@patrick @layman

Patrick, you're right about the Trump demographic. https://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/

Layman - Why are these voters switching from Bush et al to Trump? Once again, Corey's whole point is that there is very little difference between the racism of Trump and the mainstream party since Nixon. Is Trump just more racist? Or are the policies of Trump resonating differently than Bush for reasons other than race?

Are the folks that voted for the other candidates in the primary less racist so Trump supporters are just the most racist among Republicans? Cruz less racist? You have to explain the shift within the Republican party because that's what happened.

Anarcissie 08.06.16 at 3:00 pm

Faustusnotes 08.06.16 at 1:50 pm @ 270 -

Eric Berne, in The Structures and Dynamics of Organizations and Groups, proposed that among the defining characteristics of a coherent group is an explicit boundary which determines whether an individual is a member of the group or not. (If there is no boundary, nothing binds the assemblage together; it is a crowd.) The boundary helps provide social cohesion and is so important that groups will create one if necessary. Clearly, boundaries exclude as well as include, and someone must play the role of outsider. While Berne's theories are a bit too nifty for me to love them, I have observed a lot of the behaviors he predicts. If one wanted to be sociobiological, it is not hard to hypothesize evolutionary pressures which could lead to this sort of behavior being genetically programmed. If a group of humans, a notably combative primate, does not have strong social cohesion, the war of all against all ensues and everybody dies. Common affections alone do not seem to provide enough cohesion.

In an earlier but related theory, in the United States, immigrants from diverse European communities which fought each other for centuries in Europe arrived and managed to now get along because they had a major Other, the Negro, against whom to define themselves (as the White Race) and thus to cohere sufficiently to get on with business. The Negro had the additional advantage of being at first a powerless slave and later, although theoretically freed, was legally, politically, and economically disabled - an outsider who could not fight back very effectively, nor run away. Even so, the US almost split apart and there continue to be important class, ethnic, religious, and regional conflicts. You can see how these two theories resonate.

It may be that we can't have communities without this dark side, although we might be able to mitigate some of its destructive effects.

bruce wilde r 08.06.16 at 4:28 pm

I am somewhat suspicious of leaving dominating elites out of these stories of racism as an organizing principle for political economy or (cultural) community.

Racism served the purposes of a slaveholding elite that organized political communities to serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)

Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus a component of how racism works to organize a political community to serve a hegemonic master class. The business end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory institutions and authoritarian governments.

For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations.

engels 08.07.16 at 1:02 am

But how did that slavery happen

Possible short answer: the level of technological development made slavery an efficient way of exploiting labour. At a certain point those conditions changed and slavery became a drag on further development and it was abolished, along with much of the racist ideology that legitimated it.

Lupita 08.07.16 at 3:40 am

But how did that slavery happen

In Mesoamerica, all the natives were enslaved because they were conquered by the Spaniards. Then, Fray Bartolomé de las Casas successfully argued before the Crown that the natives had souls and, therefore, should be Christianized rather than enslaved. As Bruce Wilder states, this did not serve the interests of the slaveholding elite, so the African slave trade began and there was no Fray Bartolomé to argue their case.

It is interesting that while natives were enslaved, the Aztec aristocracy was shipped to Spain to be presented in court and study Latin. This would not have happened if the Mesoamericans were considered inferior (soulless) as a race. Furthermore, the Spaniards needed the local elite to help them out with their empire and the Aztecs were used to slavery and worse. This whole story can be understood without recurring to racism. The logic of empire suffices.

[Aug 20, 2016] It is a perplexing and sorry phenomenon that deserves the attention of a first rate pundit like Frank

Amazon review of Thomas Frank's The Wrecking Crew... the word "conservative" was replaced by "neoliberal" as it more correctly reflect the concept behind this social process.
Notable quotes:
"... Neoliberal ideology is championed on behalf of corporate elites who have now secured total control, even ownership, of the federal government. ..."
"... Elites need federal government revenue transferred to their realm via fat government contracts and juicy subsidies. They want government without regulation, and they want taxation imposed on the masses without real representation, but not on them. ..."
"... Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus. There ensued a vast selling-off of government assets (and favors) to those willing to fund the neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for a wholesale transfer of government responsibilities to private-sector contractors unaccountable to Congress or anyone else. An entire industry sprung up to support conservatism - the great god market (corporate globalism) replaced anti-communism as the new inspiration. (page 93) ..."
"... But capitalism is not loyal to people or anything once having lost its usefulness, not even the nation state or the flag ..."
"... According to Frank, what makes a place a free-market paradise is not the absence of governments; it is the capture of government by business interests. ..."
"... Neoliberals don't want efficient government, they want less competition and more profits - especially for defense contractors. Under Reagan, civil servants were out, loyalists were in. ..."
"... Contractors are now a fourth branch of government with more people working under contracts than are directly employed by government - making it difficult to determine where government stops and the contractors start in a system of privatized government where private contractors are shielded from oversight or accountability ..."
"... The first general rule of neoliberal administration: cronies in, experts out. ..."
"... Under Reagan, a philosophy of government blossomed that regarded business as its only constituent. ..."
"... Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government. Lobbying is how money casts its vote. It is the signature activity of neoliberal governance - the mechanism that translates market forces into political action. ..."
"... Neoliberalism speaks of not compromise but of removing adversaries from the field altogether. ..."
"... One should never forget that it was Roosevelt's New Deal that saved capitalism from itself. Also, one should not forget that capitalism came out of the classical liberal tradition. Capitalists had to wrest power away from the landowning nobility, the arch neoliberal tradition of its time. ..."
www.amazon.com
Russell Ferrell

Format: Paperback

Thomas Frank's The Wrecking Crew is another classic. This work, along with his more notable What's The Matter With Kansas?, is another ground breaking examination into a major phenomenon of American politics by one of America's foremost social analysts and critics. While What's The Matter With Kansas? looked more at cultural behavior in explaining why Red State Americans have embraced corporate elitist ideology and ballot casting that militates against their own economic self-interest, even their very survival, this title deals more with structural changes in the government, economy, and society that have come about as a result of a Republican right wing agenda. It is a perplexing and sorry phenomenon that deserves the attention of a first rate pundit like Frank.

Neoliberal ideology is championed on behalf of corporate elites who have now secured total control, even ownership, of the federal government. The Wrecking Crew is about a Republican agenda to totally eliminate the last vestiges of the New Deal and Great Society, which have provided social safety nets for ordinary working class Americans through programs such as Social Security and Medicare. Corporate elites want to demolish only that part of government that doesn't benefit the corporation. Thus, a huge military budget and intrusive national security and police apparatus is revered, while education, health, welfare, infrastructure, etc. are of less utility for the corporate state. High taxes on the corporations and wealthy are abhorred, while the middle class is expected to shoulder a huge tax burden. Although Republicans rail against federal deficits, when in office they balloon the federal deficits in a plan for government-by-sabotage. (Page 261)

Elites need federal government revenue transferred to their realm via fat government contracts and juicy subsidies. They want government without regulation, and they want taxation imposed on the masses without real representation, but not on them. The big government they rail at is the same government they own and benefit from. They certainly do not want the national security state (the largest part of government) or the national police system to go away, not even the IRS. How can they fight wars without a revenue collection system? The wellspring of conservatism in America today -- preserving connections between the present and past -- is a destroyer of tradition, not a preserver. (Page 267)

Neoliberals drew up a long term strategy to sabotage and disrupt the liberal apparatus. There ensued a vast selling-off of government assets (and favors) to those willing to fund the neoliberal movement. The strategy was concocted as a long term plan - the master blueprint for a wholesale transfer of government responsibilities to private-sector contractors unaccountable to Congress or anyone else. An entire industry sprung up to support conservatism - the great god market (corporate globalism) replaced anti-communism as the new inspiration. (page 93)

Market populism arose as business was supposed to empower the noble common people. But capitalism is not loyal to people or anything once having lost its usefulness, not even the nation state or the flag. (page 100) While the New Deal replaced rule by wealthy with its brain trust, conservatism, at war with intellectuals, fills the bureaucracy with cronies, hacks, partisans, and creationists. The democracy, or what existed of it, was to be gradually made over into a plutocracy - rule by the wealthy. (Page 252) Starting with Reagan and Thatcher, the program was to hack open the liberal state in order to reward business with the loot. (Page 258) The ultimate neoliberal goal is to marketize the nation's politics so that financial markets can be elevated over vague liberalisms like the common good and the public interest. (Page 260)

According to Frank, what makes a place a free-market paradise is not the absence of governments; it is the capture of government by business interests. The game of corporatism is to see how much public resources the private interest can seize for itself before public government can stop them. A proper slogan for this mentality would be: more business in government, less government in business. And, there are market based solutions to every problem. Government should be market based. George W. Bush grabbed more power for the executive branch than anyone since Nixon. The ultra-rights' fortunes depend on public cynicism toward government. With the U.S. having been set up as a merchant state, the idea of small government is now a canard - mass privatization and outsourcing is preferred. Building cynicism toward government is the objective. Neoliberals don't want efficient government, they want less competition and more profits - especially for defense contractors. Under Reagan, civil servants were out, loyalists were in.

While the Clinton team spoke of entrepreneurial government - of reinventing government - the wrecking crew under Republicans has made the state the tool of money as a market-based system replaced civil service by a government-by-contractor (outsourcing). Page 137 This has been an enduring trend, many of the great robber barons got their start as crooked contractors during the Civil War. Contractors are now a fourth branch of government with more people working under contracts than are directly employed by government - making it difficult to determine where government stops and the contractors start in a system of privatized government where private contractors are shielded from oversight or accountability. (Page 138)

The first general rule of neoliberal administration: cronies in, experts out. The Bush team did away with EPA's office of enforcement - turning enforcement power over to the states. (Page 159) In an effort to demolish the regulatory state, Reagan, immediately after taking office, suspended hundreds of regulations that federal agencies had developed during the Carter Administration. Under Reagan, a philosophy of government blossomed that regarded business as its only constituent. In recent years, neoliberals have deliberately piled up debt to force government into crisis.

Watergate poisoned attitudes toward government - helping sweep in Ronald Reagan with his anti-government cynicism. Lobbying and influence peddling proliferated in a privatized government. Lobbying is how money casts its vote. It is the signature activity of neoliberal governance - the mechanism that translates market forces into political action. (Page 175)

It is the goal of the neoliberal agenda to smash the liberal state. Deficits are one means to accomplish that end.- to persuade voters to part with programs like Social Security and Medicare so these funds can be transferred to corporate contractors or used to finance wars or deficit reduction.. Uncle Sam can raise money by selling off public assets.

Since liberalism depends on fair play by its sworn enemies, it is vulnerable to sabotage by those not playing by liberalism's rules/ (Page 265) The Liberal State, a vast machinery built for our protection has been reengineered into a device for our exploitation. (Page 8) Liberalism arose out of a long-ago compromise between left-wing social movements and business interests. (Page 266) Neoliberalism speaks of not compromise but of removing adversaries from the field altogether. (Page 266) No one dreams of eliminating the branches of state that protect Neoliberalism's constituents such as the military, police, or legal privileges granted to corporations, neoliberals openly scheme to do away with liberal bits of big government. (Page 266)

Liberalism is a philosophy of compromise, without a force on the Left to neutralize the magneticism exerted by money, liberalism will be drawn to the right. (Page 274)

Through corporate media and right wing talk show, liberalism has become a dirty word. However, liberalism may not be dead yet. It will have to be resurrected from the trash bin of history when the next capitalist crisis hits. One should never forget that it was Roosevelt's New Deal that saved capitalism from itself. Also, one should not forget that capitalism came out of the classical liberal tradition. Capitalists had to wrest power away from the landowning nobility, the arch neoliberal tradition of its time.

[Aug 19, 2016] The conditions that produced and enabled Trump are the Democratic Party betrayal or working classes, especially its transformation into another wing of neoliberal party of the USA under Clinton. People now view a vote for Hillary as a vote for more of the same - increasing disparity in wealth and income.

Sizeable numbers of Americans have seen wages decline in real terms for nearly 20 years. Many/most parents in many communities do not see a better future before them, or for their children.
Notable quotes:
"... Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule. ..."
"... I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money. ..."
"... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
"... Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. ..."
"... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
"... Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope. ..."
crookedtimber.org

Glenn 08.02.16 at 5:01 pm

@William Meyer 08.02.16 at 4:41 pm

Legislators affiliated with the duopoly parties should not write the rules governing the ballot access of third parties. This exclusionary rule making amounts to preserving a self-dealing duopoly. Elections are the interest of the people who vote and those elected should not be able to subvert the democratic process by acting as a cartel.

Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule.

Of course any meaningful change would require a voluntary diminishment of power of the duopoly that now has dictatorial control over ballot access, and who will prevent any Constitutional Amendment that would enhance the democratic nature of the process.

bruce wilder 08.02.16 at 8:02 pm

I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money.

Ronan(rf) 08.04.16 at 10:35 pm

"I generally don't give a shit about polls so I have no "data" to evidence this claim, but my guess is the majority of Trump's support comes from this broad middle"

My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income.

This would make some sense as they are generally in economically unstable jobs, they tend to be hostile to both big govt (regulations, freeloaders) and big business (unfair competition), and while they (rhetorically at least) tend to value personal autonomy and self sufficiency , they generally sell into smaller, local markets, and so are particularly affected by local demographic and cultural change , and decline. That's my speculation anyway.

bruce wilder 08.06.16 at 4:28 pm

I am somewhat suspicious of leaving dominating elites out of these stories of racism as an organizing principle for political economy or (cultural) community.

Racism served the purposes of a slaveholding elite that organized political communities to serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)

Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus a component of how racism works to organize a political community to serve a hegemonic master class. The business end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory institutions and authoritarian governments.

For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations.

bruce wilder 08.06.16 at 4:31 pm

Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope.

[Aug 16, 2016] Thomas Frank One Market Under God-- Extreme Capitalism

Notable quotes:
"... This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism in foreign policy, has worked its way into the mindset of the ruling elites of many of the developed nations, and has taken a place in the public consciousness through steady repetition. I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and served and been blessed by their god. ..."
"... The adherents become blind by their devotion to their gods. ..."
"... This is not something new. It is a madness that has appeared again and again throughout history in the form of Mammon, the golden idol of the markets. It is a way of looking at people and the world that is as old as Babylon, and as evil as sin. ..."
jessescrossroadscafe.blogspot.com
There is a lack of critical assessment of the past. But you have to understand that the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical approach to the past."

Ryszard Kapuscinski

But they maintain a firm grasp on information and power, for their own sake, and sidetrack and stifle any meaningful reform.

In October 2000 Thomas Frank published a prescient critical social analysis titled, One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy .

In the video below from 2015, Thomas Frank looks back over the past 15 years to when he wrote this insightful book, and ends with this observation.

"I want to end with the idea that the market is capable of resolving all of our social conflict, fairly and justly. That is the great idea of the 1990's. And we all know now what a crock that is. I think what we need in order to restore some kind of sense of fairness is not the final triumph of markets over the body and soul of humanity, but something that confronts markets, and that refuses to think of itself as a brand ."
The book was not received well at the time in the waning days of the Clinton revolution and the birth of the era of the neo-cons in foreign policy and neo-liberals in economics.

This religion of the markets had yet to suffer the serial failures and decimation of the real economy which it would see over the next sixteen years.

This is an ideology, a mindset, and as Frank calls it a religion, of taking market capitalism to such an extreme that it dispenses with the notion of restraints by human or policy consideration. It comes to consider the market as a god, with its orthodoxy crafted in think tanks, its temples in the exchanges and the banks, and its oracles on their media and the academy.

This extreme form of market capitalism, also called neo-liberalism in economics and neo-conservatism in foreign policy, has worked its way into the mindset of the ruling elites of many of the developed nations, and has taken a place in the public consciousness through steady repetition. I has become the modern orthodoxy of the fortunate few, who have been initiated into its rites, and served and been blessed by their god.

It is the taking of an idea, of a way of looking at things, that may be substantially practical when used as a tool to help to achieve certain outcomes, and placing it in such an extreme and inappropriate place as an end in itself, as the very definition and arbiter of what is good and what is not, that it becomes a kind of anti-human force that is itself considered beyond all good and evil, like a natural law.

It is born of and brings with it an extreme tendency that kills thought, and stifles the ability to make distinctions between things. If not unfettered capitalism then what, communism ? The adherents become blind by their devotion to their gods.

This is not something new. It is a madness that has appeared again and again throughout history in the form of Mammon, the golden idol of the markets. It is a way of looking at people and the world that is as old as Babylon, and as evil as sin.

youtube.com

[Aug 14, 2016] How the Fed Promoted Financial Dominance and Shadow Banking by Promoting Repo

Notable quotes:
"... By Daniela Gabor is associate professor in economics at the University of the West of England, Bristol. Originally published at the Institute for New Economic Thinking website ..."
"... For a detailed account see Gabor, D. (2016) The (impossible) repo trinity : the political economy of repo markets, Review of International Political Economy, doi 10.1080/09692290.2016.1207699 ..."
www.nakedcapitalism.com

... ... ...

By Daniela Gabor is associate professor in economics at the University of the West of England, Bristol. Originally published at the Institute for New Economic Thinking website

Since the 1980s, central banks have been increasingly freed from fiscal dominance , the obligation to monetize government debt. The new regime of monetary dominance celebrated the (price) stability benefits of insulating scientific monetary policy from poorly theorized, highly politicized fiscal policy. Yet the growing dominance of the 'monetary science, fiscal alchemy' view in both academia and policy circles played a critical role in the rapid rise of shadow banking. The untold story of shadow banking is the story of (failed) attempts to separate monetary from fiscal policy, and of the bordeland that connects them, mapped onto the repo market .

While the state withdrew from economic life, privatizing state-owned enterprises or state banks, and putting macroeconomic governance in the hands of independent central banks, its role in financial life grew bigger. Sovereign debt evolved into the cornerstone of modern financial systems, used as benchmark for pricing private assets, for hedging and as base asset for credit creation via shadow banking . The state's role as debt issuer, passive and systemic at once, has been reliant, beyond the arithmetic of budget deficits, on the intricate workings of the repo trinity.

The repo trinity captures a consensus in central bank circles emerging after the 1998 Russian crisis, the first systemic crisis of collateral-intensive finance, that financial stability requires liquid government bond markets and liberalized repo markets (fig. 1).

Figure 1 The repo trinity

gabbor-f1

The repo-government bond market nexus took shape in the 1980s. In the US, securities dealers preferred repos to secured lending against collateral because market convention treated repos as outright sales and repurchases of collateral that allowed dealers to re-use collateral for a wide range of activities (short-selling, hedging, selling to a third party). When bankruptcy courts decided that repos would be subjected to automatic stay rules, Paul Volcker, then the Federal Reserve chairperson, successfully lobbied Congress to exempt repos with US Treasuries (UST) and agency securities collateral. Then, Salomon Brothers short-squeezed the UST market in 1991 by becoming the only repo supplier of a two-year note. This allowed Salomon to fund securities through repo transactions at exceptionally low rates. The ensuing public enquiry into the Salomon scandal showed little appetite for regulating repos. Rather, the Fed and the Treasury introduced new practices to fix gaps in repo plumbing, celebrating repos as innovative, liquidity enhancing instruments that would support the state in the post fiscal-dominance era.

The UST blueprint diffused rapidly to Europe. Pressured to adjust to a world of independent central banks, market-based financing and global competition for liquidity, European states embarked on a project of creating modern government bond markets, with modernity understood to mean the structural features of the US government bond market: regular auctions, market-making based on primary dealers and a liberalised repo market.

Central banks were at first divided on the benefits of opening up repo markets. While Banque de France followed the US Fed in assuming a catalyst role for the repo-sovereign bond market nexus, Bundesbank and Bank of England worried that deregulated repo markets would unleash structural changes in finance that could undermine the conduct of monetary policy and financial stability. In the architecture of the US government bond market, the Bundesbank saw the conditions nurturing short-term , fragile finance. Seeking to keep banks captive on the uncollateralized segment of interbank markets, Bundesbank imposed reserve requirements on repo liabilities. In parallel, as government's fiscal agent, Bundesbank followed a conservative strategy, with irregular auctions, issuance concentrated at long maturities and repo rules that increased the costs of funding bunds via repos. German banks responded by moving (bund) repo activities to London and warned that France's open repo strategy would make it into the benchmark sovereign issuer for the Euroarea. For similar reasons, the Bank of England exercised strict control over the repo gilt market for 10 years after the 1986 Big Bang liberalisation of financial markets. Under intense pressure from the financial industry and Ministries of Finance, the two central banks liberalized repo markets by 1997.

As the fragilities of the new, collateral-intensive world became apparent in the 1998 Russian crisis, central banks working together in the Committee on the Global Financial System subscribed to the policy goals of the repo trinity. The CGFS argued that financial stability in market-based finance required global safe assets, issued in government bond markets, in turn 'lubricated' by free repo markets with carefully designed (but not regulated) risk management regimes.

In pursuing the objectives of the repo trinity, central banks helped consolidate the critical role that sovereign bonds play in modern financial markets. Throughout the 2000s, the shortage of US government bonds saw the trinity extended to include securitization markets, while the Euro project galvanized consensus for a European repo trinity, whereby central banks encouraged the European banks dominating the repo market to treat all Euro sovereign debt as high-quality collateral .

After Lehman, central banks and the Financial Stability Board recognized the impossible nature of the repo trinity, attributing cyclical leverage, fire sales and elusive liquidity in collateral markets, including government bond markets, to free repo markets. Central banks, with the Bank of England leading the way, now accept that financial stability means supporting liquidity in collateral markets in times of stress rather than supporting banking institutions as in the traditional lender of last resort (LOLR) model. Paradoxically, LOLR support, implemented through repo loans, can destabilize (shadow) banks where central banks' collateral framework follows collateral market valuations (figure 2).

Figure 2 The impossible repo trinity

gabbor-f2

The quiet revolution in crisis central banking that involves direct support for core markets may appear like, but does not entail a return to, fiscal dominance. Rather, it creates financial dominance , defined as asymmetric support for falling asset prices. While financial dominance should be addressed by direct regulatory interventions, the quest for biting repo rules has so far proved illusive. The precise impact of Basel III liquidity and leverage rules is yet to be determined, whereas the failed attempts to include repos in the European Financial Transactions Tax and the FSB's watered-down repo proposals suggest that (countercyclical) collateral rules are only possible once states design alternative models of organizing their sovereign debt markets. Paradoxically, new initiatives in Europe suggest that a return to the repo trinity is rather more likely: the Capital Market Union plans to create Simple, Transparent and Standardized ( STS ) securitisation again illustrate the catalyst role that central banks choose to play in market-driven solutions to safe asset shortages.

For a detailed account see Gabor, D. (2016) The (impossible) repo trinity : the political economy of repo markets, Review of International Political Economy, doi 10.1080/09692290.2016.1207699

ArkansasAngie , August 13, 2016 at 7:49 am

Intrinsically, that is authoritative … fascism,

Can't trust politicians or voters to make the right choices.

That's not a slippery slope … it's a dad gum cliff

Take decision making away from politicians and their constituents and place it in the hands of unelected yahoos.

That's a bridge to far …IMHO

Where have we seen these seeds? Why the European Union.

A troika coming to your town?

hemeantwell , August 13, 2016 at 7:59 am

Uhhh. The article is one of the rare "too short, wish it was longer" breed.

I'll hazard a remark: how can securitization be "transparent" if, as one of the articles yesterday discussed, central banks intervene to support banks so as to allow them to avoid having the market deliver a price verdict on asset value?

beene , August 13, 2016 at 8:57 am

Any time you let central banks like the Federal Bank of NY create money from debt; bankruptcy is on the horizon. This has only been proven true for around five thousand years.

For a recent example have a look at the difference in government debt in Canada now verses when it had a public banking system.

financial matters , August 13, 2016 at 8:37 am

I think this is an important point:

"Throughout the 2000s, the shortage of US government bonds saw the trinity extended to include securitization markets,"

This started treating asset based securities similar to US Treasuries

Also this:

"fire sales and elusive liquidity in collateral markets, including government bond markets,"

I don't think the European government bond market can be treated as sovereign government bonds as they don't have that guarantee of backing from a central bank.

----

Quite simply, US Treasuries can be put to much better use than supporting asset prices and other financial products.

The first target should be unemployment.

Jesper , August 13, 2016 at 12:53 pm

Repos hide risk and makes it possible to increase leverage. Why would anyone but financial institutions want that?
But since financial institutions rule all then I suppose that repos will continue and as a gesture of goodwill (dressed up as something else) they'll just become more and more complex – those (high) fees for the professionals enabling the practice has to be justified somehow…

sunny129 , August 13, 2016 at 5:21 pm

More complex invites, less transparency, more instability and volatility!

Until RESET or forced of gravity of reversion to the mean, over power the CBers, this charade will go on!

nothing but the truth , August 13, 2016 at 5:01 pm

the forced identity between credit and currency is the root of a lot problems.

it should not be the taxpayer funded mandate of the the govt to enforce this identity.

[Aug 13, 2016] The One of the largest power plant in the worldplant is on fire in Michigan and will likely be out of service for many months if not a few years

marknesop.wordpress.com
More major infrastructure woes:
http://www.freep.com/story/news/local/michigan/2016/08/12/power-plant-fire-st-clair-river/88614804/

With about 1900 megawatt output, this was once the largest power plant in the world according to a news story. The plant will likely be out of service for many months if not a few years assuming that there is sufficient economic justification to undertake the repairs.

[Aug 12, 2016] More than a third of female students have mental health problems

Stress kill. Stress combined with mental overload is even more dangerous.
Notable quotes:
"... One in three female students in the UK has a mental health problem, a survey suggests. This compared with about a fifth of male undergraduates, the YouGov survey of 1,061 students found. Overall, some 27% of the students said they had a mental health problem. ..."
"... Of those surveyed, 30% of males and 27% of females said they would not feel comfortable in talking about their mental illness with friends or family. ..."
Aug 12, 2016 | bbc.com

One in three female students in the UK has a mental health problem, a survey suggests. This compared with about a fifth of male undergraduates, the YouGov survey of 1,061 students found. Overall, some 27% of the students said they had a mental health problem. This rose to 45% among lesbian, gay, bisexual and transgender students.

Universities UK said institutions were working hard to develop good services that linked in with the NHS.

Of those students who said they had a mental health problem:

  • In May, statistics published by the ONS showed student suicides had risen to their highest level since numbers were first recorded in 2007.
  • These figures - for 2014 - showed there were 130 suicides in England and Wales among full-time students aged 18 or above. Of those, 97 deaths were for male students and 33 were females.

There has been concern about the level of mental health support services provided by universities. But the survey showed students were broadly aware of the mental health services offered by their universities.

Seeking help

Anyone affected by mental health issues can contact a number of organisations, such as:

Some 18% of students had already made contact with university mental health services, and, of those who had, nearly nine out of 10 had seen a counsellor.

Of those surveyed, 30% of males and 27% of females said they would not feel comfortable in talking about their mental illness with friends or family.

Challenging stigmas

Chief executive of Universities UK Nicola Dandridge said universities took student mental health "very seriously". "For some students, an unfamiliar higher education environment can be stressful, particularly for those who already have an underlying illness. "Some students are reluctant to disclose their difficulties, which can also present a challenge for universities seeking to support them."

But she added that the development of policies and anti-stigma campaigns was beginning to address these issues. "The challenge for universities is to build on the support services and external links that exist already, enabling referral to the NHS where necessary," she said. "It is important to remember that university wellbeing services, however excellent, cannot replace the specialised care that the NHS provides for students with mental illnesses."

Universities UK also said it had issued guidance to all universities last year with advice on dealing with students with mental health issues.

See also

[Aug 07, 2016] Donald Trump, Brexit Are Blowback From Years of Anti-Government Rhetoric US News Opinion

Notable quotes:
"... The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability. ..."
"... In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump). ..."
"... Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks. ..."
"... Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'" ..."
www.usnews.com
In addition, the issues are similar between the two campaigns: The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability.

In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump).

In both countries, political elites were caught flat-footed. Elites lost control over the narrative and lost credibility and persuasiveness with angry, frustrated and fearful voters. The British elites badly underestimated the intensity of public frustration with immigration and with the EU. Most expected the vote would end on the side of "remain," up to the very last moment. Now they are trying to plot their way out of something they never expected would actually happen, and never prepared for.

Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks.

How did the elites lose control? There are many reasons: With social media so pervasive, advertising dollars no longer controls what the public sees and hears. With unrestricted campaign spending, the party can no longer "pinch the air hose" of a candidate who strays from party orthodoxy.

Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'"

Reagan booster Grover Norquist is known for saying, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." Countless candidates and elected officials slam "Washington bureaucrats" even though these "bureaucrats" were none other than themselves. It's not a great way to build respect. Then the attack escalated, with the aim of destroying parts of government that were actually mostly working. This was done to advance the narrative that government itself is the problem, and pave the way for privatization. Take the Transportation Security Administration for example. TSA has actually done its job. No terrorist attacks have succeeded on U.S. airplanes since it was established. But by systematically underfunding it , Congress has made the lines painfully long, so people hate it. Take the Post Office. Here Congress manufactured a crisis to force service cuts, making the public believe the institution is incompetent. But the so-called "problem" is due almost entirely to a requirement, imposed by Congress, forcing the Postal Service to prepay retiree's health care to an absurd level, far beyond what a similar private sector business would have to do. A similar dynamic now threatens Social Security. Thirty-five years have passed since Reagan first mocked the potential for competent and effective government. Years of unrelenting attack have sunk in. Many Americans now distrust government leaders and think it's pointless to demand or expect wisdom and statesmanship. Today's American voters (and their British counterparts), well-schooled in skepticism, disdain and dismiss leaders of all parties and they are ready to burn things down out of sheer frustration. The moment of blowback has arrived.

[Aug 07, 2016] Methheads as a sign of socioeconomic desperation: neoliberalism behaves much like British behaves in China during opium wars

Notable quotes:
"... Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine ..."
"... children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness. ..."
"... "If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist." ..."
"... It's a Wonderful Life ..."
"... as educators ..."
"... OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. ..."
"... I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings. ..."
"... The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher). ..."
"... "In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world. ..."
"... Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me. ..."
"... My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia…). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward. ..."
"... I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters….. putting this orbs humans and resources in the correct "natural" order…. ..."
"... Disheveled Marsupial… for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet…. especially in the late 80s and 90s…. bringing the might and wonders of the – market – to the great unwashed globally… here libertarian priests rang in the good news to the great unwashed… ..."
"... I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets). ..."
"... It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual. ..."
www.nakedcapitalism.com
bluecollarAl , June 2, 2016 at 10:06 am

I am almost 70 years old, born and raised in New York City, still living in a near suburb.

Somehow, somewhere along the road to my 70th year I feel as if I have been gradually transported to an almost entirely different country than the land of my younger years. I live painfully now in an alien land, a place whose habits and sensibilities I sometimes hardly recognize, while unable to escape from memories of a place that no longer exists. There are days I feel as I imagine a Russian pensioner must feel, lost in an unrecognizable alien land of unimagined wealth, power, privilege, and hyper-glitz in the middle of a country slipping further and further into hopelessness, alienation, and despair.

I am not particularly nostalgic. Nor am I confusing recollection with sentimental yearnings for a youth that is no more. But if I were a contemporary Rip Van Winkle, having just awakened after, say, 30-40 years, I would not recognize my beloved New York City. It would be not just the disappearance of the old buildings, Penn Station, of course, Madison Square Garden and its incandescent bulb marquee on 50th and 8th announcing NYU vs. St. John's, and the WTC, although I always thought of the latter as "new" until it went down. Nor would it be the disappearance of all the factories, foundries, and manufacturing plants, the iconic Domino Sugar on the East River, the Wonder Bread factory with its huge neon sign, the Swingline Staples building in Long Island City that marked passage to and from the East River tunnel on the railroad, and my beloved Schaeffer Beer plant in Williamsburg, that along with Rheingold, Knickerbocker, and a score of others, made beer from New York taste a little bit different.

It wouldn't be the ubiquitous new buildings either, the Third Avenue ghostly glass erected in the 70's and 80's replacing what once was the most concentrated collection of Irish gin mills anywhere. Or the fortress-like castles built more recently, with elaborate high-ceilinged lobbies decorated like a kind of gross, filthy-wealthy Versailles, an aesthetically repulsive style that shrieks "power" in a way the neo-classical edifices of our Roman-loving founders never did. Nor would it even be the 100-story residential sticks, those narrow ground-to-clouds skyscraper condominiums proclaiming the triumph of globalized capitalism with prices as high as their penthouses, driven ever upward by the foreign billionaires and their obsession with burying their wealth in Manhattan real estate.

It is not just the presence of new buildings and the absence of the old ones that have this contemporary Van Winkle feeling dyslexic and light-headed. The old neighborhoods have disintegrated along with the factories, replaced by income segregated swatches of homogenous "real estate" that have consumed space, air, and sunlight while sucking the distinctiveness out of the City. What once was the multi-generational home turf for Jewish, Afro-American, Puerto Rican, Italian, Polak and Bohunk families is now treated as simply another kind of investment, stocks and bonds in steel and concrete. Mom's Sunday dinners, clothes lines hanging with newly bleached sheets after Monday morning wash, stickball games played among parked cars, and evenings of sitting on the stoop with friends and a transistor radio listening to Mel Allen call Mantle's home runs or Alan Freed and Murray the K on WINS 1010 playing Elvis, Buddy Holly, and The Drifters, all gone like last night's dreams.

Do you desire to see the new New York? Look no further than gentrifying Harlem for an almost perfect microcosm of the city's metamorphosis, full of multi-million condos, luxury apartment renovations, and Maclaren strollers pushed by white yuppie wife stay-at-homes in Marcus Garvey Park. Or consider the "new" Lower East Side, once the refuge of those with little material means, artists, musicians, bums, drug addicts, losers and the physically and spiritually broken - my kind of people. Now its tenements are "retrofitted" and remodeled into $4000 a month apartments and the new residents are Sunday brunching where we used to score some Mary Jane.

There is the "Brooklyn brand", synonymous with "hip", and old Brooklyn neighborhoods like Red Hook and South Brooklyn (now absorbed into so desirable Park Slope), and Bushwick, another former outpost of the poor and the last place I ever imagined would be gentrified, full of artists and hipsters driving up the price of everything. Even large sections of my own Queens and the Bronx are affected (infected?). Check out Astoria, for example, neighborhood of my father's family, with more of the old ways than most but with rents beginning to skyrocket and starting to drive out the remaining working class to who knows where.

Gone is almost every mom and pop store, candy stores with their egg creams and bubble gum cards and the Woolworth's and McCrory's with their wooden floors and aisles containing ordinary blue collar urgencies like thread and yarn, ironing boards and liquid bleach, stainless steel utensils of every size and shape. Where are the locally owned toy and hobby stores like Jason's in Woodhaven under the el, with Santa's surprises available for lay-away beginning in October? No more luncheonettes, cheap eats like Nedicks with hot dogs and paper cones of orange drink, real Kosher delis with vats of warm pastrami and corned beef cut by hand, and the sacred neighborhood "bar and grill", that alas has been replaced by what the kids who don't know better call "dive bars", the detestable simulacra of the real thing, slick rooms of long slick polished mahogany, a half-dozen wide screen TV's blaring mindless sports contests from all over the world, over-priced micro-brews, and not a single old rummy in sight?

