|Contents||Bulletin||Scripting in shell and Perl||Network troubleshooting||History||Humor|
|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."
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.
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).
Sep 28, 2016 | www.nakedcapitalism.comThe case of Apple's Irish operations is an extreme example of such tax avoidance accounting. It relates to two Apple subsidiaries Apple Sales International and Apple Operations Europe. Apple Inc US has given the rights to Apple Sales International (ASI) to use its "intellectual property" to sell and manufacture its products outside of North and South America, in return for which Apple Inc of the US receives payments of more than $2 billion per year. The consequence of this arrangement is that any Apple product sold outside the Americas is implicitly first bought by ASI, Ireland from different manufacturers across the globe and sold along with the intellectual property to buyers everywhere except the Americas. So all such sales are by ASI and all profits from those sales are recorded in Ireland. Stage one is complete: incomes earned from sales in different jurisdictions outside the Americas (including India) accrue in Ireland, where tax laws are investor-friendly. What is important here that this was not a straight forward case of exercising the "transfer pricing" weapon. The profits recorded in Ireland were large because the payment made to Apple Inc in the US for the right to use intellectual property was a fraction of the net earnings of ASI.
Does this imply that Apple would pay taxes on these profits in Ireland, however high or low the rate may be? The Commission found it did not. In two rather curious rulings first made in 1991 and then reiterated in 2007 the Irish tax authority allowed ASI to split it profits into two parts: one accruing to the Irish branch of Apple and another to its "head office". That "head office" existed purely on paper, with no formal location, actual offices, employees or activities. Interestingly, this made-of-nothing head office got a lion's share of the profits that accrued to ASI, with only a small fraction going to the Irish branch office. According to Verstager's Statement: "In 2011, Apple Sales International made profits of 16 billion euros. Less than 50 million euros were allocated to the Irish branch. All the rest was allocated to the 'head office', where they remained untaxed." As a result, across time, Apple paid very little by way of taxes to the Irish government. The effective tax rate on its aggregate profits was short of 1 per cent. The Commissioner saw this as illegal under the European Commission's "state aid rules", and as amounting to aid that harms competition, since it diverts investment away from other members who are unwilling to offer such special deals to companies.
In the books, however, taxes due on the "head office" profits of Apple are reportedly treated as including a component of deferred taxes. The claim is that these profits will finally have to be repatriated to the US parent, where they would be taxed as per US tax law. But it is well known that US transnationals hold large volumes of surplus funds abroad to avoid US taxation and the evidence is they take very little of it back to the home country. In fact, using the plea that it has "permanent establishment" in Ireland and, therefore, is liable to be taxed there, and benefiting from the special deal the Irish government has offered it, Apple has accumulated large surpluses. A study by two non-profit groups published in 2015 has argued that Apple is holding as much as $181 billion of accumulated profits outside the US, a record among US companies. Moreover, The Washington Post reports that Apple's Chief Executive Tim Cook told its columnist Jena McGregor, "that the company won't bring its international cash stockpile back to the United States to invest here until there's a 'fair rate' for corporate taxation in America."
This has created a peculiar situation where the US is expressing concern about the EC decision not because it disputes the conclusion about tax avoidance, but because it sees the tax revenues as due to it rather than to Ireland or any other EU country. US Treasury Secretary Jack Lew criticised the ruling saying, "I have been concerned that it reflected an attempt to reach into the U.S. tax base to tax income that ought to be taxed in the United States." In Europe on the other hand, the French Finance Minister and the German Economy Minister, among others, have come out in support of Verstager, recognizing the implication this has for their own tax revenues. Governments other than in Ireland are not with Apple, even if not always for reasons advanced by the EC.
... ... ...
Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions. The costs of garnering that difference are, therefore, often missed. Reuters reports that an investigation conducted by it in 2013 found that around three-fourths of the 50 biggest U.S. technology companies use practices that are similar to Apple's to avoid paying tax. So Verstager has taken on not just one giant, but the worlds corporate elite. She should not lose. But even if she does this time, this is a battle well begun.
JEHR September 28, 2016 at 10:42 amRanger Rick September 28, 2016 at 10:43 am
Greed has no boundaries!tegnost September 28, 2016 at 11:23 am
I think the common misconception that multinational corporations exist because "they are big companies that happen to operate in more than one country" is one of the biggest lies ever told.
From the beginning (e.g. Standard Oil, United Fruit) it was clear that multinational status was an exercise in political arbitrage.
" Thus the power of the multinationals comes not just from their own size and reach, and from the support that their own governments afford them, but from their ability to divide desperate countries seeking the presence of global giants to make a small difference to their economic conditions "
Those who support globalisation support this power disparity.
Sep 28, 2016 | www.nakedcapitalism.com
"Oil and gas companies typically leave management of their sites to subcontractors, a practice that dilutes safety standards and protects companies from liability, making an already dangerous job even more so, a Denver Post investigation has found" [ Denver Post ]. "Workers' compensation laws give the site owners immunity from lawsuits brought by subcontracted workers injured on the job. Contracts between owners and subcontractors often contain a provision - so controversial that its use in the oil and gas industry is banned in several other high-producing states - in which the companies agree not to sue each other over accidents regardless of who is at fault."
"Labor-force participation rate decline is mostly structural, Fed's Fischer says" [ MarketWatch ]. "On the participation rate, Fischer said some of the decline reflects the people who became discouraged after losing their job and not finding new ones. But he said "much" of the decline was due to the nation's aging population, as well as a trend since the mid-1960s for declining participation by prime-age males. As for the reason why prime-age male participation is falling, particularly for those with no more than a high school education, Fischer said there's a number of possibilities. He said some economists have said disability insurance and public assistance income has played a role, while others point out a decline in demand for lower-skilled labor, which is evidenced by the steep drop in wages in comparison with college graduates."
"A simple linear trend suggests that by mid-century about a quarter of men between 25 and 54 will not be working at any moment" [ Larry Summers ].
Sep 28, 2016 | baselinescenario.com
Last week, Council of Economic Advisers chair Jason Furman took to the Washington Post to announce that President Obama has "narrowed the inequality gap." Furman's argument, bolstered by charts and data from a recent CEA report, has won over some of the more perceptive commentators on the Internet, including Derek Thompson, who concludes that Obama "did more to combat [income inequality] than any president in at least 50 years." In 538, the headline on Ben Casselman's summary reads, "The Income Gap Began to Narrow Under Obama."
But is it true?
I already wrote about the key misdirection in Furman's argument: his measures of reduced inequality compare the current world not against the world of eight years ago, but against a parallel universe in which, essentially, the policies of George W. Bush remained in place. (This is not something either Thompson or Casselman fell for; they both realized what Furman was actually arguing.) Today I want to address the larger question of whether inequality is actually getting worse or better.
First, let's orient ourselves. At a high level, there are two sets of forces that affect income inequality. The first set is underlying economic factors that determine inequality of pre-tax income: skills gap, globalization, bargaining power of labor, and so on. The second set is government policies that affect the distribution of income, often referred to as taxes and transfers; these policies take pre-tax income inequality as an input and produce after-tax income inequality as an output. (This isn't a perfect distinction, since tax and transfer policies also affect the distribution of pre-tax income, but I think it's good enough for explanatory purposes.)
Furman's argument is that Obama has improved that second set of policies. That's what this chart really shows; remember, it's comparing the effect of taxes and transfers next year against the effect of taxes and transfers under George W. Bush policies.
skunk | September 27, 2016 at 6:01 pm
Either way, we still have an economy which is build on a foundation of debt, that in turn leads to price increases, and the separation of the haves, and the have nots.
Sep 28, 2016 | www.nakedcapitalism.comBy Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
The New York Fed published an eye-opener of an article on its blog, Liberty Street Economics , seemingly about the aging of the US labor force as one of the big economic trends of our times with "implications for the behavior of real wage growth." Then it explained why "negative growth" – the politically correct jargon for "decline" – in real wages is going to be the new normal for an ever larger part of the labor force.
If you're wondering why a large portion of American consumers are strung out and breathless and have trouble spending more and cranking up the economy, here's the New York Fed with an answer. And it's going to get worse.
The authors looked at the wages of all employed people aged 16 and older in the Current Population Survey (CPS), both monthly data from 1982 through May 2016 and annual data from 1969 through 1981. They then restricted the sample to employed individuals with wages, which boiled it down to 7.6 million statistical observations.
Then they adjusted the wages via the Consumer Price Index to 2014 dollars and divide the sample into 140 different "demographic cohorts" by decade of birth, sex, race, and education. As an illustration of the principles at work, they picked the cohort of white males born in the decade of the 1950s.
That the real median income of men has declined 4% since 1973 is an ugly tidbit that the Census Bureau hammered home in its Income and Poverty report two weeks ago, which I highlighted in this article – That 5.2% Jump in Household Income? Nope, People Aren't Suddenly Getting Big-Fat Paychecks – and it includes the interactive chart below that shows how the real median wage of women rose 36% from 1973 through 2015, while it fell 4% for men...
Sally Snyder September 28, 2016 at 7:22 amDamian September 28, 2016 at 7:35 am
Here is an interesting article that looks at which Americans have left the workforce in very high numbers:
The current real world employment experience of millions of Americans has shown little improvement since the end of the Great Recession.Jim A. September 28, 2016 at 7:37 am
The number of public companies have been cut in half in the last 20 years. Just for one metric.
So for those born in the 50's, reaching middle or senior management by the time they were in their mid 40's (1999) was increasingly harder as the probability of getting squeezed out multiplied. In the last ten years, the birth / death rate of startups / small business has reversed as well.
There is probably ten other examples of why age is not the mitigating criteria for the decline in wages. It's not skill sets, not ambition, not flexibility. Pure number of chances for advancement and therefore associated higher wages has declined precipitously.
Anti Trust Enforcement went out the window as Neo-Liberal policies converted to political donations for promoting consolidation.
Now watch even those in their 20-30 age group will experience the same thing as H-1b unlimited takes hold with the Obama / Clinton TTP burning those at younger demographics. Are you going to say they are "too old" as well to write software?
Tell me where you want to go, and I will focus on selective facts and subjective interpretation of those selective facts to yield the desired conclusions.
Barack Peddling Fiction Obama – BS at the B.L.S. – has a multiplicity of these metrics.Ignim Brites September 28, 2016 at 8:35 am
Hmm…Because wages are "sticky downwards" it would be helpful to see the inflation rate on that first chart.Reply ↓Steve H. September 28, 2016 at 8:05 am
Nominal wages are sticky downwards but not real wages. That is why the FED, the banks, the corporate sector and the economists support persistent inflation, i.e. it lowers real wages. The "study" correlating wage growth with aging is one of those empirical pieces by economists to obscure the role of inflation in lowering real wages.
Real Wage Growth chart very interesting, crossing negative at about 55 for no college, and 43 for a Bachelor's degree. 43!! Not even halfway through a work-life, and none better since 2003 at best.
Sep 28, 2016 | www.nber.org
Sep 28, 2016 | www.nber.org
Sep 27, 2016 | economistsview.typepad.com
Peter K. : September 27, 2016 at 06:45 AM DeLong on helicopter money: "The swelling wave of argument and discussion around "helicopter money" has two origins:
First, as Harvard's Robert Barro says: there has been no recovery since 2010.
The unemployment rate here in the U.S. has come down, yes. But the unemployment rate has come down primarily because people who were unemployed have given up and dropped out of the labor force. Shrinkage in the share of people unemployed has been a distinctly secondary factor. Moreover, the small increase in the share of people with jobs has been neutralized, as far as its effects on how prosperous we are, by much slower productivity growth since 2010 than America had previously seen, had good reason to anticipate, and deserves.
The only bright spot is a relative one: things in other rich countries are even worse.
I thought Krugman and Furman were bragging about Obama's tenure.
"Now note that back in 1936 [John Maynard Keynes had disagreed]:
"The State will have to exercise a guiding influence... partly by fixing the rate of interest, and partly, perhaps, in other ways.... It seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself.... I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private initiative..."
By the 1980s, however, for Keynes himself the long run had come, and he was dead. The Great Moderation of the business cycle from 1984-2007 was a rich enough pudding to be proof, for the rough consensus of mainstream economists at least, that Keynes had been wrong and Friedman had been right.
But in the aftermath of 2007 it became very clear that they-or, rather, we, for I am certainly one of the mainstream economists in the roughly consensus-were very, tragically, dismally and grossly wrong."
DeLong sounds very much left rather than center-left. His reasons for supporting Hillary over Sanders eludes me.
Hillary's $275 billion over 5 years is substantially too small as center-leftist Krugman put it.
Now we face a choice:
Do we accept economic performance that all of our predecessors would have characterized as grossly subpar-having assigned the Federal Reserve and other independent central banks a mission and then kept from them the policy tools they need to successfully accomplish it?
Do we return the task of managing the business cycle to the political branches of government-so that they don't just occasionally joggle the elbows of the technocratic professionals but actually take on a co-leading or a leading role?
Or do we extend the Federal Reserve's toolkit in a structured way to give it the tools it needs?
Helicopter money is an attempt to choose door number (3). Our intellectual adversaries mostly seek to choose door number (1)-and then to tell us that the "cold douche", as Schumpeter put it, of unemployment will in the long run turn out to be good medicine, for some reason or other. And our intellectual adversaries mostly seek to argue that in reality there is no door number (3)-that attempts to go through it will rob central banks of their independence and wind up with us going through door number (2), which we know ends badly..."
Some commenters believe more fiscal policy via Congress is politically more realistic than helicopter money.
I don't know, maybe they're right. I do know Hillary's proposals are too small. And her aversion to government debt and deficit is wrong given the economic context and market demand for safe assets.
Some pundits like Krugman believe helicopter money won't be that effective "because the models tell him." We should try it and find out. Reply Tuesday, September 27, 2016 at 06:45 AM
reason -> Peter K.... , Tuesday, September 27, 2016 at 08:40 AM"Moreover, the small increase in the share of people with jobs has been neutralized, as far as its effects on how prosperous we are, by much slower productivity growth since 2010 than America had previously seen, had good reason to anticipate, and deserves."pgl -> reason ... , Tuesday, September 27, 2016 at 09:08 AM
?????? The rate of (measured) productivity growth is not all that important. What has happened to real median income.
And why are quoting from Robert Barro who is basically a freshwater economist. Couldn't you find somebody sensible?Barro wants us to believe we have been at full employment all along. Of course that would mean any increase in aggregate demand would only cause inflation. Of course many of us think Barro lost it years ago.Peter K. -> pgl... , Tuesday, September 27, 2016 at 01:05 PM
These little distinctions are alas lost on PeterK.run a long stupid troll.Peter K. -> reason ... , Tuesday, September 27, 2016 at 01:06 PM
Go read some hack Republican analyses.DeLong is quoting Barro.Paine -> Peter K.... , Tuesday, September 27, 2016 at 09:57 AMReally it's Delong on the context that has produced a return to HM fantasiesPeter K. -> Paine ... , Tuesday, September 27, 2016 at 01:09 PM
I'm sure u agree
He doesn't endorse HM in this post does he ?Sounds to me like he does:
"Now we face a choice:
 Do we accept economic performance that all of our predecessors would have characterized as grossly subpar-having assigned the Federal Reserve and other independent central banks a mission and then kept from them the policy tools they need to successfully accomplish it?
 Do we return the task of managing the business cycle to the political branches of government-so that they don't just occasionally joggle the elbows of the technocratic professionals but actually take on a co-leading or a leading role?
 Or do we extend the Federal Reserve's toolkit in a structured way to give it the tools it needs?
Helicopter money is an attempt to choose door number (3). Our intellectual adversaries mostly seek to choose door number (1)-and then to tell us that the "cold douche", as Schumpeter put it, of unemployment will in the long run turn out to be good medicine, for some reason or other. And our intellectual adversaries mostly seek to argue that in reality there is no door number (3)-that attempts to go through it will rob central banks of their independence and wind up with us going through door number (2), which we know ends badly...""
Conservatives want 1 and 2 ends badly, so 3 is the only choice.
Sep 27, 2016 | economistsview.typepad.com
anne : Tuesday, September 27, 2016 at 05:05 AMhttp://cepr.net/blogs/beat-the-press/contrary-to-what-ap-tells-you-social-security-is-not-a-main-driver-of-the-country-s-long-term-budget-problem
September 27, 2016
Contrary to What AP Tells You, Social Security Is NOT a Main Driver of the Country's Long-term Budget Problem
The New York Times ran a short Associated Press piece * on Social Security and "why it matters." The piece wrongly told readers that Social Security is "a main driver of the government's long-term budget problems." This is not true. Under the law, Social Security can only spend money that is in its trust fund. If the trust fund is depleted then full benefits cannot be paid. The law would have to be changed to allow Social Security to spend money other than the funds designated for the program and in that way contribute to the deficit.
The piece also plays the "really big number" game, telling readers:
"the program faces huge shortfalls that get bigger and bigger each year.In 2034, the program faces a $500 billion shortfall, according to the Social Security Administration. In just five years, the shortfalls add up to more than $3 trillion.
"Over the next 75 years, the shortfalls add up to a staggering $139 trillion. But why worry? When that number is adjusted for inflation, it comes to only $40 trillion in 2016 dollars - a little more than twice the national debt."
Since this is talking about shortfalls projected to be incurred over a long period of time, it would be helpful to express the shortfall relative to the economy over this period of time, not debt at a point in time. This is not hard to do, since there is a table ** right in the Social Security trustees report that reports the projected shortfall as being equal to 0.95 percent of GDP over the 75-year forecasting horizon. By comparison, the costs of the war in Iraq and Afghanistan came to around 1.6 percent of GDP at their peaks in the last decade.
The piece also gets the reason for the projected shortfall wrong. It tells readers:
"In short, because Americans aren't having as many babies as they used to. That leaves relatively fewer workers to pay into the system. Immigration has helped Social Security's finances, but not enough to fix the long-term problems.
"In 1960, there were 5.1 workers for each person getting benefits. Today, there are about 2.8 workers for each beneficiary. That ratio will drop to 2.1 workers by 2040."
Actually the drop in the birth rate and the declining ratio of workers to beneficiaries had long been predicted. The reason that the program's finances look worse than when the Greenspan commission put in place the last major changes in 1983 is the slowdown in wage growth and the upward redistribution of wage income so that a larger share of wage income now goes untaxed.
In 1983, only 10 percent of wage income was above the payroll tax cap. Today it is close to 18 percent. This upward redistribution explains more than 40 percent *** of projected shortfall over the next 75 years.
It is also worth noting that the loss in wage income for most workers to upward redistribution swamps the size of any tax increases that could be needed to maintain full funding for the program. While AP wants to get people very worried over possible tax increases in future years, it would rather they ignore the policies (e.g. trade, Federal Reserve policy, Wall Street policy, patent policy) that have taken money out of the pockets of ordinary workers and put it in the hands of the rich.
-- Dean BakerReply Tuesday, September 27, 2016 at 05:05 AM Foreign Kidnappers said in reply to anne... , Tuesday, September 27, 2016 at 05:21 AMPaine -> anne... , Tuesday, September 27, 2016 at 07:23 AM
fewer workers to pay into the system. Immigration has helped Social Security's finances, but not enough to fix the long-term
Fewer workers who on balance draw smaller pay-check-s within a World of rising prices. Can you see the long trend of inflation? Do you see how the price of a t-bond has risen steady on during the past 35 years? As the bond price rises the yield falls. Do you see how much?
This is a long term unstoppable inflation that raises the price of all ships. All nursing homes and all ships!
Dean in high gearJulio -> anne... , Tuesday, September 27, 2016 at 01:39 PM
Remove the taxable compensation exclusions and capsThat's 139 Trillion with a capital "T", and that rhymes with "P", and that stands for pool!anne : , Tuesday, September 27, 2016 at 05:08 AM
And don't look at guys like me to save Social Security. My unfunded liability for kids shoes alone is over $20,000, and that's assuming they leave home at 18.http://cepr.net/publications/op-eds-columns/time-to-treat-bank-ceos-like-adultsanne -> anne... , Tuesday, September 27, 2016 at 06:09 AM
September 26, 2016
Time to Treat Bank CEOs Like Adults
By Dean Baker
The country's major banks are like trouble-making adolescents. They constantly get involved in some new and unimagined form of mischief. Back in the housing bubble years it was the pushing, packaging and selling of fraudulent mortgages. Just a few years later we had JP Morgan, the country's largest bank, incurring billions in losses from the gambling debts of its "London Whale" subsidiary. And now we have the story of Wells Fargo, which fired 5,300 workers for selling phony accounts to the bank's customers.
It is important to understand what is involved in this latest incident at Wells Fargo. The bank didn't just discover last month that these employees had been ripping off its customers. These firings date back to 2011. The company has known for years that low-level employees were ripping off customers by assigning them accounts -- and charging for them -- which they did not ask for. And this was not an isolated incident, 5,300 workers is a lot of people even for a huge bank like Wells Fargo.
When so many workers break the rules, this suggests a problem with the system, not bad behavior by a rogue employee. And, it is not hard to find the problem with the system. The bank gave these low level employees stringent quotas for account sales. In order to make these quotas, bank employees routinely made up phony accounts. This practice went on for five years.
As it became aware of widespread abuses, it's hard to understand why the bank would not change its quota system for employees. One possibility is that they actually encouraged this behavior, since the new accounts (even phony accounts) would be seen as good news on Wall Street and drive up the bank's stock price.
Certainly Wells Fargo CEO John Stumpf, as a major share and options holder, stood to gain from propping up the stock price, as pointed out by reporter David Dayan. In keeping with this explanation, Carrie Tolsted, the executive most immediately responsible for overseeing account sales, announced her resignation and took away $125 million in compensation. This is equal to the annual pay of roughly 5,000 starting bank tellers at Wells Fargo. That is not ordinarily the way employees are treated when they seriously mess up on the job.
Regardless of the exact motives, the real question is what will be the consequences for Stumpf and other top executives. Thus far, he has been forced to stand before a Senate committee and look contrite for four hours. Stumpf stands to make $19 million this year in compensation. That's almost $5 million for each hour of contrition. Millions of trouble-making high school students must be very jealous.
There is little reason for most of us to worry about Stumpf contrition, or lack thereof. His bank broke the law repeatedly on a large scale. And, he was aware of these violations, yet he nonetheless left in place the incentive structure that caused them. In the adult world this should mean being held accountable.
This is not a question of being vindictive towards Stumpf, it's a matter of getting the incentives right. If the only price for large-scale law breaking by the top executives of the big banks is a few hours of public shaming, but the rewards are tens of millions or even hundreds of millions in compensation, then we will continue to see bankers disregard the law, as they did at Wells Fargo and they did on a larger scale during the run-up of housing bubble.
There is another aspect to the Wells Fargo scandal that is worth considering. Insofar as the bank was booking revenue on accounts that didn't exist, it was also ripping off the banks' shareholders. The shareholders' interests are supposed to be protected by the bank's board of directors.
It doesn't seem the shareholders got much help there....http://www.nytimes.com/2016/09/27/business/dealbook/wells-fargo-workers-claim-retaliation-for-playing-by-the-rules.htmlPaine -> anne... , Tuesday, September 27, 2016 at 07:31 AM
September 26, 2016
Wells Fargo Workers Claim Retaliation for Playing by the Rules
By STACY COWLEY
In two lawsuits seeking class-action status, workers say they were fired or demoted for acting ethically and falling short of unrealistic sales goals.Really importantpgl -> anne... , Tuesday, September 27, 2016 at 08:19 AMRehire the staff. Fire the CEO.EMichael -> anne... , Tuesday, September 27, 2016 at 09:06 AMThis isn't going to be popular in here, and I do not even like saying it, but the timing of these lawsuits suggest to me ambulance chasing.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:18 AM
Unless someone can tell me how it is possible for these employees to accept this treatment for years and years until the CFPB fines Wells Fargo.Cellino & Barnes? I hope these plaintiffs have been attorneys than that. But yea - having a government agency make your case is a good idea as I'm sure top Wells Fargo management has hired some nasty defense attorneys.EMichael -> pgl... , Tuesday, September 27, 2016 at 09:26 AMNot my point.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:46 AM
California has some of the strongest whistle blower protections in the country.
I find it remarkable that(and I have tried but failed to find any evidence) not one of these mistreated employees filed a lawsuit years ago. The firings started in 2011. Are you telling me these employees sat around for 5 years without a single one of them taking action?
The other part that bothers me is this bonus level goal. Wells Fargo is not the only company in the world that sets their bonus levels at points that are almost impossible to obtain.
I do not see why that is an issue at all.
Not talking whistle blower protections. Firms like Cellino and Barnes only take cases where they know they can win. Then again - I am talking about a dirt bag law firm. Why bring a case when the odds are stacked against you? But I think what you are pointing out is they is a new sheriff in town with respect to gathering the facts - which of course is always key in winning any law suit.pgl -> EMichael... , Tuesday, September 27, 2016 at 09:47 AM"not one of these mistreated employees filed a lawsuit years ago".EMichael -> pgl... , Tuesday, September 27, 2016 at 10:04 AM
A lot of women who have been raped don't bother to prosecute the creep thinking they can't win anyway. This may have been the thinking of these employees until now.0 for 5300 is mind boggling.Julio -> EMichael... , Tuesday, September 27, 2016 at 11:19 AM
I am not saying the law firm is incompetent, I am saying it seems to me they are taking a case where WF might not want to deal with more bad pr and settle.
The only people, from what I have seen of this case, that have a chance to win on the merits are those who claimed they called the ethics department at Wells and were fired for that action.Yes, the lawyers are circling like vultures.cm -> anne... , Tuesday, September 27, 2016 at 09:35 AM
But it just shows that lawyers evaluate cases before taking them on, and that the cases' prospects depend on public opinion.
In addition, it is much easier for people to feel empowered, talk to lawyers, and fight back if they don't feel isolated and vulnerable to retaliation."the executive most immediately responsible for overseeing account sales, announced her resignation and took away $125 million in compensation. ... That is not ordinarily the way employees are treated when they seriously mess up on the job."EMichael -> anne... , Tuesday, September 27, 2016 at 10:52 AM
Based on (public) evidence available to me, I have to inform you that this *is* ordinarily the way how the higher executive ranks are treated when the have to leave because of a serious blunder. In many cases, the termination package is written into their contract, with exceptions mostly for criminal malfeasance, breach of contract, and that type of thing, or if the management/board deems it is better for everybody else to "convince" the undesired executive to leave without a big splash, then they will sweeten the deal.
As I have seen in tech, in many companies the rank-and-file are treated to similar arrangements, only the amounts are several orders of magnitude lower. But it is not very common for somebody to be outright fired without severance. There are commonly provisions like a few weeks of salary continuation per year of service, or offering a small sum to get a quick exit instead of a drawn out and arduous process of managing somebody out and "documenting" everything.
Here's the part that bothers me about this.(and once again I will mention that I feel almost dirty defending bank execs).Paine -> EMichael... , Tuesday, September 27, 2016 at 11:38 AM
" large-scale law breaking by the top executives of the big banks".
I don't get this at all. It seems that setting huge bonus numbers is somehow large scale law breaking.
But let's look at the real numbers is some perspective here(which is usually Baker's thing).
The idea seems to be that Stumpf came up with this idea to open accounts that people did not know they had. Those accounts would both generate revenue and allow him to talk about the growth of accounts in the bank.
I have seen nothing that shows how many accounts were opened illegally(I would like to see that) and nothing to show how many legal accounts were opened during this time frame. With that info you could put this into perspective how Stumpf and other high level execs gained from this action.
That being said I know one thing. People who had accounts opened illegally were returned the fees that they paid. That total is $5 million. Not a lot of revenue but it kind of makes sense. You cannot charge people a lot of fees with products they do not even know they have. there is no way in the world that anyone can think there was going to be a lot of money made on accounts that were, to all intents and purposes, dead.
Meanwhile, in the time period that this case covers, Wells Fargo had profits of almost $100 billion. To think the CEO is going to worry about such an insignificant amount of revenue by "planning" an illegal action is absurd.
I am all in in the bank CEOs committing fraud during the bubble, there was a huge amount of profit to be made. But to think this thing came from the top, or even five or six levels down, is silly. There is no reason.
This was the case of front line people committing fraud to make money. It was also the case of their managers to encourage and/or allow that fraud to make money.
Wells certainly deserves the punishment for allowing this fraud to happen, but thinking it originated in the executive offices makes no sense from an standpoint.
It takes courage to defend top managementPeter K. -> Paine ... , Tuesday, September 27, 2016 at 01:01 PM
Of a oligop bank
EMichael hates lefites. He gets off on baiting them (us).paine -> Peter K.... , -1Let us enjoy the attention
Sep 27, 2016 | plus.google.comsaid... https://www.stlouisfed.org/on-the-economy/2016/september/great-moderation-vacation
I don't like the way this is written. Is low volatility in measured GDP growth and inflation a good thing in and of itself? I would think that this needs justification. I have the feeling this is a clear case of proxy creep. We try to control a proxy for something we care about, and in the end we forget what it is that we actually care about and the proxy becomes useless, misleading even. What if the decline of the middle class that we are so concerned about is the result precisely of the policies we are using to reduce volatility? Reply Tuesday, September 27, 2016 at 01:58 AM Paine said in reply to reason ... Excellent Trade-induced increases in inequality of disposable income erode about 20% of the gains from trade reason said... http://www.nber.org/papers/w22676#fromrss
Didn't read the paper, but in the conclusions this was important
"Our quantitative results suggest that both corrections are nonnegligible: trade-induced increases in inequality of disposable income erode about 20% of the gains from trade, while the gains from trade would be about 15% larger if redistribution was carried out via non-distortionary means. " reason said... http://oecdinsights.org/2016/09/26/complexity-theory-and-evolutionary-economics/
"So where should we go with complexity? I believe that a core component of complexity is and should be evolution. In an evolutionary view, an economy is an "organism" that is constantly developing new industries, technologies, organizations, occupations, and capabilities while at the same time shedding older ones that new technologies and other evolutionary changes make redundant. This rate of evolutionary change differs over time and space, depending on a variety of factors, including technological advancement, entrepreneurial effort, domestic policies, and the international competitive environment. To the extent that neoclassical models consider change, it is seen as growth more than evolution. In other words, market transactions maximize static efficiency and consumer welfare. As Alan Blinder writes, "Can economic activities be rearranged so that some people are made better off, but no one is made worse off? If so we have uncovered an inefficiency. If not, the system is efficient."
In complexity or evolutionary economics, we should be focusing not on static allocative efficiency, but on adaptive efficiency. Douglass North argues that: "Adaptive efficiency…is concerned with the kinds of rules that shape the way an economy evolves through time. It is also concerned with the willingness of a society to acquire knowledge and learning, to induce innovation, to undertake risk and creative activity of all sorts, as well as to resolve problems and bottlenecks of the society through time." Likewise, Richard Nelson and Sidney G. Winter wrote in their 1982 book An Evolutionary Theory of Economic Change, "The broader connotations of 'evolutionary' include a concern with processes of long-term and progressive change."
This provides a valuable direction. It means that a key focus for economic policy should be to encourage adaptation, experimentation and risk taking. It means supporting policies to intentionally accelerate economic evolution, especially from technological and institutional innovation. This means not only rejecting neo-Ludditism in favor of techno-optimism, it means the embrace of a proactive innovation policy. And it means enabling new experiments in policy, recognizing that many will fail, but that some will succeed and become "dominant species." Policy and program experimentation will better enable economic policy to support complex adaptive systems.
Yes, I basically agree with this because it is specifically directed towards policy thinking in the broadest sense. I was suspicious of the article at first because of this:
"However, despite what Larry Summers has written, economics is not a science that applies for all times and places."
This seems to me wrong headed. Do we need a new biology every time there is some genetic change or do we need a biology that can cope with genetic change? Reply Tuesday, September 27, 2016 at 02:12 AM RC AKA Darryl, Ron said in reply to reason ... We need a new biology that can rewrite the laws of science whenever we want :<)
Sep 27, 2016 | www.nakedcapitalism.comfresno dan September 27, 2016 at 4:46 pmjrs September 27, 2016 at 5:08 pm
Why There is Trump ~Ilargi
But nobody seems to really know or understand. Which is odd, because it's not that hard. That is, this all happens because growth is over. And if growth is over, so are expansion and centralization in all the myriad of shapes and forms they come in.
Global is gone as a main driving force, pan-European is gone, and whether the United States will stay united is far from a done deal. We are moving towards a mass movement of dozens of separate countries and states and societies looking inward. All of which are in some form of -impending- trouble or another.
What makes the entire situation so hard to grasp for everyone is that nobody wants to acknowledge any of this. Even though tales of often bitter poverty emanate from all the exact same places that Trump and Brexit and Le Pen come from too.
That the politico-econo-media machine churns out positive growth messages 24/7 goes some way towards explaining the lack of acknowledgement and self-reflection, but only some way. The rest is due to who we ourselves are. We think we deserve eternal growth.
And of course it's confusing that the protests against the 'old regimes' and the growth and centralization -first- manifest in the rise of faces and voices who do not reject all of the above offhand. That is to say, the likes of Marine Le Pen, Donald Trump and Nigel Farage may be against more centralization, but none of them has a clue about growth being over. They don't get that part anymore than Hillary or Hollande or Merkel do.
So why these people? Look closer and you see that in the US, UK and France, there is nobody left who used to speak for the 'poor and poorer'. While at the same time, the numbers of poor and poorer increase at a rapid clip. They just have nowhere left to turn to. There is literally no left left.
Dems in the US, Labour in the UK, and Hollande's 'Socialists' in France have all become part of the two-headed monster that is the political center, and that is (held) responsible for the deterioration in people's lives. Moreover, at least for now, the actual left wing may try to stand up in the form of Jeremy Corbyn or Bernie Sanders, but they are both being stangled by the two-headed monster's fake left in their countries and their own parties.
This is from today's Links, but I didn't have a chance to post this snippet.
Long time since we had 5% – if the whole system is financial scheme is premised on growth, and there is less and less of it ever year, it doesn't look sustainable. How bad http://www.nakedcapitalism.com/2016/09/200pm-water-cooler-9272016.html#comment-2676054does it have to get for how many before the model is chucked???
In the great depression, even the bankers were having a tough time. If the rich are exempt from suffering, I think history has shown that a small elite can impose suffering on masses for a long time…
'there is nobody left who used to speak for the 'poor and poorer'.
Actually, there are plenty who SPEAK for the poor, there just is NONE who ACT.Reply ↓fresno dan September 27, 2016 at 6:13 pm
How would we measure this growth that is supposed to be over? Yes of course there are the conventional measurements like GDP, but it's not zero. Yes of course if inflation is understated it would overstate GDP, and yes GDP measurements may not measure much as many critics have said. But what about other measures?
Is oil use down, are CO2 emissions down, is resource use in general down? If not it's growth (or groath). This growth is at the cost of the planet but that's why GDP is flawed. And the benefit of this groath goes entirely to the 1%ers, but that's distribution.
The left failed, I don't know all the reasons (and it's always hard to oppose the powers that be, the field always tilts toward them, it's never a fair fight) but it failed. That's what we see the results of.OpenThePodBayDoorsHAL September 27, 2016 at 5:12 pm
I agreeSoftie September 27, 2016 at 5:42 pm
Someone very smart said "the Fed makes the economy more stable".
He also quoted The Princess Bride: "You keep using that word, I do not think it means what you think".
Definition of stable: firm; steady; not wavering or changeable.
As in: US GDP growth of a paltry 1.22% per year.
But hey it only took an additional trillion $ in debt per year to stay "stable".Lee September 27, 2016 at 5:58 pm
there are plenty who SPEAK for the poor, there just is NONE who ACT.
That's why in 1992 Francis Futurama refirmed the end of history that was predicted by Hegel some 150 years earlier.
Time to revisit Herman Daly's Steady-State Economy.
Sep 26, 2016 | www.nakedcapitalism.com
DrBob September 25, 2016 at 11:58 am
The Financialization of Education and the Student Loan Debt Bubble
Sep 26, 2016 | econospeak.blogspot.com
EconoSpeakPerusing Palgrave's Dictionary of Political Economy from 1894 alerted me to the odd interaction of a pair of distinctions. The first distinction was between the study of "what is" and "what ought to be." The second distinction was between "economic science" (or "economics") and "political economy." Economic science presumably distinguished itself from political economy by its strict focus on describing "what is" rather than on prescribing "what ought to be."
Palgrave's explains the latter distinction to have been at least partly motivated by the confusion that arose over just what kind of laws -- legal or natural -- so-called "laws of political economy" were. Even after the attempt at rebranding, however:"...even well-educated persons still occasionally speak of "laws of political economy" as being "violated" by the practice of statesmen, trades-unions and other individuals and bodies.You can't "break" scientific laws. They are simply generalized descriptions of fact. A flying airplane doesn't break the law of gravity. It conforms to a more comprehensive complex of physical laws. The law of gravity isn't the only law.
Palgrave's Dictionary further noted that the "great complexity and variety of circumstance which surround every economic problem are such as to render the enunciation of general laws, on a large scale, barely possible and if possible barely useful."
So the whole "positive" economics rigamarole wasn't just about methodological rigor. It was a purification ritual to rid the
politicaleconomist of the stigma of dogma. Economists who invoke the violation of so-called laws aren't only forfeiting any legitimate claim to economic science. They are contaminating their profession with atavistic hokum.
Speaking of atavistic hokum, I have been trying to track down ANY accessible published record of a trade unionist or advocate of the reduction of the hours of labor EVER overtly expressing the belief that there is a fixed amount of work to be done or a certain quantity of labor to be performed or whatever synonymous equivalent. There is none.
There is a reasonable explanation for this absence of evidence. The alleged false belief is expressed in abstract language that was not vernacular to the people accused of harbouring it. It's the wrong answer to a question workers never asked themselves.
False belief requires two conditions to be fulfilled: 1. the idea is false and 2. it is believed by someone to be true. The matrix below shows the possible states of belief and falsehood. An idea does not have to be true to be "not false" and it doesn't have to be believed to be false to be "not believed to be true." The fallacy claim asserts a simplistic (and false!) polarization in which the beliefs of the "unenlightened" are "the opposite" of economic orthodoxy.
In an 1861 letter to the Times of London "A Master Builder" alleged that George Potter, secretary of the carpenters' union, and his associates had "absurdly argued that there was only a certain amount of work to be done" during a 1859 strike and lock-out of the London building trades. There is a detailed report on the 1859 strike in an 1860 report on Trades' Societies and Strikes published by the National Association for the Promotion of Social Science. The 23-page account presents several items of correspondence from Potter outlining the union's position with not a hint of a lump in the load. The "certain amount of work to be done" was what Mr. Master Builder thought he heard when he mentally translated Potter's argument into his own capitalistic patois .
There was something else interesting in the 685-page document -- an overarching controversy about whether or not labor was a commodity just like any other and therefore whether or not unions violated the laws of political economy by trying to regulate wages and hours of work. The employers who maintained this were pretty dogmatic about it. "Rates of wages cannot be settled by mediation, but must be left to the free operation of supply and demand." It's the law!
This was not simply political economy It was vulgar political economy of the most self-serving and disingenuous kind. One has no difficulty whatsoever finding multiple evocations by employers of the so-called laws of political economy but the elusive lump remains "one of the most tenaciously held and generally least articulated of trade union beliefs."
Least articulated? Least articulated is an understatement. Try NEVER articulated. There is no there there. The alleged false belief is a pure projection by the laws-of-political-economy crowd onto the unbeliever. The eighth annual report of the New York Bureau of Labor Statistics for the year 1890 contains the responses of over 600 labor union locals to the question of whether and why they support an eight-hour day. Not one claims there is only a certain quantity of work to be done.
Below is an example of what an overt statement of the theory of the lump of labor looks like. It is not from a trade union manifesto or a pamphlet of the eight-hour day movement. It is from a propaganda tract put out by Nassau Senior's crew of Whig-Benthamites in defense of their New Poor Laws, which abolished outdoor relief and established the workhouse test:
The fact is, there is a certain quantity of work to be done, and the question is who ought to do it -- those who live by their labour, and their labour only, or those who have thrown themselves on public charity.Can anyone find such an unequivocal articulation of the false belief by a trade unionist? Of course not. It's not the way that workers talk about their work. Work is not an abstract, disembodied quantity to those who do it. It is part of a lived experience. "A certain quantity of work to be done" is political economy speak, plain and simple. It's ceteris paribus and "all else being equal."
Paradoxically, for old school vulgarians there both is and is not a certain quantity of work to be done. There is a certain quantity of work to be done when it comes to disparaging the idea that workers might increase wages their through collective action:
There is a certain quantity of work to be done, and a certain number of hands to do it; if there be much work and comparatively few hands, wages will rise; if little work and an excess of hands, wages will fall. It is self-evident that combinations and strikes cannot alter this law. They can neither increase capital, nor diminish population; and, therefore, it is utterly impossible, in the very nature of things, that they ever can procure a permanent rise of wages.But there isn't a certain amount of work when it comes to explaining why such foolish action isn't even necessary:
There is, say they, a certain quantity of labour to be performed. This used to be performed by hands, without machines, or with very little help from them... The principle itself is false. There is not a precise limited quantity of labour, beyond which there is no demand. Trade is not hemmed in by great walls, beyond which it cannot go. By bringing our goods cheaper and better to market, we open new markets, we get new customers, we encrease the quantity of labour necessary to supply these, and thus we are encouraged to push on, in hope of still new advantages. A cheap market will always be full of customers.Five years ago I compiled a database of over 500 instances of the claim in books and journal articles between 1890 and 2010 ( Excel file ). That's 500 claims without a single overt statement of the false belief from an alleged believer. Six claimants (about one percent) named culprits whose argument "arguably depends upon..." "makes an error equivalent to..." "indicates a belief..." "seems hopelessly involved in..." "is an example of the strange conclusions to which one may be carried by clinging clinging firmly to..." and "are driven by implicit assumptions." Each of those turns out to be a false alarm -- an uncharitable, speculative inference. Five hundred boys crying "wolf" and not a single wolf to be seen?
This is an astonishing performance. This compulsion to repeat is not "careless" or "dogmatic." It's neurotic.
The patient cannot remember the whole of what is repressed in him, and what he cannot remember may be precisely the essential part of it.. He is obliged to repeat the repressed material as a contemporary experience instead of remembering it as something in the past.The atavistic return of the repressed "laws of political economy" conforms faithfully to a description toward the end of chapter 3 of Beyond the Pleasure Principle where Freud talks about the experiences of "people with whom every human relationship ends in the same way" and gives as a "singularly affecting" final example the events in a romantic epic, in which the hero, Tancred, repeatedly slays his beloved, Clorinda, each time she reappears in a different guise. In this example, as Gavriel Reisner notes,
Freud reverses the compulsion to repeat, showing how we will sometimes injure others in order to avoid injuring ourselves. Freud concludes that we often project the internal, masochistic drive as the external, sadistic drive, victimizing others to redirect an intent toward self-victimization.The utilitarian political economists styled themselves advocates for "the greatest good for the greatest number" and viewed opponents as apologists for narrow special interests. The supposed laws they discovered, which operated through isolated exchanges between individuals in the market, vindicated a system of natural liberty and consequently freedom entailed obedience to those laws. Collective action and collective bargaining violated the laws of individual exchange, resulting in sub-optimal outcomes. Such perversity could only be motivated by false beliefs. The false beliefs of the adversary were presumably the opposite of the true beliefs of the faithful: trade unions operated through tyranny and their bizzaro-world political economy assumed that less output meant more income.
Reality discredited that polemic of political economy and calmer heads sought to rebrand the enterprise as economics. The ersatz laws were scaled back to tendencies, which operated within the admittedly abstract ceteris paribus pound of the economist's static model. Real life and the evolution of economic relations operated outside the ceteris paribus pound but maybe the static model could shed light on dynamic economic activity.
It was no longer fashionable to denounce "The Evils of Collective Bargaining in Trades' Unions" (Thomas Cree, 1898) because it was increasingly understood that the so-called laws of supply and demand operated quite differently with regard to the peculiar commodity of labor power (Richard Ely, 1886):
While those who sell other commodities are able to influence the price by a suitable regulation of production, so as to bring about a satisfactory relation between supply and demand, the purchaser of labor has it in his own power to determine the price of this commodity and the other conditions of sale.But even as old-guard political economy was being gradually displaced by rebranded economics in the universities, employers' associations and business journalism emerged to propound and propagate the old-time religion. The break with quasi-scientific, quasi-legalistic, quasi-religious pseudo-laws was ambivalent, the reconciliation surreptitious. Employers' associations told the college teachers what to teach. Textbooks served up a smorgasbord of the obsolescent and the innovative.