Old Rip searches for these and many more remembered haunts, what Ray Oldenburg called the "great good places" of his sleepy past, only to find store windows full of branded, high-priced, got-to-have luxury-necessities (necessary if he/she is to be certified cool, hip, and successful), ridiculously overpriced "food emporia", high and higher-end restaurants, and apparel boutiques featuring hardened smiles and obsequious service reserved for those recognized by celebrity or status.

Rip notices too that the visible demographic has shifted, and walking the streets of Manhattan and large parts of Brooklyn, he feels like what walking in Boston Back Bay always felt like, a journey among an undifferentiated mass of privilege, preppy or 'metro-sexed' 20 and 30-somethings jogging or riding bicycles like lean, buff gods and goddesses on expense accounts supplemented by investments enriched by yearly holiday bonuses worth more than Rip earned in a lifetime.

Sitting alone on a park bench by the river, Rip reflects that more than all of these individual things, however, he despairs of a city that seems to have been reimagined as a disneyfied playground of the privileged, offering endless ways to self-gratify and philistinize in a clean, safe (safest big city in U.S., he heard someone say), slick, smiley, center-of-the-world urban paradise, protected by the new centurions (is it just his paranoia or do battle-ready police seem to be everywhere?). Old ethnic neighborhoods are filled with apartment buildings that seem more like post-college "dorms", tiny studios and junior twos packed with three or four "singles" roommates pooling their entry level resources in order to pay for the right to live in "The City". Meanwhile the newer immigrants find what place they can in Kingsbridge, Corona, Jamaica, and Cambria Heights, far from the city center, even there paying far too much to the landlord for what they receive.

New York has become an unrecognizable place to Rip, who can't understand why the accent-less youngsters keep asking him to repeat something in order to hear his quaint "Brooklyn" accent, something like the King's English still spoken on remote Smith Island in the Chesapeake, he guesses
.
Rip suspects that this "great transformation" (apologies to Polanyi) has coincided, and is somehow causally related, to the transformation of New York from a real living city into, as the former Mayor proclaimed, the "World Capital" of financialized commerce and all that goes with it.

"Financialization", he thinks, is not the expression of an old man's disapproval but a way of naming a transformed economic and social world. Rip is not an economist. He reads voraciously but, as an erstwhile philosopher trained to think about the meaning of things, he often can't get his head around the mathematical model-making explanations of the economists that seem to dominate the more erudite political and social analyses these days. He has learned, however, that the phenomenon of "capitalism" has changed along with his city and his life.

Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine
.
Above all else is the astronomical rise in wealth and income inequality. Rip recalls that growing up in the 1950's, the kids on his block included, along with firemen, cops, and insurance men dads (these were virtually all one-parent income households), someone had a dad who worked as a stock broker. Yea, living on the same block was a "Wall Streeter". Amazingly democratic, no? Imagine, people of today, a finance guy drinking at the same corner bar with the sanitation guy. Rip recalls that Aristotle had some wise and cautionary words in his Politics concerning the stability of oligarchic regimes.

Last year I drove across America on blue highways mostly. I stayed in small towns and cities, Zanesville, St. Charles, Wichita, Pratt, Dalhart, Clayton, El Paso, Abilene, Clarksdale, and many more. I dined for the most part in local taverns, sitting at the bar so as to talk with the local bartender and patrons who are almost always friendly and talkative in these spaces. Always and everywhere I heard similar stories as my story of my home town. Not so much the specifics (there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness.

I am not a trained economist. My graduate degrees were in philosophy. My old friends call me an "Eric Hoffer", who back in the day was known as the "longshoreman philosopher". I have been trying for a long time now to understand the silent revolution that has been pulled off right under my nose, the replacement of a world that certainly had its flaws (how could I forget the civil rights struggle and the crime of Viet Nam; I was a part of these things) but was, let us say, different. Among you or your informed readers, is there anyone who can suggest a book or books or author(s) who can help me understand how all of this came about, with no public debate, no argument, no protest, no nothing? I would be very much appreciative.

tegnost , June 2, 2016 at 2:20 pm

I'll just highlight this line for emphasis
"there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness."
my best friend pretty much weeps every day.

Michael Fiorillo , June 2, 2016 at 3:13 pm

bluecollar Al,

As a lifelong New Yorker, I too mourn the demise of my beloved city. Actually, that's wrong: my city didn't die, it was taken from me/us.

But if it's any consolation, remember that Everyone Loses Their New York (even insufferable hipster colonizers)…

Left in Wisconsin , June 2, 2016 at 3:24 pm

Beautifully said.

I don't have a book to recommend. I do think you identify a really underemphasized central fact of recent times: the joint processes by which real places have been converted into "real estate" and real, messy lives replaced by safe, manufactured "experiences." This affects wealthy and poor neighborhoods alike, in different ways but in neither case for the better.

I live in a very desirable neighborhood in one of those places that makes a lot of "Best of" lists. I met a new neighbor last night who told me how he and his wife had plotted for years to get out of the Chicago burbs, not only to our city but to this specific neighborhood, which they had decided is "the one." (This sentiment is not atypical.) Unsurprisingly, property values in the neighborhood have gone through the roof. Which, as far as I can tell, most everyone here sees as an unmitigated good thing.

At the same time, several families I got to know because they moved into the neighborhood about the same time we did 15-20 years ago, are cashing out and moving away, kids off to or out of college, parents ready (and financed) to get on to the next phase and the next place. Of course, even though our children are all Lake Woebegoners, there are no next generations staying in the neighborhood, except of course the ones still living, or back, at "home." (Those families won't be going anywhere for awhile!)

I can't argue that new money in the hood hasn't improved some things. Our formerly struggling food co-op just finished a major expansion and upgrade. Good coffee is 5 minutes closer than it used to be. But to my wife and me, the overwhelming feeling is that we are now outsiders here in this neighborhood where we know all the houses and the old trees but not what motivates our new neighbors. So I made up a word for it: unsettling (adj., verb, noun).

Softie , June 2, 2016 at 4:14 pm

Try to read this one:

"If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

- Steve Fraser, The Age of Acquiescence

Jim , June 2, 2016 at 4:25 pm

bluecollar Al:

Christopher Lash in "Revolt of the Elites and the Betrayal of Democracy" mentions Ray Oldenburg's "The Great Good Places: Cafes, Coffee Shops, Community Centers, Beauty Parlors, General Stores, Bars, Hangouts and How they Got You through the Day."

He argued that the decline of democracy is directly related to the disappearance of what he called third places:,

"As neighborhood hangouts give way to suburban shopping malls, or, on the other hand private cocktail parties, the essentially political art of conversation is replaced by shoptalk or personal gossip.

Increasingly, conversation literally has no place in American society. In its absence how–or better, where–can political habits be acquired and polished?

Lasch finished he essay by noting that Oldenburg's book helps to identify what is missing from our then newly emerging world (which you have concisely updated):

"urban amenities, conviviality, conversation, politics–almost everything in part that makes life worth living."

JDH , June 2, 2016 at 4:28 pm

The best explainer of our modern situation that I have read is Wendell Berry. I suggest that you start with "The Unsettling of America," quoted below.

"Let me outline briefly as I can what seem to me the characteristics of these opposite kinds of mind. I conceive a strip-miner to be a model exploiter, and as a model nurturer I take the old-fashioned idea or ideal of a farmer. The exploiter is a specialist, an expert; the nurturer is not. The standard of the exploiter is efficiency; the standard of the nurturer is care. The exploiter's goal is money, profit; the nurturer's goal is health - his land's health, his own, his family's, his community's, his country's. Whereas the exploiter asks of a piece of land only how much and how quickly it can be made to produce, the nurturer asks a question that is much more complex and difficult: What is its carrying capacity? (That is: How much can be taken from it without diminishing it? What can it produce dependably for an indefinite time?) The exploiter wishes to earn as much as possible by as little work as possible; the nurturer expects, certainly, to have a decent living from his work, but his characteristic wish is to work as well as possible. The competence of the exploiter is in organization; that of the nurturer is in order - a human order, that is, that accommodates itself both to other order and to mystery. The exploiter typically serves an institution or organization; the nurturer serves land, household, community, place. The exploiter thinks in terms of numbers, quantities, "hard facts"; the nurturer in terms of character, condition, quality, kind."

I also think Prof. Patrick Deneen works to explain the roots (and progression) of decline. I'll quote him at length here describing the modern college student.

"[T]he one overarching lesson that students receive is the true end of education: the only essential knowledge is that know ourselves to be radically autonomous selves within a comprehensive global system with a common commitment to mutual indifference. Our commitment to mutual indifference is what binds us together as a global people. Any remnant of a common culture would interfere with this prime directive: a common culture would imply that we share something thicker, an inheritance that we did not create, and a set of commitments that imply limits and particular devotions.

Ancient philosophy and practice praised as an excellent form of government a res publica – a devotion to public things, things we share together. We have instead created the world's first Res Idiotica – from the Greek word idiotes, meaning "private individual." Our education system produces solipsistic, self-contained selves whose only public commitment is an absence of commitment to a public, a common culture, a shared history. They are perfectly hollowed vessels, receptive and obedient, without any real obligations or devotions.

They won't fight against anyone, because that's not seemly, but they won't fight for anyone or anything either. They are living in a perpetual Truman Show, a world constructed yesterday that is nothing more than a set for their solipsism, without any history or trajectory."

ekstase , June 2, 2016 at 5:55 pm

Wow. Did this hit a nerve. You have eloquently described what was the city of hope for several generations of outsiders, for young gay men and women, and for real artists, not just from other places in America, but from all over the world. In New York, once upon a time, bumping up against the more than 50% of the population who were immigrants from other countries, you could learn a thing or two about the world. You could, for a while, make a living there at a job that was all about helping other people. You could find other folks, lots of them, who were honest, well-meaning, curious about the world. Then something changed. As you said, you started to see it in those hideous 80's buildings. But New York always seemed somehow as close or closer to Europe than to the U.S., and thus out of the reach of mediocrity and dumbing down. New York would mold you into somebody tough and smart, if you weren't already – if it didn't, you wouldn't make it there.

Now, it seems, this dream is dreamt. Poseurs are not artists, and the greedy and smug drive out creativity, kindness, real humor, hope.

It ain't fair. I don't know where in this world an aspiring creative person should go now, but it probably is not there.

Dave , June 2, 2016 at 10:21 am

Americans cannot begin to reasonably demand a living wage, benefits and job security when there is an unending human ant-line of illegals and legal immigrants willing to under bid them.

Only when there is a parity or shortage of workers can wage demands succeed, along with other factors.

From 1925 to 1965 this country accepted hardly any immigrants, legal or illegal. We had the bracero program where Mexican males were brought in to pick crops and were then sent home to collect paychecks in Mexico. American blacks were hired from the deep south to work defense plants in the north and west.

Is it any coincidence that the 1965 Great Society program, initiated by Ted Kennedy to primarily benefit the Irish immigrants, then co-opted by LBJ to include practically everyone, started this process of Middle Class destruction?

1973 was the peak year of American Society as measured by energy use per capita, expansion of jobs and unionization and other factors, such as an environment not yet destroyed, nicely measured by the The Real Progress Indicator.

Solution? Stop importing uneducated people. That's real "immigration reform".

Now explain to me why voters shouldn't favor Trump's radical immigration stands?

RUKidding , June 2, 2016 at 11:06 am

Maybe, but OTOH, who is it, exactly, who is recruiting, importing, hiring and training undocumented workers to downgrade pay scales??

Do some homework, please. If businesses didn't actively go to Central and South America to recruit, pay to bring here, hire and employ undocumented workers, then the things you discuss would be great.

When ICE comes a-knocking at some meat processing plant or mega-chicken farm, what happens? The undocumented workers get shipped back to wherever, but the big business owner doesn't even get a tap on the wrist. The undocumented worker – hired to work in unregulated unsafe unhealthy conditions – often goes without their last paycheck.

It's the business owners who manage and support this system of undocumented workers because it's CHEAP, and they don't get busted for it.

Come back when the USA actually enforces the laws that are on the books today and goes after big and small business owners who knowingly recruit, import, hire, train and employee undocumented workers… you know, like Donald Trump has all across his career.

tegnost , June 2, 2016 at 12:24 pm

This is the mechanism by which the gov't has assisted biz in destroying the worker, competition for thee, but none for me. For instance I can't go work in canada or mexico, they don't allow it. Policy made it, policy can change it, go bernie. While I favor immigration, in it's current form it is primarily conducted on these lines of destroying workers (H1b etc and illegals combined) Lucky for the mexicans they can see the american dream is bs and can go home. I wonder who the latinos that have gained citizenship will vote for. Unlikely it'll be trump, but they can be pretty conservative, and the people they work for are pretty conservative so no guarantee there, hillary is in san diego at the tony balboa park where her supporters will feel comfortable, not a huge venue I think they must be hoping for a crowd, and if she can't get one in san diego while giving a "if we don't rule the world someone else will" speech, she can't get one anywhere. Defense contractors and military advisors and globalist biotech (who needs free money more than biotech? they are desperate for hillary) are thick in san diego.

RUKidding , June 2, 2016 at 12:47 pm

I live part-time in San Diego. It is very conservative. The military, who are constantly screwed by the GOP, always vote Republican. They make up a big cohort of San Diego county.

Hillary may not get a big crowd at the speech, but that, in itself, doesn't mean that much to me. There is a segment of San Diego that is somewhat more progressive-ish, but it's a pretty conservative county with parts of eastern SD county having had active John Birch Society members until recently… or maybe even ongoing.

There's a big push in the Latino community to GOTV, and it's mostly not for Trump. It's possible this cohort, esp the younger Latino/as, will vote for Sanders in the primary, but if Clinton gets the nomination, they'll likely vote for her (v. Trump).

I was unlucky enough to be stuck for an hour in a commuter train last Friday after Trump's rally there. Hate to sound rude, but Trump's fans were everything we've seen. Loud, rude, discourteous and an incessant litany of rightwing talking points (same old, same old). All pretty ignorant. Saying how Trump will "make us great again." I don't bother asking how. A lot of ugly comments about Obama and how Obama has been "so racially divisive and polarizing." Well, No. No, Obama has not been or done that, but the rightwing noise machine has sure ginned up your hatreds, angers and fears. It was most unpleasant. The only instructive thing about it was confirming my worst fears about this group. Sorry to say but pretty loutish and very uninformed. Sigh.

tegnost , June 2, 2016 at 2:12 pm

part timer in sd as well, family for hillary except for nephew and niece….I keep telling my mom she should vote bernie for their sake but it never goes over very well

Bob Haugen , June 2, 2016 at 10:35 am

Re Methland, we live in rural US and we got a not-very-well hidden population of homeless children. I don't mean homeless families with children, I mean homeless children. Sleeping in parks in good weather, couch-surfing with friends, etc. I think related.

equote , June 2, 2016 at 10:43 am

Fascism is a system of political and social order intended to reinforce the unity, energy and purity of communities in which liberal democracy stand(s) accused of producing division and decline. . . . George Orwell reminded us, clad in the mainstream patriotic dress of their own place and time, . . . an authentically popular fascism in the United States would be pious and anti-Black; in Western Europe, secular and antisemitic, or more probably, these days anti-Islamic; in Russia and Eastern Europe, religious, antisemitic, and slavophile.
Robert O. Paxton
In The Five Stages of Faschism

"… that eternal enemy: the conservative manipulators of privilege who damn as 'dangerous agitators' any man who menaces their fortunes" (maybe 'power and celebrity' should be added to fortunes)
Sinclair Lewis
It Can't Happen Here page 141

Take the Fork , June 2, 2016 at 11:07 am

On the Boots To Ribs Front: Anyone hereabouts notice that Captain America has just been revealed to be a Nazi? Maybe this is what R. Cohen was alluding to… but I doubt it.

pissed younger baby boomer , June 2, 2016 at 11:57 am

The four horse men are, political , social, economic and environmental collapse . Any one remember the original Mad Max movie. A book I recommend is the Crash Of 2016 By Thom Hartmann.

rfam , June 2, 2016 at 11:59 am

From the comment, I agree with the problems, not the cause. We've increased the size and scope of the safety net over the last decade. We've increased government spending versus GDP. I'm not blaming government but its not neoliberal/capitalist policy either.

1. Globalization clearly helps the poor in other countries at the expense of workers in the U.S. But at the same time it brings down the cost of goods domestically. So jobs are not great but Walmart/Amazon can sell cheap needs.

2. Inequality started rising the day after Bretton Woods – the rich got richer everyday after "Nixon Shock"

https://www.google.com/search?q=gini+coefficient+usa+chart&client=safari&rls=en&biw=1371&bih=793&tbm=isch&imgil=tRkxcVEo17ID8M%253A%253B-Lt3-YscSzdOaM%253Bhttp%25253A%25252F%25252Fwww.the-crises.com%25252Fincome-inequality-in-the-us-1%25252F&source=iu&pf=m&fir=tRkxcVEo17ID8M%253A%252C-Lt3-YscSzdOaM%252C_&usg=__bipTqXhWx0tXxke6Xcj5MUAcn-o%3D&ved=0ahUKEwjY18rm2onNAhUPeFIKHREjAS4QyjcILw&ei=nFdQV9iZCo_wyQKRxoTwAg#imgrc=tRkxcVEo17ID8M%3A

TedWa , June 2, 2016 at 12:30 pm

Hi rfam : To point 1 : Why is there a need to bring down the cost of goods? Is it because of past outsourcing and trade agreements and FR policies? I think there's a chicken and egg thing going on, ie.. which came first. Globalization is a way to bring down wages while supplying Americans with less and less quality goods supplied at the hand of global corporations like Walmart that need welfare in the form of food stamps and the ACA for their workers for them to stay viable (?). Viable in this case means ridiculously wealthy CEO's and the conglomerate growing bigger constantly. Now they have to get rid of COOL's because the WTO says it violates trade agreements so we can't trace where our food comes from in case of an epidemic. It's all downhill. Wages should have risen with costs so we could afford high quality American goods, but haven't for a long, long time.

tegnost , June 2, 2016 at 12:35 pm

Globalization helps the rich here way more than the poor there. The elites get more money for nothing (see QE before you respond, if you do, that's where the money for globalization came from) the workers get the husk. Also the elite gets to say "you made your choices" and other moralistic crap. The funny(?) thing is they generally claim to be atheists, which I translate into "I am God, there doesn't need to be any other" Amazon sells cheap stuff by cheating on taxes, and barely makes money, mostly just driving people out of business. WalMart has cheap stuff because they subsidise their workers with food stamps and medicaid. Bringing up bretton woods means you don't know much about money creation, so google "randy wray/bananas/naked capitalism" and you'll find a quick primer.

RUKidding , June 2, 2016 at 12:57 pm

The Walmart loathsome spawn and Jeff Bezos are the biggest welfare drains in our nation – or among the biggest. They woefully underpay their workers, all while training them on how to apply for various welfare benefits. Just so that their slaves, uh, workers can manage to eat enough to enable them to work.

It slays me when US citizens – and it happens across the voting spectrum these days; I hear just as often from Democratic voters as I do from GOP voters – bitch, vetch, whine & cry about welfare abuse. And if I start to point out the insane ABUSE of welfare by the Waltons and Jeff Bezos, I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare.

Hey, I'm totally sure and in agreement that there are likely a small percentage of real welfare cheats who manage to do well enough somehow. But seriously? That's like a drop in the bucket. Get the eff over it!!!

Those cheats are not worth discussing. It's the big fraud cheats like Bezos & the Waltons and their ilk, who don't need to underpay their workers, but they DO because the CAN… and they get away with it because those of us the rapidly dwindling middle/working classes are footing the bill for it.

Citizens who INSIST on focusing on a teeny tiny minority of real welfare cheats, whilst studiously ignoring the Waltons and the Bezos' of the corporate world, are enabling this behavior. It's one of my bugabears bc it's so damn frustrating when citizens refuse to see how they are really being ripped off by the 1%. Get a clue.

That doesn't even touch on all the other tax breaks, tax loopholes, tax incentives and just general all-around tax cheating and off-shore money hiding that the Waltons and Bezos get/do. Sheesh.

JustAnObserver , June 2, 2016 at 2:51 pm

This statement –

"I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

is the key and a v. long term result of the application of Bernays' to political life. Its local and hits at the gut interpersonal level 'cos the "someones" form a kind of chain of trust esp. if the the first one on the list is a friend or a credentialed media pundit. Utterly spurious I know but countering this with a *merely* rational analysis of how Walmart, Amazon abuse the welfare system to gouge profits from the rest of us just won't ever, for the large majority, get through this kind emotional wall.

I don't know what any kind of solution might look like but, somehow, we need to find a way of seriously demonising the corporate parasites that resonates at the same emotional level as the "welfare cheat" meme that Bill Clinton and the rest of the DLC sanctified back in the '90s.

Something like "Walmart's stealing your taxes" might work but how to get it out there in a viral way ??

Vatch , June 2, 2016 at 6:54 pm

"random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

Hmm. Your acquaintances might need to be educated about urban legends .

Anonymous Coward , June 2, 2016 at 12:04 pm

Wait, you mean we don't all enjoy living in Pottersville?

For anyone missing the reference, you clearly haven't been subjected to It's a Wonderful Life enough times.

Judith , June 2, 2016 at 12:06 pm

People may be interested in an ongoing project by the photographer Matt Black (who was recently invited to join Magnum) called the Geography of Poverty. http://www.mattblack.com/the-geography-of-poverty/

Steve Sewall , June 2, 2016 at 12:07 pm

What a comment from seanseamour. And the "hoisting" of it to high visibility at the site is a testament to the worth of Naked Capitalism.

seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend…" This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nation's public school system.*

And as I suspect seanseymour would agree, when a nation loses public education, it loses everything.

But I don't want to spend all morning doing that because I'm convinced that it's not too late for America to rescue itself from maelstrom in which it finds itself today. (Poe's "Maelstrom" story, cherished by Marshall McLuhan, is supremely relevant today.)

To turn America around, I don't look to education – that system is too far gone to save itself, let alone the rest of the country – but rather to the nation's media: to the all-powerful public communication system that certainly has the interactive technical capabilities to put citizens and governments in touch with each other on the government decisions that shape the futures of communities large and small.

For this to happen, however, people like the us – readers of Naked Capitalism – need to stop moaning and groaning about the damage done by the neoliberals and start building an issue-centered, citizen-participatory, non-partisan, prime-time Civic Media strong enough to give all Americans an informed voice in the government decisions that affect their lives. This Civic media would exist to make citizens and governments responsive and accountable to each other in shaping futures of all three communities – local, state and national – of which every one of us is a member.

Pie in the sky? Not when you think hard about it. A huge majority of Americans would welcome this Civic Media. Many yearn for it. This means that a market exists for it: a Market of the Whole of all members of any community, local, state and national. This audience is large enough to rival those generated by media coverage of pro sports teams, and believe it or not much of the growth of this Civic media could be productively modeled on the growth of media coverage of pro sports teams. This Civic Media would attract the interest of major advertisers, especially those who see value in non-partisan programming dedicated to getting America moving forward again. Dynamic, issue-centered, problem-solving public forums, some modeled on voter-driven reality TV contests like The Voice or Dancing with the Stars, could be underwritten by a "rainbow" spectrum of funders, commericial, public, personal and even government sources.

So people take hope! Be positive! Love is all we need, etc. The need for for a saving alternative to the money-driven personality contests into which our politics has descended this election year is literally staring us all in the face from our TV, cellphone and computer screens. This is no time to sit back and complain, it's a time to start working to build a new way of connecting ourselves so we can reverse America's rapid decline.

OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final.

hunkerdown , June 2, 2016 at 5:40 pm

"Don't hate the media, become the media" -Jello Biafra

Sound of the Suburbs , June 2, 2016 at 12:36 pm

I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings.

The end is nigh for the Neo-Liberals.

Sound of the Suburbs , June 2, 2016 at 1:04 pm

Whatever system is put in place the human race will find a way to undermine it. I believe in capitalism because fair competition means the best and most efficient succeed.

I send my children to private schools and universities because I want my own children at the top and not the best. Crony capitalism is inevitable, self-interest undermines any larger system that we try and impose.

Can we design a system that can beat human self-interest? It's going to be tricky.

"If that's the system, how can I take advantage of it?" human nature at work. "If that's the system, is it working for me or not?" those at the top.
If not, it's time to change the system.
If so, how can I tweak it to get more out of it?

Neo-Liberalism

Academics, who are not known for being street-wise, probably thought they had come up with the ultimate system using markets and numeric performance measures to create a system free from human self-interest.

They had already missed that markets don't just work for price discovery, but are frequently used for capital gains by riding bubbles and hoping there is a "bigger fool" out there than you, so you can cash out with a handsome profit.

(I am not sure if the Chinese realise markets are supposed to be for price discovery at all).

Hence, numerous bubbles during this time, with housing bubbles being the global favourite for those looking for capital gains.

If we are being governed by the markets, how do we rig the markets?
A question successfully solved by the bankers.

Inflation figures, that were supposed to ensure the cost of living didn't rise too quickly, were somehow manipulated to produce low inflation figures with roaring house price inflation raising the cost of living.

What unemployment measure will best suit the story I am trying to tell?
U3 – everything great
U6 – it's not so good
Labour participation rate – it hasn't been this bad since the 1970s

Anything missing from the theory has been ruthlessly exploited, e.g. market bubbles ridden for capital gains, money creation by private banks, the difference between "earned" and "unearned" income and the fact that Capitalism trickles up through the following mechanism:

1) Those with excess capital collect rent and interest.
2) Those with insufficient capital pay rent and interest.

Neo-Liberalism – It's as good as dead.

perpetualWAR , June 2, 2016 at 1:18 pm

I just went on a rant last week. (Not only because the judge actually LIED in court)

I left the courthouse in downtown Seattle, to cross the street to find the vultures selling more foreclosures on the steps of the King County Administration Building, while above them, there were tents pitched on the building's perimeter. And people were walking by just like this scene was normal.

Because the people at the entrance of the courthouse could view this, I went over there and began to rant. I asked (loudly) "Do you guys see that over there? Vultures selling homes rendering more people homeless and then the homeless encampment with tents pitched on the perimeter above them? In what world is this normal?" One guy replied, "Ironic, isn't it?" After that comment, the Marshall protecting the judicial crooks in the building came over and tried to calm me down. He insisted that the scene across the street was "normal" and that none of his friends or neighbors have been foreclosed on. I soon found out that that lying Marshall was from Pierce County, the epicenter of Washington foreclosures.

The scene was totally surreal. And unforgettable.

Softie , June 2, 2016 at 2:26 pm

You need to take a photograph or two using your above words as caption.

EGrise , June 2, 2016 at 2:31 pm

And nobody cares
As long as they get theirs

Softie , June 2, 2016 at 3:09 pm

The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher).

Softie , June 2, 2016 at 2:16 pm

"In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world.

For these people, already skeptical about who runs things and to what end, and who are now undergoing their own eviction from the middle class, skepticism sours into a passive cynicism. Or it rears up in a kind of vengeful chauvinism directed at alien others at home and abroad, emotional compensation for the wounds that come with social decline…If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

- Steve Fraser, The Age of Acquiescence

LeitrimNYC , June 2, 2016 at 2:25 pm

One thing I don't think I have seen addressed on this site (apologies if I have missed it!) in all the commentary about the destruction of the middle class is the role of US imperialism in creating that middle class in the first place and what it is that we want to save from destruction by neo-liberalism. The US is rich because we rob the rest of the world's resources and have been doing so in a huge way since 1945, same as Britain before us. I don't think it's a coincidence that the US post-war domination of the world economy and the middle class golden age happened at the same time. Obviously there was enormous value created by US manufacturers, inventors, government scientists, etc but imperialism is the basic starting point for all of this. The US sets the world terms of trade to its own advantage. How do we save the middle class without this level of control? Within the US elites are robbing everyone else but they are taking what we use our military power to appropriate from the rest of the world.

Second, if Bernie or whoever saves the middle class, is that so that everyone can have a tract house and two cars and continue with a massively wasteful and unsustainable lifestyle based on consumption? Or are we talking about basic security like shelter, real health care, quality education for all, etc? Most of the stories I see seem to be nostalgic for a time when lots of people could afford to buy lots of stuff and don't 1) reflect on origin of that stuff (imperialism) and 2) consider whether that lifestyle should be the goal in the first place.

perpetualWAR , June 2, 2016 at 2:49 pm

I went to the electronics recycling facility in Seattle yesterday. The guy at customer service told me that they receive 20 million pounds per month. PER MONTH. Just from Seattle. I went home and threw up.

Praedor , June 2, 2016 at 3:57 pm

It doesn't have to be that way. You can replace military conquest (overt and covert) with space exploration and science expansion. Also, instead of pushing consumerism, push contentment. Don't setup and goose a system of "gotta keep up with the Joneses!"

In the 50s(!!!) there was a plan, proven in tests and studies, that would have had humans on the mars by 1965, out to Saturn by 72. Project Orion. Later, the British Project Daedalus was envisioned which WOULD have put space probes at the next star system within 20 years of launch. It was born of the atomic age and, as originally envisioned, would have been an ecological disaster BUT it was reworked to avoid this and would have worked. Spacecraft capable of comfortably holding 100 personnel, no need to build with paper-thin aluminum skin or skimp on amenities. A huge ship built like a large sea vessel (heavy iron/steel) accelerated at 1g (or more or slightly less as desired) so no prolonged weightlessness and concomitant loss of bone and muscle mass. It was all in out hands but the Cold War got in the way, as did the many agreements and treaties of the Cold War to avoid annihilation. It didn't need to be that way. Check it out: https://en.wikipedia.org/wiki/Project_Orion_(nuclear_propulsion)

All that with 1950s and 60s era technology. It could be done better today and for less than your wars in the Middle East. Encourage science, math, exploration instead of consumption, getting mine before you can get yours, etc.

hunkerdown , June 2, 2016 at 5:48 pm

Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me.

Left in Wisconsin , June 2, 2016 at 4:12 pm

My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia…). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward.

Likewise, US elites are clearly NOT robbing the manufacturing firms that have set up in China and other low-wage locations, so it is an oversimplification to say they are "robbing everyone else."

Nostalgia is overrated but I don't sense the current malaise as a desire for more stuff. (I grew up in the 60s and 70s and I don't remember it as a time where people had, or craved, a lot of stuff. That period would be now, and I find it infects Sanders' supporters less than most.) If anything, it is nostalgia for more (free) time and more community, for a time when (many but not all) people had time to socialize and enjoy civic life.

jrs , June 2, 2016 at 5:52 pm

those things would be nice as would just a tiny bit of hope for the future, our own and the planet's and not an expectation of things getting more and more difficult and sometimes for entirely unnecessary reasons like imposed austerity. But being we can't have "nice things" like free time, community and hope for the future, we just "buy stuff".

catlady , June 2, 2016 at 5:12 pm

I live on the south side, in the formerly affluent south shore neighborhood. A teenager was killed, shot in the head in a drive by shooting, at 5 pm yesterday right around the corner from my residence. A white coworker of mine who lives in a rich northwest side neighborhood once commented to me how black people always say goodbye by saying "be safe". More easily said than done.

Skippy , June 2, 2016 at 6:50 pm

I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters….. putting this orbs humans and resources in the correct "natural" order….

Disheveled Marsupial… for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet…. especially in the late 80s and 90s…. bringing the might and wonders of the – market – to the great unwashed globally… here libertarian priests rang in the good news to the great unwashed…

Jim , June 2, 2016 at 8:10 pm

Hi Skippy:

I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets).

It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual.

But as Mirowski argues–carrying their analysis this far begins to undermine their own neoliberal assumptions about markets always promoting social welfare.

Skippy , June 2, 2016 at 10:09 pm

Hay Jim…

When I mean – agents – I'm not referring to agency, like you say the market gawd/computer does that. I was referencing the – rational agent – that 'ascribes' the markets the right at defining facts or truth as neoliberalism defines rational thought/behavior.

Disheveled Marsupial… yes democracy is a direct threat to Hayekian et al [MPS and Friends] paranoia due to claims of irrationality vs rationally…

Rick Cass , June 2, 2016 at 7:32 pm

Neo-liberalism could not have any power without legal and ethical positivism as the ground work of the national thought processes.

seanseamour , June 3, 2016 at 4:32 am

I have trouble understanding the focus on an emergence of fascism in Europe, focus that seems to dominate this entire thread when, put in perspective such splinter groups bear little weight on the European political spectrum.
As an expat living in France, in my perception the Front National is a threat to the political establishments that occupy the center left and right and whose historically broad constituencies have been brutalized by the financial crisis borne of unbridled anglo-saxon runaway capitalism, coined neoliberalism. The resulting disaffection has allowed the growth of the FN but it is also fueled by a transfer of reactionary constituencies that have historically found identity in far left parties (communist, anti-capitalist, anarchist…), political expressions the institutions of the Republic allow and enable in the name of plurality, a healthy exultury in a democratic society.
To consider that the FN in France, UKIP in the UK and others are a threat to democratic values any more that the far left is non-sensical, and I dare say insignificant compared to the "anchluss" our conservative right seeks to impose upon the executive, legislative and judicial branches of government.
The reality in Europe as in America is economic. The post WWII era of reconstruction, investment and growth is behind us, the French call these years the "Trente Glorieuses" (30 glorious years) when prosperity was felt through all societal strats, consumerism for all became the panacea for a just society, where injustice prevailed welfare formulas provided a new panacea.
As the perspective of an unravelling of this golden era began to emerge elites sought and conspired to consolidate power and wealth, under the aegis of greed is good culture by further corrupting government to serve the few, ensuring impunity for the ruling class, attempting societal cohesiveness with brash hubristic dialectics (America, the greatest this or that) and adventurism (Irak, mission accomplished), conspiring to co-opt and control institutions and the media (to understand the depth of this deception a must read is Jane Mayer in The Dark Side and in Dark Money).
The difference between America and Europe is that latter bears of brunt of our excess.
The 2008 Wall St / City meltdown eviscerated much of America' middle class and de-facto stalled, perhaps definitively, the vehicle of upward mobility in an increasingly wealth-ranked class structured society – the Trump phenomena feeds off the fatalistic resilience and "good book" mythologies remnant of the "go west" culture.
In Europe where to varying degrees managed capitalism prevails the welfare state(s) provided the shock absorbers to offset the brunt of the crisis, but those who locked-in on neoliberal fiscal conservatism have cut off their nose in spite leaving scant resources to spur growth. If social mobility survives, more vibrantly than the US, unemployment and the cost thereof remains steadfast and crippling.
The second crisis borne of American hubris is the human tidal wave resulting from the Irak adventure; it has unleashed mayhem upon the Middle East, Sub Saharan Africa and beyond. The current migrational wave Europe can not absorb is but the beginning of much deeper problem – as ISIS, Boko Haram and so many others terrorist groups destabilize the nation-states of a continent whose population is on the path to explode in the next half century.
The icing on the cake provided by a Trump election will be a world wave of climate change refugees as the neoliberal establishment seeks to optimize wealth and power through continued climate change denial.
Fascism is not the issue, nationalism resulting from a self serving bully culture will decimate the multilateral infrastructure responsible nation-states need to address today's problems.
Broadly, Trump Presidency capping the neoliberal experience will likely signal the end of the US' dominant role on the world scene (and of course the immense benefits derived for the US). As he has articulated his intent to discard the art of diplomacy, from soft to institutional, in favor of an agressive approach in which the President seeks to "rattle" allies (NATO, Japan and S. Korea for example) as well as his opponents (in other words anyone who does not profess blind allegiance), expect that such modus operandi will create a deep schism accompanied by a loss of trust, already felt vis-a-vis our legislature' behavior over the last seven years.
The US's newfound respect among friends and foes generated by President Obama' presidency, has already been undermined by the GOP primaries, if Trump is elected it will dissipate for good as other nations and groups thereof focus upon new, no-longer necessarily aligned strategic relationships, some will form as part as a means of taking distance, or protection from the US, others more opportunist with the risk of opponents such as Putin filling the void – in Europe for example.

dk , June 3, 2016 at 8:08 am

Neoliberalism isn't helping, but it's a population/resource ratio thing. Impacts on social orders occur well before raw supply factors kick in (and there is more than food supply to basic rations). The world population has more than doubled in the last 50 years, one doesn't get that kind of accelerated growth without profound impacts to every aspect of societies. Some of the most significant impacts are consequent to the acceleration of technological changes (skill expirations, automations) that are driven in no small part by the needs of a vast + growing population.

https://en.wikipedia.org/wiki/Population_growth
Note that the vertical scale in the of the first graph is logarithmic.