In this twilight of science and superstition, the fallacy claim offered uncertain economists a distinctive advantage. It enabled them to continue to denounce violations of the laws of political economy without actually having to specify which laws were being violated. That left them exempt from any obligation to justify the validity of defunct laws. The burden of proof deftly shifted and the providence of economic science affirmed, albeit by default.
Economic science thus gets to have its "what is" humility... and eat its "what ought to be" hubris too! Evidence be damned.
That there was one particular offense singled out for condemnation by the self-appointed economic police is suggested by the example given in Palgrave's Dictionary for the common confusion between the legislative and scientific senses of law: "Thus it is often said that to regulate the hours of labour, or to introduce differential import duties, is to break economic law." The anachronism of such a view should require no explanation. The hours of labor are regulated.
Any proposal to repeal the Fair Labor Standards Act of 1938 on the grounds that it "breaks economic law" would no doubt be laughed at by Paul Krugman, David Autor, Jonathan Portes or Alan Manning. But, inadvertently, that is precisely the historical grammar of their lump-of-labor fallacy taunt. Although there is no logical imperative that links the law-breaking claim to the fallacy claim, they have been inseparably paired in usage from their inception. To invoke the latter is either to imply the former or it is a non sequitur.
At long last, economists, have you no scientific self-respect ? On this labor day, 2016, would you still insist that regulating of the hours of work breaks the laws of economics? Posted by Sandwichman at 12:00 AM
Sep 23, 2016 | econospeak.blogspot.com"Everybody except Joan Robinson agrees about capital theory." -- Robert Solow (as paraphrased by Robinson)An essential text in my researches on mercantilism, usury and bills of exchange is Raymond de Roover's Gresham on Foreign Exchange, which just happens to be stored in part of SFU's library that is under construction and thus inaccessible. The immediate unavailability of that book, however, led to a fortuitous discovery.
I browsed in the call number section of the library's general collection where de Roover's book would have been and Robert Leeson's Ideology and the International Economy caught my eye. I flipped through the book and noticed on page 19 the delicious quote from Joan Robinson that, "the free-trade doctrine is just a more subtle form of mercantilism."
The quote is from a 1966 lecture, "The New Mercantilism" that is included in a collection of essays, Contributions to Modern Economics, which also contains "Capital Theory Up-to-Date," a 1970 review of C. E. Ferguson's The Neoclassical Theory of Production and Distribution, in which Robinson reprises her parody of neo-Walrasian, neo-neoclassical capital " leets. " Leets is steel spelled backward and makes its debut in "Equilibrium Growth Models," Robinson's 1961 review of James Meade's Neo-Classical Theory of Economic Growth.
This allegedly ectoplasmic representation of capital is, in a nutshell, the crux of the "Cambridge capital controversy," which Robinson launched with her 1952 challenge, "I leave it to those who draw production functions to say what marginal productivity and the elasticity of substitution mean when labour and capital are the factors of production." Looking back, in 1978, on her 1952 essays and the "long struggle to escape... habitual modes of thought and expression," Robinson stressed that "it was precisely from the concept of equilibrium that Keynes was struggling to escape..." Contrarily, though:"...textbook teaching in the department of so-called macro theory was an attempt to push Keynes into short-term equilibrium. ... The grand neoclassical synthesis (now known as bastard Keynesianism) was a more ambitious attempt to reduce the General Theory to a system of equilibrium."In responding to Robinson's leets critique, Robert Solow began by acknowledging "much truth" to the objection that "the usual production functions, allowing for more or less substitutability between capital and labor, attribute to 'capital' a degree of malleability which contradicts common observation." He then distinguished between the "econometrically-minded person" who would view the overly malleable capital as a "specification error" and others -- presumably including Robinson -- who judge it to be "a doctrinal error; and its consequence is a kind of Fall from Grace." Seven years later, Robinson had this to say about "doctrinal disputes":
Many economists, nowadays, who are interested in practical questions are impatient of doctrinal disputes. What does it matter, they are inclined to say, let him have his leets, what harm does it do? But the harm that the neo-neoclassicals have done is, precisely, to block off economic theory from any discussion of practical questions.If one is concerned about actual unemployment in an actual economy, Robinson later explained, one "has to discuss it in terms of processes taking place in actual history. The concept of equilibrium is incompatible with history. It is a metaphor based on movements in space applied to processes taking place in time." In other words, it is not just some kind of ethereal affectation to object to the concept of equilibrium -- it is an argument with irrevocable real-world consequences.
The failure of what Robinson dismissed as "bastard Keynesianism" also had real-world doctrinal consequences. "In the era of stagflation, this notion [that equilibrium growth can be achieved through fiscal and monetary 'fine tuning'] has been discredited and the quantity theory of money is blossoming afresh amongst its ruins." This 'blossoming,' incidentally, was not something Robinson welcomed.
Well, my interlibrary loan of de Roover's Gresham on Foreign Exchange has arrived, so I'm off up the hill to pick it up. To be continued...
Sep 26, 2016 | economistsview.typepad.com
RGC : , The downside of upward mobilityThe downside of upward mobilityanne -> RGC... , Sunday, September 25, 2016 at 09:40 AM
Saturday, September 17, 2016
I think that we are led to a very somber conclusion here. In societies with slow growth, upward mobility is limited by the lack of opportunities and the solid grip that those who are on the top keep over the chances of their children to remain on the top. It is either self-delusion or hypocrisy to believe that societies with such unevenness of chances will come close to resembling "meritocracies". But it is also the case that true upward mobility comes with an enormous price tag of lives lost and wealth destroyed.
http://glineq.blogspot.com/2016/09/the-downside-of-upward-mobility.htmlReally important essay.
Sep 26, 2016 | www.nakedcapitalism.com
Walmart's Sam's Club Scan-and-Go App May Make Cash Registers ObsoleteKurtisMayfield September 25, 2016 at 7:39 am
As of 2014, nearly 30% of the US households no internet access. How do you think that maps onto WalMart customers? Plue get outside the big cities, you see a big drop in smart phone use. Even in wealthy Mountain Brook, Alabama (yes, believe it or not, it looks like the better parts of Westchester County), you see a fraction of the device use in NYC. These analysts need to get out and see more of the heartland.crittermom September 25, 2016 at 11:13 am
Re: the street article on the Walmart app.
#1 I am happy that the news industry has found new sources of revenue, because that story read like a Walmart advertisement. Don't they have to disclose if they are getting paid for it?
#2. They already have these prescan guns in supermarkets. I see a very small percentage of people us them. I doubt that it saves you any time shopping because the register person can probably scan the items faster than an amateur. If you wanted to save time at the store you would have ordered online.
I certainly agree with you on #1. It did read like a Walmart ad.
The part that jumped out at me was: "If the item doesn't have a barcode, it could be easily looked up."
Really? How is the barcode looked up? And by whom? The customer?
It didn't say how in that 'ad'. (poor reporting)
It all sounds like another way of eliminating employees and forcing the customer to do the work. Obviously 'checking out' is one job that can't be outsourced, so now they've discovered a way to still eliminate the employees by forcing the customer to do the work instead.
As Yves mentioned, many of us living rural don't have dumbphones because we don't have service. I've never had a cell phone because there's never been coverage where I've lived out in the country, but even if I did, I'd resent having to 'check myself out' to increase the profits of the company. Oh, hell no!
I refuse to use self-checkouts at grocery stores, as well. I see that, and this new Sam's app, as doing nothing more than 'outsourcing' the job onto the customers themselves (but even better, as they have to pay no one), eliminating jobs, while increasing their profits by cutting the overhead for the company we're patronizing.
SS recently required a cell phone to access your account online. They quickly dialed that back when they realized that many of us don't have one. Duh? I agree with Yves that these analysts need to get out into the heartland more.
And I hope their vehicle breaks down while there, so reality smacks 'em hard. To quote a comedian, "Here's your sign!"
Regarding #2, I have no experience with those. My nearest Walmart is hours away so what little I do buy from them I order online and have it shipped to me.
IMO I think we, as the public, should refuse to use such apps, forcing companies such as these to keep employees rather than allowing them to eliminate jobs to increase their profits. The words 'customer service' are rare enough in businesses these days, already.
Sep 24, 2016 | econospeak.blogspot.comUneasy Money has a wonderful post on the "all models are false dodge". Nothing really to add but I especially enjoyed this:Romer's most effective rhetorical strategy is to point out that the RBC core of modern DSGE models posit unobservable taste and technology shocks to account for fluctuations in the economic time series, but that these taste and technology shocks are themselves simply inferred from the fluctuations in the times-series data, so that the entire structure of modern macroeconometrics is little more than an elaborate and sophisticated exercise in question-begging.I used to ask the New Classical crowd what the great negative real shock was during the early 1980's. The massive real appreciation of the dollar may have lowered net export demand but that was one of those Keynesian things. One would think the rise in the relative price of domestically supplied goods would have increased employment. Same with the alleged wonders of the Reagan tax cut. Oh but it was paid for by reducing transfer payments – another one of those Keynesian things. If poor people got less government assistance, then they should have gone all Jeb! and worked harder. And of course we were enjoying the start of the computer and technology revolution. But here is where the list gets hysterical – the line was that these new tools were being used to do less work in the office. But before you fall in the floor laughing at this excuse consider a recent excuse ala Tyler Cowen :There are a few reasons, but the internet may be the biggest. It is easier to have fun while unemployed. That's a social problem for some people.Tyler was debating Noah Smith. Noah had just argued for more infrastructure investment on the Keynesian notion that we were still below full employment. Tyler seems to think the low employment to population ratio is still somehow consistent with full employment. Noah disagreed noting that real wage growth is weak to which Tyler continues:Maybe employers just aren't that keen to hire those males who prefer to live at home, watch porn and not get married. Is that more of a personal failure on the part of the worker than a market failure?Oh my – boys will be boys! Noah had some good counters including:Female labor force participation in the U.S. is well below its pre-crisis level. Maybe video games are now marketed equally toward men and women.Thankfully Tyler did not respond by suggesting the ladies in the office were going crazy over hot dudes on Instragram. Posted by ProGrowthLiberal at 4:50 AM
DrDick said... September 25, 2016 at 10:45 AMSweet spreadable Jeebus on a matzoh, Cowen is an idiot. I think the man needs to get some serious first hand experience on how much "fun" unemployment is.Anonymous said... September 25, 2016 at 4:38 PMI take it you don't put much stock in articles like this in The Post, then?ProGrowthLiberal September 25, 2016 at 4:46 PM
https://www.washingtonpost.com/news/wonk/wp/2016/09/23/why-amazing-video-games-could-be-causing-a-big-problem-for-america/The Washington Post article noted this presentation:Anonymous said... September 25, 2016 at 5:51 PM"Leisure Luxuries and the Labor Supply of Young Men"
Presenter: Mark Bils, University of Rochester
Coauthors: Mark Aguiar, Kerwin Charles, and Erik Hurst
Discussant: John Kennan, University of Wisconsin
did not provide a link so I have not read this "research".
Until I do - I am not taking stock into this thesis.
Fair enough.ProGrowthLiberal September 25, 2016 at 6:42 PM
As it happens, Dean Baker was the only person who noted that "the drop in employment rates among less-educated women over the last 15 years has been even sharper. Furthermore there has been a decline in employment rates among all groups of prime age workers (25-54), even those with college degrees."
This seems to put a pretty big whole in the idea from the get go, doesn't it?Anon- Dean's point was pretty clear. We have seen a broad based drop in the employment to population ratio which is better described by weak aggregate demand than some strange tale that the kids stay home to watch video games. And the weakness in real wage growth is better explained by demand rather than supply factors. The rest is details.
Sep 26, 2016 | economistsview.typepad.com
pgl : , In 2015, the work rate (or employment-to-population ratio) for American males ages 25 to 54 was slightly lower than it had been in 1940, at the tail end of the Great Depression.A hat tip to PeterK for alerting us to the latest from Nicholas Eberstadt (AEI):pgl -> pgl... , Sunday, September 25, 2016 at 10:43 AM
"In 2015, the work rate (or employment-to-population ratio) for American males ages 25 to 54 was slightly lower than it had been in 1940, at the tail end of the Great Depression. If we were back at 1965 levels today, nearly 10 million additional men would have paying jobs. The collapse of male work is due almost entirely to a flight out of the labor force-and that flight has on the whole been voluntary. The fact that only 1 in 7 prime-age men are not in the labor force points to a lack of jobs as the reason they are not working."
Uh Nick – thanks for telling us what we already knew – labor force participation is down. But do you realize how you just contradicted yourself. Keynesians like myself would agree that is due to a lack of jobs (aka low aggregate demand). So is this a voluntary thing?
Let's read on:
"these unworking men are floated by other household members (wives, girlfriends, relatives) and by Uncle Sam. Government disability programs figure prominently in the calculus of support for unworking men-ever more prominently over time."
Since government provided benefits have not been scaled up by our policy makers – he must think the hard working ladies are cuddling young men for their good lucks or something. Uh Nick – come to NYC and you will see that the ladies here think this is so stupid. His next excuse is all those dudes in prison. Seriously? Does this AEI clown not realize crime is much lower than it was a generation ago? This piece was dumb even by AEI "standards". But at least he did not dwell on the Tyler Cowen porn thing.And at the risk of repeating myself (and Noah Smith) if their thesis that young men had suddenly decided to loaf, then the inward shift of the labor supply curve would mean higher real wages than we are seeing.
I decided to put these thoughts in the following Econospeak post which goes a little further debunking the misrepresentations from the AEI hack:RC AKA Darryl, Ron : , Sunday, September 25, 2016 at 10:10 AM
http://econospeak.blogspot.com/2016/09/the-new-men-without-jobs-conservative.html[A reply from Paine:RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , Sunday, September 25, 2016 at 10:14 AM
"paine -> RC AKA Darryl, Ron...
Joe playing hill
Who knows what he thinks
Reply Friday, September 23, 2016 at 01:29 PM"
Reminded me of this entirely by accident or maybe incident:]
A song by Alfred Hayes, Music by Earl Robinson©1938 by Bob Miller, Inc.
I dreamed I saw Joe Hill last night
Alive as you or me
Says I, But Joe, you're ten years dead
I never died, says he
I never died, says he
In Salt Lake, Joe, says I to him
Him standing by my bed
They framed you on a murder charge
Says Joe, But I ain't dead
Says Joe, But I ain't dead
The copper bosses killed you, Joe
They shot you, Joe, says I
Takes more than guns to kill a man
Says Joe, I didn't die
Says Joe, I didn't die
And standing there as big as life
And smiling with his eyes
Joe says, What they forgot to kill
Went on to organize
Went on to organize
Joe Hill ain't dead, he says to me
Joe Hill ain't never died
Where working men are out on strike
Joe Hill is at their side
Joe Hill is at their side
From San Diego up to Maine
In every mine and mill
Where workers strike and organize
Says he, You'll find Joe Hill
Says he, You'll find Joe Hill
I dreamed I saw Joe Hill last night
Alive as you or me
Says I, But Joe, you're ten years dead
I never died, says he
I never died, says he
[More about Joe Hill and Alfred Hayes at the link.]Fortunately I will have very little spare time for idle or addle minded leisure now until well after the election and even well after the subsequent coronation save those days so rainy that outdoor activity is entirely impractical.pgl : , Sunday, September 25, 2016 at 11:55 AMI never liked Ross Douhart. The political right thinks he has written something very important:Peter K. -> pgl... , Sunday, September 25, 2016 at 01:38 PM
"At the same time, outside the liberal tent, the feeling of being suffocated by the left's cultural dominance is turning voting Republican into an act of cultural rebellion - which may be one reason the Obama years, so good for liberalism in the culture, have seen sharp G.O.P. gains at every level of the country's government. This spirit of political-cultural rebellion is obviously crucial to Trump's act."
Vote for a racist like Trump because liberals are suffocating. Did I say I really do not like Ross Douhart?
Again we agree. (Signs of the apocalypse? I guess Trump is going to win.)anne -> Peter K.... , Sunday, September 25, 2016 at 02:44 PM
Douchehat is the worst hypocrite. He wants readers to believe he's an expert in morality and morale rectitude and that's what conservative should be known for when in reality Republicans chose Trump as their candidate, one grand example of immorality and dishonesty.
And still Douthat turns on the liberals as behaving badly. Suffocating? Howabout the insanity of the Republican convention? That was suffocating.
He even quotes Internet Troll Steve Sailor!!!
"(The alt-right-ish columnist Steve Sailer made the punk rock analogy as well.)"
It's like Douthat writing about JohnH or BINY. Every one of Sailor's Internet comments would be racist ones about immigration. He's mentally unhinged.
"But it remains an advantage for the G.O.P., and a liability for the Democratic Party, that the new cultural orthodoxy is sufficiently stifling to leave many Americans looking to the voting booth as a way to register dissent."
Clueless Douthat. The culture is getting better in certain ways because the TV executives just want to sell advertising and these performers are popular. It's capitalism at work.
Kudos to John Oliver for winning an Emmy.
"Among millennials, especially, there's a growing constituency for whom right-wing ideas are so alien or triggering, left-wing orthodoxy so pervasive and unquestioned, that supporting a candidate like Hillary Clinton looks like a needless form of compromise."
Note the disdain for millennials. "Triggering."
Conservative like Douthat and Bobo Brooks "trigger" the hate and anger centers of my brain.
The fact is that Samantha Bee is right and NBC facilitated the rise of Trump with the Apprentice and treating him well on other shows like Jimmy Fallon and SNL.
Here's the offending video.
http://www.huffingtonpost.com/entry/samantha-bee-slams-jimmy-fallon-nbc-for-softball-donald-trump-interview_us_57e12dbbe4b0071a6e095c1f--------- is the worst hypocrite....pgl : , Sunday, September 25, 2016 at 12:24 PM
[ Do not use sickening language on this blog. Never ever use such language here. ]I have provided this link to some of the papers by Michael Bruno – many co-authored by Jeffrey Sachs – for a couple of reasons:
The minor reason is they have a nice paper on the Dutch Disease – something JohnH thinks he understands but he needs to read up on this topic. But the main reason has to do with a stupid comment from Paine on my Econospeak post, which goes to show how very little Paine actually learned in graduate school.
I was try to paint a picture of some Real Business Cycle claim that Bruno and Sachs emphasized when I was in graduate school. I never truly bought their story as I was (and still am) a die hard Keynesian. But here is how it went as applied to the early 1980's (the period I was talking about). If a nation enjoys a massive real appreciation and if aggregate demand does not matter (the New Classical view which we Keynesians do not buy) then the real wages of its domestic workers rise. These workers supply more labor driving down wages relative to domestic prices. So domestic firms hire more workers.
That is their story. I do not buy it as I was clearly mocking it. Alas Paine never learned this. And so he mocks someone who did. Just another day at the EV comment section. Aals.
Sep 26, 2016 | economistsview.typepad.com
anne -> djb... September 25, 2016 at 07:29 AM https://www.bloomberg.com/view/articles/2016-09-12/debating-government-s-role-in-boosting-growth
September 12, 2016
Debating Government's Role in Boosting Growth: Cowen and Smith
By Tyler Cowen & Noah Smith
Smith: If that's true -- if we're seeing a greater preference for leisure -- why are we not seeing wages go up as a result? Is that market also broken?
Cowen: Maybe employers just aren't that keen to hire those males who prefer to live at home, watch porn and not get married. Is that more of a personal failure on the part of the worker than a market failure? Reply Sunday, DrDick -> djb... , Sunday, September 25, 2016 at 07:49 AMThis is a man who has never visited reality.Paine -> DrDick... , Sunday, September 25, 2016 at 12:03 PMAnd he's well compensated for his pipe dreamingDrDick -> Paine ... , -1
Why seek truth from facts
When from scratch
story telling pays so much better;-)cm -> djb... , -1And I thought it was "video games".pgl -> djb... , -1
There will always be water carriers "explaining" lack of success by lack of virtue. Likewise, before large scale automation and "globalization", we didn't need PISA studies to highlight the failures of the education systems and alleged lack of student/graduate preparedness.
Sandwichman had multiple expositions on the early lump of labor fallacy debates where the plight of laborers was ascribed to their carrying their money to the ale house.He lacks basic logic. If his story was valid, real wages would have risen. Inward shift of the supply curve v. movement along a supply curve? Hello? What do they teach the kids at GMU?Peter K. -> pgl... , -1This month's Time magazine - with Kaepernick on the cover - has a column by an AEI hack, Eberstadt, who pushes the exact same line Cowen is pushing. The lazy/entertained male meme.Peter K. -> Peter K.... , Sunday, September 25, 2016 at 06:42 AM
His reasoning is that the decline in the labor force participation rate is consistent through boom times and recessions. (I'm not going to bother linking.)
"Consider: America's prime-male workforce participation has been declining at a virtually linear rate for half a century - a trajectory unaffected by good times or recessions."
Again I suspect the conservatives are just lying. The Age of Niallism.
Excellent Econospeak post by PGL. He can be quite good when not trolling or mud-wrestling with trolls.Dean Baker also takes on the new conservative meme:Peter K. -> Peter K.... , Sunday, September 25, 2016 at 06:43 AM
If Men Don't Work Because of Video Games, What Explains Women Not Working?
by Dean Baker
Published: 24 September 2016
As is widely known the Washington Post never misses an opportunity to blame the victims of policy for bad outcomes, rather than rich and powerful folks who design policy. We are treated to yet another example of this charade with the Post running a major article that claims that video games are a major reason that fewer young men are working today than 15 years ago.
The basic story is that many young men, particularly those with less education, have dropped out of the labor force in the last 15 years. According to survey data, they appear to be spending much of their time playing video games. They also report to be relatively happy. See, all you people who thought it was a bad economy are mistaken, the problem is the video games are just too much fun.
Okay, that's a great Trumpian level of analysis, but let's get back to the real world. Less-educated young men are not the only group with declines in employment rates. In fact, the drop in employment rates among less-educated women over the last 15 years has been even sharper. Furthermore there has been a decline in employment rates among all groups of prime age workers (25-54), even those with college degrees.