I don't suggest population as a pat simplistic answer. And neoliberalism accelerates the declining performance of institutions (as in the CUNY article… and that's been going on for decades already, neoliberalism just picked up where neoconservatism petered out), but we would be facing issues like homelessness, service degradation, population displacements, etc regardless of poor policies. One could argue (I do) that neoliberalism has undertaken to accelerate existing entropies for profit.

Murica Derp , June 3, 2016 at 3:21 pm

Thanks for soliciting reader comments on socioeconomic desperation. It's encouraging to know that I'm not the only failure to launch in this country.

I'm a seasonal farm worker with a liberal arts degree in geology and history. I barely held on for six months as a junior environmental consultant at a dysfunctional firm that tacitly encouraged unethical and incompetent behavior at all levels. From what I could gather, it was one of the better-run firms in the industry. Even so, I was watching mid-level and senior staff wander into extended mid-life crises while our entire service line was terrorized by a badly out-of-shape, morbidly obese, erratic, vicious PG who had alienated almost the entire office but was untouchable no matter how many firing offenses she committed. Meanwhile I was watching peers in other industries (especially marketing and FIRE) sell their souls in real time. I'm still watching them do so a decade later.

It's hard to exaggerate how atrociously I've been treated by bougie conformists for having failed/dropped out of the rat race. A family friend who got into trouble with the state of Hawaii for misclassifying direct employees of his timeshare boiler room as 1099's gave me a panic attack after getting stoned and berating me for hours about how I'd wake up someday and wonder what the fuck I'd done with my life. At the time, I had successfully completed a summer job as the de facto lead on a vineyard maintenance crew and was about to get called back for the harvest, again as the de facto lead picker.

Much of my social life is basically my humiliation at the hands of amoral sleazeballs who presume themselves my superiors. No matter how strong an objective case I have for these people being morally bankrupt, it's impossible to really dismiss their insults. Another big component is concern-trolling from bourgeois supremacists who will do awfully little for me when I ask them for specific help. I don't know what they're trying to accomplish, and they probably don't, either. A lot of it is cognitive dissonance and incoherence.

Some of the worst aggression has come from a Type A social climber friend who sells life insurance. He's a top producer in a company that's about a third normal, a third Willy Loman, and a third Glengarry Glen Ross. This dude is clearly troubled, but in ways that neither of us can really figure out, and a number of those around him are, too. He once admitted, unbidden, to having hazed me for years.

The bigger problem is that he's surrounded by an entire social infrastructure that enables and rewards noxious, predatory behavior. When college men feel like treating the struggling like garbage, they have backup and social proof from their peers. It's disgusting. Many of these people have no idea of how to relate appropriately to the poor or the unemployed and no interest in learning. They want to lecture and humiliate us, not listen to us.

Dude recently told me that our alma mater, Dickinson College, is a "grad school preparatory institution." I was floored that anyone would ever think to talk like that. In point of fact, we're constantly lectured about how versatile our degrees are, with or without additional education. I've apparently annoyed a number of Dickinsonians by bitterly complaining that Dickinson's nonacademic operations are a sleazy racket and that President Emeritus Bill Durden is a shyster who brainwashed my classmates with crude propaganda. If anything, I'm probably measured in my criticism, because I don't think I know the full extent of the fraud and sleaze. What I have seen and heard is damning. I believe that Dickinson is run by people with totalitarian impulses that are restrained only by a handful of nonconformists who came for the academics and are fed up with the propaganda.

Meanwhile, I've been warm homeless for most of the past four years. It's absurd to get pledge drive pitches from a well-endowed school on the premise that my degree is golden when I'm regularly sleeping in my car and financially dependent on my parents. It's absurd to hear stories about how Dickinson's alumni job placement network is top-notch when I've never gotten a viable lead from anyone I know from school. It's absurd to explain my circumstances in detail to people who, afterwards, still can't understand why I'm cynical.

While my classmates preen about their degrees, I'm dealing with stuff that would make them vomit. A relative whose farm I've been tending has dozens of rats infesting his winery building, causing such a stench that I'm just about the only person willing to set foot inside it. This relative is a deadbeat presiding over a feudal slumlord manor, circumstances that he usually justifies by saying that he's broke and just trying to make ends meet. He has rent-paying tenants living on the property with nothing but a pit outhouse and a filthy, disused shower room for facilities. He doesn't care that it's illegal. One of his tenants left behind a twenty-gallon trash can full to the brim with his own feces. Another was seen throwing newspaper-wrapped turds out of her trailer into the weeds. They probably found more dignity in this than in using the outhouse.

When I was staying in Rancho Cordova, a rough suburb of Sacramento, I saw my next-door neighbor nearly come to blows with a man at the light rail station before apologizing profusely to me, calling me "sir," "man," "boss," and "dog." He told me that he was angry at the other guy for selling meth to his kid sister. Eureka is even worse: its west side is swarming with tweakers, its low-end apartment stock is terrible, no one brings the slumlords to heel, and it has a string of truly filthy residential motels along Broadway that should have been demolished years ago.

A colleague who lives in Sweet Home, Oregon, told me that his hometown is swarming with druggies who try to extract opiates from local poppies and live for the next arriving shipment of garbage drugs. The berry farm where we worked had ten- and twelve-year-olds working under the table to supplement their families' incomes. A Canadian friend told me that he worked for a crackhead in Lillooet who made his own supply at home using freebase that he bought from a meathead dealer with ties to the Boston mob. Apparently all the failing mill towns in rural BC have a crack problem because there's not much to do other than go on welfare and cocaine. An RCMP sergeant in Kamloops was recently indicted for selling coke on the side.

Uahsenaa's comment about the invisible homeless is spot on. I think I blend in pretty well. I've often stunned people by mentioning that I'm homeless. Some of them have been assholes about it, but not all. There are several cars that I recognize as regular overnighters at my usual rest area. Thank God we don't get hassled much. Oregon is about as safe a place as there is to be homeless. Some of the rest areas in California, including the ones at Kingsburg and the Sacramento Airport, end up at or beyond capacity overnight due to the homeless. CalTrans has signs reminding drivers that it's rude to hog a space that someone else will need. This austerity does not, of course, apply to stadium construction for the Kings.

Another thing that almost slipped my mind (and is relevant to Trump's popularity): I've encountered entrenched, systemic discrimination against Americans when I've tried to find and hold menial jobs, and I've talked to other Americans who have also encountered it. There is an extreme bias in favor of Mexican peasants and against Americans in the fields and increasingly in off-farm jobs. The top quintile will be lucky not to reap the whirlwind on account of this prejudice.

[Aug 07, 2016] Neoliberalism has only exacerbated falling living standards

Notable quotes:
"... the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder. ..."
"... the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources. ..."
www.nakedcapitalism.com
Sally Snyder , August 5, 2016 at 11:57 am

Here is an article that explains the key reason why economic growth will be slow for the foreseeable future:

http://viableopposition.blogspot.ca/2016/08/the-baby-bust-and-its-impact-on.html

No matter what central banks do, their actions will not be able to create the same level of economic growth that we have become used to over the past seven decades.

JEHR , August 5, 2016 at 12:57 pm

Economic growth does not come from the central banks; if government sought to provide the basics for all its citizens, including health care, education, a home, and proper food and all the infrastructure needed to give people the basics, then you could have something akin to "growth" while at the same time making life more pleasant for the less fortunate. There seems to be no definition of economic growth that includes everyone.

David , August 5, 2016 at 1:25 pm

This seems a very elaborate way of stating a simple problem, that can be summarised in three points.

    The living standards of most people have fallen over the last thirty years or so because of the impact of neoliberal economic policies. Conventional politicians are promising only more of the same. Therefore people are increasingly voting for non-conventional politicians.

And that's about it.

jgordon , August 5, 2016 at 8:10 pm

Neoliberalism has only exacerbated falling living standards. Living standards would be falling even without it, albeit more gradually.

Neoliberalism itself may even be nothing more than a standard type response of species that have expanded beyond the capacity of their environment to support them. What we see as an evil ideology is only the expression of a mechanism that apportions declining resources to the elites, like shutting shutting down the periphery so the core can survive as in hypothermia.

I Lost at Jeopardy , August 5, 2016 at 6:57 pm

I really don't have problem with this. Let the financial sector run the world into the ground and get it over with.

In defference to a great many knowledgable commentors here that work in the FIRE sector, I don't want to create a damning screed on the cost of servicing money, but at some point even the most considered opinions have to acknowledge that that finance is flooded with *talent* which creates a number of problems; one being a waste of intellect and education in a field that doesn't offer much of a return when viewed in an egalitarian sense, secondly; as the field grows due to, the technical advances, the rise in globilization, and the security a financial occuptaion offers in an advanced first world country nowadays, it requires substantially more income to be devoted to it's function.

This income has to be derived somewhere, and the required sacrifices on every facet of a global economy to bolster positions and maintain asset prices has precipitated this decline in the well being of peoples not plugged-in to the consumer capitalist regime and dogma.

Something has to give here, and I honestly couldn't care about your 401k or home resale value, you did this to yourself as much as those day-traders who got clobbered in the dot-com crash.

nothing but the truth , August 6, 2016 at 11:46 am

the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder.

the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources.

[Aug 07, 2016] The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies

This is downright sickening and the people who are voting for Hillary will not even care what will happen with the USA iif she is elected.
By attacking Trump using "Khan gambit" she risks a violent backlash (And not only via Wikileaks, which already promised to release information about her before the elections)
People also start to understand that she is like Trump. He destroyed several hundred American lifes by robbing them, exploiting their vanity (standard practice in the USA those days) via Trump University scam. She destroyed the whole country -- Libya and is complicit in killing Khaddafi (who, while not a nice guy, was keeping the country together and providing be highest standard of living in Africa for his people).
In other words she is a monster and sociopath. He probably is a narcissist too. So there is no much phychological difference between them. And we need tight proportions to judge this situation if we are talking about Hillary vs Trump.
As for people voting for Trump -- yes they will. I think if Hillary goes aganst Trump, the female neoliberal monster will be trumped. She has little chances even taking into account the level of brainwashing in the USA (which actually is close to those that existed in the USSR).
Notable quotes:
"... The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist. ..."
"... U.S. Government Tried to Tackle Gun Violence in 1960s ..."
"... Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them. ..."
"... The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences. ..."
"... "Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor. ..."
"... My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. ..."
"... "…the gutters and cutters of neoliberalism" ..."
"... The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck. ..."
"... The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. ..."
"... This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot. ..."
"... Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government. ..."
"... In other words, the MSM's fear is the clearest sign to these voters that their ..."
"... Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase. ..."
"... Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories? ..."
"... Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal. ..."
"... Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders. ..."
"... Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors. ..."
"... Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation. Impose tariffs to compensate for lower labor costs overseas and revise industry. ..."
"... Cut the Defense budget by 50% and use that money for intensive infrastructure development. ..."
"... Raise the national minimum wage to $15 and hour. ..."
"... Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official. ..."
"... Free public education including college (4 year degree). ..."
"... Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left. ..."
"... This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade. ..."
"... Totally agree tegnost, no more democratic neoliberals ! ..."
"... "they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism? ..."
"... Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption. ..."
"... Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people. ..."
"... The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy. ..."
"... America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses. ..."
"... Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy. ..."
www.nakedcapitalism.com
The first comment gives a window into the hidden desperation in America that is showing up in statistics like increasing opioid addiction and suicides, rather than in accounts of how and why so many people are suffering. I hope readers will add their own observations in comments.

seanseamour, June 1, 2016 at 3:26 am

We recently took three months to travel the southern US from coast to coast. As an expat for the past twenty years, beyond the eye opening experience it left us in a state of shock. From a homeless man convulsing in the last throes of hypothermia (been there) behind a fuel station in Houston (the couldn't care less attendant's only preoccupation getting our RV off his premises), to the general squalor of near-homelessness such as the emergence of "American favelas" a block away from gated communities or affluent ran areas, to transformation of RV parks into permanent residencies for the foreclosed who have but their trailer or RV left, to social study one can engage while queuing at the cash registers of a Walmart before beneficiaries of SNAP.

Stopping to take the time to talk and attempt to understand their predicament and their beliefs as to the cause of their plight is a dizzying experience in and of itself. For a moment I felt transposed to the times of the Cold War, when the Iron Curtain dialectics fuzzed the perception of that other world to the west with a structured set of beliefs designed to blacken that horizon as well as establish a righteous belief in their own existential paradigm.

What does that have to do with education? Everything if one considers the elitist trend that is slowly setting the framework of tomorrow's society. For years I have felt there is a silent "un-avowed conspiracy", why the seeming redundancy, because it is empirically driven as a by-product of capitalism's surge and like a self-redeeming discount on a store shelf crystalizes a group identity of think-alike know-little or nothing frustrated citizens easily corralled by a Fox or Trump piper. We have re-rcreated the conditions or rather the reality of "Poverty In America" barely half a century after its first diagnostic with one major difference : we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe.

Praedor, June 1, 2016 at 5:37 pm

So Richard Cohen now fears American voters because of Trump. Well, on Diane Reem today (NPR) was a discussion on why fascist parties are growing in Europe. Both Cohen and the clowns on NPR missed the forest for the trees. The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist.

In the US we don't have the refugees, but the neoliberalism is further along and more damaging. There's no mystery here or in Europe, just the natural effects of governments failing to represent real people in favor of useless eater rich.

Make the people into commodities, endanger their washes and job security, impose austerity, and tale in floods of refugees. Of COURSE Europeans stay leaning fascist.

Praedor , June 2, 2016 at 3:31 pm

According to NPR's experts, many or most of those parties are "fascist". The fascist label is getting tossed around a LOT right now. It is slung at Trump, at UKIP, or any others. Fascist is what you call the opposition party to the right that you oppose. Now I don't call Trump a fascist. A buffoon, yes, even a charlatan (I still rather doubt he really originally thought he would become the GOP nominee. Perhaps I'm wrong but, like me, many seemed to think that he was pushing his "brand" – a term usage of which I HATE because it IS like we are all commodities or businesses rather than PEOPLE – and that he would drop by the wayside and profit from his publicity).

Be that as it may, NPR and Co were discussing the rise of fascist/neofascist parties and wondering why there were doing so well. Easy answer: neoliberalism + refugee hoards = what you see in Europe.

I've also blamed a large part of today's gun violence in the USA on the fruits of neoliberalism. Why? Same reason that ugly right-wing groups (fascist or not) are gaining ground around the Western world. Neoliberalism destroys societies. It destroys the connections within societies (the USA in this case). Because we have guns handy, the result is mass shootings and flashes of murder-suicides. This didn't happen BEFORE neoliberalism got its hooks into American society. The guns were there, always have been (when I was a teen I recall seeing gun mags advertising various "assault weapons" for sale…this was BEFORE Reagan and this was BEFORE mass shootings, etc). Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism. Neoliberalism steals your job security, your healthcare security, your home, your retirement security, your ability to provide for your family, your ability to send your kids to college, your ability to BUY FOOD. Neoliberalism means you don't get to work for a company for 20 years and then see the company pay you back for that long, good service with a pension. You'll be lucky to hold a job at any company from month-to-month now and FORGET about benefits! Healthcare? Going by the wayside too. Workers in the past felt a bond with each other, especially within a company. Neoliberalism has turned all workers against each other because they have to fight to gain any of the scraps being tossed out by the rich overlords. You can't work TOGETHER to gain mutual benefit, you need to fight each other in a zero sum game. For ME to win you have to lose. You are a commodity. A disposable and irrelevant widget. THAT combines with guns (that have always been available!) and you get desperate acting out: mass shootings, murder suicides, etc.

WorldBLee , June 2, 2016 at 6:06 pm

There are actual fascist parties in Europe. To name a few in one country I've followed, Ukraine, there's Right Sector, Svoboda, and others, and that's just one country. I don't think anyone calls UKIP fascist.

John Zelnicker , June 3, 2016 at 12:24 am

@Praedor – Your comment that Yves posted and this one are excellent. One of the most succinct statements of neoliberalism and its worst effects that I have seen.

As to the cause of recent mass gun violence, I think you have truly nailed it. If one thinks at all about the ways in which the middle class and lower have been squeezed and abused, it's no wonder that a few of them would turn to violence. It's the same despair and frustration that leads to higher suicide rates, higher rates of opiate addiction and even decreased life expectancy.

Jacob , June 3, 2016 at 11:35 am

"Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism."

Easy availability of guns was seen as a serious problem long before the advent of neoliberalism. For one example of articles about this, see U.S. Government Tried to Tackle Gun Violence in 1960s . Other examples include 1920s and 1930s gangster and mob violence that were a consequence of Prohibition (of alcohol). While gun violence per-capita might be increasing, the population is far larger today, and the news media select incidents of violence to make them seem like they're happening everywhere and that everyone needs to be afraid. That, of course, instills a sense of insecurity and fear into the public mind; thus, a fearful public want a strong leader and are willing to accept the inconvenience and dangers of a police state for protection.

Disturbed Voter , June 2, 2016 at 6:49 am

First they came for the blue collar workers …

America has plenty of refugees, from Latin America …

Neo-liberal goes back to the Monroe Doctrine. We used to tame our native workers with immigrants, and we still do, but we also tame them by globalism in trade. So many rationalizations for this, based on political and economic propaganda. All problems caused by the same cause … American predatory behavior. And our great political choice … iron fist with our without velvet glove.

Jeff , June 2, 2016 at 7:58 am

Germany, Belgium, France, Poland, Hungary, Romania, Turkey, Israel, Australia come to mind (if one is allowed to participate in a European song contest, one is supposed to be part of Europe :) They all have more or less fascist governments.
Once you realize that the ECB creates something like 60 billion euros a month, and gives nothing to its citizens nor its nation-states, that means the money goes to corporations, which means that the ECB, and by extension the whole EU, is a fascist construct (fascism being defined as a government running on behalf of the corporations).

Seb , June 2, 2016 at 8:07 am

That's a fallacy. Corporatism is a feature of fascism, not the other way around.

None of the governments you mention, with the possible exception of Israel and Turkey, can be called fascist in any meaningful sense.

Even the anti-immigration parties in the Western European countries you mention – AfD, Front National, Vlaams Belang – only share their nationalism with fascist movements. And they are decidedly anti-corporatist.

BananaBreakfast , June 4, 2016 at 5:28 pm

The problem here is one of semantics, really. You're using "fascist" interchangeably with "authoritarian", which is a misnomer for these groups. The EU is absolutely anti-democratic, authoritarian, and technocratic in a lot of respects, but it's not fascist. Both have corporatist tendencies, but fascist corporatism was much more radical, much more anti-capitalist (in the sense that the capitalist class was expected to subordinate itself to the State as the embodiment of the will of the Nation or People, as were the other classes/corporate units). EU technocratic corporatism has none of the militarism, the active fiscal policy, the drive for government supported social cohesion, the ethno-nationalism, or millenarianism of Fascism.

The emergent Right parties like UKIP, FNP, etc. share far more with the Fascists, thought I'd say they generally aren't yet what Fascists would have recognized as other Fascists in the way that the NSDAP and Italian Fascists recognized each other -perhaps they're more like fellow travelers.

tgs , June 2, 2016 at 9:46 am

True, I posted a few minutes ago saying roughly the same thing – but it seems to have gone to moderation.

Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them.

Jeff , June 2, 2016 at 10:05 am

When I was young, there were 4 divisions:
* who owned the means of production (public or private entities)
* who decided what those means were used for.
If it is a 'public entity' (aka government or regime) that decides what is built, we have a totalitarian state, which can be 'communist' (if the means also belong the public entities like the government or regional fractions of it) or 'fascist' (if the factories are still in private hands).
If it is the private owner of the production capacity who decides what is built, you get capitalism. I don't recall any examples of private entities deciding what to do with public means of production (mafia perhaps).
Sheldon Wolin introduced us to inverted totalitarism. While it is no longer the government that decides what must be done, the private 'owners' just buy the government, the judiciary, the press, or whatever is needed to achieve their means.
When I cite Germany, it is not so much AfD, but the 2€/hour jobs I am worried about. When I cite Belgium, it is not the fools of Vlaams Belang, but rather the un-taxing of corporations and the tear-down of social justice that worries me.

Jim , June 2, 2016 at 1:57 pm

But Jeff, is Wolin accurate in using the term "inverted totalitarianism" to try to capture the nature of our modern extractive bureaucratic monolith that apparently functions in an environment where "it is no longer the government that decides what must be done..simply.."private owners just buy the government, the judiciary, the press, or whatever is needed to achieve their means."

Mirowski argues quite persuasively that the neoliberal ascendency does not represent the retreat of the State but its remaking to strongly support a particular conception of a market society that is imposed with the help of the State on our society.

For Mirowski, neoliberalism is definitely not politically libertarian or opposed to strong state intervention in the economy and society.

TedWa , June 2, 2016 at 10:19 am

Inverted totalitarianism is the mirror image of fascism, which is why so many are confused. Fascism is just a easier term to use and more understandable by all. There is not a strict adherence to fascism going on, but it's still totalitarian just the same.

jan , June 2, 2016 at 10:54 am

Hi
I live in Europe as well, and what to think of Germany's AfD, Greece's Golden Dawn, the Wilder's party in the Netherlands etc. Most of them subscribe to the freeloading, sorry free trading economic policies of neoliberalism.

schizosoph , June 2, 2016 at 9:28 am

There's LePen in France and the far-right, fascist leaning party nearly won in Austria. The far right in Greece as well. There's clearly a move to the far right in Europe. And then there's the totalitarian mess that is Turkey. How much further this turn to a fascist leaning right goes and how widespread remains to be seen, but it's clearly underway.

myshkin , June 2, 2016 at 11:28 am

Searched 'current fascist movements europe' and got these active groups from wiki.

National Bolshevik Party-Belarus
Parti Communautaire National-Européen Belgium
Bulgarian National Alliance Bulgaria
Nova Hrvatska Desnica Croatia
Ustaše Croatia
National Socialist Movement of Denmark
La Cagoule France
National Democratic Party of Germany
Fascism and Freedom Movement – Italy
Fiamma Tricolore Italy
Forza Nuova Italy
Fronte Sociale Nazionale Italy
Movimento Fascismo e Libertà Italy
Pērkonkrusts Latvia
Norges Nasjonalsosialistiske Bevegelse Norway
National Radical Camp (ONR) Poland
National Revival of Poland (NOP)
Polish National Community-Polish National Party (PWN-PSN)
Noua Dreaptă Romania
Russian National Socialist Party(formerly Russian National Union)
Barkashov's Guards Russia
National Socialist Society Russia
Nacionalni stroj Serbia
Otačastveni pokret Obraz Serbia
Slovenska Pospolitost Slovakia
España 2000 Spain
Falange Española Spain
Nordic Realm Party Sweden
National Alliance Sweden
Swedish Resistance Movement Sweden
National Youth Sweden
Legion Wasa Sweden
SPAS Ukraine
Blood and Honour UK
British National Front UK
Combat 18 UK
League of St. George UK
National Socialist Movement UK
Nationalist Alliance UK
November 9th Society UK
Racial Volunteer Force UK

Lexington , June 2, 2016 at 12:50 pm

"Fascism" has become the prefered term of abuse applied indiscriminately by the right thinking to any person or movement which they want to tar as inherently objectionable, and which can therefore be dismissed without the tedium of actually engaging with them at the level of ideas.

Most of the people who like to throw this word around couldn't give you a coherant definition of what exactly they understand it to signify, beyond "yuck!!"

In fairness even students of political ideology have trouble teasing out a cosistent system of beliefs, to the point where some doubt fascism is even a coherent ideology. That hardly excuses the intellectual vacuity of those who use it as a term of abuse, however.

OpenThePodBayDoorsHAL , June 2, 2016 at 4:39 pm

Precisely 3,248 angels can fit on the head of a pin. Parsing the true definition of "fascism" is a waste of time, broadly, fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks.

As far as the definition "neo-liberalism" goes, yes it's a useful label. But let's keep it simple: every society chooses how resources are allocated between Capital and Labor. The needle has been pegged over on the Capital side for quite some time, my "start date" is when Reagan busted the air traffic union. The hideous Republicans managed to sell their base that policies that were designed to let companies be "competitive" were somehow good for them, not just for the owners of the means of production.

The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences.

Jim , June 2, 2016 at 7:40 pm

PodBay stated:

"Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor.

Take, for example, the late 1880s-1890s in the U.S. During that time-frame there were powerful agrarian populists movements and the beginnings of some labor/socialist movements from below, while from above the property-production system was modified by a powerful political movement advocating for more corporate administered markets over the competitive small-firm capitalism of an earlier age.

It was this movement for corporate administered markets which won the battle and defeated/absorbed the agrarian populists.

What are the array of such forces in 2016? What type of movement doe Trump represent? Sanders? Clinton?

Lexington , June 2, 2016 at 10:31 pm

fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks

Which textbooks specifically?

The article I cited above in Vox canvasses the opinion of five serious students of fascism, and none of them believe Trump is a fascist. I'd be most interested in knowing what you have been reading.

As for your definition of "fascism", it's obviously so vague and broad that it really doesn't explain anything. To the extent it contains any insight it is that public institutions (the state), private businesses (the corporation) and the armed forces all exert significant influence on public policy. That and a buck and and a half will get you a cup of coffee. If anything it is merely a very crude descriptive model of the political process. It doesn't define fascism as a particular set of beliefs that make it a distinct political ideology that can be differentiated from other ideologies (again, see the Vox article for a discussion of some of the beliefs that are arguably characteristic of fascist movements). Indeed by your standard virtually every state that has ever existed has to a greater or lesser extent been "fascist".

My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. Given that these movements are only growing in strength as faith in traditional political movements and elites evaporate this is likely to produce exactly the opposite result. Right wing populism isn't going to disappear just because the left keeps trying to wish it away. Refusing to accept this basic political fact risks condemning the left rather than "the fascists" to political irrelevance.

Roger Smith , June 2, 2016 at 7:13 am

"…the gutters and cutters of neoliberalism"

This phrase is pure gold.

allan , June 2, 2016 at 7:44 am

The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck.

sleepy , June 2, 2016 at 7:56 am

I moved to a small city/town in Iowa almost 20 years ago. Then, it still had something of a Norman Rockwell quality to it, particularly in a sense of egalitarianism, and also some small factory jobs which still paid something beyond a bare existence.

Since 2000, many of those jobs have left, and the population of the county has declined by about 10%. Kmart, Penney's, and Sears have left as payday/title loan outfits, pawnshops, smoke shops, and used car dealers have all proliferated.

Parts of the town now resemble a combination of Appalachia and Detroit. Sanders easily won the caucuses here and, no, his supporters were hardly the latte sippers of someone's imagination, but blue collar folks of all ages.

weinerdog43 , June 2, 2016 at 8:25 am

My tale is similar to yours. About 2 years ago, I accepted a transfer from Chicagoland to north central Wisconsin. JC Penney left a year and a half ago, and Sears is leaving in about 3-4 months. Kmart is long gone.

I was back at the old homestead over Memorial Day, and it's as if time has stood still. Home prices still going up; people out for dinner like crazy; new & expensive automobiles everywhere. But driving out of Chicagoland, and back through rural Wisconsin it is unmistakeable.

2 things that are new: The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. (Yes, that means there is only enough money to resurface all the county roads if spread out over 200 years.) 2nd, there are dead deer everywhere on the side of the road. In years past, they were promptly cleaned up by the highway department. Not any more. Gross, but somebody has to do the dead animal clean up. (Or not. Don't tell Snotty Walker though.)

Anyway, not everything is gloom and doom. People seem outwardly happy. But if you're paying attention, signs of stress and deterioration are certainly out there.

Jim Haygood , June 2, 2016 at 12:08 pm

"the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis"

… while the fedgov spends north of 5 percent of GDP on global military dominance.

We're the Soviets now, comrades: shiny weapons, rotting infrastructure.

Today in San Diego, the Hildabeest will deliver a vigorous defense of this decadent, dying system.

Mary Wehrheim , June 2, 2016 at 8:32 am

This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot.

You also have the more gullible fundis who have actually deluded themselves into thinking the man who is ultimate symbol of hedonism will deliver them from secularism because he says he will. Authoritarians who seek solutions through strong leaders are usually the easiest to con because they desperately want to believe in their eminent deliverance by a human deus ex machina. Plus he is ostentatiously rich in a comfortably tacky way and a TV celebrity…beats a Harvard law degree. And why not the thinking goes …the highly vaunted elite college Acela crowd has pretty much made a pig's breakfast out of things. So much for meritocracy. Professor Harold Hill is going to give River City a boys band.

uahsenaa , June 2, 2016 at 9:58 am

Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government.

In other words, the MSM's fear is the clearest sign to these voters that their political revolution is working. Since TPTB decided peaceful change (i.e. Sanders) was a non-starter, then they get to reap the whirlwind.

Praedor , June 2, 2016 at 3:41 pm

Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase.

hunkerdown , June 2, 2016 at 4:29 pm

Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories?

Besides, consumers need to learn to play the long game and suck up the "scurrilous attacks" on their personal consumption habits for the next four years. The end of abortion for four years is not important - lern2hand and lern2agency, and lern2cutyourrapist if it comes to that. What is important is that the Democratic Party's bourgeois yuppie constituents are forced to defend against GOP attacks on their personal and cultural interests with wherewithal that would have been ordinarily spent to attend to their sister act with their captive constituencies.

If bourgeois Democrats hadn't herded us into a situation where individuals mean nothing outside of their assigned identity groups and their corporate coalition duopoly, they wouldn't be reaping the whirlwind today. Why, exactly, should I be sympathetic to exploitative parasites such as the middle class?

Dave , June 2, 2016 at 11:04 am

There are all good ideas. However, population growth undermines almost all of them. Population growth in America is immigrant based. Reverse immigration influxes and you are at least doing something to reduce population growth.

How to "reverse immigration influxes"?

  • Stop accepting refugees. It's outrageous that refugees from for example, Somalia, get small business loans, housing assistance, food stamps and lifetime SSI benefits while some of our veterans are living on the street.
  • No more immigration amnesties of any kind.
  • Deport all illegal alien criminals.
  • Practice "immigrant family unification" in the country of origin. Even if you have to pay them to leave. It's less expensive in the end.
  • Eliminate tax subsidies to American corn growers who then undercut Mexican farmers' incomes through NAFTA, driving them into poverty and immigration north. Throw Hillary Clinton out on her ass and practice political and economic justice to Central America.

I too am a lifetime registered Democrat and I will vote for Trump if Clinton gets the crown. If the Democrats want my vote, my continuing party registration and my until recently sizeable donations in local, state and national races, they will nominate Bernie. If not, then I'm an Independent forevermore. They will just become the Demowhig Party.

Jack Heape , June 2, 2016 at 10:00 am

Here's a start…

  1. Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal.
  2. Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks.
  3. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders.
  4. Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors.
  5. Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation.
  6. Impose tariffs to compensate for lower labor costs overseas and revise industry.
  7. Cut the Defense budget by 50% and use that money for intensive infrastructure development.
  8. Raise the national minimum wage to $15 and hour.
  9. Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official.
  10. Free public education including college (4 year degree).
TedWa , June 2, 2016 at 10:56 am

Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left.

tegnost , June 2, 2016 at 11:56 am

This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade.

TedWa , June 2, 2016 at 12:35 pm

Totally agree tegnost, no more democratic neoliberals ! Patty Murray (up for re-election) and Cantwell are both trade traitors and got fast track passed.

hunkerdown , June 2, 2016 at 4:44 pm

"they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism?

Sluggeaux , June 2, 2016 at 9:13 am

Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption.

This deserves a longer and more thoughtful comment, but I don't have the time this morning. I have to fight commute traffic, because the population of my home state of California has doubled from 19M in 1970 to an estimated 43M today (if you count the Latin American refugees and H1B's).

Vatch , June 2, 2016 at 11:04 am

Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people.

seanseamour , June 3, 2016 at 7:59 am

The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy.

In the 1980's I worked inside the beltway witnessing the new cadre of apparatchiks that drove into town on the Reagan coattails full of moral a righteousness that became deviant, parochial, absolutist and for whom bi-partisan approaches to policy were scorned prodded on by new power brokers promoting their gospels in early morning downtown power breakfasts. Sadly our politicians no longer serve but seek a career path in our growing meritocratic plutocracy.

paul whalen , June 2, 2016 at 9:19 am

America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses.

Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy.

http://www.counterpunch.org/2015/08/28/the-myth-of-the-middle-class-have-most-americans-always-been-poor/

[Aug 07, 2016] Angry Bear " Taxes, government, and the good life

angrybearblog.com
  1. Jim Hannan August 6, 2016 10:47 am

    It's surprising to me how little talk there is about the estate tax. When Bill Clinton was president, the estate tax rate was 55% on estates over $1.5 million. The Bush tax cuts eliminated the estate tax, but only in the last year of the ten years that the tax cuts were in effect. So, certain high asset taxpayers like George Steinbrenner of NY Yankees fame, paid no estate tax because they died that year.
    When the Democratic congress was unable to pass a new tax law in the fall of 2010, with all of the Bush tax cuts expiring, Obama was left to negotiate with Republicans on the new tax rates. The estate tax rate is now 40% on estates over $5 million.
    If Democrats ever regain control of Congress, I suggest that they consider a tiered estate tax, similar to the tiered income tax. Let the 40% rate stay for estates from $5 million to say $25 million. Then, move to a 50% rate for estates from $25 to $100 million. Finally, have a 60% rate for estates above $100 million.