This general drop in employment rates might suggest that the real problem is a lack of demand. In other words, young men are not working for the same reason young women are not working, the Washington Post and other advocates of austerity have been successful in reducing demand in the economy by reducing the government budget deficit. So the problem has little to do with video games, the problem is the policy, but hey, if the Post can use video games to distract attention from what its favored policies are doing to people -- why not?
Not just Time magazine, but the Washington Post as well. A large problem is MediaMacro or the corporate media.cm -> Peter K.... , Sunday, September 25, 2016 at 08:40 AMWhat, is there a presumption that young women don't play video games? (Or indulge in other online/"social media" entertainment formats?)Peter K. -> cm... , Sunday, September 25, 2016 at 09:16 AM
Of course lack of employment is not the consequence but the cause of filling one's day with any available entertainment - and due to cheap offshore manufacturing the hardware is overall a minor expenditure, as well as due to the near zero marginal cost of software replication, the games are quite affordable. For online games there are data center expenses but they are distributed over many players which fits the budget of involuntary or semi-voluntary "Hotel Mama" residents.
Of course puritans cannot have it that the un(der)employeds are not suffering every inconvenience there is, particularly the soul crushing boredom of an absence of any engaging activity. Hence the mindset that the welfare state must provide exactly the measure of life support that keeps the beneficiaries from death but in this particular state of suffering. Being able to play games or having sexual relations (with others or oneself) defeats the whole purpose.
Well said.JF -> Peter K.... , Sunday, September 25, 2016 at 10:25 AMYou mean reducing Spending in the economy, and yes via political controls that stop the govt from spending at levels that might fill the gaps.pgl -> Peter K.... , Sunday, September 25, 2016 at 09:23 AM
But the point is, to me, that private spending is where it is and will not increase to fill the gaps. Only the public acting as society's agent vua its govt can increase spending to fill the gaps - uh, jusy as Keynes and many ithers have said for quite some time.
I'm pretty sure you agree, but the point is about spending, not about the fiscal math (a deficit is just 2nd grade math, not a policy). The other party does not want to fill gaps and does not want the public to understand its role in governance - political control for infirm reasons, and that is not a word containing a typo.
Spending to cause gaps to fill. How to get this.I will have to take a peek at this Eberstadt piece. Maybe he will explain to us how a supposed inward shift of the labor supply curve is consistent with weak real wage growth. Oh wait - he writes for the AEI so maybe not.Peter K. -> pgl... , Sunday, September 25, 2016 at 10:15 AMThat's what I thought. When I saw he was from AEI I knew we were getting lies. Just like with Trump.pgl -> Peter K.... , Sunday, September 25, 2016 at 10:45 AM
That it was in a column in Time magazine depressed me.
Reading your blogpost shredding Cowen cheered me up!
Thanks.I have a new Econospeak post going after this horrible AEI post. Thanks again for the alert.pgl -> Peter K.... , Sunday, September 25, 2016 at 09:39 AMJust posted a link to this really awful piece from this AEI goofball. Thanks for the tip. Along with the link, I rip its sheer stupidity. Tyler Cowen was really bad but this AEI guy is incredibly incoherent.Paine -> pgl... , Sunday, September 25, 2016 at 11:18 AMTry this on for incoherentpgl -> Paine ... , Sunday, September 25, 2016 at 11:45 AM
" ...One would think the rise in the relative price of domestically supplied goods would have increased employment. "
banana peel ?I see standard aka Econ 101 theory - which is what the New Classical crowd pushes - is lost on you. Do try to follow the discussion before your usual babbling. Jesus H. Christ - even JohnH is trying to grasp the economics of the Dutch disease. OK - he is doing his usual terrible job but you do not even try.Paine -> pgl... , Sunday, September 25, 2016 at 12:24 PMLook carefully my friendPaine -> Paine ... , -1
It's your good fortune no ump stands over your shoulder to rub your face in this goof
Higher dollar leads to lower domestic employment in trade good industries
That or lower wage rates
Or some combo of bothRBC. Modelersanne -> pgl... , Sunday, September 25, 2016 at 07:00 AM
Largely Ignore the complications of open systems
U invoke the forex rate
Then fumble the ball behind the line of scrimmage
You are actual more careless and over confident then most here realize
My adivice avoid actual economists
Stay in the boon docks
And at that very gentl hetero fox site econo speak
Where loons can flock with mavericks
Lions lie down with skunkshttps://en.wikipedia.org/wiki/Real_business-cycle_theoryDrDick -> pgl... , -1
Real business-cycle theory (RBC theory) are a class of New classical macroeconomics models in which business-cycle fluctuations to a large extent can be accounted for by real (in contrast to nominal) shocks. Unlike other leading theories of the business cycle, RBC theory sees business cycle fluctuations as the efficient response to exogenous changes in the real economic environment. That is, the level of national output necessarily maximizes expected utility, and governments should therefore concentrate on long-run structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth out economic short-term fluctuations.
According to RBC theory, business cycles are therefore "real" in that they do not represent a failure of markets to clear but rather reflect the most efficient possible operation of the economy, given the structure of the economy.Conservative economics, like RBC, cannot survive exposure to reality. Your post in the list today quite nicely shreds that kind of nonsense.
Sep 26, 2016 | economistsview.typepad.comPeter K. : September 25, 2016 at 07:01 AM This is a large problem for the left. (and I see the prospect of enacting "maximum wage laws" as pretty slim. Maybe I'm wrong.)
You read progressive commenters like David and EMichael here pondering the returns on their investments. Not that there's anything fundamentally wrong with it. It's just a problem needed to be solved by public policy so everyone is facing the same rules.
You Voted to Pay Wells Fargo CEO John Stumpf $19.5 Million
by Dean Baker
Published: 24 September 2016
You don't remember casting that vote? Well, you didn't actually cast it, but if you have a 401(k) someone like Blackrock CEO Larry Fink cast the vote for you.
Most middle income people have 401(k)s for their retirement and most of this money is in mutual funds. These mutual funds have control over the proxy votes for the shares they hold. This means that funds like Blackrock, which has more than $5 trillion in assets, have enormous say over the distribution of income in this country. And, as Gretchen Morgenson points out in her NYT column this morning, these folks almost always endorse outlandish pay packages for CEOs. As they say in Wall Street circles, what's a few million dollars between friends.
So, if you're upset about an economy where the rich keep getting richer, just remember, you voted for it, sort of. Reply Sunday, pgl -> Peter K.... , Sunday, September 25, 2016 at 09:43 AM$19.5 million and zero accountability. Wells Fargo needs a new CEO now.Cray Singularity -> pgl... , Sunday, September 25, 2016 at 10:04 AMpgl -> Cray Singularity... , Sunday, September 25, 2016 at 10:47 AM
Folks need to keep their $$$$ out of mutual funds, keep their $$$$ out of 401(k). Plus you will avoid the load. When stocks fall your t-bonds will rise by virtue of their negative beta. Is that why investment bankers are contributing more to Clinton Dynasty Foundation? To Clinton election slush fund? Than to Trump University? Because the strongly suspect that stocks will collapse when the Donald moves into White House?
Do you know where your assets are? When was the last
time you saw
?Gold may be a negative beta asset but government bonds? Don't think so.mrrunangun -> Peter K.... , Sunday, September 25, 2016 at 10:06 AMI hate to remark on so obvious a matter. A TBTF bank CEO bonus of $19.5million is a low bonus by industry standards. Back in the 90s and oughties a $2million bonus for a managing director was an insult or an indication that you were on your way out. $10million was a good bonus, $5 million was OK. A $20 million bonus was really good for an MD. CEOs and leaders of successful business units could see 9 figure bonuses, like Mr Blankfein's $130million 2010 bonus, and he was not the highest paid GS exec that year. A bonus below $20million for a current day CEO could be read as bad news and is probably read as such by his friends. He is probably on his way out.pgl -> mrrunangun... , Sunday, September 25, 2016 at 10:48 AM
Bonuses today are not as sumptuous as they were in 2010 when the Obama bailout money was considered income and bonuses were paid out in proportion to the income of the business unit.OK, I bet Jamie Dimon makes more but I'd be really dismayed if he refused to take basic accountability for what Wells Fargo did.pgl -> mrrunangun... , Sunday, September 25, 2016 at 10:50 AMIt seems Wells Fargo may have avoided the disasterous decline in stock valuations that BofA and Citigroup experienced but this is not exactly a large increase either:pgl -> pgl... , Sunday, September 25, 2016 at 10:52 AM
https://finance.yahoo.com/quote/WFC?ltr=1JPMorgan has seen a 25% increase in stock prices.JohnH -> pgl... , -1
Wells Fargo fairly flat and big stock declines for BofA and Citigroup. And yet we here from JohnH some incessant spin about record bank profits.
So many misconceptions so easily debunked.More BS from pgl. Banks were able to take advantage of the Fed's historically low interest rates and post record profits in 2014 and 2015, while median real household income was back where it was a generation ago.
Sad part, is that now pgl will tell us about the woes of one or two of his favorite banks and try to project that to the industry...or he'll put in a link showing declines in net interest margins...because he's a dissembling sleazebag.
This dude is so confused that he doesn't even know the difference between net INCOME margin (profit) and net INTEREST margin!
www.truth-out.orgIn 2008, the governments of the city of Chattanooga, Hamilton County, the state of Tennessee, and the United States all collaborated to provide Volkswagen (VW) with a $577 million subsidy package, the largest taxpayer handout ever given to a foreign-headquartered automaker in U.S. history. The bulk of the subsidy package, $554 million, came from local and state sources. The federal government also threw in $23 million in subsidies, bringing the grand total of taxpayer money that VW received in 2008 to $577 million. According to the Subsidy Tracker at the website of watchdog group Good Jobs First, the package provided to VW included "$229 million from the state for training costs and infrastructure; $86 million in land and site improvements from the city and the county; state tax credits worth $106 million over 30 years; and local tax abatements worth $133 million over the same period." In exchange for this massive infusion of public wealth onto Volkswagen's corporate balance sheets, the company promised to create 2,000 jobs in Chattanooga, bringing the price tag for each promised job to $288,500.
When asked to respond to concerns about VW's record-shattering subsidy package, then-Tennessee Governor Phil Bredesen, a Democrat, unabashedly replied, "I don't know whether it's fair that a Mercedes Benz costs $90,000, I just know if I want one that's what I've got to pay." Tennessee's U.S. Senator Lamar Alexander, a Republican, applauded the deal as another significant mile marker on the way towards "Tennessee's future" of becoming the "the No. 1 auto state in the country."
The political logic is pretty clear: massive subsidies are just the price that the public is expected to pay in exchange for the limited number of jobs made available to them within the "free enterprise" system. The VW subsidy deal is just one example of how large corporations leveraged the widespread suffering caused by the Great Recession, the longest and deepest economic crisis since the 1930s, to bleed the funds of state governments in exchange for jobs. In a 2013 report studying the rise of "megadeals" -- subsidy deals with a local and state subsidy cost of $75 million or more -- Good Jobs First found that "since 2008, the average number of megadeals per year has doubled (compared to the previous decade) and their annual cost has roughly doubled as well, averaging around $5 billion." This was certainly the trend in Tennessee, where VW was the first of three separate megadeals negotiated in the state from 2008 to 2009. The same year that the VW deal was announced, Hemlock Semiconductor received over $340 million in government giveaways to develop a $1.2 billion polycrystalline silicon manufacturing plant in Clarksville, Tenn. By 2014, the plant was shuttered and all 500 promised jobs evaporated. Wacker Chemie received over $200 million in subsidies to build a billion-dollar plant in Bradley County, just outside of Chattanooga, to produce materials used in solar panels and semiconductors. Another megadeal was brokered with Amazon, which received over $100 million in local and state subsidies to build a distribution center in Chattanooga's industrial development park, which is shared with the Volkswagen plant.
The Bipartisan Consensus
The subsidy deals with Volkswagen, Hemlock, Wacker, and Amazon were all originally negotiated by Tennessee Governor Phil Bredesen, a Democrat, and U. S. Senators Lamar Alexander and Bob Corker, both Republicans, and was approved by the Tennessee General Assembly, which in 2008 came under Republican control for the first time since Reconstruction. These deals were drafted in collaboration between state politicians (both Democratic and Republican) and business elites in total secrecy. Tom Rowland, mayor of Cleveland City in Bradley County, the location for the Wacker plant just outside of Chattanooga, revealed the frequency of such secret meetings: "You don't know how many times we have slipped Gov. Bredesen, Sen. [Bob] Corker and [Tennessee Economic and Community Development commissioner] Matt Kisber into the Chamber office."
By 2010, the state was firmly under the control of a Republican governor, Bill Haslam, and a Republican super-majority in the General Assembly. By 2012, the Republicans held over two-thirds of all state government offices in what they called a "super duper majority." The parties might have changed, but the love for corporate welfare did not, as the Republicans continued to build upon and extend all of the agreements from the previous governor's administration.
In fact, President Obama came to Chattanooga to join in on Tennessee's bi-partisan economic consensus. During his 2013 jobs tour, the President delivered a speech at the Chattanooga Amazon distribution facility, praising the company for doing its part to restore the middle class through "good jobs with good wages." The starting wage at the Chattanooga warehouse is $11.25 an hour.
"Good Jobs" and Concessionary Unionism
According to a 2015 study by the Center for Automotive Research, auto workers at VW in Chattanooga had the lowest hourly pay and benefits of any employees in a U.S. car factory. The starting hourly wage rate for an assembly line worker at Volkswagen is about $15 an hour, or approximately $31,000 a year. A full-time production employee can top out their pay in seven years at a wage rate of $23 an hour, or about $48,000 a year. That makes the top pay at Volkswagen less than 80% of the estimated annual median income for Hamilton County. Third-party contractors hired by Volkswagen to work on the line in the plant and the network of auto suppliers servicing the factory pay even lower hourly wage rates. Yet U.S. Senator Corker describes production jobs at VW as "good paying," Hamilton County Mayor Jim Coppinger prefers the term "family-wage jobs," and Chattanooga Mayor Andy Berke describes VW as providing "living-wage jobs" that are helping to "build our middle class."
Tennessee's billionaire governor, Bill Haslam, who happens to be the richest politician in the country, has expressed little concern over whether or not the jobs brought to the state were high paying. In fact, it appears that he is proud that they are not. In official material directed to foreign companies by the Haslam administration, the governor touted a pro-business environment in which companies can exploit a "low-cost labor force" thanks to the state's "very low unionization rates." (That's alongside the boon of state and local taxes that are "some of the lowest in the region.")
Since the Great Recession, the United Auto Workers (UAW) has been overseeing the erosion of gains made by auto workers in previous decades. The union has been able to maintain higher wages and benefits for the auto workers they represent when compared to manufacturing overall, but the difference has shrunk dramatically in recent years. According to the Detroit Free Press, "Back in 1960, a Detroit Three UAW autoworker was paid 16% more than the average U.S. manufacturing worker. By the early 2000s, that wage gap had grown to nearly 70% in favor of the UAW worker, but shrank back to 33% by this year."
The union, to be sure, is operating under difficult conditions in the auto industry: trade deficits in manufacturing that were growing even prior to the Great Recession, the relative increase of jobs in parts plants that pay less than assembly plants, the growth in auto employment at nonunion "transplants" (belonging to non-U.S. headquartered companies like Volkswagen and Toyota), and the rise of temp agencies and "just in time" production as part of the overall lean production management processes in the industry. All of these changes, however, have taken place in the context of the UAW's top-down brand of business unionism, which has led to its deeply concessionary approach to collective bargaining and new organizing. For example, an Economic Policy Institute (EPI) report jointly authored by a former UAW leader, a former vice president from Ford, and an academic expert on "workplace innovation," lauded the UAW for being "a full partner for more than a decade in experimenting with innovations in work organization" and working with corporate management at the Big Three to reduce a "major portion" in the "cost differential" with non-union foreign-headquartered auto makers:
In 2005, there was a gap of $3.62 between the average hourly wage of $27.41 at Ford and $23.79 for the transplants. When fringe benefits, legally required payments, pension benefits, retiree health care, and other post-employment labor costs are added in, the gap grew to $20.55 ($64.88 versus $44.33) .... In 2010, following the 2007 introduction of the entry wage and concessions made during the 2009 government bailout, the wage gap stood at $4 ($28 for Ford versus $24 for the transplants), and the gap when including fringe benefits and post-employment costs stood at $6 ($58 for Ford versus $52 for the transplants).
Incredibly, the UAW leadership has continued to proudly highlight how contract concessions have induced an ever-closer wage convergence between transplants -- located largely in low-wage, Republican-dominated states in the southeastern United States -- and U.S.-headquartered automakers in historically union-dense strongholds, like Michigan. They hold this up as proof of their labor-management partnership credentials while simultaneously championing the auto industry as lifting up "good jobs" and "the middle class." Despite the reality of declining wages, benefits, and jobs, the public appears to believe the same. According to an analysis of several polls by the National Employment Law Project (NELP), a majority of the general public believes that "manufacturing is the most important job sector, in terms of strengthening the economy."
At the Chattanooga VW plant, workers also face a brutal lean-production management model on the assembly-line floor that works to squeeze higher productivity from a scant and beleaguered workforce. The working conditions on the assembly line are so physically demanding that many production workers cannot see working at VW as a long-term career. Yet in 2013, when the UAW announced that they were seeking to organize the Chattanooga plant, the union decided against organizing around the salient issues in the plant and instead chose to frame their entire organizing campaign around collaboration with the company to form the first German-style "works council" in the history of the United States. The UAW's strategy was exclusively predicated on advancing what the union championed as an innovative form of labor-management partnership.
The UAW even went so far as to sign a neutrality agreement with Volkswagen which committed the union to "maintaining and where possible enhancing the cost advantages and other competitive advantages that [Volkswagen] enjoys relative to its competitors." When pressed to account for why the union would make such a shocking concession, then-UAW president Bob King issued this reply:
Our philosophy is, we want to work in partnership with companies to succeed. Nobody has more at stake in the long-term success of the company than the workers on the shop floor, both blue collar and white collar. With every company that we work with, we're concerned about competitiveness. We work together with companies to have the highest quality, the highest productivity, the best health and safety, the best ergonomics, and we are showing that companies that succeed by this cooperation can have higher wages and benefits because of the joint success.
Continued Investments, Too-Big-to-Fail and Too-Big-to-Jail
In July 2014, Volkswagen announced that it was planning to invest $600 million into expanding the Chattanooga plant, adding additional assembly lines for the production of an SUV for the North American market. According to local news reports:
More than a third of that investment will initially come from state and local governments who agreed to pump more than $230 million of upfront tax dollars into the project to woo VW into expanding in Chattanooga rather than at its other major North American plant in Puebla, Mexico, where labor costs are far lower. Combined with other property tax breaks, TVA incentives, road projects and other potential tax credits, Volkswagen could qualify for more than $300 million of grants, credits and other government assistance over the next decade....
The expansion of the Chattanooga plant brings the total subsidy package provided to Volkswagen up to about $877 million dollars. Following the official announcement of the expanded subsidy deal, Tennessee House Majority Leader Gerald McCormick, whose district includes Chattanooga, told the press, "I think it is a good investment and we will convince the Legislature of that because there are just so many ripple effects from this investment that will help so much of our state." The ripple effects of such an enormous single investment took on a completely different character with the announcement, in September 2015, that the EPA was fining Volkswagen for installing "defeat devices" on their automobiles, allowing the diesel cars produced at the Chattanooga plant to temporarily hide the emissions they produce.
Since the EPA's announcement, VW has acknowledged that it produced over 11 million diesel vehicles worldwide that contained software allowing them to cheat nitrogen oxide tests. This software, installed on 2009–2015 diesel VWs, reduced emissions while the cars were hooked up to testing devices, only to let pollution "spill out of the tail pipe at up to 40 times the allowable level" when cars were on the road. An analysis performed by the Associated Press (AP) estimates that about 100 people in the United States have likely died as a result of the pollution produced by VW's diesel Passat over the last few years. AP's analysis estimates that the death toll in Europe is substantially higher, likely resulting in hundreds of deaths for every year the cars were on the road.
After the EPA's announcement in September 2015; VW's stock price plummeted and VW Group CEO Martin Winterkorn resigned. Volkswagen Group of America President and CEO Michael Horn admitted, during his official testimony before Congress in October, that the defeat devices were installed for the express purpose of beating emissions tests. In November 2015, the Chattanooga VW plant stopped the production of the diesel Passat. More recently, VW has agreed to a partial settlement with federal and state authorities of over $15 billion as new lawsuits and government investigations from around the world continue to make headlines. How have the local and state government responded to the news of VW's rampant criminality and corruption? Speaking to reporters about VW and the scandal, Governor Haslam said, "We're married to them. We want this plant to be a success."
Hamilton County Mayor Jim Coppinger, meanwhile, told reporters, "We need for the plant to be successful. It's important to our economy." The state is too invested in VW -- politically and financially -- to be in any position to truly hold the company accountable for its actions.
A New Road Forward
Put it all together and we have a formula for maximizing corporate profits that mixes equal parts political opportunism with class collaboration. Following the Great Recession, voters were desperate for jobs. Politicians, campaigning on bringing jobs to voters, are willing to provide massive subsidies to companies willing to locate in their voting districts. The union, desperate to organize new bargaining units from which to collect dues and to be seen as a legitimate partner with corporate and political elites, actually agrees to "maintain" and "enhance" the competitive advantages corporations gain by pushing private business costs off onto the public while providing jobs with lower wages, reduced benefits, and deteriorating working conditions. Meanwhile, the public believes they are getting "good jobs," while the actual quality of those jobs continues to decline. The companies laugh all the way to the bank. With their backs to the wall, unions like the UAW can no longer put off organizing auto makers and suppliers that choose to locate their plants in the South, but they will not succeed by promising to "work in partnership" with the companies. Labor organizers in the South will usually be working in an environment in which both business and government are hostile to unions. When the UAW narrowly lost the VW vote in 2014, the union should have learned a valuable lesson. The company might have formally committed to being "neutral," but the business and political elites in the South made no such agreement. If unions fail to win over the broader working class, they have no chance of winning representation elections -- especially in states like Tennessee, where only 6% of all workers belong to a union, and in cities like Chattanooga, where the unionization rate is even lower, at an abysmal 3.4% of all workers.
To win, unions will not only have to jettison the pipedream of courting management with promises of maximizing worker productivity and containing costs. Rather, they will have to return to their militant roots: connecting shop-floor fights with community organizing. This approach has been successfully exemplified by the Chicago Teachers Union (CTU) and the Grassroots Collaborative, a labor-community alliance that has become a permanent fixture in Chicago politics and generated immense public support for CTU's militant fights with the city's investor class and mayor. CTU's combination of bottom-up work-site organizing and authentic, non-transactional support for community organizations and their struggles were critical preludes to the union's relatively successful 2012 strike. A long-term strategy focused on this kind of organizing would go a long way towards building the kind of movement infrastructure that labor needs to win in the South.
All of this is easier said than done. But we are currently faced with the atrocious working conditions and ever-diminishing wages and benefits of manufacturing jobs, the spread of poverty throughout our communities, the deep underfunding of public services, and the rising tide of anger and resentment (especially among young people) towards the economic and political elite. The time is ripe for organizers to begin harvesting the fruits of our exploited labor.
Shouldering the Subsidy: Tennessee's Regressive Tax System
Tennessee has one of the most regressive tax systems in the country. Currently, Tennessee has no state income tax and a constitutional amendment, passed by referendum in 2014, prevents the state government from ever establishing an income or payroll tax. Moreover, earlier this year the state legislature passed a bill to phase out the state's tax on dividends and income from bonds by 2022, resulting in millions of dollars in tax revenue being stripped from city budgets. This will likely result in city governments raising revenue by hiking property taxes, further shifting the burden of raising revenues for the state onto the working and middle classes.
The lack of an income tax means that the Tennessee state government relies to a large degree on sales taxes to raise revenue. The sales tax is especially regressive due to the state's refusal to exempt essentials like groceries (though groceries are at least taxed at a lower rate than the overall sales tax), while completely exempting luxury goods such as "attorneys' fees, services such as haircuts and massages, and goods for horses and airplanes." Additionally, the state fails to offer any tax credits to low-income taxpayers to offset either sales or property taxes.
This means that the primary form of wealth for the working and middle classes -- a family home -- is taxed to provide the vast majority of revenue for local governments. Meanwhile, major forms of wealth for the ruling class -- corporate stocks and bonds -- are not. Tennessee's working and middle classes are being squeezed under the highest average combined state-local sales tax rate in the country, while the owners of capital skirt any responsibility for paying their share.
This regressive system is compounded with every tax abatement given to a large multinational corporation, such as Volkswagen. When the state increases its reliance on sales taxes to offset the holes punched into the budget by corporate tax breaks, this increases the overall tax burden on the poor and working class. The only other option to raising revenue through regressive taxes is for the state to cut services. Cuts to services, such as healthcare, public education, infrastructure, and transportation, are just another way to shift the burden onto the working class. While public services diminish, highly profitable multinational corporations, such as Volkswagen, benefit from direct state supports, like state-financed job training and capital-improvement grants, which improve their bottom-line and further entrench wealth inequality.
The federal tax system, on the whole, is progressive, according to a 2016 Tax Policy Center report. Economists with the Federal Reserve Bank studied the impact of state taxes on income inequality and found that Tennessee's regressive tax system "reverses around one-third of the compression [in the income spread] caused by federal taxes" -- the most of any state in the country.
Inequality's Racial Disparities
According to the 2015 report "State of Black Chattanooga," by the Ochs Center for Metropolitan Studies, the median wealth of white households in Tennessee bounced back in the years after the Great Recession, increasing by 2.4% between 2010 and 2013, to $141,900. Contrast that with the median wealth of Black households in the state, which continued to spiral down in the same time period, falling more than 33% to $11,000.
The arrival of Volkswagen, Wacker, and Amazon has failed to fundamentally alter the overall low-wage economy in Chattanooga and Hamilton County. When these "megadeals" combine with the further subsidies provided to land developers for luxury condos and apartments in Chattanooga's urban core and the expanding priority placed by local governments on police and jails, the results are gentrification, displacement, and incarceration. Currently, 27% of Chattanoogans overall live in poverty, almost double the national average, and that number jumps to 36% in the city's Black community. In the eleven lowest-income neighborhoods in the city, in which about three-quarters of residents identify as Black, the poverty rate is 64%. Only 17% of the Tennessee population is Black, yet Black people are 44% of our state's prison population.
Concerned Citizens for Justice, a grassroots organization dedicated to Black liberation in Chattanooga, describes this underlying systemic approach by politicians and business leaders as "an arrangement that is good for rich financiers and developers and bad for Chattanooga's working class and oppressed majority." The numbers certainly bear out their analysis.
Sources:Frank Ahrens and Sholnn Freeman 2007. "GM, Union Agree on Contract to End Strike," Washington Post, Sept. 27, 2015 http://www.washingtonpost.com/wp-dyn/content/article/2007/09/26/AR2007092600155.html ; Associated Press, "TN touts 'low-cost labor force' to lure foreign business," Sept. 2, 2015 http://www.tennessean.com/story/news/2015/09/02/tn-touts-low-cost-labor-force-lure-foreign-business/71617998/ ; Associated Press, "Volkswagen now under investigation for tax evasion," Nov. 24, 2015 http
Sep 24, 2016 | www.nakedcapitalism.comYves here. This article argues that people don't mind inequality due to "brute luck"…but is one man's brute luck another man's rigged system?
By Matthew Weinzierl, Assistant Professor of Business Administration, Harvard Business School. Originally published at VoxEU
Tax policy to correct inequality assumes that nobody is entitled to advantages due to luck alone. But the public largely rejects complete equalisation of 'brute luck' inequality. This column argues that there is near universal public support for an alternative, benefit-based theory of taxation. Treating optimal tax policy as an empirical matter may help us to close the gap between theory and reality.
... .... ...
In this case, the optimal tax policy aggressively offsets inequality. Only the need to retain incentives to work and the desire to reward extra effort justify allowing inequality to persist.
... ... ...
Brute Luck and Economic Inequality
What explains the gap between scholarly and popular views of the moral status of pre-tax income? A clue might be our attitude to luck.
The view that individuals have no moral claim to their pre-tax incomes relies on the ethical assumption that nobody is entitled to advantages due to factors outside his or her control. Philosophers such as Cohen (2011) call this 'brute luck'. Given the importance of brute luck (for example, natural ability, childhood home environment, and early schooling) to a person's economic status, this assumption directly leads to a rejection of moral claims to pre-tax income.
... ... ...
The 2016 US presidential campaign's attention to inequality fits these findings. Some candidates complain of a 'rigged system' and rich individuals and corporations who do not pay their 'fair' share. Critically, gains due to a rigged system or tax avoidance are due to unjust actions, not brute luck. They are due to the toss of a loaded coin, not a fair one.
... ... ...
These are early steps in developing a new approach to tax theory that I have called 'positive optimal taxation'. This approach modifies the standard optimal tax analysis by treating the objective for taxation as an empirical matter. It uses a variety of sources – including opinion surveys, political rhetoric, and analysis of robust policy features – to highlight gaps between the standard theory and prevailing reality of tax policy. It also identifies and incorporates into the theory alternative goals – and the philosophical principles behind them – that better describe the public's views on policy.
.... .... ...Robert Hahl September 24, 2016 at 6:13 amAdam1 September 24, 2016 at 6:17 am
"I stole it fair and square" is not a form of brute luck, but I saw no recognition of that fact while skimming the article. Sorry if I missed it.DanB September 24, 2016 at 7:34 am
One piece of logic missing from the research analysis is accounting for the game itself. If I agree to play a game of chance that is fairly played I am by default also agreeing that I accept the possibility that the outcomes will not be equal, otherwise why would I play. It shouldn't be a surprise that in the end people are willing to maintain that inequality because they originally agreed to it by the fact that they agreed to play.
As Yves points out, if you change the scenario where one of the players was allowed to collude with the person executing the game and the other player was informed of this you might get a very different answer. You might even get a punishing answer.
The trick or con being played by the elite is to convince enough of us that the game of life is being played fair. And when that fails, the con or lie becomes that its the fault of (insert target minority group).Uahsenaa September 24, 2016 at 9:21 am
From two complementary sociological points of view -- conflict theory and symbolic interactionism -- this article is naive -or a red herring- in the ways you suggest.
Indeed, the issue is about people accepting a "definition of the situation" that is in fact detrimental to their material interests (Pierre Bourdieu terms this "misrecognition"). Erving Goffman, who was trained as an interactionist, studied con artists to describe how they successfully created a definition of situation -- which means a version of social reality -- that their marks would internalize as reality itself. A sociologist would not begin a discussion of socioeconomic inequality with tax policy.John Wright September 24, 2016 at 10:06 am
A sociologist would not begin a discussion of socioeconomic inequality with tax policy.
But an economist would, and therein lies the problem. Control over arguments regarding political economy in the public sphere have to be wrested from economists, so that we can start to talk about what actually matters. Sanders' popularity, despite his numerous problems, lay in how he took control of the argument and laid bare the absurdities of those who benefit from the status quo.
I say we boycott economists. Sure some of them are not terrible, but in the main the discipline needs to be torn down and rebuilt from the ground up.Norb September 24, 2016 at 10:35 am
Many economists function as members of the courtier class, justifying what the rich and powerful want to occur. Most citizens already boycott economists in that they don't use their services except when required to attend an Econ class at school.
But economists do influence average citizens lives via their justification of tax policy, land use policy, labor policy, trade policy and law implementation.
Even if we tore down the profession, it could likely regrow to provide the same functionality.
The profession provides a valuable service, as it is valued by the class with power and money throughout the world.Uahsenaa September 24, 2016 at 11:02 am
Economic education has been a failure of the left. Everyone needs to know how money and finance works. Only then can that power be put to various uses. It is not that you don't need economists, you need economists working in your interest.
All knowledge and technology works this way. It is the purposeful use of information that matters, not the information itself. The left wastes time, effort, and resources trying to convince people to change their minds. Instead, they need to focus on building things in the real world, using all the economic tools at their disposal.Norb September 24, 2016 at 11:50 am
I could get behind this. And I would have to agree that harping against the evils of capitalism, which are very real, often comes from those who don't really understand how it works.
Maybe the solution is more co-ops and less rhetoric.Jeremy Grimm September 24, 2016 at 11:42 am
Using the power of the boycott is another. The powerless need to rediscover what power they truly wield in this system. That was the other failure of the left. Yes, they were actively crushed by corporate power, but the ideas live on. They can only be exterminated through lack of use.
A new ideology needs to be born of the ashes. If the predictions of climate disruption are anywhere near accurate, a proactive, and positive direction can be undertaken. My experience is that caring, healthy people are driven to help others in times of adversity. Well, those times are coming. We are once again going to have to face the choice between choosing abject fear or rolling up our sleeves and getting back to work making everyones lives better.
You don't need corporate sponsorship to do that. They need us more than we need them. In the end, I have a feeling that the current system will come down very quickly. Being prepared for that outcome is what should be driving the actions of those not vested in keeping the status quo going.Norb September 24, 2016 at 12:34 pm
The post indicates this guy is Assistant Professor of Business Administration - at Harvard Business School - so I'm not sure I would give him even so much regard as I might give an economist. I wonder how he and his will regard the fairness of luck while they wait in line to be serviced at the guillotine they're building - much as Scrooge crafted his chain and weights for his afterlife.Jeremy Grimm September 24, 2016 at 1:07 pm
For a historian, making connections between past and present situations is the root of their insight. As in all walks of life, your efforts can gain value to your fellow citizens or they can be used as a tool for your own self interest- whatever that might be. How interesting are these repeating cycles in the human drama.
Interesting reference to Scrooge -- the power of art to enlighten the human condition cannot be underestimated. As I get older, it seems to me that the capitalism system debases everything it touches. Anything of real value will be found outside this system. It has become the box that confines us all.
When your viewpoint of the world and your relationship to it shrink to only seeking profits, the depravity of that situation is hidden from view unless shocked back to awareness.
As Peter Gabriel would say- Shock the Monkey
Shock the monkey to life
Shock the monkey to life
Cover me when I run
Cover me through the fire
Something knocked me out' the trees
Now I'm on my knees
Cover me darling please
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Fox the fox
Rat on the rat
You can ape the ape
I know about that
There is one thing you must be sure of
I can't take any more
Darling, don't you monkey with the monkey
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Wheels keep turning
Don't like it but I guess I'm learning
Shock! – watch the monkey get hurt, monkey
Cover me, when I sleep
Cover me, when I breathe
You throw your pearls before the swine
Make the monkey blind
Cover me, darling please
Monkey, monkey, monkey
Don't you know you're going to shock the monkey
Too much at stake
Ground beneath me shake
And the news is breaking
Shock! – watch the monkey get hurt, monkey
Shock the monkey
Shock the monkey
Shock the monkey to lifeSpencer September 24, 2016 at 7:12 am
This is tangential to topic of this thread:
I was particularly struck by your comment about art: "the power of art to enlighten the human condition cannot be underestimated." I recall a similar assertion made in one of Howard Zinn's speeches - sorry I can't recall the exact phrasing of his statement or its context.
I'm retired and found a strange calling to make art - a calling I never listened to when I had to worry about supporting a household. I find it difficult to make art that isn't political, satirical or in some way didactic. Whether anyone else would regard my works as art I don't know and in a way I don't care. Art has become a way in which I must express something inside me I don't understand but whose direction I must follow. I suppose similar feeling drive many expressions of art. Perhaps that explains something of the power of art you refer to.Moneta September 24, 2016 at 7:43 am
For the erosion in income inequality to be fixed, economic policies need fixed. The disparity between income quintiles will continue to widen. Social unrest will continue to proliferate. This situation will simply never get corrected until the commercial banks are driven out of the savings business (however bizarre one might think that solution is).
Vladimir Lenin, leader of the 1917 Russian Revolution said: "The best way to destroy the capitalist system is to debauch the currency." Not so. The best way to destroy capitalists is the deregulation of deposit caps for saver-holders' accounts in the commercial banking system. This policy error simply increased the bank's costs with no increase in their income. Bottling up savings, is first observed by the decline in money velocity, then by a decline in AD (secular stagnation), and when the Fed attempts to offset this decline, by an increase in stagflation.Alejandro September 24, 2016 at 10:52 am
The beliefs come first, then the system reflects these. Creeping individualism and the belief in the self made man will do the trick.Spencer September 24, 2016 at 9:44 pm
""[V]elocity" is just a dummy variable to "balance" any given equation – a tautology, not an analytic tool."
How can the "code" be modified to restrain usurious AND sociopathic behaviour?Alejandro September 24, 2016 at 10:28 pm
Vi is contrived. Vt is money actually exchanging counterparties. But since Ed Fry discontinued the G.6 debit and demand deposit turnover release in Sept. 1996, the Fed has no rudder or anchor.
Required reserves are a surrogate, though the underweight Vt. But RRs are based on payments (money turning over). And 95 percent of all demand drafts clear thru transaction based accounts.
The "code" you speak of relates to the volume of financial transactions consummated. Financial transactions are not random. Financial speculation is a function of money flows. The volume of bank debits during the housing crisis would have stood out like a sore thumb (as it captured both new and existing real-estate transactions).
Only price increases generated by demand, irrespective of changes in supply, provide evidence of inflation. There must be an increase in aggregate demand which can come about only as a consequence of an increase in the volume and/or transactions velocity of money. The volume of domestic money flows must expand sufficiently to push prices up, irrespective of the volume of financial transactions, the exchange value of the U.S. dollar, and the flow of goods and services into the market economy.
The "administered" prices would not be the "asked" prices, were they not "validated" by (M*Vt), i.e., "validated" by the world's Central Banks.
- Michel de NostredameMoneta September 24, 2016 at 7:40 am
I'm not sure that what you just spewed even makes sense to you, or that you even bothered to read the link provided…but the "code" is about concurrent monetary AND fiscal policy to serve a purpose other than making the rich richer and the poor poorer…HotFlash September 24, 2016 at 7:53 am
If someone gets the waterfront property just because he/she was born first so got there first, he better do something positive for the next generation… The next generation will understand the luck factor as not everyone can be standing in the same spot at the same time, but it will not accept the scrooge.Eclair September 24, 2016 at 9:32 am
Prof Weinzieri says
If people are entitled, even in part, to their pre-tax incomes, the optimal tax policy would no longer offset inequality as aggressively. Taxes would, instead, be focused on raising funds for government activities in a way that tries to respect those entitlements.
which seems fair-ish, but also
Given the importance of brute luck (for example, natural ability, childhood home environment, and early schooling)
Oh my! Childhood home environment and (gasp!) early schooling are matters of luck? Oh those Haaahvaahd guys! No, professor, winning the lottery is a matter of luck, and can happen to anyone at any point in their life. Being born in poverty, into a class 15% of whose male population is incarcerated or having to go to a crappy school are *systemic* results of deliberate social structures, the elites just prefer to call it "bad luck". Thus we see how the Ivies serve the elites.Uahsenaa September 24, 2016 at 9:32 am
Yes, HotFlash. And these 'deliberate social structures,' the 'red-lining' policies, the wildly unequal sentences for crack versus cocaine, the casual brutality of the prison system (over 200,000 male rapes per year), the laws preventing people who have served their sentence for a felony from voting, public housing, scholarship aid, welfare .. in other words, from living and improving their lives .. are structural violence. And then we are 'surprised' when people who have lived their lives under a regime of these subtle but unrelenting acts of economic, social and spiritual violence, finally hit back.Banana Breakfast September 24, 2016 at 9:49 am
It's also worth noting how his examples are still a function of the neoliberal canard that privilege is simply a boost on the ladder of meritocracy. The game is still implicitly understood to be fair.
Yet, it's not clear to me what Alice Walton, for instance, has done to justify being a multi-billionaire. People who are born not just with spoons but entire silver foundries in their mouths could redistribute 90% of the wealth they acquired by virtue of being someone's baby and still be absurdly rich.OpenThePodBayDoorsHAL September 24, 2016 at 5:28 pm
The paper seems totally oblivious to the fact that in the scenario presented, all the gains enjoyed by both players are due to luck. Player B is getting a windfall either way, so there's no sense of real unfairness. The perception would be quite different if it was only the difference between A and B that was assigned randomly, while each had to earn some baseline.Jeremy Grimm September 24, 2016 at 11:45 pm
And I think the "popular acceptance" part is given a huge boost when the young, black, nominally-Democrat president keeps insisting everything is awesome and anyone who says otherwise is "peddling fiction".Rodger Malcolm Mitchell September 24, 2016 at 10:20 am
I think this paper goes to great lengths to build a question around the ideas of the fairness behind progressive taxation. This post hardly seems to pose a question worthy of study. Our tax systems so much favor Corporations and the wealthy that considerations of "fairness" are at best comical - and I'm not laughing.kgw September 24, 2016 at 10:35 am
The most important problem in economics is the widening Gap between the rich and the rest. A solution is: https://mythfighter.com/2014/11/09/a-brief-reference-what-you-need-to-know-when-discussing-economics/From Cold Mountain September 24, 2016 at 11:14 am
As William Godwin says, if people actually knew who they were, all would be peaceable…
https://www.amazon.com/Enquiry-Concerning-Political-Justice-Influence-ebook/dp/0140400303/ref=la_B000APJ4OS_1_5?s=books&ie=UTF8&qid=1474727648&sr=1-5Jeremy Grimm September 24, 2016 at 11:48 pm
Yes, the outcome of self awareness will always be Anarchism. I came be an advocate, not through economics or politics, but thought Buddhism and Daoism. It is a story older than humanity that we are just starting to remember.
So here I am sitting, watching, waiting for the rest of the world to catch up.Ivy September 24, 2016 at 10:56 am
What kind of self-knowledge did Hitler find in his imprisonment? It didn't lead to anything I would call peaceable. Was there some inner Hitler he didn't reach in his prison contemplations?Jeremy Grimm September 24, 2016 at 11:40 pm
If I had only known it was luck, I would not have spent so many late nights in the library during undergrad and grad schools. However, I enjoyed those nights and was enriched by them. Is that taxable?Norb September 24, 2016 at 11:24 am
Learning must be for its own sake. Like you, I spent many hours in the library. BUT it was to scratch an itch I have not been able to quell - even in these many years since I was in that library.Jeremy Grimm September 24, 2016 at 11:36 pm
Will future generations, if there are any, be able to look back and reflect," what were these people thinking?"
There is no justification for the levels of inequality and environmental destruction we are experiencing. Period. We can all consider ourselves fools, even for entertaining debating these issues much longer. We need to be discussing concrete actions, not theoretical justifications.
Everyone must face the randomness of the universe every day. The only certainty know is the one WE create as human beings- one and together. Why is it do you think that the elite never break ranks. They are creating their own certainty in an uncertain world. Heads I win, tails you loose. TBTF. Race to the bottom. The new normal. Political capture using the revolving door techniques.
Human evolution is racing toward a crisis point. Ending inequality and world conflict are at the focal point of this outcome. Leaders that continue to use the outdated modes of social control will either drive us over the cliff to destruction, or will loose the ability to control outcomes as their numbers dwindle. The day the revelation is made that the elite are full of crap, is the day change becomes possible.
It seems large social structures will always come crashing down. The weakness in human nature and flaws in our social structures lead to eventual failure. Greed and selfish action is seldom tolerated is smaller structures.sd September 24, 2016 at 11:32 am
I think there will always be inequality between people on many many dimensions. I am constantly humbled by how much I don't know that other people know, people less well educated and I suspect less intelligent - whatever that means - than I am. I celebrate this inequality and sincerely hope this larger knowledge shared with mine and the knowledge of many others will suffice to address the great challenges we face in the all too near future.
HOWEVER - inequality as a matter of power relations - that is different matter. If I were my great great grandson I could never forgive what I have allowed through my cowardice and intent to have a surviving great great grandson - or granddaughter.Vatch September 24, 2016 at 5:43 pm
I am not sure I really understand the intention of this paper. The example used, that 20% of $90,000 income must be paid in taxes, and then taking surveys of how that distribution should work seems to ignore whether or not the respondents actually understand basic math.
Why do I say this?