  2. Zachary Smith August 6, 2016 11:12 am

    "We have starved the IRS while assigning it more and more functions, meaning it is much harder for the IRS to effectively enforce the laws, allowing wealthy people and big corporations with sophisticated lawyers a better chance to scam the system while ordinary people pay taxes due through withholding."

    I'd quibble with the "we" part of this statement, but this was a really good read overall.

    I don't see things getting any better. Both of the presidential candidates are quite wealthy. One was born with a silver spoon in his mouth, and has no idea at all what it's like to live in the "real world". The other is nouveau riche, and that mix of relative poverty and newly found wealth has warped her viewpoint of the world.

    I'm a hardliner on the estate tax. Anything exceeding some arbitrary point – say $100 million – would be taxed at 95%. Can't see THAT happening, either. The propagandists for the rich would use extreme examples – What If You Won The Power Ball? And Joe Sixpack would buy it. Just as he has been against his own interests for generations.

  3. EMichael August 6, 2016 11:25 am

    ZS,

    Nice to see your consistency. Amazing how you can come to an opinion about different topics(like the estate tax) and what Clinton believes without making any effort to find out the truth.

    Must be nice to know everything without reading anything.

  4. Joel August 6, 2016 1:42 pm

    Why not tax estates like income? The person who inherits the windfall didn't earn it, I know, but like every taxable transaction, money has changed hands.

    Tax inherited income as income. Tax dividend income as income. Why privilege some kinds of income over others?

[Aug 03, 2016] Financialization and its Discontents

Notable quotes:
"... We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional decay and corruption. ..."
"... Capitalism has always favored the few at the expense of the many. Yet there have been places and moments, like in post-WWII U.S., where effort has gone into making the financial system at least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic ticket in a timely fashion, you may well lose your liberty, or even your life. ..."
"... The problem we have is that the system is rigged. Bad actors in the upper class can destroy their bank for fun and profit. Individuals father down the scale cannot discharge student loans under any circumstances. This is the largest source of discontent and a problem elites refuse to address. ..."
"... And the elites won't address it until they are jailed or guillotined. Why should they? ..."
"... The article starts off well enough, but then loses track of the critical standpoints it initially sets out. For example, within the above idea, the author can't talk about dimensions of life that are not monetizable because they are a capitalist prerogative. For instance, if someone is forced to work mandatory overtime because their employer doesn't want to hire enough workers to cover demand without overtime, you either do the overtime or you exit. You can't buy your time off. Etc. ..."
"... I'm not sure what point this article is attempting to make. The distinction between money and debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many of the rest of the commenters in not having read any of these oft cited books. ..."
"... I agree with other comments the formula "we are each of us banks" is lame. I think it matches nicely with the oft repeated analogy between government finance and a family business. ..."
"... Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers. ..."
"... money is the mental construct, the idea, by which we value human labor and transport that value across spacetime. ..."
"... Other People's Money ..."
naked capitalism
TomDority , August 3, 2016 at 6:55 am

Not sure the bank thing is a good analogy. Seams when a financial system raises the cost of an asset like land through speculation to the point where a debtor has not enough income to cover outflow to provide basics of survival….. food, water, shelter, community etc……..then does the crrditor/speculator thus owe society because, it was through speculation and Mal-investment that society was damaged.

Thomas Jefferson….I think, said something along the lines…… if banks get a hold of credit creation then, by inflation and deflation the citizens of this country will be left homeless upon the land their fathers established.

IDG , August 3, 2016 at 7:30 am

We are all "banks", but we don't have the capacity to socialise costs and privatise benefits. The problem is thereby, a problem of the power structure and accountability. Of institutional decay and corruption.

Ulysses , August 3, 2016 at 9:41 am

Very well said!

Capitalism has always favored the few at the expense of the many. Yet there have been places and moments, like in post-WWII U.S., where effort has gone into making the financial system at least appear somewhat transparent and predictable. Today we simply suffer the unrestrained looting of kleptocrats who laugh in our faces if we dare to complain. They violate "rules" that are already tilted in their favor with impunity. Meanwhile, if you are a poor person, unable to pay a traffic ticket in a timely fashion, you may well lose your liberty, or even your life.

washunate , August 3, 2016 at 10:55 am

Capitalism has always favored the few at the expense of the many.

I'm curious what makes capitalism unique for you in that regard? I agree that there are problems with market-based economics, but you seem to be suggesting that other forms of political economy don't have problems of concentration of wealth and power?

Capitalism without democracy and individual rights absolutely favors the few at the expense of the many. That's why our intellectual enablers have spent so much energy trying to separate economics from politics: to camouflage political choices as if they are natural economic outcomes.

Left in Wisconsin , August 3, 2016 at 11:52 am

I'm not sure what "other forms" you have in mind for comparison. But I would suggest it is a huge failure of imagination to suggest humans have exhausted all possible forms of economic organization and are stuck with contemporary global capitalism. Time for some innovation!

readerOfTeaLeaves , August 3, 2016 at 11:04 am

Agreed.

And as Mehring points out: "Focusing on what money really is – whether gold or state fiat – shifts attention away from what credit really is, which is to say away from the center of discontent." It's the quality of that debt, what it is and why, that needs far more examination. At present, it is at the root of much discontent: why should I and mine be expected to salvage bank balance sheets that are essentially fraudulent in terms of crap mortgages?

The institutional decay is really some kind of measure of the quality of crappy debt, which is making many of us seriously discontent at being expected to cover crap bets.

Larry , August 3, 2016 at 7:36 am

The problem we have is that the system is rigged. Bad actors in the upper class can destroy their bank for fun and profit. Individuals father down the scale cannot discharge student loans under any circumstances. This is the largest source of discontent and a problem elites refuse to address.

Benedict@Large , August 3, 2016 at 8:22 am

And the elites won't address it until they are jailed or guillotined. Why should they?

hemeantwell , August 3, 2016 at 8:42 am

From a money view perspective, the origin of discontent seems to lie in the fact that each of us, in our interface with the essentially financial system that is modern capitalism, operates essentially as a bank, meaning a cash inflow, cash outflow entity.

The article starts off well enough, but then loses track of the critical standpoints it initially sets out. For example, within the above idea, the author can't talk about dimensions of life that are not monetizable because they are a capitalist prerogative. For instance, if someone is forced to work mandatory overtime because their employer doesn't want to hire enough workers to cover demand without overtime, you either do the overtime or you exit. You can't buy your time off. Etc.

Jeremy Grimm , August 3, 2016 at 9:34 am

I'm not sure what point this article is attempting to make. The distinction between money and debt becomes moot if money is a debt - which if I understand his arguments correctly is what Michael Hudson argues in "Killing the Host". I do like the reading list at the bottom. I'm behind many of the rest of the commenters in not having read any of these oft cited books.

I agree with other comments the formula "we are each of us banks" is lame. I think it matches nicely with the oft repeated analogy between government finance and a family business.

The close: "fundamental misunderstanding of the nature of the system" leaves me hanging. Where is the explanation which clarifies things and repairs my misunderstanding? I missed it in the presentation above and the concluding absurdity - "… we are each of us banks, managing our daily cash inflow and cash outflow relative to the larger system which is society." - hardly serves as clarification of anything. It just makes me annoyed that I bothered to read down that far.

JEHR , August 3, 2016 at 11:38 am

Bad analogy: If each of us were our own bank, then we would be able to create money like banks and loan out with interest and make billions each quarter because sometimes we could speculate or gamble and make billions more while our fellow citizens become poorer because of our efforts.

washunate , August 3, 2016 at 10:25 am

Unlike some commenters, I do happen to like the imagery of all of us being banks. That's what we all do: our labor flows out, other people's labor flows in. Imbalances can (and in fact, almost by definition have to) occur over arbitrarily short time frames, but over longer timeframes, these inflows and outflows do have to roughly balance. It also helps lay bare the fallacy of bailing out individual banks (TBTF) as some kind of means of saving the banking system rather than those specific banks bailed out. If the USFG gave Wash a trillion buck bailout, Wash Banking Inc would be very grateful and fix lots of things in Wash Town USA and make lots of jawbs and groaf and all dat. Does that make it good policy, either for the residents of Wash Town or the residents of Dry Town across the valley?

Where I don't quite follow the author's point is in distinguishing money/credit/financialization/etc. The easiest way to understand money at a macro level is that money is labor. Or a bit more complexly, money is the mental construct, the idea, by which we value human labor and transport that value across spacetime.

The issue of financialization isn't market vs. non-market or money vs. non-money or something like that. Financialization is about the subset of money called currency, particularly currency units issued by a sovereign government, being used to allocate resources in areas where currency units are poor allocators of resources. Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers.

The biggest areas of financialization in contemporary western culture, especially in the heart of the free world in DC, are not markets at all. They are government sponsored enterprises carrying out that age old quest of the Will to Power. Remove USFG policy choices to run a global empire abroad and create massive inequality at home, and our supposedly market-based financial system would shrink to a much smaller size overnight.

JEHR , August 3, 2016 at 11:39 am

If money were true labour then bankers would be broke!

Robert Dannin , August 3, 2016 at 11:51 am

"Financialization is about middlemen and looters skimming off money as it flows through; whether this is good or bad in a particular case depends upon whether those middlemen add value or simply act as rentiers."

You hit the nail on the head here. Profits from financial transactions differ from those derived in trading commodities and services. The former are occult whereas the latter originate in the value of labor power. The claim that financial profits track interest rates doesn't work because they remain linked to credit and ultimately commodity exchange. If you listen to the Blankfeins and Dimons, they will say they are compensated for some special managerial skills that add values to the financial transaction. This is only nonsense to justify their mega-salaries, themselves only a fraction of the huge profits in finance. According to Hilferding's Finance Capital, the source of profit in finance is "sui generis" and derives from what we now call transaction fees. Whether legitimate or not, we need to understand how those rates are determined relative to the other variables.

Left in Wisconsin , August 3, 2016 at 11:58 am

money is the mental construct, the idea, by which we value human labor and transport that value across spacetime.

But even this has to be qualified by tradition, power relations, etc. as there are many, many forms of human labor (often those forms traditionally performed by women) that we value but do not compensate with money. Also, who is "we?" And when did "we" decide that 2 and 20 was appropriate compensation for the "value" provided by hedge funders?

Alejandro , August 3, 2016 at 11:10 am

This "economist" alludes to, but fails to make the connection of the "asymmetrical" AND disproportionate power between creditors and debtors, that has been legislated, ratified and codified into the creditor castle (institution) of banking, currently run by banksters and moated with pols, judges, story-tellers masquerading as "journos"/"economists" etc….e.g.-assuming it were possible to make a sharp distinction between speculating and investing, by what reasonable definition of creditor can vultures be classified as creditors?

Also doesn't seem to challenge the presupposition of "self-regulation" in the abstract "logic"(and language) of "markets", which is innate in thinking of "money" as a commodity. This abstract "logic"(and language) has "supplied" the fodder for neoliberal zealots to rationalize de-regulation, which many have concluded has been a major driver of the "defining issue of our time" and the disdainful polarization between the "haves" and "have-nots".

Also seems to fail to recognize the conflict when thinking about money as a commodity and the effects of compounding interest…

Sluggeaux , August 3, 2016 at 12:23 pm

Thanks for this. I followed the link and have started reading Louis Brandeis' Other People's Money , which I've never read before. We've learned little in the ensuing 100 years…

[Aug 01, 2016] The top one tenth of percent couldnt have done so much damage to the world if millions supposedly good people hadnt fallen into their traps so easily...

www.moonofalabama.org

@84 PhilK

Anything I got wrong? Anything I missed? There's an address you can reach me at the page if you have suggestions.

Posted by: jfl | Jul 30, 2016 1:37:48 AM | 90

@86 Thank you, Penelope. You make very good points, as always. :-)

But let me repeat my conclusion - the world is evil because people are weak.

The 0.1% couldn't have done so much damage to the world if millions supposedly "good people" hadn't fallen into their traps so easily...

Posted by: ProPeace | Jul 30, 2016 2:57:04 AM | 91

@72 Many good USians have been murdered (Phill Marshall, sen. Paul Wellstone, JFK junior - competing with Hitlary for the Senate seat), silenced, imprisoned, intimidated, disenfranchised for standing up to the criminal elite.

They deserve our utmost respect.

Do not use collective responsibility, Bolshevik style.

Posted by: ProPeace | Jul 30, 2016 3:05:11 AM | 92

[Jul 31, 2016] If you think that this picture seems to rhyme with the Internet Bubble of 1999 … youre right!

www.nakedcapitalism.com
Jim Haygood , July 29, 2016 at 3:41 pm

ALL FIVE largest U.S. companies by market cap are now tech stocks: Apple, Google, Microsoft, Amazon and Facebook.

http://www.usatoday.com/story/money/2016/07/29/amazon-facebook-top-exxon-mobil-market-cap/87700896/

They are the top five holdings in the Nasdaq 100 index, which hit a record high yesterday.

Technically, Amazon is classified in the Consumer Discretionary sector (and the internet retailing industry), whereas the other four are in the Technology sector. But Amazon's value derives from the technology of its internet platform, its cloud services, etc.

If you think that this picture seems to rhyme with the Internet Bubble of 1999 … you're right!

IDG , July 29, 2016 at 6:31 pm

Also Google and Facebook income are just big advertising and marketing (data mining) companies disguised as tech companies. Their core business is not producing and selling any tech (specially Facebook).

[Jul 28, 2016] Elite needs a kill switch for their front men and women

marknesop.wordpress.com
Patient Observer , July 23, 2016 at 7:07 pm
An interesting article on John McCain. I disagree with the contention that McCain hid knowledge that many American POWs were left behind (undoubtedly some voluntarily choose to remain behind but not hundreds ). However, the article touched on some ideas that rang true:

Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history.

An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin soon outmaneuvered and exiled his oligarch patron Boris Berezovsky. One means of minimizing such risk is to select puppets who are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise.

The gist is that elite need a kill switch on their front men (and women).

http://www.unz.com/runz/american-pravda-when-tokyo-rose-ran-for-president/

Cortes , July 24, 2016 at 11:16 am

Seems to be a series of pieces dealing with Vietnam POWs: the following linked item was interesting and provided a plausible explanation: that the US failed to pay up agreed on reparations…

http://www.unz.com/runz/american-pravda-relying-upon-maoist-professors-of-cultural-studies/

marknesop , July 24, 2016 at 12:29 pm
Remarkable and shocking. Wheels within wheels – this is the first time I have ever seen McCain's father connected with the infamous Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights.
Cortes , July 25, 2016 at 9:08 am
Another stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic audio file of POW McCain's broadcasts from captivity. Dynamite stuff. The conclusion regarding aspiring untenured historians is quite downbeat:

http://www.unz.com/runz/american-pravda-will-there-be-a-spotlight-sequel-to-the-killing-fields/

marknesop , July 25, 2016 at 10:40 am
Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the Cover-Up. yalensis , July 25, 2016 at 3:40 pm
So, McCain was Hanoi Jack broadcasting from the Hanoi Hilton?

[Jul 20, 2016] Bill Black: Mankiws Mythical Ten Commandments of Theoclassical Economics

Notable quotes:
"... Democrats: Please Renounce Mankiw's Myths ..."
"... Mankiw is a propagandist. ..."
"... The values and ideology represented in the Economics textbook Bill Black analyzed didn't arise in a vacuum. The points Black lists reflect the ideology, values, ethics and interests of a narrow segment of our society who have accumulated enormous personal wealth through a variety of extra-legal and illegal mechanisms, and who use a small portion of that wealth to fund "Economics Chairs" in our public and private universities; economics "think tanks"; and speeches, books, consulting engagements, and board memberships for "prominent economists". ..."
"... Mankiw is a shill/useful idiot for his oligarchs patrons. #11 explains the idiocy of the previous 10. ..."
"... Did the banks which loaned billions to the gas frackers of North Dakota know that production would exceed demand and cause a crash? Perhaps the loan officer might have such concern, but would more likely be most concerned with his/her own bottom line – a meme Yves explores in Econned. ..."
"... Newly-printed money CAN cause inflation, but WHERE the price rises happen depends greatly on the pockets in which the money lands. ..."
"... stocks, real estate, luxury goods, premium educations, etc. ..."
"... This kind of ignorant cluelessness is pretty prevalent among the oligarchy and its supporters like Mankiw. Just like that guy in Davos who simply couldn't understand why there's so much social unrest in the world today. They live in a completely different world. ..."
"... My first exposure to Mankiw's principles was actually an early version of the talk by Yoram Bauman in this video. It hits several of the points Mr. Black makes and is also pretty funny. It definitely demonstrates how Mankiw attempts to cloak his biases in supposedly neutral terms. ..."
"... I doubt Mankiw will accept 100% estate tax on the justification that the cost of bequests is zero to the recipient. (and thus a 100% estate tax doesn't incur large costs on the recipient) ..."
"... My paper lists four principles claimed to be at the core of modern economics by Mankiw and then shows how all four principles are false: Amir-ud-Din, Rafi and Zaman, Asad, Failures of the 'Invisible Hand' (July 15, 2013). Forum for Social Economics, Vol. 45, Iss. 1, 2016. Available at SSRN: http://ssrn.com/abstract=2293940 or http://dx.doi.org/10.2139/ssrn.2293940 ..."
May 17, 2016 | nakedcapitalism.com

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

This is the second column in a series on the N. Gregory Mankiw's myths and dogmas that he spreads in his economic textbooks. The first column exposed the two (contradictory) meta-myths that begin his preface. This column de-mythologizes Mankiw's unprincipled " principles " of economics – the ten commandments of theoclassical economics' priestly caste. Some of these principles, correctly hedged, could be unobjectionable, but in each case Mankiw dogmatically insists on pushing them to such extremes that they become Mankiw myths.

To understand Mankiw's mythical 10 commandments, one must understand "Mankiw morality" – a morality that remains hidden in each of his textbooks. Few people understand how radically theoclassical economics has moved in the last thirty years. Milton Friedman famously argued that CEOs should operate exclusively in the interest of shareholders. Mankiw, however, is a strong supporter of the view that CEOs will not only defraud customers, but also shareholders and creditors by looting the firm. "[I]t would be irrational for savings and loans [CEOs] not to loot." "Mankiw morality" decrees that if you have an incentive as CEO to loot, and fail to do so, you are not moral – you are insane. Mankiw morality was born in Mankiw's response as discussant to George Akerlof and Paul Romer's famous 1993 article "Looting: The Economic Underworld of Bankruptcy for Profit."

Mankiw's textbooks preach the wonders of the indefensible a system he has helped design to allow elite CEOs to loot the shareholders with impunity – the antithesis of Friedman's stated goal. Mankiw morality helps create the "criminogenic environments" that produce the epidemics of "control fraud" that drive our recurrent, intensifying financial crises. It is essential to interpret Mankiw's ten myths in light of his unacknowledged immoral views about how CEOs will and should respond to incentives to rig the system against the firm's consumers, employees, creditors, and shareholders. His textbooks religiously avoid any disclosure of Mankiw morality or its implications for perverting his ten commandments into an unethical and criminogenic dogma that optimizes the design of a criminogenic environment.

Mankiw's myths

  1. People Face Tradeoffs. To get one thing, you have to give up something else. Making decisions requires trading off one goal against another.

    This can be true, but Mankiw pushes his principle to the point that it becomes a myth. Life is filled with positive synergies and externalities. If you study logic or white-collar criminology you will make yourself a far better economist. You may trade off hours of study, but not "goals." If your "goal" is to become a great economist you will not be "trading off one goal against another" if you become a multidisciplinary scholar – you will strongly advance your goal. If you study diverse research methods you will be a far better economist than if you study only econometrics.

  2. The Cost of Something is What You Give Up to Get It. Decision-makers have to consider both the obvious and implicit costs of their actions.

    "Opportunity costs" are an important and useful economic concept, but Mankiw's definition sneaks ideological baggage into both sentences that turns his principle into multiple myths. Mankiw implicitly assumes fraud and other forms of theft out of existence in the first sentence. "Cost" is often not measured in economics by "what you give up to get it." If your inherit a home that lacks fire insurance and immediately burns down there is a cost to you (and society) even though you gave up nothing to inherit the home. If the CEO loots "his" firm he gave up nothing to get the millions, but if he loses those millions he will consider it to have a "cost." Theoclassical economists have a primitive tribal taboo against even using the "f" word (fraud).

    Decision-makers frequently ignore the "costs of their actions." There is nothing in economic theory or experience that supports the claim that the "decision-makers" "have" to consider costs. It is rare that decision-makers must do – or not do – anything.

    It is likely that Mankiw means that optimization requires decision-makers to "consider" all "costs of their actions," but that too is a myth. Theoclassical optimization requires perfect, cost-free information, pure "rationality," and no externalities. None of these conditions exist. Car buyers have no means of knowing the costs of buying a particular car. If they bought a GM car the ignition mechanism defect could cause the driver to lose the ability to control the car – turning it into an unguided missile hurtling down (or off) a highway at 70 mph. The car buyer does not know of the defect, does not know who will be driving when the defect becomes manifest, does not know who the passengers will be, and does not know who and what else could be injured or damaged as a result of the defect. The theoclassical view is that the buyer who "considers" the costs of buying his defective car to others (negative externalities) and pays more money to buy a car that minimizes those negative externalities is not acting ethically, but irrationally.

    It is typically cheaper (for the producer, not society) to produce goods of inferior (but difficult to observe) quality. The inability of the consumer to "consider" even the true costs to the consumer and the consumer's loved ones of these hidden defects means that economists began warning 46 years ago that "market forces" could become criminogenic. George Akerlof's 1970 article on markets for "lemons" even coined the term "Gresham's" dynamic to describe the process. A Gresham's dynamic is a leading form of a criminogenic environment.

    [D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.

    Akerlof was made a Nobel laureate in economics in 2001 for this body of work. Economics is the only field in which someone would write a textbook ignoring a Nobel laureate whose work has proven unusually accurate on such a critical point. There is only one reason to exclude this reality from Mankiw's myths – Akerlof's work falsifies Mankiw's myths, so Akerlof's work disappears from Mankiw's principles, as does the entire concept of fraud.

  3. Rational People Think at the Margin . A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost.

    The mythical nature of this principle flows from the multiple errors I have described. Mankiw is being deliberately disingenuous. Theoclassical economics does not claim, for example, that a firm produces a product "only if the marginal benefit of the action exceeds the marginal cost." Theoclassical economists claim that a firm sells a product "only if the marginal benefit of the action to the seller exceeds the marginal cost to the seller." The seller ignores social costs and benefits.

    For the sake of brevity, I will summarize that Mankiw's third principle is a myth for five reasons known to every economist. First, it implicitly assumes out of existence positive and negative externalities, which means that supposedly rational, self-interested decision-makers he postulates, even if they had perfect, cost-free information, would not contract to maximize social welfare.

    Second, as Mankiw morality implicitly admits, the actual optimization principle under theoclassical economics would be determined by the marginal benefits and costs of an action to the decision-maker – the CEO – not the firm, and certainly not society. Theoclassical economists, however, refuse to admit that explicitly, so it disappears from Mankiw's 10 commandments.

    Third, the information provided by CEOs is often not simply incomplete and costly, but deliberately deceptive. Where information is merely incomplete, consumers may pay far more for a product than they will benefit from the purchase. Where the seller provides deceptive information about quality, the buyer and members of the public may be harmed or even killed. The CEO may also be looting "his" firm as well as the customers. Mankiw has implicitly assumed perfect, cost-free information and implicitly assumed that fraud does not exist.

    Fourth, conflating rationality with optimization of personal costs and benefits is wrong on multiple grounds. It defines ethical behavior as "irrational" where the consumer or CEO takes into account social costs and benefits and protects the interests of others in an altruistic manner. Everything we know from behavioral economics also makes clear that humans are not "rational" in the manner predicted by theoclassical economics. Mankiw has implicitly assumed out of existence thirty years of economic research on how people actually behave and make decisions.

    Fifth, firms with monopoly power, according to theoclassical economics, maximize their profits by deliberately reducing production to a point that the social cost of producing the marginal unit is less than the marginal benefit to the consumer. Mankiw has implicitly assumed away monopolies.

  4. People Respond to Incentives. Behavior changes when costs or benefits change.

    I have responded to this myth in a prior article . The implications of his fourth principle in conjunction with Mankiw morality are devastating for theoclassical economics. CEOs create the incentives and understand how "behavior changes" among their agents, employees, and subordinate officers in response to those incentives. Under theoclassical principles this will unambiguously lead "rational" CEOs to set incentives to rig the system in favor of the CEO. Because fraud and abuse creates a "sure thing" that is certain to enrich the CEO, Mankiw's fourth commandment predicts that control frauds led by CEOs will be ubiquitous. Fortunately, many CEOs are ethical and remain ethical unless they are subjected to a severe Gresham's dynamic. As a result, Mankiw's commandments over-predict the incidence of fraud and abuse by CEOs. Similarly, experiments demonstrate that humans frequently act in altruistic manners despite financial incentives to act unfairly.

  5. Trade Can Make Everyone Better Off .
    Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services.

    See my article on faux "trade deals" that exposes this myth.

  6. Markets Are Usually a Good Way to Organize Economic Activity .
    Households and firms that interact in market economies act as if they are guided by an "invisible hand" that leads the market to allocate resources efficiently. The opposite of this is economic activity that is organized by a central planner within the government.

    Again, the key interaction under theoclassical theory is between CEO and consumers, employees, creditors, shareholders, and the general public. "Markets" are vague constructs and they work best when ethical and legal provisions reduce fraud to minor levels. When these ethical and legal institutions are not extremely effective against fraud, the incentives created by the market can be so perverse that they create a criminogenic environment that produces epidemic levels of fraud. Mankiw's myth is to describe only one possible incentive and treat it as the sole possibility other than what he falsely describes as "the opposite" – a government planner. The opposite incentive to the so-called "invisible hand" is the Gresham's dynamic. Mankiw mythically presents the government as the threat to an effective economy rather than an institution that is essential to producing and enforcing the rule of law that prevents a Gresham's dynamic.

  7. Governments Can Sometimes Improve Market Outcomes .
    When a market fails to allocate resources efficiently, the government can change the outcome through public policy. Examples are regulations against monopolies and pollution.

    The myth here is that government only has a desirable role where there is a "market fail[ure]." Mankiw treats "markets" as the norm and implicitly assumes that the government normally has nothing to do with making markets succeed. Even conservative classical economists admitted that the rule of law was essential to an effective economy and required an effective government. Well-functioning governments always improve "market outcomes." Indeed, they are typically essential to making possible well-functioning "markets."

    Mankiw also fails to explain that "markets" will be fictional and massively distort resource allocation (that is what a hyper-inflated bubble does) when there is an epidemic of control fraud. As I have explained, Mankiw's own principles predict (indeed, over-predict) that deregulated "markets" will frequently prove so criminogenic that they will produce epidemics of control fraud.

  8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services. Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.

    First, the CEOs of sectors such as finance that are immensely unproductive – so unproductive that they cause enormous losses rather than growth, and receive exceptional income because they loot. Income is often based not on productivity, but on the CEOs' wealth and economic and political power that allows them to rig the economy. A nation's standard of living also depends on its employment levels, which can be crushed by economic policies such as austerity.

    The issue is not what happens to "average income," but what happens to median income, wealth, the income and wealth of the lowest quartile or particular minorities, and to income and wealth inequality. A nation can have high average productivity, yet have poor performance for decades in these other critical measures.

    Consider what has happened to the folks who tried to do everything right to boost their productivity according to the theoclassical economic "experts'" advice. This is what has happened to Latino and black households where a head of the household has at least a college degree. The source is economists at the extremely conservative St. Louis Fed .

    Hispanic and black families headed by someone with a four-year college degree, on the other hand, typically fared significantly worse than Hispanic and black families without college degrees. This was true both during the recent turbulent period (2007-2013) as well as during a two-decade span ending in 2013 (the most recent data available).

    White and Asian college-headed families generally fared much better than their less-educated counterparts. The typical Hispanic and black college-headed family, on the other hand, lost much more wealth than its less-educated counterpart. Median wealth declined by about 72 percent among Hispanic college-grad families versus a decline of only 41 percent among Hispanic families without a college degree. Among blacks, the declines were 60 percent versus 37 percent.

    One of the reasons that college-educated Latino and black families lost so much wealth compared to their white and Asian-American counterparts is that they were more likely to get their degrees from the for-profit colleges that theoclassical economists touted – colleges that frequently provided a very expensive and very poor education, often involving defrauding the students. Another reason that college-educated Latino and black families lost so much wealth compared to their white and Asian-American counterparts is that they were far more likely to be the victims of predatory home lending – an activity for which theoclassical economists served as the primary apologists.

    Mankiw also ignores critical factors that determine "a country's standard of living." Yes, China reports higher growth, but it is also operating in an unsustainable fashion that has destroyed much of its environment and threatens to be a major contributor to the global suicide strategy of causing severe climate change.

  9. Prices Rise When the Government Prints Too Much Money . When a government creates large quantities of the nation's money, the value of the money falls. As a result, prices increase, requiring more of the same money to buy goods and services.

    No, and Mankiw knew this was a myth when he wrote it. First, "prices rise" for many reasons. Pharmaceutical prices rise because hedge fund managers take over pharma firms or encourage others to do so in order to increase prices on existing drugs by hundreds, sometimes thousands of percent. Prices rise because accounting control fraud recipes hyper-inflated the largest bubble in history in U.S. real estate. Prices rise because of cartels. Prices rise because oil cartels cause oil shocks. Prices rise due to real bottlenecks, e.g., shortages of a skill or material.

    Inflation has not risen, indeed general price levels have often fallen (deflation) despite record creation of money by central banks and private banks. Theoclassical economists have regularly predicted hyper-inflation. As Paul Krugman emphasizes, virtually none of them even admits their serial prediction failures.

  10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment . Reducing inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding the short-run effects of changes in taxes, government spending and monetary policy.

    Mankiw ends his ten myths with a series of myths. Foolish, counterproductive austerity often causes inflation to fall to harmfully low – even negative (deflation) – levels that can lead to prolonged recessions that cause severe damage to people and economies. Stimulus provides a win-win that improves economic growth and reduces human suffering without causing harmful inflation.

    A nation is able to operate at extremely high levels of employment without producing harmful inflation. Mankiw is a partisan Republican. When Republican presidents in the modern era are faced with recessions they junk their theoclassical dogmas and adopt stimulus programs, though they generally do so largely through the economically inefficient and less effective means of slashing tax rates for the wealthy.

Democrats: Please Renounce Mankiw's Myths

Unlike the Republicans, who always rise above their theoclassical principles when their president is in office and faces a recession, the "New Democrats" are the ones who seem to have drunk the theoclassical Kool-Aid and strive endlessly to create the self-inflicted wound of austerity when they are in power. New Democrats also love to bash Republican presidents for running deficits even when those deficits produced no harmful inflation and helped produce recovery. It is sensible and honest to point out that tax cuts for the wealthy are a far less effective form of stimulus and to present and support superior alternatives such as job guarantee and infrastructure programs. It would be superb if Democrats were to point out that by far the most effective, prompt means of cutting taxes to stimulate the economy in response to a recession is to cease collecting the Social Security taxes for several years. It is not fine to praise Bill Clinton for taking the harmful step of running a budget surplus or to bash Republicans because they – correctly – increased fiscal stimulus (and therefore the short-term deficit) in response to a recession.

Democrats also need to stop spreading the myth that Bill Clinton was an economic marvel. He was the luckiest president in history in terms of timing. His economic "success" was the product of two of the largest bubbles in history (the dot.com and real estate bubbles). The real estate bubble is the only thing that prevented his dot.com bubble from causing an economic collapse during his term. The real estate bubble was so enormous that it made it easy for the fraudulent CEOs to "roll" (refinance) the fraudulent loans they made, which helped cause the bubble to hyper-inflate. The saying in the trade is "a rolling loan gathers no loss." This meant that the bubble was Bill Clinton and George Bush's bubble, but it collapsed on George Bush's watch so Clinton gets the credit for the high employment produced by the twin bubbles and Bush gets the blame for the massive unemployment that a massive bubble will create when it collapses (if it is not replaced by an even larger bubble).

Selected Skeptical Comments
ke , May 17, 2016 at 1:10pm

The pots are calling the kettles black; standard politics, redundancy easily replaced by automation.

You do know that Bernie isn't going after Hillary because he has his skeletons, especially in the medical university complex, don't you. Ever live in Vermont. You did notice that Hillary just threatened him, to the core of his argument.

Jef , May 17, 2016 at 11:2am

Ke – Very insightful!

This… "Energy is information, most of which humans ignore."…and this… "Public Education policies are disgusting to anyone who really wants to learn…" are the important elements although I would add that humans don't ignore so much as don't know/are not taught, and I would say Public education has been purposefully corroded to the point of disgusting.

Left in Wisconsin , May 17, 2016 at 11:5am

Democrats: Please Renounce Mankiw's Myths

Good one.

Jim Haygood , May 17, 2016 at 12:14pm

"Prices rise" for many reasons.

Pharmaceutical prices rise because hedge fund managers take over pharma firms or encourage others to do so in order to increase prices on existing drugs by hundreds, sometimes thousands of percent. Prices rise because accounting control fraud recipes hyper-inflated the largest bubble in history in U.S. real estate. Prices rise because of cartels. Prices rise because oil cartels cause oil shocks. Prices rise due to real bottlenecks, e.g., shortages of a skill or material.

- Bill Black

----–

All of these examples treat relative price rises in the affected sector, not the general inflation which saw the U.S. CPI increase by a factor of ten (10) since 1950. Hedge funds and cartels couldn't do that, no matter how successful they were in increasing their share of the pie.

The same logic is used by union busters to claim that "greedy labor unions" cause inflation - an equally false notion. Labor can increase its share of national income at the expense of corporate profit, but it cannot cause a general inflation.

This unprecedented secular inflation did, however, coincide with government bonds surpassing gold as the Federal Reserve's largest holding in 1945, and with the dollar's gold link being severed in 1971.

Bill Black evidently hews to the scholarly tradition of the eminent Argentine economist and former central banker Mercedes Marcó del Pont:

"It is totally false to say that the printing more money generates inflation; price increases are generated by other phenomena like supply and external sector's behaviour," said Marcó del Pont.

http://tinyurl.com/jk5d64w

This from a country that lopped thirteen (13) zeros off its currency in the past century.

*takes another bong hit and blows a fat smoke ring*

ChrisPacific , May 17, 2016 at 6:35pm

I would argue that the real estate bubble caused genuine inflation because it was a credit bubble, but I agree on your other points. Intuitively I think of inflation as a rise in prices without a corresponding rise in (average) affordability. It's why a Big Mac today can cost multiple times what it did 30 years ago without being any less affordable for the average customer.

Mankiw's definition isn't precisely wrong but it's oversimplified. He doesn't address the role of banks in money creation, he doesn't define money (what about credit?) he doesn't discuss the factors that might cause government to print more or less money, and he doesn't say how much is too much. Without more rigor than he provides, it's only useful as a plausibility argument after the fact.

Regarding Black's comment:

Inflation has not risen, indeed general price levels have often fallen (deflation) despite record creation of money by central banks and private banks.