The "easy" answer is that Person A pays $15,000 and person B pays $3,000 which is the equivalent of a flat tax. And yet, that's not how most responded. Only 5% selected the easy answer. Which makes me wonder if the targets of the survey even understand basic math.
So I guess I am questioning the questioning….Vatch September 24, 2016 at 9:52 pm
Actually the easiest answer is for person A to pay the whole $18,000. He's the one who is getting more money before taxes, and if he pays the $18,000, he's still getting $12,000 more than person B. The "flat tax" is probably the second easiest answer. However, since neither person is doing any tangible work to receive the money, the fairest result is for both to get the same after "taxes". If person A pays $24,000, $18,000 will go to the "state", and $6,000 will go to person B, and both A and B will each get $36,000. Person B can force person A to agree to this, because if they don't agree, then person A only gets $600 and person B gets $300.
If we want to get complicated, then the result should be such that the difference between person A's portion and person B's portion is $300, whether they agree or not. So if they agree, person A would pay $23,850 ($18,000 to the "state" and $5,850 to person B), and person A would get $36,150. In that case, person B would get $35,850. The difference between person A's income and person B's income is $300, just as it would have been if they had not agreed.Jeremy Grimm September 24, 2016 at 11:13 pm
The "easy" answer is that Person A pays $15,000 and person B pays $3,000 which is the equivalent of a flat tax.
Wait a minute. 20% of $60,000 is $12,000, and 20% of $30,000 is $6,000. Not $15,000 and $3,000.
Anyhow, I still like my solution where person A pays $23,850.Jeremy Grimm September 24, 2016 at 11:19 pm
Why not question the $90K - of income? - instead.
In terms of the money and wealth of the people who run our government and economy, and control and direct our lives and the lives of millions of others - $90K barely registers.knowbuddhau September 24, 2016 at 12:47 pm
I read this post as questioning the basis for progressive taxation - a rationale for taxation we sorely lack.Jeremy Grimm September 24, 2016 at 11:23 pm
I have little faith in studies like these. My first question is always, "What's a respondent?" Define Person, please.
Notice how they're treated as entirely substitutable standardized parts. That is, as if people were molecules or atoms. But try as it might, social science ain't physics. You can't just grab the nearest few people, sit them down at a keyboard to play your game (for credit? for fun? on assignment?) and then substitute their behavior for the behavior of all people everywhere.
Which people, where, under what conditions, and how many? Was the sample representative? Did the author go to prisons, ghettos, farm fields, etc. and ask them? Or was it proximity and ease of access that defined it?
It's the old "college sophomores in the lab" problem. As an undergrad psych student, I saw time and time again how people gamed the system, yet PhD candidates and professors took the data as gospel. It's only too often more a demonstration of ability to work the method, to play the academic game, than testing hypotheses.
Or I guess as coders say, GIGO.Jeremy Grimm September 24, 2016 at 12:53 pm
Also you might ask what meaning to attribute to a questionable measure of human opinions about a concept like "what is fair" in an environment completely dominated by promotion of ideas of fairness which to my mind are quite unfair.
So I agree with you and wonder why you don't pres further.Emma September 24, 2016 at 9:47 pm
This post frames inequality in terms of "fairness" and luck/pluck and treats money as some form of prize in an economic "game". I suppose this way of looking at things works up to a point as long as we look to those below us and congratulate our merit while accepting some greater luck of those above us which help rationalize our merit. But any concepts of fairness or the justice things rapidly fractures if we look past those in our own neighborhood. Riding a bubble through the slums here and elsewhere in the world it becomes very difficult to rationalize justice and merit. Looking in the other direction toward the high rises and gated estates and manifestations of wealth I can't even imagine and the fragments of the fairness or justice of things evaporates completely. The "findings" of this post do not scale - at all.
Aside from the living standard which money/wealth affords the notions of "fairness" "merit" and "luck" this post contemplates there is no discussion of other aspects of money/wealth conveniently passed over and ignored.
In our society our money-culture money/wealth is equated with merit. It packages demand for automatic respect and deference. This pecuniary one-size-fits all measure for character, intellect, excellence, creativity, leadership, even physical attractiveness undermines all these values reducing them to commodities of the marketplace.
But the ability of money/wealth to control and command the lives of others and the collective resources of society is far more pernicious. What concept of "fairness" or "justice" can justify this aspect of inequality?Jeremy Grimm September 24, 2016 at 10:47 pm
JG – Rogge covers this in his book: "World Poverty and Human Rights: Cosmopolitan Responsibilities and Reforms" ( https://en.wikipedia.org/wiki/World_Poverty_and_Human_Rights ) using the perfect example of the acquisition and management of natural resources.Adar September 24, 2016 at 5:43 pm
Your comment to mine leaves me quizzical. Though I value any comments to mine given my wondering how far I am from what is reasonable - global poverty is far beyond the complexity of anything I might address in my comments. I grant global poverty is not a problem beyond solution - but first we need to address the problems of economic philosophy used to justify and enable the gross inequalities of our world.
I have not read Rogge's book. There are far too many books I have not read and of the books i have read there are far too many I have not really understood. I am also concerned by how little this post seems to have stimulated our commentariat - an entity I have come to greatly respect.
Please elaborate on what you mean. I am concerned by this post's lack of consideration of the political power money/wealth confers - something beyond and to some degree outside considerations of poverty and the suffering inequality fosters - even celebrates.Jeremy Grimm September 24, 2016 at 11:06 pm
My poor non-economist head reels at this article. OK, it's a mind exercise to determine attitudes toward taxation. But it's completely made up – Fig. 1 Tossing a fair coin, doesn't scan for me, it's like a crap game. At the random flip of a coin, A gets twice as much as B, but where did the $18k penalty come from? Is it arbitrary? Why "could" one have to pay more, and who decides? And where did the $24k figure come from? Seems obvious to me A got twice as much, and so should pay 2 out of 3 parts of the penalty. So, re brute luck and tax policy, if inherited wealth or investment income (i.e. rent) vs. wage income is really what's meant here, please say so.Doug September 25, 2016 at 6:46 am
I view this post - at least in part - as questioning the basis for a progressive tax rate based on attitudes toward what is "fair" in turn based on a - sorry - hokey experiment to test attitudes about what is fair. To me the problem is a problem of scale. If we're talking about my place opposed to that of the fellow in the house on the hill or the house down the street - I might - on a good day - buy-in to this post's notions about "fairness". Those notions do NOT scale and they don't give any consideration to the powers of control and command which great wealth confers.
What I can accept in the way of inequality between myself and the guy on the hill does NOT scale when the guy on the hill doesn't live on the hill and only owns the house on the hill as a reminder of his lowly beginnings. He lives in a multi-million dollar 10,000 sq. ft. condominium high in New York City and a similar flat in London, and in Tai Pei and Shanghai and Paris and … and lives in none of them really. And I cannot accept the poverty and oppression found in Camden, New Jersey, Southside Chicago, … in Brazilian favelas or the slums of Seoul.Sound of the Suburbs September 25, 2016 at 3:47 am
Perhaps the failure to scale arises from the compounded flaws that, first, this post is all about "I" and speaks not at all to "we"; and, second, as your comments point out, uses money in typical fashion as the lowest common denominator determining utility and fairness when, 'we' demands a focus on the highest not lowest common denominator (and that's not mathematically or logically convenient).
Further, 'we' must be something more meaningful than a mere agglomeration of "I's". Those are at best 'thin we's' easily seduced into theoretical constructs that, in fact, have nothing to do with the actual experience of 'we' in any meaningful way.
Real, 'thick' we's comprised of actual people who persistently interact and truly know they share some to a lot of their shared fates respond to questions of brute luck, fairness and inequality together (whether democratically or otherwise or blends of ways). They don't determine their shared fates with an eye on abstract individualism grounded in lowest common denominators of 'utility'. They actually care about 'what makes most sense for us together' and balk at devices, questions - indeed swindles - aimed at tearing apart the fabric of 'we'.Sound of the Suburbs September 25, 2016 at 5:20 am
Milton Freidman, the man that wrecked the world with bad economics.
Milton Freidman's charm, energy and charisma seduced his students and global elites alike into believing he had come up with an economics that could transform the world. His students loved the idea of transforming the world through economics as it made them feel so important. Global elites loved his economics as it worked so well for them and gave a scientific backing for a world that was one that they had always wanted.
Unfortunately, there were a lot of problems with his economics that are making themselves felt today.
His economics was missing:
1) The work of the Classical Economists
2) The true nature of money and debt
3) The work of Irving Fischer in the 1930s
The Classical Economists were the first economists to look at and analyse the world around them, a world of small state, raw capitalism.
They noted how the moneyed classes were always rent seeking and looking to maintain themselves in luxury and leisure, through rent and interest. This sucked money out of the productive side of the economy, reducing the purchasing power within the nation.
They noted how the cost of living must be kept low, to keep the basic minimum wage low, so nations could be competitive in the international arena.
This knowledge is missing today.
The UK dream is to live like the idle, rich rentier, with a BTL portfolio extracting "unearned" rental income from the "earned" income of generation rent.
In the US they removed all the things that kept the cost of living down, not realising these costs would have to be covered by wages. The US now has a very high minimum wage due to soaring costs of housing, healthcare and student loans and US businesses are squealing.
The true nature of money and debt were understood in the 1930s when the Chicago Plan was put forward after a thorough investigation into the 1929 bust.
Money and debt are opposite sides of the same coin.
If there is no debt there is no money.
Money is created by loans and destroyed by repayments of those loans.
This knowledge is missing today.
Today's ubiquitous housing boom is like a printing press creating more and more money as the new mortgage debt comes into existence.
The money supply expands and pours into the real economy making everything look really good.
The only thing that is really happening is the inflation of the price of things that exist already, houses. All the debt being created is not productive investment.
The cost of living goes up and more and more money gets sucked into mortgage and rent payments sucking purchasing power out of the economy. The increasing cost of living, raises the basic minimum wage pricing labour out of international labour markets.
Irving Fisher also looked into the 1929 bust and developed a theory of economic crises called debt-deflation, which attributed the crises to the bursting of a credit bubble.
Irving Fisher looked into debt inflated asset bubbles and realised the huge danger they pose to the whole economy. This knowledge is missing today. The ubiquitous housing boom is a debt inflated asset bubble, with huge amounts of debt spread through the whole economy, when it bursts there is hell to pay.
This was first seen in Japan in 1989, its economy has never recovered.
It was repeated in the US and leveraged up with derivatives leading to 2008.
Ireland and Spain have also wrecked their economies with housing bubbles.
There are housing bubbles around the world, ready to burst and pull that nation into debt deflation.
Milton Freidman, the man that wrecked the world with bad economics.Skippy September 25, 2016 at 6:20 am
Milton Freidman worked at the Chicago School of Economics and was the global ambassador for his dire economics. This dire economics and the University of Chicago were also behind the design of the Euro, no wonder it doesn't work.
"The putative "father of the Euro", economist Robert Mundell is reported to have explained to one of his university of Chicago students, Greg Palast: "the Euro is the easy way in which Congresses and Parliaments can be stripped of all power over monetary and fiscal policy. Bothersome democracy is removed from the economic system" Michael Hudson "Killing the Host"
Their dire economics predicts the Euro-zone economies will converge into a stable equilibrium.
The reality – the economies are diverging and the poorer nations are going under. It's bad. 2008 – How did that happen?
The neoclassical economists didn't have a clue as the Minsky Moment was approaching.
Two people who did see 2008 coming (there aren't many).
Steve Keen – A whole book "Debunking Economics" on this dire neoclassical economics and the problems of not using realistic assumptions on money and debt.
Michael Hudson – Calls it "junk" economics and has written a whole book on the problems of forgetting the world of Classical Economics – Killing the Host.
Naomi Klein "Shock Doctrine" goes into the brutality of the Chicago Boys and Berkeley Mafia in implementing their economic vision. A right wing "Khmer Rouge" that descended on developing nations to wipe away left wing thinking.
It's bad and Milton Freidman was behind it.
Goes a bit deeper than just the Chicago boys imo…
Marginalist economics tends to be characterised primarily by a couple of distinct axioms that operate 'under the surface' to produce its key results. these are simplistically characterise as: the axiom of methodological individualism; the axiom of methodological instrumentalism; and the axiom of methodological equilibration, where models derived from them have ex-ante predictive power.
This is historically Epicurean philosophy, example, Epicurus wrote,
"The magnitude of pleasure reaches its limit in the removal of all pain. When such pleasure is present, so long as it is uninterrupted, there is no pain either of body or of mind or of both together."
Which is a reflection of its materialistic atomism which is basically identical with the marginalist focus on atomistic individuals and makes it an atomistic doctrine. Thorstein Veblen where he wrote in his Why is Economics Not an Evolutionary Science?:
"The hedonistic conception of man is that of a lightning calculator of pleasure and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated definitive human datum."
Which in turn is just Epicurean ontology where everything becomes objects and not subjects where Epicurean ethics involves individuals maximising pleasure and minimising pain - or, as the marginalists would put it, maximising utility and minimising disutility - it simply follows from the basic ontological position that is put forward.
Just to put a more modern perspective on it – see: Note that the patient suffering from schizophrenia tends not to answer the questions directed at him but rather responds with complete non-sequiturs.
"In his book, King lays out how economists have tried to establish supposedly disaggregated "microfoundations" with which to rest their macroeconomics upon. The idea here is that Keynesian macroeconomics generally deals with large aggregates of individuals – usually entire national economies – and draws conclusions from these while largely ignoring the actions of individual agents. As King shows in the book, however, the idea that a macro-level analysis requires such microfoundations is itself entirely without foundation. Unfortunately though, since mainstream economists are committed to methodological individualism – that is, they try to explain the world with reference to what they think to be the rules of individual behaviour – they tend to pursue this quest across the board and those who proclaim scepticism about the need for microfoundations can rarely articulate this scepticism as they too are generally wedded to the notion that aggregative behaviour can only be explained with reference to supposedly disaggregated behaviour."
You might also like – Le Bon, Gustave. The Crowd: A Study of the Popular Mind, you can get it free online.
Additionally – The Myth of the Rational Market: Wall Street's Impossible Quest for Predictable Markets – by Justin Fox
Chronicling the rise and fall of the efficient market theory and the century-long making of the modern financial industry, Justin Fox's "The Myth of the Rational Market" is as much an intellectual whodunit as a cultural history of the perils and possibilities of risk. The book brings to life the people and ideas that forged modern finance and investing, from the formative days of Wall Street through the Great Depression and into the financial calamity of today. It's a tale that features professors who made and lost fortunes, battled fiercely over ideas, beat the house in blackjack, wrote bestselling books, and played major roles on the world stage. It's also a tale of Wall Street's evolution, the power of the market to generate wealth and wreak havoc, and free market capitalism's war with itself.
The efficient market hypothesis -- long part of academic folklore but codified in the 1960s at the University of Chicago -- has evolved into a powerful myth. It has been the maker and loser of fortunes, the driver of trillions of dollars, the inspiration for index funds and vast new derivatives markets, and the guidepost for thousands of careers. The theory holds that the market is always right, and that the decisions of millions of rational investors, all acting on information to outsmart one another, always provide the best judge of a stock's value. That myth is crumbling.
Disheveled Marsupial…. Main stream econnomics is an extenuation of much deeper metaphysical and resultant ideological beliefs….
Sep 23, 2016 | www.nakedcapitalism.com...if you look at absolute inequality, as opposed to relative inequality, inequality has increased around the world. This calls into question one of the big arguments made in favor of globalization: that the cost to workers in advanced economies are offset by gains to workers in developing economies, and is thus virtuous by lowering inequality more broadly measured.
By Miguel Niño-Zarazúa, Research Fellow, UNU-WIDE, Laurence Roope, Researcher, Health Economics Research Centre, University of Oxford, and Finn Tarp, Director, UNU-WIDER. Originally published at VoxEU
Since the turn of the century, inequality in the distribution of income, together with concerns over the pace and nature of globalisation, have risen to be among the most prominent policy issues of our time. These concerns took centre stage at the recent annual G20 summit in China. From President Obama to President Xi, there was broad agreement that the global economy needs more inclusive and sustainable growth, where the economic pie increases in size and is at the same time divided more fairly. As President Obama emphasised, "[t]he international order is under strain." The consensus is well founded, following as it does the recent Brexit vote, and the rise of populism (especially on the right) in the US and Europe, with its hard stance against free trade agreements, capital flows and migration.
... ... ...
The inclusivity aspect of growth is now more imperative than ever. Globalisation has not been a zero sum game. Overall perhaps more have benefitted, especially in fast-growing economies in the developing world. However, many others, for example among the working middle class in industrialised nations, have seen their incomes stagnating in real terms for over 20 years. It is unsurprising that this has bred considerable discontent, and it is an urgent priority that concrete steps are taken to reduce the underlying sources of this discontent. Those who feel they have not benefitted, and those who have even lost from globalisation, have legitimate reasons for their discontent. Appropriate action will require not only the provision of social protection to the poorest and most vulnerable. It is essential that the very nature of the ongoing processes of globalisation, growth, and economic transformation are scrutinised, and that broad based investments are made in education, skills, and health, particularly among relatively disadvantaged groups. Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come.
See original post for references
tony , September 23, 2016 at 7:20 amcnchal , September 23, 2016 at 7:32 am
John Ross argues that the reduction in poverty has been pretty much all China. I'm also not convinced China is actually that much richer than before. A sweatshop worker has a higher income than a traditional farmer, but probably has a lower standard of living, and while the traditional farmer maintains the natural resource base, the industrial worker destroys it.Sally Snyder , September 23, 2016 at 7:35 am
Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come.
Globalization is an economic and ecological disaster. We have outsourced wealth creation to China and they do it in the most polluting way possible, turning their country into a toxic waste dump in the process.
The peasants slaving away in the cinder block hellholes of their factories churning out the crapola on Wal-Mart's shelves also get paid squat, while the leaders of the Chinese Criminal Party steal half of their effort for themselves and smuggle the loot out, to get away from the pollution. The other half gets stolen by the likes of Wal-Mart and Apple.
The elites sold globalization as something that would generate such a munificent surplus that those in harms way would be helped. It ends up as a lie, where the elites the world over help themselves to the stolen sweat of the lowest people in society, with nothing left over, except for a polluted planet.
Sustainable economic growth is an oxymoron.tegnost , September 23, 2016 at 10:15 am
Here is an article that looks at the relationship between wealth and ethnicity/race in the United States:
The notable presence of public policies that exacerbate racial and economic inequality and the lack of will by Washington to change the system mean that the ethnic/racial wealth gap is becoming more firmly entrenched in society.timotheus , September 23, 2016 at 2:26 pm
Good article but standard policy prescription…
"broad based investments are made in education, skills, and health, particularly among relatively disadvantaged groups. Only in this way will the world experience sustained – and sustainable – economic growth and the convergence of nations in the years to come."
…I guess if the skills were sustainable low chemical and diverse farming in 5 acre lots or in co-ops then I might have less complaint, however the skills people apparently are going to need are supervising robots and going to non jobs in autonomous vehicles and being fed on chemical mush shaped like things we used to eat, a grim dystopia.
Yesterday I had the unpleasant experience of reading the hard copy nyt wherein kristof opined that hey it's not so bad, extreme poverty has eased (the same as in this article, but without this article's Vietnamese example where 1 v. 8 becomes 8 v. 80),ignoring the relative difference while on another lackluster page there was an article saying immigrants don't take jobs from citizens which had to be one of the most thinly veiled press releases of some study made by some important sounding acronym and and, of course a supposed "balance" between pro and anti immigration academics. because in this case, they claim we're relatively better off.
So there you have it, it's all relative. Bi color bird cage liner, dedicated to the ever shrinking population of affluent/wealthy who are relatively better off as opposed to the ever increasing population of people who are actually worse off…There was also an article on the desert dwelling uighur and their system of canals bringing glacier water to farm their arid land which showed some people who were fine for thousands of years, but now thanks to fracking, industrial pollution and less community involvement (kids used to clean the karatz, keeping it healthy) now these people can be uplifted into the modern world(…so great…) that was reminiscent of the nyt of olde which presented the conundrum but left out the policy prescription which now always seems to be "the richer I get the less extreme poverty there is in the world so stop your whining and borrow a few hundred thousand to buy a PhD "
http://www.nytimes.com/2016/09/22/world/asia/china-xinjiang-turpan-water.htmlsgt_doom , September 23, 2016 at 4:47 pm
Yes, those who "have seen their incomes stagnating in real terms for over 20 years" are indeed experiencing "considerable discontent." But this anodyne phrasing masks the reality of entire communities seeing their means of livelihood ripped out and shipped across the globe. This rhetoric makes it sound like, Oh those prosperous American workers can't buy as many luxuries now, boo hoo, when the standard practice from NAFTA on of globalization-as-corporate-welfare has meant real impoverishment for hundreds of thousands of individuals, entire cities and large chunks of whole states. As Lambert always says, Whose economy?
Great comments, timotheus , great comments!
Three reading recommendations for anyone who doesn't grasp your sentiment, shared by millions: Sold Out , by Michelle Malkin Outsourcing America , by Ron Hira America: Who Stole the Dream? , by Donald L. Barlett Reply ↓
Sep 22, 2016 | www.nakedcapitalism.com
"The work is there," Wangerin tells me, "they just don't want to pay."
A one-time adjunct and contract lecturer myself, I decide to look into the matter more deeply. Are Wangerin's contentions particular to her own experience or are they more widely shared across the United States? And if they are, what does this mean for higher education?
Information, as it turns out, isn't hard to come by. I write one message to a long-time Twitter contact who also happens to be a contingent faculty member and my inbox explodes. As I sort through my e-mails a picture of higher education begins to emerge and, far removed from the conventional image of pipe-smoking professors in book-lined studies, it is largely one of exploitation and control.
"I am currently teaching one class, and in all honesty, unemployment benefits pay double that," a community college lecturer who wished to remain anonymous told me, "I would be better off not teaching at all."
An art professor from Ohio writes in to tell me that she's just thrown in the towel after more than a decade of work: "My class was canceled two weeks before classes start and I decided to get my Alternative Educator License and teach at the high school level."
I hear of a lecturer whose courses were allocated to someone else after he spoke out about a contract clause that demanded access to his DNA; about an adjunct who could not afford to pay property taxes on the family home after 20 years of teaching; and of someone who was fired after a student complaint that he was a "black racist." "Whatever that means," the adjunct reporting the incident grumbles.