I would say this was because they were doing it during the deflation of a credit bubble on a large enough scale that money creation by the government was a drop in the bucket by comparison, and that was what caused deflation. Which again points to the importance of defining terms and operating constraints (why couldn't the government print money on a massive scale to compensate? What are the drawbacks and limitations on that approach?)

Economists do love to make doomsday hyperinflation predictions that never seem to pan out. As far as I can tell, that's because they think that the economy is inherently unstable and will lapse naturally into massive inflation (see: wage-price spiral) or some other disastrous state without the wise guiding hand of a central banker to prevent it. There seems to be very little evidence of this actually happening in reality, and the few genuine examples of hyperinflation (Weimar, Zimbabwe) have typically resulted from a collapse in production coupled with debts denominated in other currencies that (a) considerably exceed the country's ability to pay and (b) require the attempt to be made anyway.

Nathanael , May 21, 2016 at 8:0am

Notice that Mankiw managed to say nothing about "Economic instability or deflation, and eventually economic depression, is caused when the government prints TOO LITTLE money", which is actually true and happens quite reliably.

Mankiw is a propagandist.

TG , May 17, 2016 at 12:59pm

The true laws of economics:

  1. If it is physically impossible for something to occur, it won't, and finance be damned. Economics is first and foremost a branch of the physical sciences, though most economists have forgotten this.
  2. Supply and demand.
  3. Unintended consequences.
  4. High productivity does not create high wages. High wages create high productivity. If you spend a lot of money on water-conservation technology at the base of Niagara Falls, will it increase the economic value of water there?
  5. The physical utility of a commodity (including labor) is not related to its economic value. Adam Smith did get something right.
  6. Nothing in this universe can grow exponentially for very long. Societies with sustained high fertility rates will always be miserably poor, and only societies that have first reduced their fertility rate can hope to become rich.
  7. A (more-or-less) free market is indeed a powerful and essential optimization mechanism ("the invisible hand") but it is nonlinear. Like all such nonlinear optimization mechanisms, it can and does get stuck in local minima and require external directed efforts to move to a more optimal solution. This is basic math.
  8. Inflation occurs when prices go up. That's it.
  9. "Capitalism" guarantees neither poverty nor prosperity. The market is neutral. Even as the laws of physics are obeyed equally well by a building that stands tall as by one that collapses into a heap of rubble, the laws of the market are also obeyed in miserably poor Bangladesh as well as in prosperous Switzerland. With 100 desperate people competing for every job, wages for the many will be low and profits for the few will be high. And vice versa. Blaming "capitalism" for poverty is silly, as if I threw someone off a cliff and then blamed the law of gravity for their death. Trying to deny market forces is equally silly, like trying to legislate gravity out of existence. It simply must be worked with.
  10. "Free to choose to own or employ slaves", "Free trade includes the ability of big corporations to restrict trade to maximize their profits", "Free to buy politicians and have them loot the public treasury in your interest" … Strict libertarianism is logically incoherent and ethically vile.
bdy , May 18, 2016 at 12:3am

Nice.

I quibble with 6 & 8. "A more or less free market" is a well regulated market. How much "more free" or "less free" a market needs to be to best distribute its product depends entirely on its particular conditions and vagaries. The insinuation that a market should be "stuck in a local minima" before oversight can improve its performance echoes Mankiw's 7th misconstruction, that (in Bill Black's words) "government only has a desirable role when there is a market failure."

I especially disagree that markets are neutral. Markets exist at the pleasure of the Capitalists who create and smother them for profit. Capitalists are forever cajoling "market opportunities" out from under every rock they can turn over. They invent, shape, split, combine, dissect, analyze, produce, reproduce, abandon, corner and strangle markets in pursuit of lucre. There is no market for Ford electric cars in California beyond the handful required by statute, despite ample demand, because individuals at Ford have determined that creating that particular market will eat into the personal profit they might extract from other markets. "Efficient" markets, that only return a gazilionth of a point on investment because of optimal competition, cease to be because the margin is too low to justify the hassle or the capital risk. Switching gears, labor markets in Bangladesh & Switzerland exist when Capitalists decide to hire workers. Hirees agree to be paid what Capitalists choose to pay, whether "freely" or under the duress of the State.

There is no market equivalent to gravity or the law of planetary motion. The model of supply and demand is a hypothetical post rationalization of a shifting negotiation – while it's helpful to a degree, supply/demand doesn't make "lawfull" (or useful) predictions until demand nears infinity (see health care: "how much will that be, doc?" – "how much have you got?", or housing: "how much can you borrow from a fractional reserve player who lends without risk and won't verify your income?")

As the local monopolists of violence, States can engage markets as they see fit. They can supply (Volkswagon & the post office), demand (food stamps, R&D grants), regulate, open (ACA) or close them (pharmaceutical imports) to their hearts desire. Good or bad outcomes depend entirely on the wisdom of the policy.

Whoa. Exhale. To be sure, I inhaled. Too many words when I should just say:

Nice.

Its good we agree that policy should be just and compassionate.

Chauncey Gardiner , May 17, 2016 at 1:12pm

The values and ideology represented in the Economics textbook Bill Black analyzed didn't arise in a vacuum. The points Black lists reflect the ideology, values, ethics and interests of a narrow segment of our society who have accumulated enormous personal wealth through a variety of extra-legal and illegal mechanisms, and who use a small portion of that wealth to fund "Economics Chairs" in our public and private universities; economics "think tanks"; and speeches, books, consulting engagements, and board memberships for "prominent economists".

This matter is really about whose values will control government economic policy and law.

Excellent analysis. Thank you, Bill Black, for all you do and have done.

Lumpenproletariat , May 17, 2016 at 1:16pm

#11

Mankiw is a shill/useful idiot for his oligarchs patrons. #11 explains the idiocy of the previous 10.

steelhead23 , May 17, 2016 at 2:45pm

I see much of the underlying theory of classical economics as simplifications that make the math easier. One of my favorite examples of misallocation of resources was the market for Burbank Russet potatoes in 2001. Basically, producers wanted $6.50 per hundredweight for spuds. The big buyer, Simplot offered farmers $4.50 pre-season. Many farmers decided to wait until harvest, hoping the spot market would give them a better price. I should also mention that in Idaho, farmers not wishing to plant in a given year, could sell their water to other farmers, or to the federal government which uses the water to help salmon and to produce hydropower. Thus, producing potatoes carried the opportunity cost of water leasing. But leasing water leasing to the federal government is culturally taboo in the ag. community. 2001 was a dry year and most of the ag. water was consumed growing spuds.

The outcome was a banner year in production, driving the spot market price to $0.50 per hundredweight, far less than the cost of production. Many acres of potatoes were plowed under – a total loss – to everyone.

My point is – there is no way to know, in advance, what the price of a commodity will be in the future unless you know, or can limit, the rate of production and control demand.

Did the banks which loaned billions to the gas frackers of North Dakota know that production would exceed demand and cause a crash? Perhaps the loan officer might have such concern, but would more likely be most concerned with his/her own bottom line – a meme Yves explores in Econned.

I suppose I am a bit defensive of classical microeconomics because it is elegant. But I am also terribly suspicious of its answers because one never has either the information or the control to be anywhere near as certain as the calculus would suggest.

Mike Thorne , May 17, 2016 at 4:01pm

On point #9: "Prices Rise When the Government Prints Too Much Money". Recent inflation data suggests it's a myth. But if restated as "When government prints money, prices rise on the goods and services that the people who receive the money tend to buy", then it's NOT a myth.

That was the whole problem with the Federal Reserve's damned QE efforts. They printed gobs of money, and it all landed in the pockets of the wealthy. The stuff they buy (stocks, real estate, luxury goods, premium educations, etc.) has seen prices rise MUCH faster than nominal inflation. And the people who didn't get any of the newly printed money (i.e., most of us)… Well, these sad folks couldn't afford to spend any more than before, so anybody who attempted to impose prices hikes on low-end consumer goods saw a loss of sales volume.

Newly-printed money CAN cause inflation, but WHERE the price rises happen depends greatly on the pockets in which the money lands.

Jeff Z , May 17, 2016 at 6:24pm

Excellent Point!

TK421 , May 17, 2016 at 6:32pm

stocks, real estate, luxury goods, premium educations, etc.

But it's hard to produce more of those, so with an increase in money chasing them their prices will rise. If the government handed money to poor people, they would buy food, clothes, cars, televisions, etc. In other words, things that society can produce more of. That's my read, anyway.

Mike Thorne , May 18, 2016 at 8:2am

Partially. Prices for good where quantities are truly fixed (like acres of land in San Francisco) can rise sharply when extra money pours in.

But even when there is opportunity to increase production, manufacturers must purchase equipment (like farm equipment for more food) or hire more workers (thereby tightening the labor market and pushing wages up). These result in price hikes. More modest price hikes than San Francisco real estate, but still real hikes. It's the classic supply vs. demand curve from classic microeconomics.

That said, "QE to the people" is certainly less objectionable than the "QE to the bankers and the 1%" that we've seen over the past five years. Prices would go up, but people would get to buy more things they want or need, and hiring would likely go up as well. [And at a minimum, there needs to be at least *some* growth in the money supply to keep up with population growth. Otherwise we see deflation and the ability to become wealthier by hoarding cash.]

dao , May 17, 2016 at 5:07pm

This was Mankiw's "response" to OWS back in 2011:

"Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years.

"According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396."

This kind of ignorant cluelessness is pretty prevalent among the oligarchy and its supporters like Mankiw. Just like that guy in Davos who simply couldn't understand why there's so much social unrest in the world today. They live in a completely different world.

TK421 , May 17, 2016 at 6:33pm

And since then, nearly every penny of income gains has gone to the 1%.

Expat , May 18, 2016 at 2:3am

The big difference being that $70k to the 99th percentile means the difference between a new Beemer this year or next while $500 for the median family means choosing which child goes hungry for the second half of December.

And of course, Anonymous's excellent point. You are cherry picking old data based on a stock market and real estate bubble crash. Median income families don't "own" real estate and certainly don't own stocks.

Mankiw is either psychotic or was gleefully obfuscating when he presenting that out-dated analysis.

I say Kill the Rich and feed their bodies to the poor. It's not a solution at all (and I am rich myself) but it would be deeply, deeply satisfying!

Jayinbmore , May 18, 2016 at 8:5am

My first exposure to Mankiw's principles was actually an early version of the talk by Yoram Bauman in this video. It hits several of the points Mr. Black makes and is also pretty funny. It definitely demonstrates how Mankiw attempts to cloak his biases in supposedly neutral terms.

Erwin Gordon , May 18, 2016 at 10:2am

As for number 6, I couldn't disagree with you more. Organisational power is dependent on it being enforced BY THE GOVERNMENT. Without that coercion, individuals would find other solutions for the want provided for by that particular organisation. I would suggest that you look at the history of Pennsylvania circa 1681-1690 or Moresnet (in what is now Aachen) circa 1816 until the end of WWI to understand what is possible when the free market really operates.

Nontraditional Student , May 19, 2016 at 6:2am

I am actually a returning undergrad student and starting an econ course next week. I just looked at the text book… and its Mankiw. Should be a fun semester.

Yves Smith , May 19, 2016 at 8:2am

Don't argue with the PR. You need to be strategic. Regurgitate the BS but be sure to read enough corrective material that the toxins don't infect your brain.

Patrick , May 20, 2016 at 5:19pm

I doubt Mankiw will accept 100% estate tax on the justification that the cost of bequests is zero to the recipient. (and thus a 100% estate tax doesn't incur large costs on the recipient)

Asad Zaman , July 13, 2016 at 10:1am

My paper lists four principles claimed to be at the core of modern economics by Mankiw and then shows how all four principles are false: Amir-ud-Din, Rafi and Zaman, Asad, Failures of the 'Invisible Hand' (July 15, 2013). Forum for Social Economics, Vol. 45, Iss. 1, 2016. Available at SSRN: http://ssrn.com/abstract=2293940 or http://dx.doi.org/10.2139/ssrn.2293940

[Jul 20, 2016] Global elites must heed the warning of populist rage

Notable quotes:
"... Real income stagnation over a far longer period than any since the second world war is a fundamental political fact. But it cannot be the only driver of discontent. For many of those in the middle of the income distribution, cultural changes also appear threatening. So, too, does immigration - globalisation made flesh. Citizenship of their nations is the most valuable asset owned by most people in wealthy countries. They will resent sharing this with outsiders. Britain's vote to leave the EU was a warning. ..."
"... First, understand that we depend on one another for our prosperity. It is essential to balance assertions of sovereignty with the requirements of global co-operation. ..."
"... Second, reform capitalism. The role of finance is excessive. The stability of the financial system has improved. But it remains riddled with perverse incentives. The interests of shareholders are given excessive weight over those of other stakeholders in corporations. ..."
"... Above all, recognise the challenge. Prolonged stagnation, cultural upheavals and policy failures are combining to shake the balance between democratic legitimacy and global order. The candidacy of Mr Trump is a result. ..."
July 19, 2016 | ft.com

Real income stagnation over a longer period than any since the war is a fundamental political fact

For every complex problem, there is an answer that is clear, simple and wrong." HL Mencken could have been thinking of today's politics. The western world undoubtedly confronts complex problems, notably, the dissatisfaction of so many citizens. Equally, aspirants to power, such as Donald Trump in the US and Marine Le Pen in France, offer clear, simple and wrong solutions - notably, nationalism, nativism and protectionism.

The remedies they offer are bogus. But the illnesses are real. If governing elites continue to fail to offer convincing cures, they might soon be swept away and, with them, the effort to marry democratic self-government with an open and co-operative world order.

What is the explanation for this backlash? A large part of the answer must be economic. Rising prosperity is a good in itself. But it also creates the possibility of positive-sum politics. This underpins democracy because it is then feasible for everybody to become better off at the same time. Rising prosperity reconciles people to economic and social disruption. Its absence foments rage.

The McKinsey Global Institute sheds powerful light on what has been happening in a report entitled, tellingly, Poorer than their Parents?, which demonstrates how many households have been suffering from stagnant or falling real incomes. On average between 65 and 70 per cent of households in 25 high-income economies experienced this between 2005 and 2014. In the period between 1993 and 2005, however, only 2 per cent of households suffered stagnant or declining real incomes. This applies to market income. Because of fiscal redistribution, the proportion suffering from stagnant real disposable incomes was between 20 and 25 per cent. (See charts.)

McKinsey has examined personal satisfaction through a survey of 6,000 French, British and Americans. The consultants found that satisfaction depended more on whether people were advancing relative to others like them in the past than whether they were improving relative to those better off than themselves today. Thus people preferred becoming better off, even if they were not catching up with contemporaries better off still. Stagnant incomes bother people more than rising inequality.

The main explanation for the prolonged stagnation in real incomes is the financial crises and subsequent weak recovery. These experiences have destroyed popular confidence in the competence and probity of business, administrative and political elites. But other shifts have also been adverse. Among these are ageing (particularly important in Italy) and declining shares of wages in national income (particularly important in the US, UK and Netherlands).

Real income stagnation over a far longer period than any since the second world war is a fundamental political fact. But it cannot be the only driver of discontent. For many of those in the middle of the income distribution, cultural changes also appear threatening. So, too, does immigration - globalisation made flesh. Citizenship of their nations is the most valuable asset owned by most people in wealthy countries. They will resent sharing this with outsiders. Britain's vote to leave the EU was a warning.

So what is to be done? If Mr Trump were to become president of the US, it might already be too late. But suppose that this does not happen or, if it does, that the result is not as dire as I fear. What then might be done?

  1. First, understand that we depend on one another for our prosperity. It is essential to balance assertions of sovereignty with the requirements of global co-operation. Global governance, while essential, must be oriented towards doing things countries cannot do for themselves. It must focus on providing the essential global public goods. Today this means climate change is a higher priority than further opening of world trade or capital flows.
  2. Second, reform capitalism. The role of finance is excessive. The stability of the financial system has improved. But it remains riddled with perverse incentives. The interests of shareholders are given excessive weight over those of other stakeholders in corporations.
  3. Third, focus international co-operation where it will help governments achieve significant domestic objectives. Perhaps the most important is taxation. Wealth owners, who depend on the security created by legitimate democracies, should not escape taxation.
  4. Fourth, accelerate economic growth and improve opportunities. Part of the answer is stronger support for aggregate demand, particularly in the eurozone. But it is also essential to promote investment and innovation. It may be impossible to transform economic prospects. But higher minimum wages and generous tax credits for working people are effective tools for raising incomes at the bottom of the distribution.
  5. Fifth, fight the quacks. It is impossible to resist pressure to control flows of un­skilled workers into advanced economies. But this will not transform wages. Equally, protection against imports is costly and will also fail to raise the share of manufacturing in employment significantly. True, that share is far higher in Germany than in the US or UK. But Germany runs a huge trade surplus and has a strong comparative advantage in manufacturing. This is not a generalisable state of affairs. (See chart.)

Above all, recognise the challenge. Prolonged stagnation, cultural upheavals and policy failures are combining to shake the balance between democratic legitimacy and global order. The candidacy of Mr Trump is a result. Those who reject the chauvinist response must come forward with imaginative and ambitious ideas aimed at re-establishing that balance. It is not going to be easy. But failure must not be accepted. Our civilisation itself is at stake.

martin.wolf@ft.com

More on this topic

[Jul 16, 2016] Paul Krugman Bull Market Blues

Economist's View

High stock prices are "not evidence of a healthy economy":

Bull Market Blues, by Paul Krugman, NY Times : Like most economists, I don't usually have much to say about stocks. Stocks ... have a lot less to do with the state of the economy or its future prospects than many people believe. ...
Still, we shouldn't completely ignore stock prices. The fact that the major averages have lately been hitting new highs ... is newsworthy and noteworthy. What are those Wall Street indexes telling us?
The answer, I'd suggest, isn't entirely positive..., in some ways the stock market's gains reflect economic weaknesses, not strengths. ...
We measure the economy's success by the extent to which it generates rising incomes for the population. But stocks ... only reflect the part of income that shows up as profits.
This wouldn't matter if the share of profits in overall income were stable; but it isn't. The share of profits ... has been a lot higher in recent years than it was during the great stock surge of the late 1990s ... making the relationship between profits and prosperity weak at best. ...
When investors buy stocks, they're buying a share of future profits. What that's worth to them depends on what other options they have for converting money today into income tomorrow. And these days those options are pretty poor... So investors are willing to pay a lot for future income, hence high stock prices for any given level of profits. ...
This may seem, however, to present a paradox. If the private sector doesn't see itself as having a lot of good investment opportunities, how can profits be so high? The answer, I'd suggest, is that these days profits often seem to bear little relationship to investment in new capacity. Instead, profits come from some kind of market power... And companies making profits from such power can simultaneously have high stock prices and little reason to spend.
Consider the fact that the three most valuable companies in America are Apple, Google and Microsoft. None of the three spends large sums on bricks and mortar. ...
In other words, while record stock prices do put the lie to claims that the Obama administration has been anti-business, they're not evidence of a healthy economy. If anything, they're a sign of an economy with too few opportunities for productive investment and too much monopoly power.
So when you read headlines about stock prices, remember: What's good for the Dow isn't necessarily good for America, or vice versa.
anne : , Friday, July 15, 2016 at 09:16 AM
http://cepr.net/blogs/beat-the-press/paul-krugman-s-stock-market-advice

July 15, 2016

Paul Krugman's Stock Market Advice

Paul Krugman actually did not make any predictions on the stock market, so those looking to get investment advice from everyone's favorite Nobel Prize winning economist will be disappointed. But he did make some interesting comments * on the market's new high. Some of these are on the mark, but some could use some further elaboration.

I'll start with what is right. First, Krugman points out that the market is horrible as a predictor of the future of the economy. The market was also at a record high in the fall of 2007. This was more than a full year after the housing bubble's peak. At the time, house prices were falling at a rate of more than 1 percent a month, eliminating more than $200 billion of homeowner's equity every month. Somehow the wizards of Wall Street did not realize this would cause problems for the economy. The idea that the Wall Street gang has some unique insight into the economy is more than a bit far-fetched.

The second point where Krugman is right on the money (yes, pun intended) is that the market is supposed to be giving us the value of future profits, not an assessment of the economy. This is the story if we think of the stock market acting in textbook form where all investors have perfect foresight. The news that the economy will boom over the next decade, but the profit share will plummet as workers get huge pay increases, would be expected to give us a plunging stock market. Conversely, weak growth coupled with a rising profit share should mean a rising market. Even in principle the stock market is not telling us about the future of the economy, it is telling us about the future of corporate profits.

Okay, now for a few points where Krugman's comments could use a bit deeper analysis. Krugman notes the rise in profit shares in recent years and argues that this is a large part of the story of the market's record high, along with extremely low interest rates. Actually, the profit story is a bit different than Krugman suggests.

The profit share had soared in the early days of the recovery. The before tax share of net corporate income went from a recession low of 16.9 percent of net income to 27.0 percent in the second quarter of 2014. The after-tax share peaked at 20.4 percent in the first quarter of 2012. However since then the profit share has trended downward. In the most recent quarter the before-tax profit share was 23.9 percent, while the after-tax share was 17.5 percent. This is most of the way back to the mid-1990s shares when before-tax profits were around 21.0 percent of net corporate income and after-tax shares were around 15.5 percent.

So, while profits had soared, the current market high cannot be explained by a soaring profit share. We are substantially below the peak shares from earlier in the recovery. One caution here is that the quarterly data are erratic and subject to large revisions. It is possible that this picture will look very different when the Commerce Department releases revised data later in the month.

The next issue is how we should think about a market high. If the stock market moves in step with corporate profits (i.e. the price to earnings ratio remains constant), and the profit share of GDP remains constant, then we should expect the stock market to continually reach new highs. In other words, market peaks are not like a new world record time in the mile, they are more like the tree in the backyard growing each year. They should not come as a surprise, nor be any cause for celebration.

The third point is that the stock market highs of the late 1990s were definitely not cause for celebration. The stock market was in a gigantic bubble. This was serious bad news for the economy and millions of 401(k) holders who saw their savings plummet in the crash of 2000-2002. (Yes, they should have sat tight, but a lot of people didn't realize this and it's not their job to be professional investors.) From the standpoint of the economy it was bad news because the crash led to a serious downturn in the labor market.

The strong wage growth of the late 1990s quickly dissipated as the labor market weakened. While the recession officially ended in December of 2001, we didn't begin to create jobs again until the fall of 2003. We didn't get back the jobs lost in the downturn until January of 2005. At the time, this was the longest period without net job growth since the Great Depression.

For what it's worth, the Clinton crew was clueless on the bubble. They wanted to put Social Security money in the stock market assuming that the real returns would average 7.0 percent annually. The actual average has been about half of this rate.

Finally, Krugman notes that the most highly valued companies in today's market are Apple, Google, and Microsoft. Krugman points out that none of these companies "spends large sums on bricks and mortar" and all three are sitting on large cash hoards.

Both points are well taken. Investment in plant and equipment has actually been falling in recent quarters. This would be fine if the decline was offset by a boom in research and development spending, but it hasn't been. Our great idea companies don't have many good ideas about what to do with all of their money.

But there is another point worth noting about the Big Three. All three are companies that depend to a large extent on government-granted monopolies in the form of patent and copyright protection. We have made these protections much stronger and longer over the last four decades through a variety of laws and trade agreements.

Of course the point of these protections is to give an incentive for innovation and creative work. But in a period where we are supposedly troubled by an upward redistribution from people who work for a living to people who "own" the technology, perhaps we should not be giving those people ever stronger claims to ownership of technology. (Yes, this involves the Trans-Pacific Partnership, among other policies.)

Anyhow, perhaps our leading economists will one day take note of this issue. It took a long time to notice that we had an $8 trillion housing bubble and that yes, it could be a problem. But let's hope our economists is learning.

* http://www.nytimes.com/2016/07/15/opinion/bull-market-blues.html

-- Dean Baker

anne -> anne... , Friday, July 15, 2016 at 09:19 AM
http://www.multpl.com/shiller-pe/

Ten Year Cyclically Adjusted Price Earnings Ratio, 1881-2016

(Standard and Poors Composite Stock Index)

July 14, 2016 PE Ratio ( 26.92)

Annual Mean ( 16.68)
Annual Median ( 16.04)

-- Robert Shiller

anne -> anne... , Friday, July 15, 2016 at 09:20 AM
http://www.multpl.com/s-p-500-dividend-yield/

Dividend Yield, 1881-2016

(Standard and Poors Composite Stock Index)

July 14, 2016 Div Yield ( 2.03)

Annual Mean ( 4.39)
Annual Median ( 4.33)

-- Robert Shiller

RC AKA Darryl, Ron -> anne... , Friday, July 15, 2016 at 09:51 AM
THANKS! Dean's the best - as usual.
anne -> RC AKA Darryl, Ron... , Friday, July 15, 2016 at 04:16 PM
Dean Baker's response to Paul Krugman is excellent, and we might consider arguing the matter further along both lines with the need for increased domestic investment the focus.
anne -> RC AKA Darryl, Ron... , Friday, July 15, 2016 at 04:31 PM
https://research.stlouisfed.org/fred2/graph/?g=4D9o

January 15, 2016

Shares of Gross Domestic Product for Private Fixed Nonresidential & Residential Investment Spending, Government Consumption & Gross Investment and Exports of Goods & Services, 2007-2016


https://research.stlouisfed.org/fred2/graph/?g=4D9t

January 15, 2016

Shares of Gross Domestic Product for Private Fixed Nonresidential & Residential Investment Spending, Government Consumption & Gross Investment and Exports of Goods & Services, 2007-2016

(Indexed to 2007)

anne -> anne... , Friday, July 15, 2016 at 04:36 PM
The problem in fostering growth comes to either increasing nonresidential investment or government spending (hopefully for infrastructure formation). There is no reason to think exports will increase significantly given the relatively strong dollar and weak international growth and slower population growth should not allow for significant residential investment increases for some time.

Either nonresidential investment or government spending is the answer then.

sanjait -> RC AKA Darryl, Ron... , Friday, July 15, 2016 at 04:
Yeah, DB calls out Krugman for not mentioning monopoly rents right after Krugman explicitly mentions them, and the Bernista crowd trumpets how great Baker is.

*rolls eyes heavily*

JohnH -> anne... , Friday, July 15, 2016 at 11:27 AM
It's not just Apple, Google and Microsoft. The whole economy is increasingly dominated by monopolies and oligopolies who can raise prices irrespective of demand.

Think about phone companies (Verizon, AT&T), cable TV (Comcast, TimeWarner), Wall Street banks, soft drinks (Coke, Pepsi), consumer goods (Procter and Gamble, Unilever), airplanes (Boeing, Airbus), oil refineries, pharmaceuticals, etc. etc.

Krugman is right that "profits come from some kind of market power... And companies making profits from such power can simultaneously have high stock prices and little reason to spend."

For many of these companies, it is not about intellectual property monopoly. Rather, it is about lack of aggressive anti-trust enforcement over the last 30 years, the Obama years being about the worst on record.

pgl -> JohnH... , Friday, July 15, 2016 at 01:26 PM
Wow - liberal economist Paul Krugman got something right. As far as your last fact free claim, I'll leave this issue to those who actually know what they are talking about:


http://www.natlawreview.com/article/has-antitrust-enforcement-been-reinvigorated-under-obama

JohnH -> pgl... , Friday, July 15, 2016 at 02:09 PM
The article takes a circuitous route to show that Obama has been more aggressive than Bush was...hardly a resounding endorsement of Obama, given Bush's lax enforcement.

I stand corrected--Obama wasn't the worst...thanks only to Bush 43's dismal record.

pgl -> JohnH... , Friday, July 15, 2016 at 03:17 PM
Wow - a first for everything! You finally admit one of your fact free rants is not reality. Progress!
JohnH -> pgl... , Friday, July 15, 2016 at 04:05 PM
Classic 'lesser of two evils' thinking: Obama was not as bad as Bush, therefore Obama was great!

Kind of like declaring that Franklin Pierce was better that Millard Fillmore, both lousy presidents...or that Miller is better than Budweiser.

This is exactly the kind of logic you get from partisan hacks like pgl...a committed Obamabot and Wall Street Democrat.

anne -> anne... , Friday, July 15, 2016 at 01:06 PM
https://investor.vanguard.com/mutual-funds/list#/mutual-funds/asset-class/month-end-returns

July 15, 2016

The 3 month Treasury interest rate is at 0.27%, the 2 year Treasury rate is 0.70%, the 5 year rate is 1.14%, while the 10 year is 1.59%.

The Vanguard Aa rated short-term investment grade bond fund, with a maturity of 3.3 years and a duration of 2.6 years, has a yield of 1.57%. The Vanguard Aa rated intermediate-term investment grade bond fund, with a maturity of 6.4 years and a duration of 5.4 years, is yielding 2.29%. The Vanguard Aa rated long-term investment grade bond fund, with a maturity of 22.0 years and a duration of 13.2 years, is yielding 3.35%. *

The Vanguard Ba rated high yield corporate bond fund, with a maturity of 5.7 years and a duration of 4.5 years, is yielding 5.28%.

The Vanguard unrated convertible corporate bond fund, with an indefinite maturity and a duration of 5.4 years, is yielding 2.07%.

The Vanguard A rated high yield tax exempt bond fund, with a maturity of 17.0 years and a duration of 6.3 years, is yielding 2.13%.

The Vanguard Aa rated intermediate-term tax exempt bond fund, with a maturity of 8.7 years and a duration of 4.8 years, is yielding 1.22%.

The Vanguard Government National Mortgage Association bond fund, with a maturity of 5.7 years and a duration of 3.4 years, is yielding 1.89%.

The Vanguard inflation protected Treasury bond fund, with a maturity of 8.7 years and a duration of 8.2 years, is yielding - 0.26%.

* Vanguard yields are after cost. Federal Funds rates are no more than 0.50%.

sanjait -> anne... , Friday, July 15, 2016 at 04:41 PM
Nit picking Dean Baker, favorite of the disaffected Bernistas who still haven't forgiven Paul Krugman, sarcastically calls for Krugman to talk about monopolistic rents for the big three tech companies but doesn't seem to notice that Krugman explicitly mentioned monopolistic rents for the big three tech companies in his blog post.
anne -> sanjait... , Friday, July 15, 2016 at 04:47 PM
Nitpicking Dean Baker, favorite of the ----------- --------- ...

[ Creepy language is where I immediately stop reading... ]

anne : , Friday, July 15, 2016 at 01:22 PM
Possibly an aside, though I would argue this is related and is surely important:

There has long been a steady refrain from most Western economists that China is doomed. Lately the refrain has been that we will soon find Chinese growth if continuing still slowing dramatically. Today, it turns out that Chinese growth which was 6.7% on a yearly basis in the first quarter was 6.7% in the second quarter. For the New York Times and Wall Street Journal however...

anne -> anne... , Friday, July 15, 2016 at 01:22 PM
http://www.wsj.com/articles/massive-stimulus-keeps-china-gdp-steady-in-second-quarter-1468549521

July 15, 2016

China GDP Sends Troubling Signal on Economic Reform
Slower growth rate would have indicated country was tackling excess industrial production, rising corporate debt
By MARK MAGNIER - Wall Street Journal

BEIJING-China maintained its growth pace of 6.7% in the second quarter-a bad sign to those who were looking for indications of economic restructuring.

Economists say a slower growth rate in the second quarter over the first quarter's 6.7% pace would have sent a welcome signal that China was tackling excess industrial production, rising corporate debt and state-owned enterprise reform.

Instead, by ramping up government spending and opening the credit taps, Beijing is likely to fuel overcapacity and see private companies crowded out by risk-averse state banks and bloated state companies.

This comes despite repeated calls by Prime Minister Li Keqiang and other senior officials to foster innovation, entrepreneurship and structural reform in order to shift the economy from credit-fueled infrastructure to high-tech industry and services....

pgl -> anne... , Friday, July 15, 2016 at 01:28 PM
China is doomed? I don't think so. Talk to any multinational and China is the new future. Although they complain that the Chinese SAT is really tough on transfer pricing enforcement. Our tax authority should take lessons from their Chinese counterparts.
anne -> pgl... , Friday, July 15, 2016 at 01:36 PM
Talk to any multinational and China is the new future. Although they complain that the Chinese State Administration Of Taxation is really tough on transfer pricing enforcement....

[ Really interesting. ]

anne -> pgl... , Friday, July 15, 2016 at 03:06 PM
Talk to any multinational and China is the new future. Although they complain that the Chinese State Administration Of Taxation is really tough on transfer pricing enforcement....

[ Again, critical for China and just what Stephen Roach of Yale has noticed and several times argued when interviewed on Bloomberg. ]

anne -> anne... , Friday, July 15, 2016 at 01:30 PM
So Chinese growth less than 6.7% would mean China was nearing doom, while growth at 6.7% means China is doomed, because growth less than 6.7% would mean that even though China slowing growth means doom for China at least slowing growth would show that the advice to restructure the economy of so many Western economists was being listened to, but 6.7% growth shows China is not listening to the advice of so many Western economists and that means, well, you know...

I think I understand.

anne -> anne... , Friday, July 15, 2016 at 01:33 PM
http://www.nytimes.com/2016/07/16/business/international/china-gdp-growth-stimulus.html

July 15, 2016

As China's Economy Slows, Beijing's Growth Push Loses Punch
By NEIL GOUGH and OWEN GUO

High debt and a glut of unneeded factories are hindering the government's usual method of using spending and lending to create more activity.

sanjait -> anne... , Friday, July 15, 2016 at 04:52 PM
Chinese growth is 6.7% with massive and unsustainable government interventions, and potentially some book cooking.

Meanwhile, people like Anne self-righteously accuse anyone who points to China's poor econ fundamentals and trends as being Western Imperialists, or something.

But if you feel so confident, go ahead and invest your money in China. The opportunity cost is low, given low rates in the devloped world, and they would certainly welcome the cash influx.

JohnH : , Friday, July 15, 2016 at 01:33 PM
IOW the real interest rate (CPI now @ 1.0%) is negative for 3 month and two year treasuries, 0.14% for 5 years, .57% for 10 years. If you invest in anything longer, a saver runs the risk of losing your shirt if a) rates unexpectedly go up or b) inflation rises forcing interest rates up.

It seems that economists enamored with inflation are oblivious (willfully?) to the consequences of saddling peopling with as much poor yielding secure debt as possible. Sure it will cheapen the real value of government debt, their primary goal, but only by screwing savers.

Unfortunately, higher inflation will make a lot of long term lenders bankrupt (think mortgage companies) as interest rates on borrowing short term exceed the interest rates on mortgages, which are currently at historical lows. To make matters worse, mark-to-market accounting will decimate the value of their holdings.

IMO anyone who lends long term, institutions or individuals buying 30 year bonds, is completely nuts. Without long term lending to support economic growth, how can the economy possibly grow?

anne -> JohnH... , Friday, July 15, 2016 at 03:14 PM
Unfortunately, higher inflation will make a lot of long term lenders bankrupt (think mortgage companies) as interest rates on borrowing short term exceed the interest rates on mortgages, which are currently at historical lows. To make matters worse, mark-to-market accounting will decimate the value of their holdings....

[ The question to ask is how can and will a mortgage company such as a Wells Fargo handle an increase in long term interest rates. There is a reason Warren Buffett has Well as a key Berkshire Hathaway holding and has recently been buying more of the company. Wells will be fine, but how?

"How" is an important question. ]

pgl -> JohnH... , Friday, July 15, 2016 at 03:19 PM
"t seems that economists enamored with inflation are oblivious"

More dishonest intellectual garbage. Economist are not for high inflation. We are for full employment. OK, OK - we know you are against full employment but hey!

JohnH -> pgl... , Friday, July 15, 2016 at 03:53 PM
Oh, puleez! If 'liberal' economists were for full employment, they would obsess about the Fed's employment target. But they don't...they obsess about not enough inflation, witout being very fussy about how to get more of it.

Do 'liberal' economists have such difficulty with the English language that they constantly substitute the word ' inflation' for 'employment?' Reading economic papers or Yellen's statements, one might think so. it's easy to see how much they struggle expressing their ideas. But constantly substituting 'inflation' for 'employment' is a bit over the top, even for tongue tied economists.

sanjait -> JohnH... , Friday, July 15, 2016 at 04:49 PM
Raising rates creates jobs ... if it were opposite day.
sanjait : , Friday, July 15, 2016 at 04:47 PM
Technical but important point: it's not the *current* profit share that matters for stock prices but rather the way current share reflects on expectations of the future that really matter.

So while Dean Baker, in his quest to nit pick everything Paul Krugman says in order to bring cheer to butt hurt Sandernistas everywhere (Who still haven't forgiven PK for daring to criticize their Beloved), does correctly note that profit share has declined, he fails to realize that a cyclical factor moving cyclically doesn't mean expectations of future profit share haven't also risen.

kaleberg : , -1
The real weakness in investment is the lack of wage growth which has limited consumer demand. Flat, or even shrinking, consumer demand means flat or shrinking demand for investment. When there is nothing to invest in, your best bet is the stock market.

[Jul 16, 2016] Stats Watch

Notable quotes:
"... Game Players of Titan ..."
www.nakedcapitalism.com

naked capitalism

Stats Watch

Industrial Production, June 2016: "Vehicles held down industrial production in May but not in June, making for a big 0.6 percent gain that is just outside Econoday's high-end estimate" [ Econoday ]. "Looking at details deeper in the report, the output of business equipment rose a solid 0.7 percent but the year-on-year rate, in what is definitive evidence of weakness in business investment, is in the negative column at minus 0.6 percent. The output of consumer goods, up 1.6 percent on the year, rose 1.1 percent in the month in what is another good showing in this report." However: "The headlines say seasonally adjusted Industrial Production (IP) improved. The year-over-year data remains in contraction but the trend lines are now pointing towards improvement" [ Econintersect ]. "Economic downturns have been signaled by only watching the manufacturing portion of Industrial Production. Historically manufacturing year-over-year growth has been negative when a recession is imminent. This index is nearing the warning area for a recession."

Empire State Mfg Survey, July 2016: "The first anecdotal report on the factory sector for the month of July is not very promising as the Empire State index barely held in the plus column" [ Econoday ]

Business Inventories, May 2016: " Businesses are keeping their inventories in check amid slow sales. Inventories rose only 0.2 percent in May following April's even leaner 0.1 percent rise. Sales in May also rose 0.2 percent keeping the inventory-to-sales ratio unchanged at 1.40, which is a little less lean than this time last year when the ratio was at 1.37″ [ Econoday ]. "Retail inventories did rise an outsized 0.5 percent in May in a build, however, that looks to be drawn down by what proved to be very strong retail sales in June. Manufacturing inventories fell 0.1 percent in May with wholesalers up 0.1 percent." But: "Econintersect's analysis of final business sales data (retail plus wholesale plus manufacturing) shows unadjusted sales improved compared to the previous month – but due to backward revisions the rolling averages declined. Inventory growth was moderate. The inventory-to-sales ratios remain at recessionary levels" [ Econintersect ].

Retail Sales, June 2016: "June proved a fabulous month for the consumer though May, after revisions, proved only so so." Above consensus [ Econoday ]. "Ex-auto ex-gas offers a gauge on underlying trends in consumer spending, a dominant one of which is ecommerce as nonstore retailers popped a 1.1 percent surge in the month which follows even stronger gains in prior months. Department stores, up 0.9 percent, show a big comeback in the month with sporting goods & hobbies strong for a second month. An outsized gain, one that hints at adjustment issues and the risk of a downward revision, is a 3.9 percent surge in building materials & garden equipment, a component that had been lagging…. This report is a major plus for the second-half economic outlook not to mention coming data on the second quarter (sales for April, after the second revision, are at a standout plus 1.2 percent). The job market is healthy and the consumer is alive and spending." A little cold water: "Retail sales improved according to US Census headline data. Our view of this month's data is similar but there was a decline in the rolling averages – and downward revision to last month's data" [ Econintersect ]. This Maine bear sunk more money into shelter and did a lot of gardening. I hate to think I'm an ideal type.

Consumer Price Index, June 2016: "Price pressures evident the last two months down the supply chain are not yet appearing in consumer prices" [ Econoday ]. Caveat: "[I]nflation does not correlate well to the economy – and cannot be used as a economic indicator" [ Econintersect ].

Consumer Sentiment: "In perhaps an early indication of a U.S. Brexit effect, the consumer sentiment flash for July is down a sharp 4.0 points to 89.5. Weakness is centered in the expectations component which fell 5.3 points to 77.1 for one of the very weakest readings of the last two years. Weakness in expectations ultimately points to doubts over the jobs outlook" [ Econoday ]. But: ""Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy. Following the Brexit vote, it was mentioned by record numbers of consumers, especially high income consumers," [Richard Curtin, the survey of consumers chief economist] said."

Shipping: "[T]he National Retail Federation is forecasting only a modest pickup at U.S. ports, with container volume that would hardly amount to a peak at all" [ Wall Street Journal ].

Shipping: "Transportation-sector analysts believe that rail volumes, which have declined over the past year, may be bottoming out. Things are looking brighter for the second half of the year, as natural gas and oil prices recover, driving more energy-related shipments. Seasonal grain exports should also provide a boost" [ Wall Street Journal , "Has U.S. Rail Traffic Found Its Rebound?"].

Supply Chain: "By creating a permanent record that can't be altered, blockchain is well-suited for tracking diamonds and other goods where buyers want to know the origins and previous owners, said Bill Fearnley Jr., a research director at International Data Corp" [ Wall Street Journal ].

Shipping: "UPS and FedEx expand pharmaceutical shipping channels to global market" [ DC Velocity ]. Seems to be optimized for clinical trials and testing, however. "The international drug market is swelling rapidly to accommodate the 20 to 30 million new Americans who have recently become insured under the Affordable Care Act and, more broadly, the "silvering" of an aging global population with growing medical needs." Because I don't get how the ACA spurs demands for international pharma shipments to patients.

Housing: "Big Wall Street investors stopped buying real estate in large quantities back in late 2014. In many cases big investors had front row seats at banks and were able to buy in bulk and for incredibly low prices not offered to the public. This crowding out of course has caused two major things to unfold: inventory to dwindle and a push up in prices for regular families looking to buy. For the first time in history many things happened in the housing market including nationally falling prices but also a large interest from Wall Street in single family homes. Now with prices near previous peak levels many of these large investors are making the full exit by offering to sell the homes to current tenants, for of course a modest increase. Those bailouts that were geared to helping the public actually created a system that has slammed the homeownership rate lower and has now jacked home prices up once again. Large investors are now making their final play by cashing out" [ Dr Housing Bubble ]. I'd want Yve's views on this, but selling to the little guy at the peak of the market sure looks like a PE scam to me. Readers, do any of you have direct experience with this?

Helicopter Money: "Monetary financing of public sector spending isn't a giant leap from where Japan is today – it could get there in a series of small steps. It would be more a case of 'drone money' than 'helicopter money' if the BOJ were to go from buying longer and longer-dated debt with lower and lower coupons to something indistinguishable from zero-coupon perpetuals. But away from such idle speculation, with monetary and fiscal policy working hand-in-hand to drive inflation expectations up, and to drive investors out of domestic assets, there's room for the yen to weaken (quite a lot) further; all the more so as the US economy stabilises" [SocGen, Across the Curve ]. You can borrow money for free and there's no government infrastructure program. Speaking of cashing out, is that what the elites are doing globally? Not that I'm foily. The best science fiction novel with autonomous vehicles that I can recall is Philip K. Dick's Game Players of Titan , and that was a depopulated world…

The Bezzle: "[F]or Google, the ultimate outcome does not look bright. A new EU competition chief is overseeing this barrage of cases, as European corporate giants line up against the Silicon Valley behemoth. Meanwhile, as Google relies more on artificial intelligence to automate a range of tasks that run its services behind the scenes, it could face a whole new round of conflict with Europe. In the end, Google in Europe could wind up as a very different thing than Google at home" [ Wired ].

The Bezzle: "BP announced on Thursday it believes the final pre-tax cost of its Deepwater Horizon spill will be $61.6bn or $44bn after tax" [ Splash247 ]. But no jail time for executives, since they have elite impunity, say for ecocide. I say let's look forward and not back.

Political Risk: "[S]hipping companies fear the [Hague Tribunal's] ruling [on the "Nine-Dash Line"] could embolden the Philippines and other smaller nations to assert their rights to the waters more aggressively and that any conflict would disrupt ship-borne trade in the waters between Hong Kong and Indonesia. Thousands of ships transit those waters daily, and a third of the world's liquefied natural gas passes through the Straits of Malacca to the South China Sea" [ Wall Street Journal ]. " Even if shipping isn't disrupted, companies say they face higher costs if the standoff escalates since insurance companies are likely to drive up rates."

[Jul 03, 2016] Men Exiting Workforce as Low-Wage Jobs Vanish

Notable quotes:
"... The report dismisses the myths that access to Social Security disability or that men are not choosing to work as culprits. More than a third were in poverty. Fewer that 25% of the men not working have a spouse supporting them and that percentage has dropped in the last 50 years. The CEA's analysis find that Social Security disability explains at most 0.5% of the reduction. ..."
"... Similarly, the problem with European-style job training programs is that US employers do not want to hire people with general training, even in a particular skill area. Their strong preference is to hire someone who is doing the exact same job for a similar company, so as to minimize their effort (in theory; in practice, the extra time spent on the search probably offsets the theoretical savings). The cure for that is a much more robust job market, where employers realize they are not going to find the perfect candidate and take someone approximate and give them the training and other guidance they need to become productive. ..."
"... Friends of mine visited Germany last year, noticed that for curb, pothole repair where in the US you see 2-3 guys and a bunch of equipment, there he would see 8 guys with shovels and little to no equipment. ..."
"... Yes, when I was working at UT-Austin, they cut the janitorial staff so that offices were only vacuumed once a month. ..."
"... The reality of what is happening is on the economic/political level. It involves a small number of people, living in a rich, opulent high tower, who for years acted and enacted without the slightest bit of empathy or selflessness. These same people have literally no depth to their thought and are ruled by the very gluttony/ego so valued in todays consumerist society. This type used to live in Rome during Diocletian's rule, in Egypt during the Hyskos invasion, in the Mayan Empire during the Postclassic period, etc ad infinitum. The overall picture has repeated itself, as an empire is a microcosm of any living organism; it gets old and becomes very susceptible to change, that is, the ruling class become so removed from reality that their decision making begins to deviate further and further from the actuality of the current situation. The Housing Crisis is a prime example. The banks saw fit to literally scam their own customers with no government intervention! Twice! This type of thinking quickly affects the entire nation. People begin to see a futility in living morally and truthfully, and start to wonder if the entire system is a scam. ..."
"... I've visited enough towns in the Mid West where everyone is on some pharmaceutical, usually Percocet or valium, yet have no money for a proper house with heating and cooling. ..."
"... So entire industries now eschew people older than 30 in favor of being staffed entirely by 20 something's. This will surely end well. ..."
"... They are bring these workers from India where starting IT salaries are $10,000/year. Check early in the morning and late at night and you will see the buses delivering the workers who lived crammed in surrounding apartments. One told me his Indian outsourcers had eight of them living in a two-bedroom apartment with one bathroom - while working 80-100 hours per week. They are threatened with deportation if they complain, and in some cases, their families back home are physically threatened. ..."
"... granting automatic work authorization to all H-1B spouses. ..."
"... expanding Bush's "Optional Practical Training" now allowing stem graduates to work for three years ..."
"... lowered qualifying requirements for L-1B visas. L-1b visas allow corporations to import their foreign employee to work in the US at the home nation salaries. And has lead to widespread abuse such as foreign employees being paid $1.73/hour. ..."
"... modified the B-1 visa, used attended training and meetings, to incorporate the "B-1 in lieu of H-1B" which now allows some foreign workers to work in the US on the B-1 visa ..."
"... There are now well over a million foreign guest workers in the US and the numbers are growing. Curiously (ha ha!), DHS does not even keep count of the above admissions. ..."
"... Wow, didn't know they expanded the student work permission to three years. Used to be one year. Essentially if you go to college here you have bought yourself a ticket to live in America and take a job from an American. ..."
"... I was replaced by a 20-something. Actually, at my last job (3 years ago) both the older employees, myself and another employee, were replaced. One employee who had worked there for 15 years and was 60, so TWO years away from retirement, was let go. (I hope he sued the pants off that horrible firm!) ..."
"... Yes indeed, there's a reason big business doesn't want medicare for all – it would result in the ultimate 'flexible workforce'. Workers immediately bailing out of every shit show employment situation they manage to fall into at the drop of the hat with no COBRA or insurance dead zones. But on the other side of the coin, it would ramp up the Uber jitney economy of on-demand disposable workers lined up holding signs displaying their skill sets for a day's pay at the highway on-ramps at 6:30 AM (or, as the neo-liberal mindset would frame it – the entrepreneurs). ..."
"... Thats pretty much how the movie/tv industry operates in Hollywood. ..."
"... History of Work Comp as I remember it - speaking of how "the company" counts its beans: Johns Manville had a problem with people getting slowly sicker on the job (handling asbestos) starting late in the 1800s paid doctors to do studies that proved the asbestos-asbestosis-mesothelioma connection, and gave some rates of worsening of the diseases and hence points at which workers could no longer work. The researchers and doctors were paid for and threatened into silence on the findings, and required to ignore their Hippocratic obligations. Workers had to go to company doctors, who would nurse them along until they were fired for inability. ..."
"... All labor reform policies put forth by Republicans and their policy activation arm (Dems) have been to make life easier and richer for CEO's, not to help workers. So now economists are surprised by the results? What a useful profession they are. ..."
"... The 40 hour work week was established under Roosevelt. If you wish to reverse or stave off the declining Participation Rate, then decrease the required number of hours work to 32. We have agreed before that Labor is the lowest cost when compared to Overhead or Materials. In the end, the difference in cost would be made up by higher productivity. ..."
June 21, 2016 | nakedcapitalism.com

A new Council of Economic Advisers study released by the White House on the fall in labor force participation among men of prime working age (25 to 54) should be subtitled, "It's the Neoliberal Economy, Stupid."

The report does a useful job in documenting where the level and nature of the decline in male workforce participation, which peaked at 98% in 1954 and is now at 88%, the third lowest among OECD countries. The decline is concentrated among less educated:

Screen shot 2016-06-21 at 4.20.59 AM

Blacks have been hit harder than other groups:

Screen shot 2016-06-21 at 4.22.31 AM

And the general outlook for employment has been deteriorating over time. However, bear in mind that this decay somewhat overlaps with the story that less educated groups have been harder hit. US educational attainment has fallen over time.

Screen shot 2016-06-21 at 4.09.30 AM

The report dismisses the myths that access to Social Security disability or that men are not choosing to work as culprits. More than a third were in poverty. Fewer that 25% of the men not working have a spouse supporting them and that percentage has dropped in the last 50 years. The CEA's analysis find that Social Security disability explains at most 0.5% of the reduction.

The cause is the state of the job market:

• Participation has fallen particularly steeply for less-educated men at the same time as their wages have dropped relative to more-educated men, consistent with a decline in demand.

o In recent decades, less-educated Americans have suffered a reduction in their wages relative to other groups. From 1975 until 2014, relative wages for those with a high school degree fell from over 80 percent of the amount earned by workers with at least a college degree to less than 60 percent

While doing a fine job dimensioning profile of the groups that have been hit the worst, the authors, after invoking hoary neoliberal defenses, as in these workers are the losers in a globalized market, the paper gives a coded acknowledgment that policies that are hostile to workers have produced the expected result:

This reduction in demand, as reflected in lower wages, could reflect the broader evolution of technology, automation, and globalization in the U.S. economy.

Conventional economic theory posits that more "flexible" labor markets-where it is easier to hire and fire workers-facilitate matches between employers and individuals who want to work. Yet despite having among the most flexible labor markets in the OECD-with low levels of labor market regulation and employment protections, a low minimum cost of labor, and low rates of collective bargaining coverage-the United States has one of the lowest prime-age male labor force participation rates of OECD member countries.

It is remarkably cheeky to see the authors attempt to depict "flexible" labor markets, where workers can be tossed on the trash heap, as beneficial to laborers.

The recommendations are tepid, and the authors assert "A number of policies proposed by the Administration would help to boost prime-age male labor force participation." In other words, we are to believe the problem is those Republican meanies in Congress, as opposed to Obama not pushing hard for these measures in his first term, when he had the opportunity to pass wide-ranging reforms.

One proposal is the new conventional wisdom of more infrastructure spending to create more jobs for unskilled workers directly, improving community colleges and other training so workers will have skills that line up with hot job markets. The problem with the latter idea is that demand can shift quickly (look at how the oil patch was robust a few years back and is now just starting to get back on its feet). Moreover, employers are extremely prejudiced against both older people and people who've been out of the workforce, and the age which is deemed to be "older" has collapsed. Per Wolf Richter (emphasis original):

Now I've come across a fascinating piece on MarketWatch, an article on what to do to get into the cross hairs of a recruiter whose algos are combing through millions of profiles on LinkedIn.

No recruiter in his right might is personally clicking through LinkedIn profiles. They're all scanned by algos by the millions in nanoseconds. And so the trick is structuring your profile to get the algos to pay attention. This isn't a human-to-human scenario, but a human-to-algo scenario. You're trying to second-guess an algo that's going to decide your future….

But apparently the lifespan of a degree has been shortened from 20 or 25 years to just 10 years! Then it rots, and it has to be swept under the rug. The article put it this way (emphasis added):

Older job-seekers….

I mean, I'm already seething.

Older job-seekers need to walk a fine line. Unless you made the cover of "Time" or discovered a solar galaxy, experience has a shelf life on LinkedIn, says Scott Dobroski, career trends analyst at Glassdoor. There's no need to wax lyrical about a job that's more than 10 years old, he says. And those who g raduated from college a decade ago may want to exclude the date they graduated. "Your college graduation date will age you," he says, "and although ageism is illegal, it's happening all the time." On the other hand, if you're applying for a job as CEO of a Fortune 500 company and you graduated in 1986, it's okay to leave the date, Dobroski says.

Note the word "older job seekers" in connection with a college degree from 10 years ago. Those older job seekers are early Millennials!

Yves here. Admittedly, candidates on LinkedIn are more educated than the group this study is most concerned about, but consider the message: even among the educated, the shelf life of a degree has diminished greatly due to ageism. Why would it be less bad among the less well educated?

Similarly, the problem with European-style job training programs is that US employers do not want to hire people with general training, even in a particular skill area. Their strong preference is to hire someone who is doing the exact same job for a similar company, so as to minimize their effort (in theory; in practice, the extra time spent on the search probably offsets the theoretical savings). The cure for that is a much more robust job market, where employers realize they are not going to find the perfect candidate and take someone approximate and give them the training and other guidance they need to become productive.

And finally, the report claims that Obama has been pumping for one of the most needed remedies:

Increasing wages for workers by raising the minimum wage, supporting collective bargaining, and ensuring that workers have a strong voice in the labor market.

Help me.

So I'm at a loss to understand the political purpose of this report. It's useless as a policy driver given that this is an election year when Obama is a lame duck. Perhaps it is a weak effort at legacy-bolstering by showing that even though the decline in labor force participation among men was marked in the Obama Administration, it started long before he took office. But it still ignores some elephants in the room, like the fact that employers stopped sharing the benefits of productivity gains with workers starting in the mid-1970s and lack of sufficient demand in the economy. What it does reveal is one of the many time-bombs that Obama has left for the next President.

Marco , June 21, 2016 at 7:27 am

Time to start blaming those darn "stay-at-home" dads!! (PEW via CalculatedRisk) How much more evidence will it take for orthodox economists to stop manufacturing silly excuses for a crappy job market.

Benedict@Large , June 21, 2016 at 8:52 am

Economists since the 1970s have been primarily involved with explaining away unemployment; that is, saying it doesn't exist. This is because their theory of inflation (printing money = inflation) breaks the rules of elementary algebra if unemployment does exist. To normal people (non-economists) confronted with such a situation, the theory would quickly be abandoned as nonsense, but to economists this is not an option, because this theory also says that big government is bad, a truism that in the economics profession needs no explanation.

So you see, Marco, there is no crappy jobs market because there's no such thing as unemployment. Ask any economist. They'll tell you.

Simon , June 22, 2016 at 9:08 am

Here are some nice nuggets from the CEA study on the stay-at-home dad myth:

"Participation rates have fallen for both parents and nonparents alike, but prime-age males without children saw a larger decline of 9.4 percentage points since 1968 compared to 4.9 percentage points among prime-age males with children. This suggests that men dropping out of the labor force to be stay-at-home fathers is likely not an important factor in the overall decline; moreover, only around a quarter of prime-age men who are not in the labor force are parents (down from around 40 percent in 1968)."

and

"Based on [American Time Use Survey] data, there is little evidence that men are staying home to care for children or to do house work. "

Of course, I am preaching to the choir here!

ambrit , June 21, 2016 at 7:34 am

"Blame the victim."

av av , June 21, 2016 at 10:20 am

Blame technology. Low skilled workers are easiest to replace. Example, you used to have people sweeping and washing floors in shopping centers or subway stations.
Now you have one person on a sweeper or washer.

Pat , June 21, 2016 at 11:50 am

And how well is that working out? I'm serious. Perhaps they need a couple of more people ALONG with the washers and sweepers. Sorry to use Disney, but part of the reason the parks are pristine is because they have a whole lot of people going along picking up the trash and sweeping up.

It is not just technology, it is a management that doesn't understand how much labor they really need and ignore the signs they do not have enough, because then their numbers might be down. And this is even when their numbers are already down.

jsn , June 21, 2016 at 3:06 pm

It's really about how the priorities are set and by whom.

In a sane society, the issuer of the currency would pay people to do things people like to do or benefit from doing themselves and pay for equipment/robots to do things people don't like.

We live a long way from there.

collins , June 21, 2016 at 4:26 pm

Friends of mine visited Germany last year, noticed that for curb, pothole repair where in the US you see 2-3 guys and a bunch of equipment, there he would see 8 guys with shovels and little to no equipment.

SpringTexan , June 21, 2016 at 4:27 pm

Yes, when I was working at UT-Austin, they cut the janitorial staff so that offices were only vacuumed once a month.

There is work to do. But not willingness to have people do it.

Steve Gunderson , June 21, 2016 at 5:08 pm

Maybe teaching people to pickup after themselves should be a Freshman level course?

Michael , June 21, 2016 at 8:19 pm

Carpets need to be vacuumed.

inhibi , June 22, 2016 at 4:26 pm

It is not as simple as "technology". I often find that those who say lines like "robots are going to take away all the jobs!" are those without actual degrees in those subjects. Technology simply moves the plane of thought, processing, manufacturing, etc to the next level. The invention of the computer spawned an entire multi-TRILLION dollar industry with millions of jobs. Robotics will be/is the same.

The reality of what is happening is on the economic/political level. It involves a small number of people, living in a rich, opulent high tower, who for years acted and enacted without the slightest bit of empathy or selflessness. These same people have literally no depth to their thought and are ruled by the very gluttony/ego so valued in todays consumerist society. This type used to live in Rome during Diocletian's rule, in Egypt during the Hyskos invasion, in the Mayan Empire during the Postclassic period, etc ad infinitum. The overall picture has repeated itself, as an empire is a microcosm of any living organism; it gets old and becomes very susceptible to change, that is, the ruling class become so removed from reality that their decision making begins to deviate further and further from the actuality of the current situation. The Housing Crisis is a prime example. The banks saw fit to literally scam their own customers with no government intervention! Twice! This type of thinking quickly affects the entire nation. People begin to see a futility in living morally and truthfully, and start to wonder if the entire system is a scam.

Now imagine the modern US economy as a sinking ship. The top level execs, elites, are busy pillaging as much as they can, because they all see that US supremacy isn't going to last. Manufacturing all moved to China, now Mexico, retail is dead in the water, the US consumer is getting weaker and weaker. Only healthcare is staying afloat, due more to political reasons than anything else.

The easiest and most common method to increase your salary as a corporate exec is to get rid of overhead: sell off portions of the business, layoffs, etc. They are all doing it regularly with no impunity. US manufacturing is all but GONE. Its all been sold to PE firms that install a puppet as the CEO, who then begins the extraction process of selling off parts of the business, instating capital controls, and layoffs. Now it moved to retail. Eventually, America will be a literal husk. Every place will just have the same options of a few fast food and retail chains. The entire Midwest is already there, hence "Rust Belt". The only places that will be spared in America will be the bubble of wealth concentrated on the coasts, but even these will begin to whither as wealth starts to move to other, happier countries.

So in this milieu, put yourself in the place of a average HS educated American. You have two options for your career: work your ass off and make next to nothing, or go to college and graduate a debt-slave, also making next to nothing. However, a third option presents itself, complements of the Welfare State: collect unemployment and have all the free time in the world. Then imagine what you see and hear everyday. Banks illegally foreclosing on homes, executives getting away with fraud in the hundreds of millions, a militarized police, potent pharmaceuticals given away like candy, a plant that causes mild decrease in heart pressure illegalized, politicians lying again and again, the wealthy talking on TV about how "easy" it is to open a business and selling books about it, etc. It all concentrates down to the worst of all emotions: depression, self-loathing, and envy.

The depression comes from the hopelessness of most American's situation: poorly educated with no future career, not even a path to take which will ensure a brighter future. The self-loathing comes from the media, as most people get an HOURLY reminder of how shitty they look, how poor they are. Even shows like Shameless don't touch on the reality of being poor in America. It isn't a day to day struggle to pay bills. Its a day to day struggle to even feel worth something. To feel part of society.

Then there's envy. You feel envious of the wealth, the attractiveness of others you see in the media, which you misplace as being the vast majority of people in America because you see them everyday and everywhere: online, on billboards, in movies, commercials, etc. You begin to feel like SOMETHING should be given to you. The Government, fearing rebellion, realized this during the last Great Depression when they began to expand the Welfare State. Welfare is a form of suppression. It keeps people on the lowest rung just happy enough to forget about rebelling. Big Pharma is a BIG factor in this as well. I've visited enough towns in the Mid West where everyone is on some pharmaceutical, usually Percocet or valium, yet have no money for a proper house with heating and cooling.

So in summary, the extraction of wealth by the upper class, (through "global" trade agreements, stock market manipulation, tax evasion, offshoring, etc) along with lax regulation & prosecution by the political body (they are very much one and the same these days) caused immense physical (monetary) and mental depression/suppression of the masses, which are steadily moving toward Welfare as it becomes the only of options with a glimmer of stability & free time.

FedUpPleb , June 21, 2016 at 8:10 am

So entire industries now eschew people older than 30 in favor of being staffed entirely by 20 something's. This will surely end well.

Arizona Slim , June 21, 2016 at 8:55 am

I would like to see where all of these highly skilled and motivated 20-somethings are coming from. Because I am not seeing them around here.

NoGig , June 21, 2016 at 11:06 am

They are bring these workers from India where starting IT salaries are $10,000/year. Check early in the morning and late at night and you will see the buses delivering the workers who lived crammed in surrounding apartments. One told me his Indian outsourcers had eight of them living in a two-bedroom apartment with one bathroom - while working 80-100 hours per week. They are threatened with deportation if they complain, and in some cases, their families back home are physically threatened.

With the defeat of H-1B expansion, Obama has now vastly increased foreign guest workers through executive actions that include:

  1. granting automatic work authorization to all H-1B spouses.
  2. expanding Bush's "Optional Practical Training" now allowing stem graduates to work for three years in the US on a student visa. The OPT has no caps, little labor protections, and no salary requirement.
  3. lowered qualifying requirements for L-1B visas. L-1b visas allow corporations to import their foreign employee to work in the US at the home nation salaries. And has lead to widespread abuse such as foreign employees being paid $1.73/hour.
  4. modified the B-1 visa, used attended training and meetings, to incorporate the "B-1 in lieu of H-1B" which now allows some foreign workers to work in the US on the B-1 visa

There are now well over a million foreign guest workers in the US and the numbers are growing. Curiously (ha ha!), DHS does not even keep count of the above admissions.

America, this is not YOUR government.

John , June 21, 2016 at 11:00 pm

Wow, didn't know they expanded the student work permission to three years. Used to be one year. Essentially if you go to college here you have bought yourself a ticket
to live in America and take a job from an American.

perpetualWAR , June 21, 2016 at 11:25 am

I was replaced by a 20-something. Actually, at my last job (3 years ago) both the older employees, myself and another employee, were replaced. One employee who had worked there for 15 years and was 60, so TWO years away from retirement, was let go. (I hope he sued the pants off that horrible firm!)

weinerdog43 , June 21, 2016 at 11:51 am

Oh, they're all out beating down the door over in Philadelphia to work as substitute teachers for $75 per day. Just google 'substitute teacher shortage' and you'll see plenty of job opportunities.

snark

inhibi , June 22, 2016 at 4:36 pm

Its called "turnover" and companies use it nowadays to suppress wages. Why pay a 30 yr old 85K when you can pay a 20 yr old 50k?

Most of the work is simple anyways, unless you work in the STEM field. And unfortunately, in the STEM field, the largest industry (software) takes this approach to the next level.

flora , June 21, 2016 at 8:14 am

Great post. Thanks.

mark , June 21, 2016 at 9:08 am

Yes it is.

"supporting collective bargaining"

Guffaw.

fresno dan , June 21, 2016 at 8:17 am

Incentives matter – if the end all and be all is GDP, you get GDP. TPP is an "industrial" policy, or more accurately a re-distribution policy – yeah – re-distribution – the fact that it is re-distribution from the poorer to the richer is a novel use of the concept, but we should never under estimate the cleverness of Davos man.

The fact that it is espoused by those who incessantly yammer about how government policy should be "neutral" exposes that these people are just making the rules for their own benefit. The fact that so many laws ("reforms") must be instituted to advance this agenda just exposes the intellectual dishonesty. Or would they have us believe that the advent of neoliberalism and the increase in inequality is just a happy (sarc) coincidence? The idea that this is some unstoppable force of nature just wants to make me puke.

If you think that work matters, that participation in society is important, and that a nation is more than airbnb beds for Davos man conference attendees, you can have policies that punish outsourcing, decide that limiting H4B workers increases demand for workers here with commensurate increases in wages. There are a zillion ways the tax code as well as other laws are inimical to US workers. It STARTS with the idea that paying labor more does NOT harm society….

These policies are not a function of physics or of God's will – they are made by men at the behest of the few to reward the few. It can be changed if we choose to change it – although I fear we are rapidly reaching a point, and may have already reached it, where we are a defacto plutocracy and any "reform" is mere window dressing.

Linda , June 21, 2016 at 8:41 am

I agree with you wholeheartedly. We are on a straight path to plutocracy and I too fear we have already passed the point of no return. I hear (read) daily the awful word, redistribution; always in the context of taking a small amount away from the rich and powerful to give to those not as fortunate; but never in the context of what is actually happening on a grand scale; the taking from the lower classes and giving it to the upper 1% and above. When will it stop? I don't know; I do know that unless we continue to try and make the masses actually understand what is happening to them and to get them off their apathetic arses and involved in the political process, thereby voting out of office the scrads of politicians devoted to and enamored of neoliberalism, we will continue down this prophetic road of self destruction. It is our choice. It will be hard. It may, in fact, already be too late. But, we have to try. We have to keep working; working to explain the awful policies of neoliberalism.

templar555510 , June 21, 2016 at 9:20 am

Agreed. So what MUST the demand be ? Let the capitalist go after FULL AUTOMATION and balance that with UNIVERSAL BASIC INCOME . Everything to do with money can be defined as a balance sheet so this should be the balance sheet for the 21st Century . The demand should come from all . And it's coming. I know the Swiss just rejected it , but the fact that they just called a referendum to decide it ( for now ) tells us it's there in the ether and the Swiss are not alone ; the Dutch, the Finns are all working on this . It's the genuine great leap forward.

tegnost , June 21, 2016 at 9:52 am

sorry but basic income guarantee is simply creating demand for the plutocrats, and is exactly why food stamps are in the agriculture budget. This is why the 13,000/yr BIG floated a week or two ago already, at it's inception, takes 3,000 and puts it towards medical care-oops, i mean insurance- you won't get care unless you pay extra, don't kid yourself. And this gravy train will have as many cars attached to it as it can carry, how much will your BIG be in the form of food stamps? rent subsidy? by the time it's implemented the person at the root of the issue won't get a thin dime, but the cronies will have a basic income guarantee, the true purpose of this terrible idea, I and others like me want things to do, not a snap card (more likely digital wallet brought generously to you by apple and jp morgan, which of course will charge a fee, and conveniently keep track of where you are at all times) that allows me to buy gmo food (yes, there will be foods that are for the poor and foods for the rich, want organic? what's your net worth?) The silicon valley parlors where these moronic ideas are hatched are filled with people who are trying to cement their presence in the upper class which is funny on the meritocrat side because many of my tech friends didn't go to college, they were good at video games and now it's robots robots robots because that's their gravy train and the BIG is their lame ass apology, while getting some demand into the economy to pay for their craptastic junk toys.

TheCatSaid , June 21, 2016 at 11:59 am

Great observations about BIG. I never thought of it that way, and you make it very obvious. Thank you.

lightningclap , June 21, 2016 at 1:21 pm

++ I have long been in favor of BIG but you point to the obvious strings that would be attached if formulated by our Valley "disruptors".

jrs , June 21, 2016 at 4:03 pm

then instead provide the basics of life to people, like healthcare and shelter, rather than money? That completely solves that problem doesn't it?

samhill , June 21, 2016 at 8:10 pm

Excellent, my vote post of the week. The best answer is to pay people to actually work, the work would be to pay them to undo the damage of the last 300 years of industrial revolution. We had created a large middle middle class and secure working class destroying the planet, we can create the same wealth cleaning it up. Instill hope on a dying planet, and for the first time in its history give humanity a reason to get up in the morning other than just exploiting each other in a rat race.

Norb , June 22, 2016 at 2:35 am

One way of looking at how a BIG can be manipulated by owners is considering slavery. It seems we are entering a new phase in the never ending capitalist struggle to secure cheep labor. Cheep labor and resources are the driving force of the current system. The logical end result is to have a self-sustaining labor force. One that makes just enough to survive and work- with little room for anything else. That is where we are headed.