... ... ...
"Education claims to ameliorate class stratification, but it actually reinforces it," says Alex Kudera, who has taught college writing and literature off the tenure track for over twenty years.
It's not hard to see what he means. The average adjunct lecturer receives only $2700 per course taught. While that amount is sometimes portrayed as easy money, in addition to time spent in class lecturers must also prepare course content, create exams and assignments, grade, advise students, and, of course, travel from campus to campus. When academics are employed on a casual basis, such activity is not compensated, meaning that the true rate of pay is often around the minimum wage.Jim Haygood , September 21, 2016 at 6:36 amNorb , September 21, 2016 at 9:02 am
'Academics may enjoy more intellectual freedom than many workers, but they also have a duty that does not generally fall on others: to research and to publish the results of that research regardless of how unpopular it may be.'
Proposal for a joint Econ/Law paper
Thesis : US academia is a Racketeer Influenced and Corrupt Organization
Synopsis : using de facto antitrust immunity garnered by its politically connected administrators, academia relentlessly hikes tuitions as well as its intake of governmental funding.
Via false and deceptive marketing, students are promised nonexistent benefits from earning a degree, then subjected to a loan sharking racket which indebts them for life, at inflated cartelized prices, without informing them of the non-dischargeability of those debts.
Systemic marketing fraud is further enabled by glossy alumni magazines touting the achievements of tenured faculty, without divulging that a majority of classes are taught by adjuncts.
Recommendations : RICO the entire industry; consolidate it; convict the managers; reopen it under new leadership (former politicians banned for life), under new legislation prohibiting marketing fraud and loan sharking.ProNewerDeal , September 21, 2016 at 6:48 am
Seems like the logical solution and the only way to avoid actual collapse of the institutions. This higher education scam can only continue until parental funds are tapped out, which is this current generation of collage age families. New entrants into the workforce, on whole, will not be able to save enough, or have job security to even consider college for their children.
The social contract that the elite are forging ahead with is the bond and willingness to be scammed. It is amazing to see their disbelieving expressions when any form of resistance is encountered. The rational response would be to ease up on the exploitation, but doesn't seem to be happening. Other forces will have to be brought to bear.diptherio , September 21, 2016 at 11:42 am
"non-tenure track teaching staff – commonly referred to as adjuncts and contingent faculty – now make up approximately 70% of all teaching staff in American higher education. This means that roughly three out of every four courses a student takes are taught by someone without job security who is working on minimal pay."
Is this actually true? If say some adjuncts are full-time other job & teach only 1 course, some adjuncts are perma-temp FT & teach ~4 courses, & tenure-track teach ~4 courses; then you could have a situation where say
1 portion of teachers that are adjuncts. The article mentioned 70% of ANY teachers teaching at least 1 course in a given semester at Universities are adjuncts
2 portion of courses taught that are taught by adjuncts: A lower number, say 40% of the courses taught at Univs are taught by adjuncts, due to having tenure-track Profs teaching ~4 courses & adjuncts teaching ~1 course each.
The author seems to make a logic error assuming that metric #2 is the same as #1. It may happen to be, but doesn't necessarily need to be.
What actually is the metric #2 number?
I have empathy for the perma-temp FT adjuncts, IMHO it is no different than perma-temp FT workers in other occupations, despite the prestige of Unviersities perhaps somewhat masking its practice.MooCows , September 21, 2016 at 1:18 pm
You're right that we don't have enough info to know #2 from the article, but I also don't know that you've got it quite right.
If full time instructors are half-and-half tenure/tenure-track and adjunct (for instance), that would mean that 30% of profs are tenure and 30% are full time adjuncts. That would leave another 40% of the total that are less-than-full time adjuncts. So you'd have a majority of classes being taught by adjuncts. But, of course, we need more info to figure it out for sure, but it seems more likely to me, based on my experience (~ half my classes were taught by adjuncts during my college days, which were in the late nineties-early aughties) that adjuncts represent a firm majority of both personnel and classroom hours.upstater , September 21, 2016 at 8:02 am
I'm not an adjunct but I'm a non-tenure track faculty member in the Electrical and Computer Engineering department at a very large university. I teach 8 technical courses a year (3/3/2) while the tenured faculty teach 3 or 4 (2/1/0). We also have adjuncts who typically teach one course a semester.
I bring this up because it could be that, from the author's perspective, I still fall into the adjunct category because my contract must be renewed yearly and the administration can choose not to renew without cause. I would say that non-tenure track faculty are responsible for about 50% of the courses in this department but, being in engineering, our department is small relative to something in the College of Liberal Arts.PlutoniumKun , September 21, 2016 at 8:03 am
This fits in, sort of, to this posting… the dean of the B-school, with a $500K salary, a supposed expert on "risk management" at Syracuse University, busted in a prostitution sting:
SU dean arrested in prostitution bust told students: 'Nothing is worth your integrity'
I guess he'll have to hire out at Goldman - aren't they the ones with the running tab at a NYC escort service?
Plenty of adjuncts at Syracuse University, where the tuition is $55K/year.Anon , September 21, 2016 at 1:25 pm
More of a question here, as I see the author teaches in Ireland. If Dr. Fuller comes below the line I'd be interested to hear her thoughts on whether the same process is infecting Irish and other European universities. I know if at least one college administrator in Itelamd who loudly proclaims the superiority if the US system. One can only wonder why…tony , September 21, 2016 at 9:52 am
Superior in what way? Science? Technical research? Economic research?
For the US undergad, adjunct instructors is the norm. (My local community college has 70% adjunct instructors.). My local University has slightly less, but uses more experienced gad students to guide less experienced grad students. In any event, the product/experience has been cheapened.Robert Dannin , September 21, 2016 at 10:10 am
Nearly half of the nation's undergraduates show almost no gains in learning in their first two years of college, in large part because colleges don't make academics a priority, a new report shows.
Report: First two years of college show small gains
Morris Berman has pointed out that US college has become a social rather than a learning experience. I suspect this cultural shift has made academics themselves replaceable. Does it really matter who babysits these four-year party retreats?SpringTexan , September 21, 2016 at 10:46 am
i was an adjunct professor of urban studies at new york university for 12 years. the entire academic department was staffed by adjuncts and part-time instructors except for the chairman, who was ironically a tenured professor of labor history.
my classes were always bursting to seams, we studied contemporary issues and were focusing on the sub-prime crisis back in 1995. one class toward the end of my lecture, i wrote the math for my salary on the blackboard. it came down to twenty-five cents per student per class, a tiny fraction of their per semester tuition. a student from the business school remarked that i could probably make more panhandling the same hours outside in washington square park. everyone laughed. by the time i got back to the department less than 20 minutes later, the chair invited me into his office. "don't talk about salary issues with your students. GOT IT!" someone had ratted me out. guess i spoiled their day. easier to discuss poor people in the outer boroughs than someone on your doorstep. in the following years i spent my spare time organizing the first adjunct faculty union. door-to-door, button-holing adjuncts on the sidewalk or in the hallways. the less experience they had, the more reluctant they were to get involved for fear of ruining their chances for a F/T tenure track position. they wouldn't listen, when i explained, once an adjunct, always an adjunct. after five more years, they began to see the light and wanted union. then the uaw swooped in, demanding my lists and fealty. they knew nothing about activism on an urban campus and didn't want to listen. when i tried to participate in meetings, i was accused of disrespecting the regional organizer who commuted to the union hqtrs. from her home in litchfield, ct. at one meeting they told us who our "friends" were on campus. yep, heading the list was my dept chair, the good-old red-diaper baby himself. finally, there was a vote, the union won a shitty package that deliberately excluded any new hires. end of the semester the dept chair sends me an email, you're fired! meet the new boss, same as the old boss.Uahsenaa , September 21, 2016 at 11:07 am
Thanks. Wish every adjunct would teach this if this is appropriate to the class. (and mention it in passing if it's not)ProNewerDeal , September 21, 2016 at 1:15 pm
I do this with my students as well, noting that about 10% of their tuition goes to me, while the rest goes to the University.
I also like to point out that they pay six six times the tuition compared to what the people running the university did, and that's before you take into consideration that they didn't have to pay an extra 1K in "fees."
If they simply cut me a check for the percentage of their tuition that goes to the class, I'd make upwards of 300K a year.flora , September 21, 2016 at 10:20 am
Thanks for sharing your story. I am sorry to hear that you were fired, apparently for exercising you human & Constitutional right to labor-organize.
The fact that your boss was "a labor history Prof" is worst-tier hypocrisy & irony. Reminds me of Constitutional Law Prof 0bama, who continually defecates on the Constitution with his assasination of US citizens overseas program, NSA bulk spying, etc.
I hope you found an alternative job that had better working conditions & a fairer boss.NoBrick , September 21, 2016 at 10:26 am
This essay is spot-on in every respect. Thanks for posting.Benedict@Large , September 21, 2016 at 10:32 am
"Tin soldiers and Nixon coming, We're finally on our own. This summer I hear the drumming, Four dead in Ohio." CSNY
It seems the "social unrest" stemmed from the collective consciousness permitted by
unrestrained objectivity. The master-client relationship was overwhelmed by repeated
gestures that breached the ordained demeandor of prostrate obedience.
The balance between confusion and illumination (consciousness) must be modified!
After all, successful marketing/propaganda begins where consciousness ends…beans , September 21, 2016 at 1:41 pm
I was fortunate enough (a long time ago) to attend an Ivy League university, with my brother attending the same two class years ahead of me. I became frustrated at one point, finding my courses to always be a number of degrees more abstract in what they were teaching than I had anticipated, and sought my brother's advice. "Brown," he said, "doesn't make engineers; they make graduate students." As I would later come to say, we were not taught to be mathematicians or chemists or historian; we were taught to think like them. I can't tell you how valuable that approach to education has turn out to be for me, both professionally and personally, as I've made my way through life. These are things you don't unlearn.
I think about this whenever I read articles (like this one) about the direction of education today, especially but not limited to the college level. These experiences are being lost as we turn our schools into trade schools and our students into mere mechanics; OK at any situation for which they have been specifically trained, but kind of useless for those when that has not been the case. Our elites tell us that this is what the market wants, but I never see any of them actually asking the students, and when I check back at the Ivy, I find that the elites still teach their own the way I was taught. The answer is clear. we are deliberately being divided by education into a world where the children of the elites, whether they have earned it or not, will find no intellectual competition from the classes below them. The Poors really will be stupid, but it will be intentional, and built in to the Nature and Nurture the elites have allowed them to have.Punxsutawney , September 21, 2016 at 10:33 am
Excellent comment, Benedict. The art of teaching people how to think instead of what to think – the educator who can do this is invaluable, now more than ever.Bitman , September 21, 2016 at 10:59 am
I might add as well, that many of these adjuncts came out of industry, having lost well paying jobs as operations were moved overseas.
Now working part-time for less than 1/2 of what they were making, if they are lucky!David , September 21, 2016 at 11:51 am
Few points to add to this excellent article:
1. The shift needed to understand the modern University is to think of it not as an institution of higher learning, but as a processing plant – it produces "students" and "graduates, and adjuncts are the staff assigned the role of processors. The model is industrial. Elite institutions of all sorts have conspired with the University to require professional credentials for more and more of the occupations they staff, in order to assure large flows of people pass through. This also means that larger populations are drawn into the debt system and thereby depoliticized.
2. The most important role an adjunct can play is to bring the issues associated with the industrializing of the university into the classroom. Make students aware of the labor situation, and what they're buying. Explain to them that adjuncts, like nurses in hospitals, are expected to overperform, and that their overperformance is what props up a diseased, corrupt institution. It's very, very important for adjuncts not to get caught up in the official institutional morality that guilts them into overperformance (hospitals are probably the leader in this respect). How much overperformance you indulge in is a personal decision, in my view, but it should never be taken on uncritically.
My own individualized response to this system has been to take on as many classes as I humanly can, so that a) my wages actually compare to those of my tenured colleagues, and b) to demonstrate to students by so doing that the University does not give a shit about their education. No one pays attention to how many courses I teach or how prepared I am to teach them. I've taught hundreds of courses (no exaggeration) and no one ever supervises me or even checks in (It's happened twice in 25 years) .Fact is, I happen to be prepared, but I stress that that is not at all a concern of the University. I've been asked to teach courses in subjects where I have absolutely no expertise, but since I'm teaching undergrads, know how to read, construct a syllabus, and make compelling arguments, I get by, sometimes even comfortably. Many get by this way. But it shouldn't be confused with providing student a good education. And I'm getting too old to maintain the pace, as we all do.
According to the evaluation numbers I'm somehow still providing students with an above-average experience in their courses, but I do so full in the knowledge that I WILL NOT overperform without making the students aware that that is what unfairly is expected of me, even though I'm given none of the resources tenured faculty are given. I cancel classes sometimes, for the express purpose of the fact I need a break (I don;t get sabbaticals). They almost invariably understand. They also are sometimes infuriated that this state of affairs persists, though like adjuncts they fear making waves.
3. Tenured faculty are the enemy (unfortunately) or PT faculty. Eevn the labor activists among them have different class interests than PT faculty at most large universities. Full-time faculty are dominated by the administration and feel themselves to be under siege, but one response to this is that they dominate PT faculty as a means of freeing themselves as much as possible from the industrial-style teaching of large University life. As a rule, they are not willing to equitably share the burdens PT faculty face, and there's no getting around that.reslez , September 21, 2016 at 2:08 pm
Having come up through the academic process and seeing the handwriting on the wall deciding to opt out of trying for an academic career, I think I can comment a bit.
First, no one is forcing these folks to be adjuncts. It's their choice.
The real issue is one of information and honesty or at least reality over hopeful expectations. When I was an undergrad my professors encouraged me to go to grad school and were pleased when I decided to pursue a Ph.D. They all implied, if not said, that I would be able to then get an academic job. I think they really believed this, but the reality was far different even at that time. By the time I graduated, unemployment in my field was at an all time high. The reality was that only 20-25% of graduates would get "potentially permanent" positions in either academia or research. So, when I finally graduated I posted a letter for the undergraduates informing them of the future in the field. Needless to say the faculty were taken aback, but when they checked they found that my data was correct.
Do these adjuncts believe that a "potentially permanent" position awaits them if they keep going on their present path? Are they being told that by the universities? If so, then they are being deceived. Or, is this just a case of blind optimism and not wanting to give up their dream? In this case, it goes back to being their choice. Or do they want a career as a serial adjunct, and just want the job to be better? The this is just typical employer/employee bargaining and back to their choice.
So, they can agitate for more money, security, authority, etc. which is what they appear to be doing, or they can leave the field for one that is more lucrative, which is what the vast majority of us have done.
http://canonicalthoughts.blogspot.comDavid , September 21, 2016 at 2:44 pm
It's their "choice" to be an adjunct. Really? If there was a true choice wouldn't the vast majority "choose" to be full-time faculty with benefits and equivalent pay? Free marketeers keep using the word "choice", but the choice they offer is usually one where you get to "choose" between homelessness and and marginal survival at $11 an hour. A mighty impressive choice!
Do they "believe" they're going to get a full-time position, because realistic career expectations wouldn't help universities get cheap grad student labor?
Or maybe they end up in grad school like a lot of people I know - because the job market was so terrible that the idea of staying in school for another couple of years was their best "choice" at that point in time? Since the media constantly tells us education is always good, and those who don't have it will fall behind, the idea that more education isn't always better comes as a foreign idea to a lot of 22 year olds. An assembly line of cheap grad student labor then gets funneled into adjunct teaching.diptherio , September 21, 2016 at 11:59 am
Yes, their choice. They can abandon the academic pursuit and choose another career. Most people with advanced degrees do just that.
I agree that their are way too many grad students and they become the adjuncts that are desperate for full time jobs. But grad students serve an important purpose as cheap labor, particularly in research universities. Why would they want to give that up? Again, this is an issue of information, which is why I posted my letter. If undergrads knew the actual prospects for grad students after they graduate perhaps they would choose a different path. But, grad school and academia are extremely attractive pursuits for many people so they readily put up with all the impediments in the hope of making it as a professor. The reality is that academia has become an avocation, a hobby, rather than a vocation for most people.KYrocky , September 21, 2016 at 1:15 pm
Here's a thought: maybe if our education system weren't built around fear, we'd be able to present a more united front.
Consider: instructors are tasked with judging students and, if they grade on the curve, punishing some of them regardless of their skill or effort…and often enough this sorting is accomplished through BS methods like high-stakes, time-limited testing. So yeah, sometimes students get resentful of the instructors who get seen as the enemy. And so, they take it out be leaving a bad review.
The reviews, just like the tests and grading systems, are being used to sort and punish profs. Bad reviews from students can be devastating financially and career-wise, as detailed in the article. So profs get scared and therefore fail to ask much of the students, so as to come off as a "nice guy/gal." The students live in fear and don't learn, and the teachers live in fear and don't teach. But what if we did things differently?
What if the point of a review process was to improve teaching methods and get feedback from students about what works and what doesn't? What if reviews were done in a way aimed at supporting instructors, rather than censuring them? And what if students were treated the same way. What if, instead of a reprimand and a shaming, students were given support and encouragement (more like Evergreen and Sarah Lawrence)?
Maybe then we'd stop being afraid of each other and be able to support eachother as we demand an answer to the question of how it is that tuitions keep going up while faculty pay keeps going down. Demand in no uncertain terms that the top Admins take major pay cuts or step down so their secretary can take over for them (with a hefty pay raise, of course, but something reasonable ).
That's my two sense.templar555510 , September 21, 2016 at 3:02 pm
We are looking at the decades long pursuit of making higher education "more like business". The mantra of privatization and that attitude that segments of our society which served the public: schools, universities, hospitals, departments of governments at all levels, etc., would all be better if they were run as businesses has been proven false a million times over.
University Boards have, for decades, been stacked with advocates of market based systems which have been imposed on institutions which formerly served their students and the public. Students are no longer viewed as students but as revenue streams. Public funding for higher education has similarly declined as the cult of the marketplace including that institutions serving a public purpose needed to be more self funding. Because forcing them to have more skin in the game would force them to trim the fat and innovate. You know, like Walmart.
For decades, political contributions bought politicians who in turn mandated that federal student loans had to be administered by banks, thereby siphoning off billions, if not tens of billions, of dollars that could have otherwise gone to students and universities. The politicians also permit these banks to gouge students on interest rates, to pass laws making it harder or impossible to discharge loan debt through bankruptcy, or to refinance their loans. None of these abuses of students served a public interest. All of these abuses exemplify our current model for how to apply business practices to higher education.
In the business sense, the only concern a University has for its product is its relationship to the revenue stream. A little like the charter school model. Universities have a need for instructors, and in applying the methods of successful business as it is defined today they will seek to fill that labor need at the absolute lowest cost achievable. Those who long for the past are out of luck; universities are never going back. Faculty pay will keep going down as long there are new warm bodies to take the place of those who don't like it, and adjuncts will be squeezed for all that can be wrung from them.
Adjuncts are nameless, faceless, and entirely forgettable as far the University administration is concerned. The administration will blow as much smoke up adjunct's asses as needed to keep their slots filled. Adjuncts are in an abusive relationship, whether they understand it or not. The abuse is never going to end, as the obstacles are not just the administration and the university Board, but the politicians, the big donors, and the attitudes of our society at large.Jim , September 21, 2016 at 3:01 pm
What you have so precisely described is yet another Ponzi scheme. Of course it is because that is what post capitalist Capitalism is .
Think of it like this : there is approximately 7 billion of us living on planet Earth and between us we can and do produce enough food, clothing and could produce enough housing ( that's another matter ) for all 7 billion.
So the problem for the capitalist is how do I create the illusion of scarcity upon which Capitalism works. Answer : grab by any and every means possible – legal and illegal , it's all the same thing – the lions share of what already exists ; in other words steal it . That's the 1 % .
And then con the 99% into believing resources are scarce etc, etc and bending to the will of the 1 %.
Most of us continue to hope that we will eventually find a secure/meaningful position somewhere in one of the major institutions that make-up our society.
This is a false hope–especially in higher education. The University, the large corporation, the particular governmental agency, are now beyond internal reform and we all know this in our bones.
Somehow we must individually and collectively find the courage and creativity to move, maneuver and survive outside of these institutions–trading in the fear and anxiety of trying to succeed in dying institutions for the fear and anxiety which comes with creating new institutions.
Mar 04, 2015 | AlterNet
Inside the trauma of globalization.
Novelist Rana Dasgupta recently turned to nonfiction to explore the explosive social and economic changes in Delhi starting in 1991, when India launched a series of transformative economic reforms. In Capital: The Eruption of Delhi, he describes a city where the epic hopes of globalization have dimmed in the face of a sterner, more elitist world. In Part 1 of an interview with the Institute for New Economic Thinking, Dasgupta traces a turbulent time in which traditional ways of life are dissolving as a new class of entrepreneur-warriors are wielding unprecedented power - and changing the global landscape.
Lynn Parramore: Why did you decide to move from New York to Delhi in 2000, and then to write a book about the city?
Rana Dasgupta: I moved to be with my partner who lived in Delhi, and soon realized it was a great place to have landed. I was trying write a novel and there were a lot of people doing creative things. There was a fascinating intellectual climate, all linked to changes in society and the economy. It was 10 years since liberalization and a lot of the impact of that was just being felt and widely sensed.
There was a sense of opportunity, not any more just on the part of business people, but everyone. People felt that things were really going to change in a deep way - in every part of the political spectrum and every class of society. Products and technology spread, affecting even very poor people. Coke made ads about the rickshaw drivers with their mobile phones -people who had never had access to a landline. A lot of people sensed a new possibility for their own lives.
Amongst the artists and intellectuals that I found myself with, there were very big hopes for what kind of society Delhi could become and they were very interested in being part of creating that. They were setting up institutions, publications, publishing houses, and businesses. They were thinking new ideas. When I arrived, I felt, this is where stuff is happening. The scale of conversations, the philosophy of change was just amazing.
LP: You've interviewed many of the young tycoons who emerged during Delhi's transformation. How would you describe this new figure? How do they do business?
RD: Many of their fathers and grandfathers had run significant provincial businesses. They were frugal in their habits and didn't like to advertise themselves, and anyway their wealth remained local both in its magnitude and its reach. They had business and political associates that they drank with and whose weddings they went to, and so it was a tight-knit kind of wealth.