Advancing technology and the desire to shed costs related to slave upkeep can be argued as important factors in slavery's demise in it's original social form as one individual owning another as property. Why bother taking on the responsibility for slave upkeep when you can rig the system in ways that require workers to enslave themselves to businesses and the system as a whole. You need the labor power, not the person.

A BIG will be sold for all the typical humanitarian half-truths, but in reality is a natural development to maintain the capitalist system. The powers that be have demonstrated no interest in maintaining a middle class workforce. Debt bondage and BIG coercion are on the horizon.

As Goethe observed: None are more hopelessly enslaved than those who falsely believe they are free.

lin1 , June 22, 2016 at 1:47 pm

Your using an abstract moral excuse to argue against fulfilling a real actual need.Until the revolution comes, BIG is a solution I will support.

Fred Rucker , June 21, 2016 at 10:52 am

How wonderfully well stated, thank you

Bill Smith , June 21, 2016 at 8:34 am

Why does there have to be a political purpose for the release of the report? I would guess that the end of a presidency works a little like late Friday afternoon when stuff get dumped to the public at their point of lowest interest.

Raising the minimum wage works at cross purposes. It helps in the short run but in the longer run – other things held constant – it makes automation more likely.

When the small company I worked for years ago was faced with replacing a piece of equipment, at some point after the minimum wage had been raised, the company replaced it with one that was more automated and took few people to operate. The cost of labor had moved up and cost of capital was lower due the interest rates. The numbers were close enough that it could have gone either way but the feeling was that the cost of labor would continue to go up. Going with the more automated equipment locked in more of our costs.

a different chris , June 21, 2016 at 9:02 am

It's weird how people can pretend to conflate technology assisting labor with replacing labor with cheaper labor, in order to derail the subject.

As far as your "point", they invented the nail and hammer and now we don't have to drill holes and put pegs in. Fine. Nobody is talking about going technologically backwards, in fact just the opposite. We are talking about the race to the bottom in labor itself. I suspect a bit of looking around can find a lot of places where 1 American + 1 machine is slightly more expensive than 4 third-worlders + shipping + no machine. Sometimes the machines have progressed so fast that work has moved back onshore (and funny that all the moaning about "helping people that live on 2cents/day" isn't heard when that happens), which is cool but it still is the exception.

But: how limited is the number of "capitalists" that are going to bother to invest in bringing down the cost of that machine when you can drive the cost of humans down in almost unlimited fashion? - there are actually limits, and we will eventually hit them but it will get a lot uglier if we do it that way.

Cry Shop , June 21, 2016 at 9:32 am

And the whole issue is treating fellow human beings as less deserving, less worthy of employment just because of their nationality.

There will always be that other half of the working class that can be used to kill the other half when pushed hard enough, any definition will do for separating the class in to us vs them, so that the war can start. Unions blew it when in the 1970s when their leadership sold out, refused to go international with trade agreements, and focused on protecting an indefensible position, indefensible from both an economics view and from an ethics view.

Jay M , June 21, 2016 at 3:48 pm

During the cold war the American Labor union movement was thoroughly anti-communist and in bed with the CIA as far coordinating with international labor. See wiki on Jay Lovestone for a bit of the flavor of the times.

Bill Smith , June 21, 2016 at 11:41 am

My point was that we ended up with one less minimum wage job because the cost of labor made it better for the company to buy the more automated piece of equipment.

That example had nothing to do with off-shoring – though I now work in a company of about two dozen people who has off-shored some work. I am going to guess about the equivalent of two full time jobs.

I was quite surprised when that decision was made given our small size but it has worked as explained to us when it started.

Steve Gunderson , June 21, 2016 at 5:12 pm

How many things does the new machine buy?

cnchal , June 21, 2016 at 11:40 pm

Looked at that way, the machine buys it's consumables and raw material used in the process. It would have done that anyway, were Bill's company to decide to buy a simpler machine and employ one more person, but because of the automation, and as long as sales justify it, the more advanced machine will process more raw material and use more consumables because it has the potential to run 24 hours per day, whereas an employee would be seeing stars after an eight hour shift, due to repetitious boring work.

Felix_47 , June 21, 2016 at 9:26 am

Good point. Also consider litigation costs which to most employers in Ca at least is a huge financial and management burder. A couple of worker's comp sore backs or knees combined with chiropractor, "pain management doctors," surgeons, secondary psychic stress etc. makes a lot of employers including me realize that every employee is a ticking liability time bomb just waiting to call that 1-800-hurt at work number. No business can hire Americans in this legal environment unless they are very well paid well beyond their value so they have no option but to do the job. In fact, in my business litigation/medical/disability costs are far more significant than hourly wages. We just can't take the risk and we outsource everything and hire as few as possible and I am not alone.. We do everything possible to avoid hiring low level workers and when we do we want young recent immigrants who are not "Americanized" and lawyer prone. Even then we get burned more often than not with claims for age related conditions. Then it is simply 1-800-Lastimado en Trabajo and you can see the ads all over the busses in TJ before they come over….ads for Ca worker's comp attorneys!!!! Lawyers, since they control the democratic party are a huge part of our unemployment problem. No employer can take the worker's comp risk of an older employee. If they feel back ache or knee ache or neck ache on the job…it is "aggravated" and the employer is often out hundreds of thousands….thanks to the lawyers who write the laws. Don't count on this lawyer in chief or the next one to do anything about it. Age discrimination and automation and outsourcing are survival tactics for most of the businesses I work with, including my own.

tegnost , June 21, 2016 at 9:58 am

medicare for all

JohnnySacks , June 21, 2016 at 10:41 am

Yes indeed, there's a reason big business doesn't want medicare for all – it would result in the ultimate 'flexible workforce'. Workers immediately bailing out of every shit show employment situation they manage to fall into at the drop of the hat with no COBRA or insurance dead zones. But on the other side of the coin, it would ramp up the Uber jitney economy of on-demand disposable workers lined up holding signs displaying their skill sets for a day's pay at the highway on-ramps at 6:30 AM (or, as the neo-liberal mindset would frame it – the entrepreneurs).

Steve Gunderson , June 21, 2016 at 5:13 pm

Thats pretty much how the movie/tv industry operates in Hollywood.

armchair , June 21, 2016 at 10:17 am

Damn it, we could unleash potent forces if we just got rid of the lawyers. When a person's knee gets torn up on the job, give em' a couple grand, an aspirin and tell them to get over it. That's all you need to do.

Think about this. If the states weren't so desperate for money, they wouldn't have to run the system on the cheap. If health costs were lowered, then the system wouldn't be so expensive. A worker's comp agency has to balance its objectives between not bankrupting the state and not screwing over hurt people. A hurt worker without an advocate is a sitting duck. One way to make lawyers go away is to abolish worker's rights. Alternatively the worker's comp system would be cheaper if health costs were cheaper, and realistic settlements without the assistance of a lawyer might be possible if states had more revenue to pay bills.

JTMcPhee , June 21, 2016 at 12:41 pm

History of Work Comp as I remember it - speaking of how "the company" counts its beans: Johns Manville had a problem with people getting slowly sicker on the job (handling asbestos) starting late in the 1800s paid doctors to do studies that proved the asbestos-asbestosis-mesothelioma connection, and gave some rates of worsening of the diseases and hence points at which workers could no longer work. The researchers and doctors were paid for and threatened into silence on the findings, and required to ignore their Hippocratic obligations. Workers had to go to company doctors, who would nurse them along until they were fired for inability.

At first, the court system's tort law provided the persistent with some compensation and support commensurate with the harm. Many cases settled, but all contained non-disclosure mousetraps (tell anyone and you lose everything.) And of course the "experts" who testified for both sides were sworn to secrecy too, for money or from fear. But Manville and other corporate creatures got inspired, starting around the 1890s I think, to pitch and successfully write (lobby) into law that "workers comp" system that persists - places an administratively determined value on the "injury," percent of disability, and the rest, bars tort litigation for WC-"covered" injuries. Even with all that, a lawyer is often needed because the fokking corporate swine do everything in their considerable power and corrupting reach to avoid even paying out the pittance WC provides, especially long-term treatments and care for the many horrific injuries. Once again, the hope is that the injured worker will GO DIE. And yes, there are cheaters, but gee, how surprising that the profits from fokking over the workers so far outweigh the little bits that a few people scam from the other side. Many of the patients I tried to help when I worked as a nurse were WC, and the treatment they got from the insurers, and the "employee advocates" and "nurse case managers" and defense lawyers acting on screw-the-worker policies of long standing, was amazingly cruel.

"Bankrupting the state?" WC is paid, far as I know, at least in FL, out of an insurance pool that is funded by employers. Subject to the same kinds of actuarial calculations that any other large-pool insurance game undertakes in underwriting. And yes, universal health care (not Obamacare) would, if it could be managed without the full usual apparently inescapable corruption by neoliberal interests and thinking, reduce EVERYONE's costs. And states are "desperate for money" largely because the Chamber of Commerce and other neoliberal fokkers like the Kochs have strangled the public general-welfare income stream and diverted most of what is left to various kinds of "white man's welfare" and corporate gifts.

Here in FL, "worker's rights" are already largely abolished, and the mopping up continues. Just so's you know. There are still lawyers who will (for a cut of the limited amounts that WC will pay out if they finally prevail, to the worker's and family's detriment, "take cases." What I learned in law school, first week in Contracts and Torts and Constitutional Law, is that "There are no rights without effective remedies." What remedies do workers have?

And for those who want to shoot at the VA, on "inefficiency" grounds and the other neoliberal overt and covert assaults, VA disability is a Workers Comp program too. Max payout for a GI who is 100% permanently and totally disabled is around $30,000 a year. There is no component as with other kinds of insurance structures for enhanced damages for "bad faith" on the part of the government and the privatized functions that make up the disability administration. "Thank you for your service, Sucker!!" And that "award" usually only comes after a decade or more of fighting with a well documented opposition from the people who administer the "system" and requires persistence, luck, and occasionally benefits (not so much any more) from intervention by the injured GI's elected representative…

animalogic , June 21, 2016 at 8:57 pm

All this talk of workplace injury, lawyers and workers comp misses the obvious point that some of these workplaces must be UNSAFE. (It's always the other workplace that's unsafe–"our" worker comp payouts are always rorts).

The answer to all worker comp issues is the same: universal mandatory insurance run by the state and work that minimises physical/psychological injury.
Naturally it won't occur as its a cost to business….

reslez , June 21, 2016 at 1:03 pm

Heaven forbid employers pay for the body parts they use up and destroy in their workers.

I agree with Anon, universal health care would resolve a lot of these issues. When the cost is spread out employers whine less when their workers are hurt.

allan , June 21, 2016 at 8:36 am

Yet despite having among the most flexible labor markets in the OECD-with low levels of labor market regulation and employment protections, a low minimum cost of labor, and low rates of collective bargaining coverage-the United States has one of the lowest prime-age male labor force participation rates of OECD member countries.

Francois Hollande to the white courtesy phone.

Larry , June 21, 2016 at 9:56 am

This song was made in 1983…and the same crap that Run-DMC mention in the lyrics still exists today:

Unemployment at a record highs
People coming, people going, people born to die
Don't ask me, because I don't know why
But it's like that, and that's the way it is
People in the world tryin to make ends meet
You try to ride car, train, bus, or feet
I said you got to work hard, you want to compete
It's like that, and that's the way it is
Huh!
Money is the key to end all your woes
Your ups, your downs, your highs and your lows
Won't you tell me the last time that love bought you clothes?
It's like that, and that's the way it is
Bills rise higher every day
We receive much lower pay
I'd rather stay young, go out and play
It's like that, and that's the way it is
Huh!
Wars going on across the sea
Street soldiers killing the elderly
Whatever happened to unity?
It's like that, and that's the way it is

https://www.youtube.com/watch?v=_hN1SKVx31s

tony , June 21, 2016 at 3:36 pm

https://www.youtube.com/watch?v=yUoiFH6Aw7o

I like old Ice-T.

The thing about being a man near the bottom in a country with low social mobility means it is extremely hard to get girls. Jordan B Peterson said in The Age of Unequals discussion that the primary motivation for men to become criminals is because it is the only way to have a chance at attractive women. That has been my personal experience with crime too.

Enquiring Mind , June 21, 2016 at 9:56 am

Ageism takes many forms, some more subtle than others. When your friendly local HR department makes a few tweaks to benefits, the newer employees don't notice, but the wizened veterans take notice. They see the handwriting earlier, and brace themselves for the next steps.

The HR folks are acting rationally in their supply-side worldview as they look out for shareholders first and consider employees well down the list, if not at the bottom. That treatment of personnel represents a policy of a very high effective discount rate on human capital in the aggregate. When parsed out, there are a few nuances that make the picture clearer. When the top handful get outsized payouts, they are incentivized to reinforce that high human capital discount rate, to the detriment of those down range.

The graphics showed an acceleration in the ominous trends in the early and mid 1990s. That coincided with the great outsourcing, re-engineeing, re-euphemising of jobs and the economy. In that era, Fortune magazine published a series of articles about the changing nature of the social contract at work.

One takeaway reflected the new bargain: companies needed to provide interesting work to retain employees, and the latter had to continue to make themselves employable. Those veteran employees referenced above discerned that there wasn't a bargain but a mandate to become more efficient, all presented with the window dressing of so-called interesting work.

A more honest presentation would have said work that meets the interest or discount rate, as part of the increasing financialization of the world. The decline in trust also accelerated during that period, whether in companies or the media. We continue to reap the results of that widespread mistrust and discontent during the current election cycle.

wobblie , June 21, 2016 at 10:08 am

A result of blind Liberal/Conservative policies.

https://therulingclassobserver.wordpress.com/2016/06/15/ruling-class-axioms/

Winston , June 21, 2016 at 10:16 am

a different Chris , please listen (see below) and read what Clayton Christensen has been saying. Big companies are mostly brands now. Have offshored main parts of company. Last stage in that development is decline of company, as in case of steel. IBM is presently also classic case as on road to failure as well for same reason. It started at IBM with Gerstner.

http://www.forbes.com/sites/stevedenning/2011/11/18/clayton-christensen-how-pursuit-of-profits-kills-innovation-and-the-us-economy/#3e737b19992a

Clayton Christensen: How Pursuit of Profits Kills Innovation and the U.S. Economy

Christensen at Gartner Symposium:
http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595

Gartner Symposium ITExpo

Oh and state/local gopvts favor large companies over small companies!

http://www.forbes.com/sites/stevedenning/2014/05/30/why-ibm-is-in-decline/#5aaa6e284c53

Why IBM Is In Decline

http://finance.yahoo.com/news/no-end-in-sight-for-ibm-decline-as-shares-near-six-year-low-141729837.html
No end in sight for IBM decline as shares near six-year low

http://www.goodjobsfirst.org/shortchanging
Shortchanging Small Business: How Big Businesses Dominate State Economic Development Incentives

Denis Drew , June 21, 2016 at 10:59 am

In a labor market that contains for the sake of argument 50% rich country workers (e.g., American raised) and 50% poor country workers (anywhere else raised) - must be something like Chicago which is 40% white, 40% black, 20% Hispanic …

… where pay is set by what I call "subsistence-plus"; meaning set STARTING at the absolute minimum pay workers will tolerate (e.g., $800/wk for American born taxi drivers, me; $400 for foreign born) and then PLUS some more for each additional level of skill (bottom for McDonald's, more for better English in Starbucks, more for college English and more competent organizing in Whole foods?) …
instead of pay set by the highest price the consumer is willing to pay - by collective bargaining or a minimum wage …

… a huge dropout of low skilled, rich country workers will occur as low skilled work pays much below what rich country workers look at as "minimum subsistence" (the labor market will not clear). E.g., American born taxi drivers (me again) and the Crips and the Bloods. How else explain that 100,000 out of my guesstimate 200,000 Chicago, gang-age males are in street gangs?

To make the psychological point about "minimum subsistence", today's rich county labor would gladly work for half of today's poor country minimum - if it were 100 years ago and that's the best a much less productive economy could pay. It's psychological, but a lot of psychological if DNA immutable.

Now here's the wind-up - that should implant permanently the unquestionable need for collective bargaining in all labor transactions: A what I call subsistence-plus labor market with 100% rich country workers will have lower pay levels than a collective bargaining labor market with 50% rich/50% poor country workers.

That's the whole law and the profits about the need to make union busting a felony (starting in progressive states) as far as I'm concerned.

PS. This is not an endorsement of Donald Trump's anti-immigration bender - that would kick down the pillars that our whole civilization is built on (sorry Native Americans) - that could mean 250 million Americans by 2050 instead of the anticipated 500 million. This IS an endorsement or rebuilding high labor union density - the missing balance-of-power pillars of our civilization. (Don't forget centralized bargaining - the "compleat" balance-of-power pillar of a unionized labor market.

Charger01 , June 22, 2016 at 2:48 pm

David Simon covered this in "The Wire" and "Show me a Hero", you have entire sections of the population that are forced to leave or participate in crime as a viable form of employment. We have a surplus population now- and going forward that are not supporter by their labor or any other resource other than transfer payments.
Please pause a moment and consider that concept. We have a paucity of credible jobs that people can cobble together a living, let alone increase their opportunities going forward.

nothing but the truth , June 21, 2016 at 11:33 am

when everyone is trying to game the system no one has the right to cry morality.

i have some small businesses that i am selling off. Too many overhead, insurance and legal costs. The line of business is becoming a slave to govt mandated costs and regulations. Customers more interested in injury lawsuits. IQ and attitude of younger employees noticeably poor.

not looking good.

Sandwichman , June 21, 2016 at 11:44 am

"THE LONG-TERM DECLINE IN PRIME-AGE MALE LABOR FORCE PARTICIPATION" report states:

"Conventional economic theory posits that more 'flexible' labor markets-where it is easier to hire and fire workers-facilitate matches between employers and individuals who want to work. Yet despite having among the most flexible labor markets in the OECD-with low levels of labor market regulation and employment protections, a low minimum cost of labor, and low rates of collective bargaining coverage-the United States has one of the lowest prime-age male labor force participation rates of OECD member countries."

I have been following this so-called "conventional economic theory" closely for nearly 20 years now and can attest that it is not a theory but a hollow assertion. Empirical "evidence" for this assertion is based on "strong priors": models containing assumptions that generate outcomes consistent with the assertions. GIGO!

At the core of the flexible labour markets dogma is obeisance to the great god NAIRU, which Jamie Galbraith exposed in all its Emperor's New Clothes nakedness 20 long years ago: "Time to Ditch the NAIRU"

https://www.aeaweb.org/articles?id=10.1257/jep.11.1.93

"The concept of a natural rate of unemployment, or non-accelerating inflation rate of unemployment (NAIRU), remains controversial after twenty-five years. This essay presents a brief for no-confidence, in four parts. First, the theoretical case for the natural rate is not compelling. Second, the evidence for a vertical Phillips curve and the associated accelerationist hypothesis that lowering unemployment past the NAIRU leads to unacceptable acceleration of inflation is weak. Third, economists have failed to reach professional consensus on estimating the NAIRU. Fourth, adherence to the concept as a guide to policy has major social costs but negligible benefits."

In "Unemployment: Macroeconomic Performance and the Labour Market" Richard Layard, Stephen Nickell and Richard Jackman grafted the dubious NAIRU concept onto the anachronistic lump-of-labor fallacy claim to create the hybrid chimera "LUMP-OF-OUTPUT FALLACY" in which central banks enforcing NAIRU anti-inflation policy would ensure that you couldn't redistribute working time. You can't make this stuff up. But Layard, Nickell and Jackman did. Nonsense on stilts.

"To many people, shorter working hours and early retirement appear to be common-sense solutions for unemployment. But they are not, because they are not based on any coherent theory of what determines unemployment. The only theory behind them is the lump-of-output theory: output is a given. In this section we have shown that output is unlikely to remain constant."

This is simply not true. Shorter working hours is based on the same theory as the theory of full employment fiscal policy. Keynes's theory. But don't take my word for it. In an April 1945 letter to T.S. Eliot, Keynes wrote:

"The full employment policy by means of investment is only one particular application of an intellectual theorem. You can produce the result just as well by consuming more or working less. Personally I regard the investment policy as first aid. In U.S. it almost certainly will not do the trick. Less work is the ultimate solution."

Galbraith's "Time to Ditch NAIRU" has 293 citations on Google Scholar. Layard et al's "Unemployment" has 5824. Economists flock to dogma like flies to shit.

Jefe , June 21, 2016 at 12:01 pm

Old and in the way….

dc , June 21, 2016 at 12:30 pm

The Oxycontin Report

Ishmael , June 21, 2016 at 2:00 pm

Some strong starting points without requiring additional govt interference:

Shut down both legal and illegal immigration. When you can not employ the ones who are here why let more in.

Inforce the borders and deport people who are here illegally.

Get rid of anchor babies

Put tariffs on imports and I mean substantial tariffs. Worrying about Smoot Hawley is a canard. At that time the US was the biggest exporter now we are the biggest importer. I would also have a sliding scale depending upon labor rights. Some would scream we need to worry about the poor in these countries. How about worrying about the poor in this country. It has reached the point that you need to look around at your family and friends and say what would you do so that these people prosper. If you are not willing to say practically anything legally then you will probably not prosper.

Cut back govt at all levels. This is a major misallocation of resources. This is especially true of the military industrial security area. Come up with new health care laws. Focus resources to generate more doctors in the US and less people with unproductive degrees.

Close down overseas bases. Stop wars.

Ishmael , June 21, 2016 at 2:10 pm

One other thing, if you look at a lot of the jobs that men use to take and make a good living it was construction, plumbing, gardening, janitorial, cooks and etc. All of these jobs have been filled by illegal aliens who live 25 to a house, pay no taxes, get free health care and suppress wages.

I know, I am a racist!

tony , June 21, 2016 at 3:23 pm

Assuming there are enough natural resources, it is quite possible to arrange an economy in a way that benefits the population of the recipient country. Think about it. The immigrants are healthy, hardworking adults. So you get their labour without investing in twenty years of raising them and then taking on the burden of those who are unhealthy or anti-social.

The US is an immigrant country with a weak safety net so an intelligent policy could easily benefit both parties.

hunkerdown , June 21, 2016 at 4:10 pm

With respect, if your givens were in the least interesting or useful to the greater good, rather than articles of faith (which is just a polite term for self-delusion that benefits the power structure) designed to benefit your imaginary friends, satisfy your need to dominate and abuse others, and give your poor lonely misery some company, you might have something worth a detailed, thoughtful response. As it is, I think you need to explain yourself a bit better.

Ishmael , June 21, 2016 at 4:52 pm

Seems very clear to me. You must have a low IQ if you need someone to explain it to you.

Illegal aliens generally do not pay taxes because they get paid with cash! Sorry, if they have to pay such taxes like sales tax that everyone else needs to pay.

hunkerdown , June 21, 2016 at 5:52 pm

"Stupid" is typical American conformist speak for "would offend my bosses".

You had two points that sounded reasonable: "Shut down both legal and illegal immigration. When you can not employ the ones who are here why let more in." Because markets. Those who own a government that was designed to be bought want to drive down the price and increase the availability ("flexibility") of all labor, of course. Plenty of Americans would be happy to work off the books for a less demeaning wage under less demeaning conditions and less demeaning people. (As if Social Security isn't going to be looted by the oligarchs by the time I'm of age to retire) They wouldn't risk death and torture to come here if EMPLOYERS weren't withdrawing the benefits of employment from those already here and offering those benefits to others. While stopping the influx would be a fine idea, until you get control over those who are paying them to come here - making EMPLOYERS into felons for any support of immigration violations would be a far, far more effective use of enforcement power than beating down brown people at arm's length to satisfy your cultural conceits - supply and demand works both ways.

And "Put tariffs on imports and I mean substantial tariffs" is in the right spirit, but fails to acknowledge, with the usual hostility to self-awareness and past actions that defines the USAmerican "mind", that other nations have just as much right to respond any way they feel like, and the "trade agreements" the USA has signed grant them contractual grounds (pacta sunt servandum, remember?) to respond disproportionately with their own tariffs, penalties against the USG, and other demerits in the international sphere which are not constrained by your triumphalism in any way. Those means would not be as effective as simply repudiating every multilateral "trade"-related agreement the USA has ever signed and not, quite literally, pawning the USA for a mess of bourgeois pottage.

It's ridiculous that you should be depending on the US government to evaluate human rights conditions, when human authorities are never bound by evidence unless they want to be. Malaysia's admission into the TPP, and the politically-driven mulligan they received on their human rights conditions, shows the utter folly of letting ambitious bourgeois careerists hide behind corporate veils of any sort.

If you only believe that people who pay taxes should have rights, you support the very definition of plutocracy, and that makes you a disease vector.

ProNewerDeal , June 21, 2016 at 4:25 pm

"illegal aliens…pay no taxes, get free health care"

You have it back-a*ward. Undocumented workers pay taxes (FICA, SS, etc deductions), that they will not receive when they reach old/SS age, even if they are in the US at that future time. There is no "free health care" for undocumented workers, not eligible for Medicaid or ACA. Emergency room service does not qualify as health care.

Even US citizens have to go through a bureaucratic nightmare to get & maintain Medicaid or ACA, which is CRAPPY INSURANCE, not ACTUAL HEALTH CARE. At the point of needing actual health care, USians are often denied the service or the insurance refuses to pay after the service is done & face another bureaucratic nightmare in fighting the payment refusal. Undocumented workers lack access to even this crapified level of "health coverage".

I do agree that increasing supply (H1-B for STEM pros, undocumented for HS-degreed workers) lowers wages. Also, restricting supply (AMA restricting physician graduates such that US physicians per capita lower than OECD levels) increases wages. Econ101 supply & demand, perhaps neoliberal economists need "retraining" & should enroll in Econ101 at the local community college.

If there was an actual desire to limit undocumented immigration, the solution is large fines on Illegal Employers. How about $100K per undocumented worker found. In addition, end the Drug War, which causes violence & refugees, especially in Mexico & Central America. Revoke or at least amend NAFTA to un-decimate the MEX agricultural industry.

Ishmael , June 21, 2016 at 4:53 pm

Generally I have no problem with large fines for companies which employ illegal aliens.

marym , June 21, 2016 at 4:39 pm

People who work "off the books" don't pay income taxes regardless of their immigration status. They do pay many other types of taxes, often regressive – sales tax, excise tax, property tax (or their landlord's property tax.

DarkMatters , June 21, 2016 at 11:58 pm

1. "When you can not employ the ones who are here why let more in."
Cui bono? Because EMPLOYERS love it, from large corporations to my neighbors who hire low-paid gardeners. Maybe this class-ifies me, but that would have considered to be an extravagance when I was growing up. I wonder how many people who complain about illegal immigrants actually rely on their services?

2. "Inforce the borders and deport people who are here illegally. Get rid of anchor babies"
Bit late for that. I do agree we really have made a mess that needs attention and an intelligent cleanup. Even so, do you think we could competently amend the Constitution at this point, which is what it would take? Practically, I do think that better border security coupled with (really) improved labor conditions, both here and in Mexico (Imagine! An international labor effort!) could improve things. But TTIP and TTP are pushing the other way.

3. "Put tariffs on imports and I mean substantial tariffs."
I like the idea, but only sovereign nations can do this, and we're not. We're subject to international courts. In this case, specifically, expect corporate lawsuits against the USA, arguing that the US should compensate corporations for loss of profits caused by said tariffs. These will be arbitrated by Investor-State Dispute Resolution panels, courtesy of said TTIP and TTP, where the no-appeal panels are staffed by international trade lawyers, who otherwise work for international corporations. Yes, by all means, worry about the poor in this country, but don't leave out anyone else.

4. "Cut back government at all levels."
Down with traffic lights! (This statement of yours hooked me into writing this entire reply). Strict libertarians strike me as being more than a little Pollyann-ish. The only historical example that comes close are now called the dark ages. In those idyllic times, a bunch of French Norman good-ol' boys could hie themselves over to Italy and wreak havoc, I mean make their fortune. Governments are necessary to contain dispute resolution, and so require power superior to all other factions, but, for the sake of equal justice, should be accountable in some way to all. I could go on, but "no government" advocacy in our times leaves a power vacuum just at a time when corporations and financiers are doing their best to take over. As the Federalists argued, we do need a strong government, to ensure that the will of the people can be vigorously asserted. Not to say that it's working out so great right now, but it would be nice if we could in some way place competent people at the helm to right the ship. Speaking of Pollyanna….

RD , June 21, 2016 at 4:33 pm

All labor reform policies put forth by Republicans and their policy activation arm (Dems) have been to make life easier and richer for CEO's, not to help workers. So now economists are surprised by the results? What a useful profession they are.

run75441 , June 21, 2016 at 7:59 pm

Yves:

You already have him on your thread. The 40 hour work week was established under Roosevelt. If you wish to reverse or stave off the declining Participation Rate, then decrease the required number of hours work to 32. We have agreed before that Labor is the lowest cost when compared to Overhead or Materials. In the end, the difference in cost would be made up by higher productivity.

Sandwichman is a proponent of this and I agree with his analysis.

[Jun 21, 2016] Depressing Similarities Between 1938 And The Present

www.benzinga.com

Benzinga

By the late 1930s, the worst of the Depression had passed after the U.S. President Franklin Roosevelt jolted the economy through the "New Deal," which focused on the "three Rs" - relief, recovery and reform.

At the same time, private investment was at poor levels, as individuals chose to pay down their debts rather than spend. Inflation was also on the low side, and the government started to back off its fiscal stimulus programs and implement a tightening of financial policy.

Sounds a bit like 2016 doesn't it?

Business Insider, citing a research report by analysts at Morgan Stanley, made the case that 2016 is no different from 1938.

"The critical similarity between the 1930s and the 2008 cycle is that the financial shock and the relatively high levels of indebtedness changed the risk attitudes of the private sector and triggered them to repair their balance sheets," Business Insider quoted the analysts as saying. "During the deleveraging process, the private sector becomes risk-averse and shifts its attention towards restoring health to its balance sheets."

[Jun 19, 2016] US economy just 'doesn't want to grow up' BofA's Contopoulos

www.cnbc.com

The United States, along with the European Central Bank and Bank of Japan , are stuck overseeing 'Peter Pan' economies that refuse to wean themselves off cheap money policies.

... ... ...

"A Peter Pan economy is an economy that just doesn't want to grow up," Michael Contopoulos recently told " Futures Now ." The central bankers of the U.S., Japan and Europe "are like three nannies managing the economies. And, that's what they're supposed to be doing.

[Jun 18, 2016] Whats Really Happening to the Humanities Under Neoliberalism?

What's happening is the same what happed with them in the USSR. Only Party (in case of neoliberalism replace the Party with "financial oligarchy") sanctioned content can be taught and the stress is on neoclassical economics as this is one of the foundation of neoliberalism (along with liberalism, Ann Rand, and similar psudo theories).
Notable quotes:
"... Chipping away at the humanities in schools jeopardizes the issues of social justice in education. Arguably, it is safe to say that the humanities and any liberal arts program are undervalued specifically because they involve knowledges, practices and traditions that usually cannot adhere to immediate short-term use ..."
www.truth-out.org

The number of college students majoring in English, according to some contested reports, has plummeted. In general, the humanities are taking a back seat to more "pragmatic" majors in college. Students, apparently, are thinking more about jobs than about general learning. Given this trend, should schools be scaling back on the humanities?

... ... ...

Some might say that since top universities like MIT have decided to focus on management, business analytics, finance and mathematical economics (or trading), secondary schools should follow suit. It would be a mistake, however, for secondary schools to cave to this argument and scale back on the humanities.

... ... ...

The Chronicle of Higher Education has noted the reason for this prevailing wisdom about the myth regarding the humanities plummet: It's largely due to mainstream publications. For instance, in 2013, The New York Times featured an essay titled "The Decline and Fall of the English Major." In 2009, The American Scholar featured an essay, titled "The Decline of the English Department." Authors cited spirals in the humanities. Even The Chronicle's Mark Bauerlein wrote, "English has gone from a major unit in the university to a minor one."

The piece goes on to explain how, back in 2010, MSNBC anchor Tamron Hall said, "Students wanting to take up majors like art history and literature are now making the jump to more-specialized fields like business and economics, and it's getting worse." This comment was juxtaposed with a chart that indicated a spiral. Prominent New York Times journalist David Brooks also jumped on the bandwagon when he remarked, "The humanities [have] turned from an inward to an outward focus." The "sky is falling" myth then led to serious underfunding, becoming a self-fulfilling prophecy.

Bérubé argues that mainstream accounts of the decline of the humanities in undergraduate education are "factually, stubbornly, determinedly wrong." He says there was a plummet, but it was between 1970 and 1980.

In reality, English isn't dying; it's just that at one time, it was unprecedentedly popular. English majors rose from 17,000 to 64,000 over a span of 30 years, from 1940 to 1970, and then declined to 34,000 by the 1990s. This does not mark a death to the humanities.

Are fields like art history and literature really "elite, niche-market affairs that will render students unemployable," as Bérubé argues? Are students abandoning the humanities because they are "callow, market-driven careerists?" No, this is not true. Bérubé states that "undergraduate enrollment in the humanities have held steady since 1980 (in relation to all degree holders, and in relation to the larger age cohort), and undergraduate enrollments in the arts and humanities combined are almost precisely where they were in 1970."

... ... ...

Chipping away at the humanities in schools jeopardizes the issues of social justice in education. Arguably, it is safe to say that the humanities and any liberal arts program are undervalued specifically because they involve knowledges, practices and traditions that usually cannot adhere to immediate short-term use by preservation seeking administrations and teachers.

... .,. ...

Dan Falcone has a master's degree in modern US history from LaSalle University in Philadelphia and currently teaches secondary education. He has interviewed Noam Chomsky, Edward Herman, Richard Falk, William Blum, Medea Benjamin and Lawrence Davidson. He resides in Washington, DC.

[Jun 18, 2016] Greenspan Shocked Disbelief

Greenspan phony "Shocked disbelief" reminds classic "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca. Compare with "... "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he said. ..."
Notable quotes:
"... "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," ..."
"... Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless banks to do reckless things. ..."
"... Private greed, not public good, caused this catastrophe: "The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn't until the securitization became a significant factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it's the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities. ..."
"... But having admitted the failure of his faith, Greenspan could not abandon it. Credit default swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations were needed, because the markets "for the indefinite future will be far more restrained than would any currently contemplated new regulatory regime." ..."
"... The only Guantanamo that the United States has any business running is a concentration camp for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud the American people from their hard earned dollar. ..."
"... There are no free markets in America, any more than there is free lunch. ..."
"... So it wasn't the military-industrial complex that did us in after all . . . ..."
"... It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's sorry testimony before Congress. What has faith in something to do with enforcing the policies of fiduciary responsibility already on the books? All these so-called "experts" on capitalism are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily and criminally responsible for their actions, inept or not. ..."
"... If it looks like class warfare, as David Harvey, author of Neoliberalism, has stated, call it class warfare and act accordingly. ..."
"... it doesn't take a genius to understand that when financial instruments are created based on crap (subprime mortgages), that eventually problems will occur with those instruments. In fact, Greenspan and his cronies knew that, which is why they resisted these instruments being regulated by the SEC or even the CFTC. ..."
"... Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation. ..."
"... Did anybody even bother to consult the Math PhDs who created these instruments to run possible scenarios -- just in case? why bother when you know you can scare congress, the president and the treasury and ultimately the people into bailing your ass out of worldwide collapse? ..."
"... Shocked Disbelief is a ploy. When they were all riding high, they didn't give a crap. They were going to come out richer than hell anyway. ..."
"... Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald Wilson Reagan", and the other "Free Market" "government is the problem" ideologues ..."
"... What about the 1994 Act of Congress that required the Fed to monitor and regulate derivatives? The Act Greenspan ignored? ..."
"... "...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca ..."
October 24, 2008 | truthout.org

by: Robert Borosage, The Campaign for America's Future

On October 23, former Federal Reserve Chairman Alan Greenspan testified before a House Oversight and Government Reform Committee hearing on the role of federal regulators in the current financial crisis.

It marks the end of an era. Alan Greenspan, the maestro, defender of the market fundamentalist faith, champion of deregulation, celebrator of exotic banking inventions, admitted Thursday in a hearing before Rep. Henry Waxman's House Committee and Oversight and Government Reform that he got it wrong.

"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he said.

As to the fantasy that banks could regulate themselves, that markets self-correct, that modern risk management enforced prudence: "The whole intellectual edifice, however, collapsed in the summer of last year."

Greenspan spurned the Republican acolytes trying desperately to defend the faith and blame the crisis on the Community Reinvestment Act and the powerful lobby of poor people who forced powerless banks to do reckless things. Greenspan dismissed that goofiness in response to a question from one of its right-wing purveyors, Rep. Todd Platts, R-Pa., noting that subprime loans grew to a crisis only as the unregulated shadow financial system securitized mortgages, marketed them across the world, and pressured brokers to lower standards to generate a larger supply to meet the demand. Private greed, not public good, caused this catastrophe:

"The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and, indeed, very unlikely to have taken on the dimensions that it did. It wasn't until the securitization became a significant factor, which doesn't occur until 2005, that you got this huge increase in demand for subprime loans, because remember that without securitization, there would not have been a single subprime mortgage held outside of the United States, that it's the opening up of this market which created a huge demand from abroad for subprime mortgages as embodied in mortgage-backed securities.

But having admitted the failure of his faith, Greenspan could not abandon it. Credit default swaps had to be "restrained," he admitted. Those who create mortgages should be mandated to retain a piece of them to insure responsible lending. Otherwise, the old faith still applied. No new regulations were needed, because the markets "for the indefinite future will be far more restrained than would any currently contemplated new regulatory regime."

Now hung over from their bender, the banks could be depended upon to remain sober "for the indefinite future." Or until taxpayers' money relieves their headaches, and they are free to party once more.


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Comments

This is a moderated forum. It may take a little while for comments to go live.

The only Guantanamo that the

Sun, 10/26/2008 - 23:37 - Captain America (not verified)

The only Guantanamo that the United States has any business running is a concentration camp for the hundreds of wall street executives and their cronies in Bushland that conspired to defraud the American people from their hard earned dollar.

What they did dwarfs the damage caused to this country by 911, (no disrespect for the many innocents who died). However, here, every single citizen is a victim of fraud and corruption on a scale that was heretofore inconceivable. Greenspan, Bush and now Paulson have done more than Bin Laden and his hordes could do in a 100 years.

By the way, if you protest YOU wind up locked up for being un-American. What happened America ?

There are no free markets in

Sun, 10/26/2008 - 19:27 - pink elephant (not verified)

There are no free markets in America, any more than there is free lunch. The game was always fixed and Greenspan was the ultimate shill for the fixers. The past thirty years have been an orgy of greed with common sense shoved aside for the sake of uncommon expediency. Americans became infatuated by arcane formulas and dense incomprehensible mathematics to the point that they forget simple arithmetic. America wake up it was only a dream, and a bad one at that.

So it wasn't the

Sun, 10/26/2008 - 19:07 - Anonymous (not verified)

So it wasn't the military-industrial complex that did us in after all . . .

It's clear from comments on

Sun, 10/26/2008 - 15:40 - afrothethics (not verified)

It's clear from comments on this contribution that few readers of Truthout believe Alan Greenspan's sorry testimony before Congress. What has faith in something to do with enforcing the policies of fiduciary responsibility already on the books? All these so-called "experts" on capitalism are now coming out to say "I'm sorry." Well, I won't be sorry for them until they are held monetarily and criminally responsible for their actions, inept or not. The truth is as plain as the nose on your face: Greenspan, the Federal Reserve, the investment banks, the Bush administration and several members of Congress unobtrusively acted to consciously and knowingly to rob the national treasury for the sake of capitalism's sacred cow: capital accumulation on behalf of the nation's political and economic elite. If it looks like class warfare, as David Harvey, author of Neoliberalism, has stated, call it class warfare and act accordingly.

We have heard statements

Sun, 10/26/2008 - 10:11 - DJK (not verified)

We have heard statements like "the mathematical models used for knowing the behavior of derivatives based on subprime mortgages were too difficult to understand", etc. But it doesn't take a genius to understand that when financial instruments are created based on crap (subprime mortgages), that eventually problems will occur with those instruments. In fact, Greenspan and his cronies knew that, which is why they resisted these instruments being regulated by the SEC or even the CFTC. And this is why they turned a blind eye to many of the rating agencies giving many of these instruments AAA ratings. I am sure that a real investigation will reveal numerous instances of fraudulent activity in conjunction with this debacle. Those perpetrators must be identified and brought to justice. While this will not fix our current problem, it hopefully should serve as a deterrent to those who would in the future attempt to again engage in such activities.

Well here you have it a

Sun, 10/26/2008 - 08:13 - Robert Iserbyt (not verified)

Well here you have it a confessional lie from the biggest fraud perpetrator in the history of American finance Why the markets ever listened to this criminal in the first place is evidence that our entire nation should be required to take a full year of real unfettered economics just in case they don't understand what is going on now. All the pundits on MSNBC and all the talking heads should be removed from the airwaves. The Bailout what will that do? the answer lies before you.

Sounds like the "maestro"

Sun, 10/26/2008 - 02:02 - Anonymous (not verified)

Sounds like the "maestro" hit a flat note in his orchestra of greed and deregulation. Come on, do you really think we are all so stupid to buy into the story that you couldn't predict a melt down knowing that those writing the subprimes held no responsibility for their actions? That's like giving a "get out of jail card" to someone who just created a felony! Did anybody even bother to consult the Math PhDs who created these instruments to run possible scenarios -- just in case? why bother when you know you can scare congress, the president and the treasury and ultimately the people into bailing your ass out of worldwide collapse?

I'm a former real estate

Sun, 10/26/2008 - 00:24 - two7five7one (not verified)

I'm a former real estate broker and my son is a mortgage broker. From about 2004 through the beginning of this "greatest financial crisis since '29", we frequently talked on the phone about the disaster which would ensue when the real estate value appreciation stopped, and people were no longer fueling the economy with money borrowed against their equity, and the sub-prime loan fiasco would end. We knew it would be disastrous, and both of us were astonished that neither the FED nor congress was willing to say or do anything about it. Anyone who has witnessed over the years the cycle of boom/bust/boom/bust in the real estate market knew that after eleven years of unprecedented "boom" -- '96 through '2007 -- the "bust" would be like an earthquake. Paulson and Greenspan and their ilk now denying that they suspected this is just is just their lying to protect the GOP which was benefitting from the booming economy. They should both end up in prison, with all of the GOP members of congress who have had their hands in the cash register.

Dance clown, dance. First

Sat, 10/25/2008 - 23:48 - mysterioso (not verified)

Dance clown, dance. First you were against the FED until you became head of the FED. Then you were for trickle down economics and letting the "system" regulate itself until you saw the inevitable destruction it caused. Dance clown, dance. You should be the first one sent to prison under the "Un-American activities act". The arrogance of your testimony before the committee was appalling. You honestly couldn't believe you were wrong !!!

Shocked disbelief, my foot.

Sat, 10/25/2008 - 23:35 - slw (not verified)

Shocked disbelief, my foot. Many of us predicted EXACTLY this outcome.

This is like telling the Fox

Sat, 10/25/2008 - 22:43 - topview (not verified)

This is like telling the Fox to watch the Hens and then walking away and trusting him to do the right thing. Government has to return to regulation and see that there is no hanky, Banky going on anymore. Monopolies have to be busted up, like the Communication industry's, the Drug industries and any other Corporations that control to much of the way the Country operates. No more Outsourcing any Government duties.

Shocked Disbelief is a ploy.

Sat, 10/25/2008 - 22:00 - radline9 (not verified)

Shocked Disbelief is a ploy. When they were all riding high, they didn't give a crap. They were going to come out richer than hell anyway.

Where's Ayn Rand when you

Sat, 10/25/2008 - 20:53 - anglohistorian (not verified)

Where's Ayn Rand when you need her? Give me a break Mr Greenspan. Never let history and reality get in the way of the big unregulated celebration of greed like we have had since "Saint Ronald Wilson Reagan", and the other "Free Market" "government is the problem" ideologues. We can spend trillions on war and corporate bailouts, but we can't have a single payer health system? We can't rebuild our infrastructure? Say it again- give me a break!

What about the 1994 Act of

Sat, 10/25/2008 - 20:41 - Jtmonrow (not verified)

What about the 1994 Act of Congress that required the Fed to monitor and regulate derivatives? The Act Greenspan ignored?

"...I am shocked - shocked,

Sat, 10/25/2008 - 20:29 - Anonymous (not verified)

"...I am shocked - shocked, there is gambling going on in this establishment...." "...here are your winnings..." exchange between Humphrey Bogart & Claude Rains in Casablanca

This would be the same

Sat, 10/25/2008 - 19:50 - dtroutma (not verified)

This would be the same "shocked disbelief" expressed by Willie Sutton's mother?

shouldn't Greenspan give his

Sat, 10/25/2008 - 18:06 - Anonymous (not verified)

shouldn't Greenspan give his salary and bonus back to taxpayers?

[Jun 03, 2016] A 'tsunami' is about to overwhelm the debt market

Notable quotes:
"... Increased regulation, the holding of high-yield debt by "less stable" investors such as mutual funds, which are likely to unload the bonds quickly in the event of a drop, and the increased size of the low-quality leveraged loan market could all make the tidal wave even worse than in the past. ..."
finance.yahoo.com

Boys crouch behind a wall as they play in the massive surf at Sydney's Narrabeen Beach in February 2004.

A tidal wave may be coming to the bond market, and it's not going to be pretty.

At least that's the view of Matthew Mish, credit strategist at UBS. To Mish, the elevated rates of default in the commodity sector and high risk bonds are a harbinger of things to come for the broader debt market.

"First, our quantitative framework is signaling a broader deterioration in the default outlook, with our model projecting default rates of 4.3% over the next 12 months (versus 2.6% one year prior)," Mish wrote in a note to clients on Thursday.

Mish's research asks whether the recent uptick in default rates is simply a "rogue wave" that will dissipate or the "start of a tsunami" that will bring the rate of defaults much higher over the long term.

Mish is in the latter camp. He cites three short-term reasons for a coming increase in the number of firms unable to pay back their debt. They are:

  1. Decreasing profits: Mish notes that corporate profits fell 7.6% in the first quarter against the same period a year ago. In order to pay back loans, companies need to continue to make more, and with less cash coming in, there will be less to allocate to debt.
  2. Lending standards are getting tighter: Firms also have the ability to pay down debt that is coming to maturity by issuing new debt, effectively kicking the can down the road. Lending conditions for new debt, however, are getting tighter as banks focus on higher quality borrowers. In turn, this makes it tougher for companies to pay for debt with more debt.
  3. Debt is getting more expensive: Loan spreads, or the difference between what banks have to pay to borrow money and what they charge companies in interest on loans they then give out, are starting to widen. In other words, new debt is getting more expensive.

This trouble is not just limited to the commodity space. Mish estimates that the default rate for nonenergy firms will creep up to 3.5% in 2016, up from 1.5% currently.

"Higher frequency data suggest default stress is rising specifically in the media/entertainment, consumer/service, retail and aerospace/industrial sectors (as well as the non-bank financials)," Mish wrote.

As these defaults start to pile up, Mish said, long-term shifts in the credit markets could snowball and make the situation even worse.

Increased regulation, the holding of high-yield debt by "less stable" investors such as mutual funds, which are likely to unload the bonds quickly in the event of a drop, and the increased size of the low-quality leveraged loan market could all make the tidal wave even worse than in the past.

More


Michael

Soon the US government will start bailing out states like California and Illinois. The precedent has already been set with the bailing out of GM and others. Their excuse will be the States are too big to fail. Taxpayers and the heirs across the nation will be footing the bill for corruption, mismanagement and just plain stupidity of these states and others that will soon follow. Of course, eventually the financial strain will overpower the producers who fund the non producers and all hell will break loose. One just has to witness current events like Venezuela's economic collapse to see our future. Maybe not today or tomorrow, but someday.

Kim

No surprise, the economy has been creeping on borrowed money without interest. The Fed kept pumping money to keep the economy afloat while Obama borrowed $10 trillion to put into the economy and regulated into the economic collapse. That borrowed money will have to be paid. When the interest goes up, we will have to pay the interest and less money for anything else. Obama has been destroying our economy without consequences just like Bill Clinton did in 1996 with the expansion of the subprime lending rate, except it is gravely worse now with our massive debt.

[Jun 03, 2016] US gains just 38K jobs, fewest in 5 years; rate at 4.7 pct.

Notable quotes:
"... Nearly a half-million jobless Americans stopped looking for work and so were no longer officially counted as unemployed. ..."
finance.yahoo.com

At the same time, the unemployment rate tumbled to 4.7 percent from 5 percent, the Labor Department said Friday, its lowest point since November 2007. The rate fell for a problematic reason: Nearly a half-million jobless Americans stopped looking for work and so were no longer officially counted as unemployed.

Susan

The unemployment rate is just a bunch of #$%$. The only jobs avail are low paying PT with no benefits. I spent so much time and money on my education and now finding it's worthless. I use to make $50k a year with benefits and another $20k freelancing from home. I've been unemployed now for a while and even went back and got my masters degree. Still no work. So now I'm suppose to work for min wage? This is my reality. This is the reality for many people. Do they really expect us to pretend everything is sunshine and smiles. Our economy is collapsing people. Don't be fooled.

[Jun 03, 2016] Jamie Dimon just sounded the alarm on auto loans

Notable quotes:
"... At more than $30,000, the average auto loan for a new car is also at an all-time high, according to Experian. Also, at more than $500, the average monthly auto loan payment is at a record. ..."
www.cnbc.com
In May, the total amount of auto loans cracked the $1 trillion mark for the first time, marking a 10 percent increase. It comes as auto sales have hovered around record highs.

At more than $30,000, the average auto loan for a new car is also at an all-time high, according to Experian. Also, at more than $500, the average monthly auto loan payment is at a record.

The Experian research also noted that more subprime borrowers are borrowing for new auto purchases.

"The continued rise in new vehicle costs have kept many consumers exploring options to keep their monthly payments affordable," said Melinda Zabritski, Experian's senior director of automotive finance, in a statement that accompanied Thursday's research. "As long as vehicle prices continue to rise, we can expect leasing rates to grow along with them. However, consumers need to understand the nuances of their lease agreements and make sure that leasing fits their lifestyle."

Read More Auto loans roar to trillion-dollar level

[Jun 03, 2016] Bill Gross Get ready for an entirely different market

www.cnbc.com

Bill Gross has some bad news for investors.

In his June investment outlook released Thursday, the widely followed bond fund manager contended that bond and stock returns realized in the last 40 years are "a grey if not black swan event that cannot be repeated." Investors should not expect 7 percent returns on bonds or returns in the high single digits or double digits on stocks, Gross told CNBC on Thursday.

"The markets are entirely different and it would pay to travel to Mars as opposed to stay on Earth, because the returns here are very, very low," the manager of the Janus Capital Unconstrained Bond Fund, said on CNBC's "Power Lunch".
Gross said easy central bank policy could hold down bond returns. Central banks in Europe and Japan have adopted negative interest rates, while the U.S. Federal Reserve's target rate is at 0.25 to 0.50 percent.

German and Japanese 10-year bonds currently have negative yields, while their 30-year bonds yield less than 1 percent. The U.S. 10-year Treasury note yield sat around 1.8 percent Thursday.

Gross contended those rate trends can hurt not only savers but also the broader economy. He said Fed policymakers, who have signaled they could hike rates at least once this year, realize they need to normalize policy.

"Ultimately, they have to move back up and I think a certain number of Fed governors realize that the normalization process is necessary in order to save business models and to save capitalism basically because capitalism doesn't work at 0 percent and it doesn't work at negative interest rates," he said.

Gross added that investors should "basically go the other way" by holding liquid cash. He said they should not buy corporate bonds and resist buying high-yield bonds or riskier stocks.

See also

Here's why oil will move higher: Energy analyst

'Sizable' stock market sell-off may lie ahead, warns oil bear

Marc 'Dr. Doom' Faber: Why stocks are 'very vulnerable'

Philips Lighting shares rise as CEO hails 'historic' market debut


[Jun 02, 2016] The shameful roles played by Americas torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nations public school system

Notable quotes:
"... we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe. ..."
"... The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist. ..."
"... Selected Skeptical Comments ..."
"... seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend…" This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nation's public school system.* ..."
"... And as I suspect seanseymour would agree, when a nation loses public education, it loses everything. ..."
"... accountable ..."
"... And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final. ..."
www.nakedcapitalism.com
Posted on June 2, 2016 by Yves Smith Yves here. The first comment came in on a post that had gone cold, and I thought it was so revealing that it needed to be seen widely. The second is a synchronistic complement.

As much as I carry on about the isolation of the Acela-riding classes from the acute distress in much of the US, I only have a very distant feel for it. For instance, I grew up moving through many small towns where a paper mill was a major, and in some cases, the biggest local employer. Those mill jobs were well paid and the workers could buy houses, cars, and had pensions. One of my brothers works for a paper mill that should have been world competitive through his retirement, but it's been wrecked by a series of private equity owners, starting with Cerberus, and in now in bankruptcy. The town in which he lives, Escanaba, Michigan, has lost over 20% of its population since the mid 1980s. Similarly, my uncle lived below the poverty line in Maine, lobstering until his knees gave out. But he had a fully paid for house he had inherited, and access to VA hospitals and doctors, so it could have been a lot worse. But Maine is a poor state, so even visiting there as a tourist in the summers, it's not hard to see the signs of struggle even in those who are getting by.

The first comment gives a window into the hidden desperation in America that is showing up in statistics like increasing opioid addiction and suicides, rather than in accounts of how and why so many people are suffering. I hope readers will add their own observations in comments.

seanseamour, June 1, 2016 at 3:26 am

We recently took three months to travel the southern US from coast to coast. As an expat for the past twenty years, beyond the eye opening experience it left us in a state of shock. From a homeless man convulsing in the last throes of hypothermia (been there) behind a fuel station in Houston (the couldn't care less attendant's only preoccupation getting our RV off his premises), to the general squalor of near-homelessness such as the emergence of "American favelas" a block away from gated communities or affluent ran areas, to transformation of RV parks into permanent residencies for the foreclosed who have but their trailer or RV left, to social study one can engage while queuing at the cash registers of a Walmart before beneficiaries of SNAP.

Stopping to take the time to talk and attempt to understand their predicament and their beliefs as to the cause of their plight is a dizzying experience in and of itself. For a moment I felt transposed to the times of the Cold War, when the Iron Curtain dialectics fuzzed the perception of that other world to the west with a structured set of beliefs designed to blacken that horizon as well as establish a righteous belief in their own existential paradigm.

What does that have to do with education? Everything if one considers the elitist trend that is slowly setting the framework of tomorrow's society. For years I have felt there is a silent "un-avowed conspiracy", why the seeming redundancy, because it is empirically driven as a by-product of capitalism's surge and like a self-redeeming discount on a store shelf crystalizes a group identity of think-alike know-little or nothing frustrated citizens easily corralled by a Fox or Trump piper. We have re-rcreated the conditions or rather the reality of "Poverty In America" barely half a century after its first diagnostic with one major difference : we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe.

Praedor, June 1, 2016 at 5:37 pm

So Richard Cohen now fears American voters because of Trump. Well, on Diane Reem today (NPR) was a discussion on why fascist parties are growing in Europe. Both Cohen and the clowns on NPR missed the forest for the trees. The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist.

In the US we don't have the refugees, but the neoliberalism is further along and more damaging. There's no mystery here or in Europe, just the natural effects of governments failing to represent real people in favor of useless eater rich.

Make the people into commodities, endanger their washes and job security, impose austerity, and tale in floods of refugees. Of COURSE Europeans stay leaning fascist.

Selected Skeptical Comments
Steve Sewall , June 2, 2016 at 12:07 pm

What a comment from seanseamour. And the "hoisting" of it to high visibility at the site is a testament to the worth of Naked Capitalism.

seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend…" This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nation's public school system.*

And as I suspect seanseymour would agree, when a nation loses public education, it loses everything.

But I don't want to spend all morning doing that because I'm convinced that it's not too late for America to rescue itself from maelstrom in which it finds itself today. (Poe's "Maelstrom" story, cherished by Marshall McLuhan, is supremely relevant today.)

To turn America around, I don't look to education – that system is too far gone to save itself, let alone the rest of the country – but rather to the nation's media: to the all-powerful public communication system that certainly has the interactive technical capabilities to put citizens and governments in touch with each other on the government decisions that shape the futures of communities large and small.

For this to happen, however, people like the us – readers of Naked Capitalism – need to stop moaning and groaning about the damage done by the neoliberals and start building an issue-centered, citizen-participatory, non-partisan, prime-time Civic Media strong enough to give all Americans an informed voice in the government decisions that affect their lives. This Civic media would exist to make citizens and governments responsive and accountable to each other in shaping futures of all three communities – local, state and national – of which every one of us is a member.

Pie in the sky? Not when you think hard about it. A huge majority of Americans would welcome this Civic Media. Many yearn for it. This means that a market exists for it: a Market of the Whole of all members of any community, local, state and national. This audience is large enough to rival those generated by media coverage of pro sports teams, and believe it or not much of the growth of this Civic media could be productively modeled on the growth of media coverage of pro sports teams. This Civic Media would attract the interest of major advertisers, especially those who see value in non-partisan programming dedicated to getting America moving forward again. Dynamic, issue-centered, problem-solving public forums, some modeled on voter-driven reality TV contests like The Voice or Dancing with the Stars, could be underwritten by a "rainbow" spectrum of funders, commercial, public, personal and even government sources.

So people take hope! Be positive! Love is all we need, etc. The need for for a saving alternative to the money-driven personality contests into which our politics has descended this election year is literally staring us all in the face from our TV, cellphone and computer screens. This is no time to sit back and complain, it's a time to start working to build a new way of connecting ourselves so we can reverse America's rapid decline.

OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final.

seanseymour, thanks for your insights and thanks, Yves, for putting them where we can see them.

* For any Yalies out there, I documented these roles in this 30-page historical memorial to my dad.

[Jun 02, 2016] Trump University playbooks offer glimpse of ruthless business practices

Notable quotes:
"... In the USA, those at the bottom collaborate based on the 'promise' that the American Dream offers them a shot at the top, if they hold the party line. ..."
"... What they do not realize is that the "party" counts on the weight of their mass to hold that line for THEMSELVES ALONE. The people who back it all are thrown under the bus with great regularity. They never see it until the wheel roll over them and by that time they have sucked millions of others into the illusion that they are the "one" special one who will make it from the bottom and be welcomed as a peer into the 1%. ..."
"... It is not so surprising. Hope is a hard thing to kill and an easy thing to exploit. ..."
"... He is being sued for "deceptive business practices" which is to do with the content of his so-called University courses. You can be a snake oil salesman and pressure people into buying more expensive stuff, but you can't sell them lemons. There are consumer protection laws to prevent that, and that's what these lawsuits are doing. ..."
"... 'Just following orders', which is basically what you are trying to justify, in a business context, has been discredited as a modus operandi and is not a legal defence (hence the lawsuit, with which I wish them the very best of luck). ..."
"... Meanwhile, the more one learns about the judge and the more this judge is in conflict of interest (IMO). This judge is for open borders and illegal immigration, is a strong advocate for La Raza (yes, that anti-White and pro-illegal Mexican hate group), has links to the Clintons (Hillary) and appointed two prosecutors to the case who are extremely generous donators towards Hillary, including paying her significant $ for speeches. ..."
"... Though, I think, not everybody who attends boarding school becomes a sociopath. But sociopathy runs in families. And sociopathic parents tend to put kids into boarding school or reformatory for that matter. Just to get rid off them. ..."
"... In such a naked, dog-eat-dog society, there should also be no personal bankruptcy protection or ring-fencing for those who fail in business. All their assets siezed to pay off creditors. Not sure Trump would be so keen on that. ..."
"... Shamelessness is not a crime in the USA, but crime (fraud) is still a crime. ..."
"... Nothing will come out of this, that will effect the election. The practices documented in the papers released is a high pressure sales tactic which are used by many. The focus should be on what Trump stands for and bring the fight to him. Hillary Clinton is the wrong person in the wrong year to be able to take on Trump. She is flawed beyond repair, and is fighting not to lose, so careful with her words that they don't resonate. ..."
"... He's being sued, so it's a civil case. Documents can be made public if it's in the public interest to know about them. And when it looks very much like a con man is on his way to the Whitehouse, I'd call that a big yes for public interest. ..."
"... Killary attacks the MANY women who accuse her husband of rape, lies to the grand jury over White Water, to congress and the people about Benghazi, runs guns to ISIS, takes money from Saudi Arabia the worst women's rights violator, lies about being shot at landing in Bosnia, approves uranium mining deal to Russian concerns while SOS and receives millions to her foundation at the same time, starts an unregistered hedge find in Columbia of all places, takes millions from banks and you fault Trump for greed and making his own way without influence peddling while in public office. ..."
"... A snake oil salesman, a 'boiler room' operator, a phishing scammer, that's all Trump is. Honestly, is there any lie this sociopath could not tell? Is there any con game too crooked and despicable for even him? ..."
"... Sounds like a third world country with no social contract other than the "opportunity" to exploit one another. ..."
"... HRC was paid $385,000 for 3 speeches given to Goldman Sachs, nearly 10 times what the Trump 3 day course costs per person. Based on the speeches we hear from HRC, what could have been in these speeches that made them so valuable? Afterward there may have been the same buyer's remorse felt by Trump-course attendees. The comments that say that the U.S. is full of scams like this are on target, starting with the $1 lottery ticket. It is the dream that brought and brings people to the U.S., and if it turns out to be an expensive nightmare, the answer is "caveat emptor." ..."
www.theguardian.com

More than 400 pages of released Trump University files describe how staff should target financial weaknesses to sell high-priced real estate courses

A federal judge has given the world an unprecedented glimpse into the ruthless business practices Donald Trump used to build his business empire.


US district court judge Gonzalo Curiel on Tuesday made public more than 400 pages of Trump University "playbooks" describing how Trump staff should target prospective students' weaknesses to encourage them to sign up for a $34,995 Gold Elite three-day package.

Trump University staff were instructed to get people to pile on credit card debt and to target their financial weaknesses in an attempt to sell them the high-priced real estate courses.

The documents contained an undated "personal message" from Trump to new enrollees at the school: "Only doers get rich. I know that in these three packed days, you will learn everything to make a million dollars within the next 12 months."

The courses are now subject to legal proceedings from unhappy clients.

This shows someone who was absolutely shameless in his willingness to lie to people - Eric Schneiderman

Judge Curiel released the documents, which are central to a class-action lawsuit against Trump University in California, despite sustaining repeated public attacks from Trump, who had fought to keep the details secret.

Curiel ruled that the documents were in the public interest now that Trump is "the front-runner in the Republican nomination in the 2016 presidential race, and has placed the integrity of these court proceedings at issue".

... ... ...

The playbook contains long sections telling Trump U team members how to identify buyers and push them to sign up for the most expensive package, and to put the cost on their credit cards.

"If they can afford the gold elite don't allow them to think about doing anything besides the gold elite," the document states.

If potential students hesitate, teachers are told to read this script.

As one of your mentors for the last three days, it's time for me to push you out of your comfort zone. It's time for you to be 100% honest with yourself. You've had your entire adult life to accomplish your financial goals. I'm looking at your profile and you're not even close to where you need to be, much less where you want to be. It's time you fix your broken plan, bring in Mr. Trump's top instructors and certified millionaire mentors and allow us to put you and keep you on the right track. Your plan is BROKEN and WE WILL help you fix it. Remember you have to be 100% honest with yourself!

Trump University staff are instructed in how to persuade students to put the cost of the course on their credit cards, even if they have just battled to pay off debts.

Do you like living paycheck to paycheck? ... Do you enjoy seeing everyone else but yourself in their dream houses and driving their dreams cars with huge checking accounts? Those people saw an opportunity, and didn't make excuses, like what you're doing now.

Trump staff are told to spend lunch breaks in sign-up seminars "planting seeds" in potential students minds about how their lives won't improve unless they join the programme. They are also told to ask students personal questions to discover weaknesses that could be exploited to help seal the deal.

Collect personalized information that you can utilize during closing time. (For example: are they a single parent of three children that may need money for food? Or are they a middle-aged commuter that is tired of traveling for 2 hours to work each day?)

New York attorney general Eric Schneiderman, who has also sued Trump University , renewed his attacks on Trump on Tuesday. "You are not allowed to protect the trade secrets of a three-card Monte game," Schneiderman said ahead of the document's release. "If you look at the facts of this case, this shows someone who was absolutely shameless in his willingness to lie to people, to say whatever it took to induce them into his phony seminars," Schneiderman said.

Urban2 -> Karlyn Isaak Lotney 1 Jun 2016 09:17

This is no more of a fraud then lotion for baldness or pills for losing weight. Or anything else being sold for that matter. And it's district attorney that is using terms like shamelessness and lying. Those are defamatory terms, not legal.
Jonathan Shearer -> Susan Victoria 1 Jun 2016 09:14
Could you please name the prosecutors, giving dates and amounts of these donations? Can I have verified quote from Curiel where he expresses his STRONG support for La Raza? Exactly what are these "links" to Hillary?

No judge is in favor of illegal immigration, though he may be in favor of changes to law to change the status of illegal immigrant and/or to make legal immigration easier. Judges are not in favor of illegal activity.

Let's make America honest and verifiable (again).

Urban2 -> CaptainRogers 1 Jun 2016 09:13
If it were a civil case, they wouldn't have been in possession of Trump's internal documents. Besides nothing would stop the plaintiffs from disclosing documents themselves. Public interest would therefor not even be an issue. Now of course I'm not aware of all the intricacies, but it does look sinister. At least to me.
Sanibel -> Paul Freeman 1 Jun 2016 09:10
"And I think that they want a president who is not afraid of making tough, ruthless decisions (in America's interests)." The US already does that with poor defenseless countries. Problem is if Trump tries that with powerful countries( with nukes like China) it may not end so well...
SakkiSelznick Susan Victoria 1 Jun 2016 09:10
"Collect personalized information that you can utilize during closing time. (For example: are they a single parent of three children that may need money for food?" The judge didn't write that. Mr. Trump's university did.
Debra Smith -> J Nagarya 1 Jun 2016 09:10
In the USA, those at the bottom collaborate based on the 'promise' that the American Dream offers them a shot at the top, if they hold the party line.

What they do not realize is that the "party" counts on the weight of their mass to hold that line for THEMSELVES ALONE. The people who back it all are thrown under the bus with great regularity. They never see it until the wheel roll over them and by that time they have sucked millions of others into the illusion that they are the "one" special one who will make it from the bottom and be welcomed as a peer into the 1%.

It is not so surprising. Hope is a hard thing to kill and an easy thing to exploit.

SakkiSelznick -> RogerColin 1 Jun 2016 09:07
A sales playbook that teaches seeking out "a single parent with three kids who struggles to buy food" and targeting them for credit card debt" is not only cruel but illegal. And it's far from buying low and selling high.
tonichicago -> Wordblind 1 Jun 2016 09:07
He appeals to those who hate "big government". Ironically, they don't seem to realise that his threats to curtail the "nasty and dishonest" press simply mean that we will end up with unfettered government. There will be no accounting to anyone.
tonichicago -> Aaron Rosier 1 Jun 2016 09:04
He is being sued for "deceptive business practices" which is to do with the content of his so-called University courses. You can be a snake oil salesman and pressure people into buying more expensive stuff, but you can't sell them lemons. There are consumer protection laws to prevent that, and that's what these lawsuits are doing. He sold them all a bill of goods.
Debra Smith -> downhillracer117 1 Jun 2016 09:01
You have hit at the crux of the matter.

This is TEAM BASED. Americans are indoctrinated to TEAM from very early in life. Every sport event, the high school team, the prom and everything in college life is TEAM BASED. You are "in" or you are "out" (meaning human or not human) by the colour of your jersey. Truth, justice, facts, are all dismissed based on what team you belong to.

ID446302 1 Jun 2016 09:00
An American success story? Exceptionalism to its core. Hidden in the shadows of our IRS and our exceptional judicial, until you threaten the political establishment by running for president.
J Nagarya -> bobkolker 1 Jun 2016 09:00
He is being sued NOW, and he is attacking the judge because he KNOWS he is being exposed for the crook he is.

Stop defending criminality: he is being sued for his tactics because they are NOT legal.

Pay attention to the news reports on his methods, as exposed in the Trump "University" materials he DIDN'T WANT released, but which now the court has released as result of his baseless slanders against the judge presiding over the case because HE KNOWS they expose his criminality.

keepsmiling -> Echocell 1 Jun 2016 09:00
Hate to tell you this, but what was written in the playbook is called "sales techniques." It's used by every company on the planet that has a product to sell. Don't hate the player, hate the game (capitalism).
'Just following orders', which is basically what you are trying to justify, in a business context, has been discredited as a modus operandi and is not a legal defence (hence the lawsuit, with which I wish them the very best of luck).

You have to fight the players - 'capitalism' is too nebulous a concept to 'fight', so you end up not seeing the wood for the trees. Exposing them one at a time is fine - it's all part of the big picture and is educational. There's a lot of educating to be done with regard to Trump's followers.

Susan Victoria 1 Jun 2016 08:56
Here we go again... the public will be fed a series of quotes, almost all taken out of context, designed to bash Trump and spread even more hate.

Meanwhile, the more one learns about the judge and the more this judge is in conflict of interest (IMO). This judge is for open borders and illegal immigration, is a strong advocate for La Raza (yes, that anti-White and pro-illegal Mexican hate group), has links to the Clintons (Hillary) and appointed two prosecutors to the case who are extremely generous donators towards Hillary, including paying her significant $ for speeches.

Very interesting testimony coming out of Clinton's deposed staff re her email server, including she didn't have a password... the mysterious fire... and more. But who cares? Trump-bashing is the order of the day.

youssou -> Ortho 1 Jun 2016 08:53
Lol interesting theory ... ;-)

I had to google it ... and yes: http://www.businessinsider.com/new-york-military-academy-closes-2015-9?IR=T

Though, I think, not everybody who attends boarding school becomes a sociopath. But sociopathy runs