But the sons, who would probably be now between 35 and 45, had an entirely different experience. Their adult life happened after globalization. Because their fathers often didn't have the skills or qualifications to tap into the forces of globalization, the sons were sent abroad, probably to do an MBA, so they could walk into a meeting with a management consultancy firm or a bank and give a presentation. When they came back they operated not from the local hubs where their fathers ruled but from Delhi, where they could plug into federal politics and global capital.
So you have these very powerful combinations of father/son businesses. The sons revere the fathers, these muscular, huge masculine figures who have often done much more risky and difficult work building their businesses and have cultivated relationships across the political spectrum. They are very savvy, charismatic people. They know who to give gifts to, how to do favors.
The sons often don't have that set of skills, but they have corporate skills. They can talk finance in a kind of international language. Neither skill set is enough on its own by early 2000's: they need each other. And what's interesting about this package is that it's very powerful elsewhere, too. It's kind of a world-beating combination. The son fits into an American style world of business and finance, but the thing about American-style business is that there are lots of things in the world that are closed to it. It's very difficult for an American real estate company or food company to go to the president of an African country and do a deal. They don't have the skills for it. But even if they did, they are legally prevented from all the kinds of practices involved, the bribes and everything.
This Indian business combination can go into places like Africa and Central Asia and do all the things required. If they need to go to market and raise money, they can do that. But if they need to sit around and drink with some government guys and figure out who are the players that need to be kept happy, they can do that, too. They see a lot of the world open to themselves.
LP: How do these figures compare to American tycoons during, say, the Gilded Age?
RD: When American observers see these people they think, well, we had these guys between 1890 and 1920, but then they all kind of went under because there was a massive escalation of state power and state wealth and basically the state declared a kind of protracted war on them.
Americans think this is a stage of development that will pass. But I think it's not going to pass in our case. The Indian state is never going to have the same power over private interests as the U.S. state because lots of things have to happen. The Depression and the Second World War were very important in creating a U.S. state that was that powerful and a rationale for defeating these private interests. I think those private interests saw much more benefit in consenting to, collaborating in, and producing a stronger U.S. state.
Over time, American business allied itself with the government, which did a lot to open up other markets for it. In India, I think these private interests will not for many years see a benefit in operating differently, precisely because continents like Africa, with their particular set of attributes, have such a bright future. It's not just about what India's like, but what other places are like, and how there aren't that many people in the world that can do what they can do.
LP: What has been lost and gained in a place like Delhi under global capitalism?
RD: Undeniably there has been immense material gain in the city since 1991, including the very poorest people, who are richer and have more access to information. What my book tracks is a kind of spiritual and moral crisis that affects rich and poor alike.
One kind of malaise is political and economic. Even though the poorest are richer, they have less political influence. In a socialist system, everything is done in the name of the poor, for good or for bad, and the poor occupy center stage in political discourse. But since 1991 the poor have become much less prominent in political and economic ideology. As the proportion of wealth held by the richest few families of India has grown massively larger, the situation is very much like the break-up of the Soviet Union, which leads to a much more hierarchical economy where people closest to power have the best information, contacts, and access to capital. They can just expand massively.
Suddenly there's a state infrastructure that's been built for 70 years or 60 years which is transferred to the private domain and that is hugely valuable. People gain access to telecommunication systems, mines, land, and forests for almost nothing. So ordinary people say, yes, we are richer, and we have all these products and things, but those making the decisions about our society are not elected and hugely wealthy.
Imagine the upper-middle-class guy who has been to Harvard, works for a management consultancy firm or for an ad agency, and enjoys a kind of international-style middle-class life. He thinks he deserves to make decisions about how the country is run and how resources are used. He feels himself to be a significant figure in his society. Then he realizes that he's not. There's another, infinitely wealthier class of people who are involved in all kinds of backroom deals that dramatically alter the landscape of his life. New private highways and new private townships are being built all around him. They're sucking the water out of the ground. There's a very rapid and seemingly reckless transformation of the landscape that's being wrought and he has no part in it.
If he did have a say, he might ask, is this really the way that we want this landscape to look? Isn't there enormous ecological damage? Have we not just kicked 10,000 farmers off their land?
All these conversations that democracies have are not being had. People think, this exactly what the socialists told us that capitalism was - it's pillage and it creates a very wealthy elite exploiting the poor majority. To some extent, I think that explains a lot of why capitalism is so turbulent in places like India and China. No one ever expected capitalism to be tranquil. They had been told for the better part of a century that capitalism was the imperialist curse. So when it comes, and it's very violent, and everyone thinks, well that's what we expected. One of the reasons that it still has a lot of ideological consensus is that people are prepared for that. They go into it as an act of war, not as an act of peace, and all they know is that the rewards for the people at the top are very high, so you'd better be on the top.
The other kind of malaise is one of culture. Basically, America and Britain invented capitalism and they also invented the philosophical and cultural furniture to make it acceptable. Places where capitalism is going in anew do not have 200 years of cultural readiness. It's just a huge shock. Of course, Indians are prepared for some aspects of it because many of them are trading communities and they understand money and deals. But a lot of those trading communities are actually incredibly conservative about culture - about what kind of lifestyle their daughters will have, what kinds of careers their sons will have. They don't think that their son goes to Brown to become a professor of literature, but to come back and run the family business.
LP: What is changing between men and women?
RD: A lot of the fallout is about families. Will women work? If so, will they still cook and be the kind of wife they're supposed to be? Will they be out on the street with their boyfriends dressed in Western clothes and going to movies and clearly advertising the fact that they are economically independent, sexually independent, socially independent? How will we deal with the backlash of violent crimes that have everything to do with all these changes?
This capitalist system has produced a new figure, which is the economically successful and independent middle-class woman. She's extremely globalized in the sense of what she should be able to do in her life. It's also created a set of lower-middle-class men who had a much greater sense of stability both in their gender and professional situation 30 years ago, when they could rely on a family member or fellow caste member to keep them employed even if they didn't have any marketable attributes. They had a wife who made sure that the culture of the family was intact - religion, cuisine, that kind of stuff.
Thirty years later, those guys are not going to get jobs because that whole caste value thing has no place in the very fast-moving market economy. Without a high school diploma, they just have nothing to offer. Those guys in the streets are thinking, I don't have a claim on the economy, or on women anymore because I can't earn anything. Women across the middle classes - and it's not just across India, it's across Asia -are trying to opt out of marriage for as long as they can because they see only a downside. Remaining single allows all kinds of benefits – social, romantic, professional. So those guys are pretty bitter and there's a backlash that can become quite violent. We also have an upswing of Hindu fundamentalism as a way of trying to preserve things. It's very appealing to people who think society is falling apart.
LP: You've described India's experience of global capitalism as traumatic. How is the trauma distinct in Delhi, and in what ways is it universal?
RD: Delhi suffers specifically from the trauma of Partition, which has created a distinct society. When India became independent, it was divided into India and Pakistan. Pakistan was essentially a Muslim state, and Hindis and Sikhs left. The border was about 400 kilometers from Delhi, which was a tiny, empty city, a British administrative town. Most of those Hindis and Sikhs settled in Delhi where they were allocated housing as refugees. Muslims went in the other direction to Pakistan, and as we know, something between 1 and 2 million were killed in that event.
The people who arrived in Delhi arrived traumatized, having lost their businesses, properties, friends, and communities, and having seen their family members murdered, raped and abducted. Like the Jewish Holocaust, everyone can tell the stories and everyone has experienced loss. When they all arrive in Delhi, they have a fairly homogeneous reaction: they're never going to let this happen to them again. They become fiercely concerned with security, physical and financial. They're not interested in having nice neighbors and the lighter things of life. They say, it was our neighbors that killed us, so we're going to trust only our blood and run businesses with our brother and our sons. We're going to build high walls around our houses.
When the grandchildren of these people grow up, it's a problem because none of this has been exorcised. The families have not talked about it. The state has not dealt with it and wants to remember only that India became independent and that was a glorious moment. So the catastrophe actually becomes focused within families rather than the reverse. A lot of grandchildren are more fearful and hateful of Muslims than the grandparents, who remembered a time before when they actually had very deep friendships with Muslims.
Parents of my generation grew up with immense silence in their households and they knew that in that silence was Islam - a terrifying thing. When you're one year old, you don't even know yet what Islam is, you just know that it's something which is the greatest horror in the universe.
The Punjabi businessman is a very distinct species. They have treated business as warfare, and they are still doing it like that 70 years later and they are very good at it. They enter the global economy at a time when it's becoming much less civilized as well. In many cases they succeed not because they have a good idea, but because they know how to seize global assets and resources. Punjabi businessmen are not inventing Facebook. They are about mines and oil and water and food -things that everyone understands and needs.
In this moment of globalization, the world will have to realize that events like the Partition of India are not local history anymore but global history. Especially in this moment when the West no longer controls the whole system, these traumas explode onto the world and affect all of us, like the Holocaust. They introduce levels of turbulence into businesses and practices that we didn't expect necessarily.
Then there's the trauma of capitalism itself, and here I think it's important for us to re-remember the West's own history. Capitalism achieved a level of consensus in the second half of the 20th century very accidentally, and by a number of enormous forces, not all of which were intended. There's no guarantee that such consensus will be achieved everywhere in the emerging world. India and China don't have an empire to ship people off to as a safety valve when suffering become immense. They just have to absorb all that stuff.
For a century or so, people in power in Paris and London and Washington felt that they had to save the capitalist system from socialist revolution, so they gave enormous concessions to their populations. Very quickly, people in the West forgot that there was that level of dissent. They thought that everyone loved capitalism. I think as we come into the next period where the kind of consensus has already been dealt a huge blow in the West, we're going to have to deal with some of those forces again.
LP: When you say that the consensus on capitalism has been dealt a blow, are you talking about the financial crisis?
RD: Yes, the sense that the nation-state - I'm talking about the U.S. context - can no longer control global capital, global processes, or, indeed, it's own financial elite.
It's a huge psychological dent in people's faith in the system. I think what's going to happen in the next few years is huge unemployment in the middle class in America because a lot of their jobs will be outsourced or automated. Then, if you have 30-40 percent unemployment in America, which has always been the ideological leader in capitalism, America will start to re-theorize capitalism very profoundly (and maybe the Institute of New Economic Thinking is part of that). Meanwhile, I think the middle class in India would not have these kinds of problems. It's precisely because American technology and finance are so advanced that they're going to hit a lot of those problems. I think in places like India there's so much work to be done that no one needs to leap to the next stage of making the middle class obsolete. They're still useful.
Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. Follow her on Twitter @LynnParramore.
Sep 16, 2016 | www.theamericanconservative.com
...Arriving on Capitol Hill to repair ties between Trump and party elites, Gov. Mike Pence was taken straight to the woodshed.
- John McCain told Pence that Putin was a "thug and a butcher," and Trump's embrace of him intolerable.
- Said Lindsey Graham: "Vladimir Putin is a thug, a dictator … who has his opposition killed in the streets," and Trump's views bring to mind Munich.
- Putin is an "authoritarian thug," added "Little Marco" Rubio.
What causes the Republican Party to lose it whenever the name of Vladimir Putin is raised?
Putin is no Stalin, whom FDR and Harry Truman called "Good old Joe" and "Uncle Joe." Unlike Nikita Khrushchev, he never drowned a Hungarian Revolution in blood. He did crush the Chechen secession. But what did he do there that General Sherman did not do to Atlanta when Georgia seceded from Mr. Lincoln's Union?
Putin supported the U.S. in Afghanistan, backed our nuclear deal with Iran, and signed on to John Kerry's plan have us ensure a cease fire in Syria and go hunting together for ISIS and al-Qaida terrorists.
Still, Putin committed "aggression" in Ukraine, we are told. But was that really aggression, or reflexive strategic reaction? We helped dump over a pro-Putin democratically elected regime in Kiev, and Putin acted to secure his Black Sea naval base by re-annexing Crimea, a peninsula that has belonged to Russia from Catherine the Great to Khrushchev. Great powers do such things.
When the Castros pulled Cuba out of America's orbit, we decided to keep Guantanamo, and dismiss Havana's protests?
Moscow did indeed support secessionist pro-Russia rebels in East Ukraine. But did not the U.S. launch a 78-day bombing campaign on tiny Serbia to effect a secession of its cradle province of Kosovo?
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Russia is reportedly hacking into our political institutions. If so, it ought to stop. But have not our own CIA, National Endowment for Democracy, and NGOs meddled in Russia's internal affairs for years?
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Is Putin's Russia more repressive than Xi Jinping's China? Yet, Republicans rarely use "thug" when speaking about Xi. During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea. Cold War necessity required it.
Scores of the world's 190-odd nations are today ruled by autocrats. How does it advance our interests or diplomacy to have congressional leaders yapping "thug" at the ruler of a nation with hundreds of nuclear warheads?
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Patrick J. Buchanan is a founding editor of The American Conservative and the author of book The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority
Tiktaalik , says: September 16, 2016 at 2:41 ambacon , says: September 16, 2016 at 5:29 am
>>During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea buttressed could be even more pertinent) Very good article indeed. Knee-jerk reaction of american politicians and journalists looks extremely strange. As a matter of fact they look like idiots or puppets.Skeptic , says: September 16, 2016 at 9:13 am
Rubio and Graham are reflexively ready to push US influence everywhere, all the time, with military force always on the agenda, and McCain seems to be in a state of constant agitation whenever US forces are not actively engaged in combat somewhere. They are loud voices, yes, but irrational voices, too.John Blade Wiederspan , says: September 16, 2016 at 10:18 am
Very sensible article. And as the EU falls further into disarray and possible disintegration, due to migration and other catastrophically mishandled problems, a working partnership with Russia will become even more important. Right now, we treat Russia as an enemy and Saudi Arabia as a friend. That makes no sense at all.SteveM , says: September 16, 2016 at 10:23 am
"Just" states the starvation of the Ukraine is a western lie. The Harvest of Sorrow by Robert Conquest refutes this dangerous falsehood. Perhaps "Just" believes The Great Leap Forward did not lead to starvation of tens of millions in China. After all, this could be another "western lie". So to could be the Armenian genocide in Turkey or slaughter of Communists in Indonesia.blimbax , says: September 16, 2016 at 11:29 am
As I've stated many times, Obama the narcissist hates Putin because Putin doesn't play the sycophantic lapdog yapping about how good it is to interact with the "smartest person in the room".
I'm serious. Obama craves sources of narcissistic supply and has visceral contempt for sources of narcissistic injury. I.e., people who may reveal the mediocrity that he actually is. Obama considers Putin a threat in that context.
The downside for the U.S. is that Obama has extended hating Putin to hating Russia. And yes, Washington is flooded with sources of sycophantic narcissistic supply for Obama including the MSM. And they are happy to massage his twisted ego by enthusiastically playing along with the Putin/Russia fear-monger bashing.
And so the U.S. – Russia relationship is wrecked by the "smartest person in the room".
P.S. too bad Hillary is saturated with her own psychopathology that portends more Global Cop wreckage.Joe the Plutocrat , says: September 16, 2016 at 3:46 pm
John asks, "We also have to deal with our current allies. Whom would Mr. Buchanan like to favor?"
Well, we could redouble our commitment to our democracy and peace loving friends in Saudi Arabia, we could deepen our ties to those gentle folk in Egypt, and maybe for a change give some meaningful support to Israel. Oh, and our defensive alliances will be becoming so much stronger with Montenegro as a member, we will need to pour more resources into that country.
Anyway, what Buchanan is saying is, "We have to deal with him," not "favor him." The two terms should not be confused.
There are a lot of "allies" of questionable usefulness that the US should stop "favoring," and a lot of competitors (and potential allies in the true sense) out there the US should begin "dealing" with.Clint , says: September 16, 2016 at 4:41 pm
"During the Cold War, we partnered with such autocrats as the Shah of Iran and General Pinochet of Chile, Ferdinand Marcos in Manila, and Park Chung-Hee of South Korea. Cold War necessity required it (funny, you failed to mention Laos, South Vietnam, Nicaragua, Noriega/Panama, and everyone's favorite 9/11 co-conspirator and WMD developer, Saddam Hussein). either way how did these "alliances" work out for the US? really doesn't matter, does it? it is early 21st century, not mid 20th century. there is a school of thought in the worlds of counter-terrorism/intelligence operations, which suggests if you want to be successful, you have to partner with some pretty nasty folks. Trump is being "handled" by an experienced, ruthless (that's a compliment), and focused "operator". unless, of course, Trump is actually the superior operator, in which case, this would be the greatest black op of all time.WakeUp , says: September 16, 2016 at 4:45 pm
"From Russia With Money - Hillary Clinton, the Russian Reset and Cronyism,"
"Of the 28 US, European and Russian companies that participated in Skolkovo, 17 of them were Clinton Foundation donors" or sponsored speeches by former President Bill Clinton, Schweizer told The Post.
Everything the Western elite does is about dollar hegemony and control of energy. Once you understand that then the (evil)actions of the Western elite make sense. Anyone who stands in the way of those things is an "enemy". This is how they determine an "enemy".
As long as Russia is not a puppet of the globalist banking cartel they will be presented as an "enemy". Standing in the way of energy imperialism was the last straw for the all out hybrid war being launched on Russia now.
If the Western public wasn't so lazy and stupid we would remove the globalists controlling us. Instead people, especially liberals, get in bed with the globalists plans against Russia bc they can't stand Russia is Christian and supports the family.
Every word about Russia allowed in the Western establishment are lies funded and molded by people like Soros and warmongers. This is the reality. Nobody who will speak honestly or positively about Russia is allowed any voice. And scumbag neoliberal globalists like Kasperov are presented as "Russians" while real Russian people are given zero voice.
What the Western elite is doing right now in Ukraine and Syria is reprehensible and its all our fault for letting these people control us.
This election cycle is so amazing one cannot help but think it has been scripted by some invisible, all-powerful, hand. I mean, how could we have two completely opposite candidates, perfectly reflecting the forces at play in this day and age? It truly is a clash between The Elites and The Masses!
Main Street vs Wall & K Street.
The Political Industrial Complex (PIC – a.k.a., The Elites or Political Class) is all up arms over the outsider barging in on their big con. The PIC is beside itself trying to stop Donald Trump from gaining the Presidency, where he will be able to clean out the People's House and the bureaucratic cesspool that has shackled Main Street with political correctness, propaganda, impossibly expensive health care, ridiculous taxes and a national debt that will take generations to pay off.
The PIC has run amok long enough – illustrated perfectly by the defect ridden democrat candidate: Hillary Clinton. I mean, how could you frame America's choices this cycle any better than this !
Back in July, Democratic presidential nominee and former Secretary of State Hillary Clinton said, "there is absolutely no connection between anything that I did as secretary of state and the Clinton Foundation."
On Monday of this week, ABC's Liz Kreutzer reminded people of that statement, as a new batch of emails reveal that there was a connection, and it was cash .
The Abedin emails reveal that the longtime Clinton aide apparently served as a conduit between Clinton Foundation donors and Hillary Clinton while Clinton served as secretary of state. In more than a dozen email exchanges, Abedin provided expedited, direct access to Clinton for donors who had contributed from $25,000 to $10 million to the Clinton Foundation. In many instances, Clinton Foundation top executive Doug Band, who worked with the Foundation throughout Hillary Clinton's tenure at State, coordinated closely with Abedin. In Abedin's June deposition to Judicial Watch, she conceded that part of her job at the State Department was taking care of " Clinton family matters ."
This is what has Main Street so fed up with Wall & K street (big business, big government). The Clinton foundation is a cash cow for Clinton, Inc. So while our taxes go up, our debt sky rockets and our health care becomes too expensive to afford, Clan Clinton has made 100's of millions of dollars selling access (and obviously doing favors, because no one spends that kind of money without results).
The PIC is circling the wagons with its news media arm shrilly screaming anything and everything about Trump as if they could fool Main Street with their worn out propaganda. I seriously doubt it will work. The Internet has broken the information monopoly that allowed the PIC in the not too distant past to control what people knew and thought.
Now we have cracks in the PIC's media spin, through which we can see the ugly truth about our modern democracy :
Massachusetts has a long history of using the power of incumbency to cripple political opponents. In fact, it's a leading state for such partisan gamesmanship. Dating back to 1812, when Gov. Elbridge Gerry signed into law a redistricting plan for state Senate districts that favored his Democratic-Republican Party, the era of Massachusetts rule rigging began. It has continued, unabated, ever since.
Given the insider dealing and venality that epitomized the 2016 presidential primary process, I'd hoped that politicians would think twice before abusing the power of the state for political purposes. Galvin quickly diminished any such prospect of moderation in the sketchy behavior of elected officials. He hid his actions behind the thin veil of fiscal responsibility. He claimed to be troubled by the additional $56,000 he was going to have to spend printing ballots to accommodate Independent voters. He conveniently ignored the fact that thousands of these UIP members have been paying taxes for decades to support a primary process that excludes them.
In my home state of Kansas, where my 2014 candidacy threatened to take a U.S. Senate seat from the Republicans, they responded predictably. Instead of becoming more responsive to voters, our state's highly partisan secretary of state, Kris Kobach, introduced legislation that would bring back one of the great excesses of machine politics: straight party-line voting – which is designed to discourage voters from considering an Independent candidacy altogether. Kobach's rationale, like Galvin's, was laughable. He described it as a "convenience" for voters.
The article goes on to note these acts by the PIC are an affront to the large swath of the electorate who really choose who will win elections:
In a recent Gallup poll, 60 percent of Americans said they do not feel well-represented by the Democrats and Republicans and believe a third major party is needed. Fully 42 percent of Americans now describe themselves as politically independent .
That means the two main parties are each smaller in size than the independents (68% divided by 2 equals 34%), which is why independents pick which side will win. If the PIC attacks this group – guess what the response will look like?
I recently had a discussion with someone from Washington State who is pretty much my opposite policy-wise. She is a deep blue democrat voter, whereas I am a deep purple independent who is more small-government Tea Party than conservative-GOP. She was lamenting the fact that her state has caucuses, which is one method to blunt Main Street voters from having a say. It was interesting that we quickly and strongly agreed on one thing above all else: open primaries. We both knew that if the voters had the only say in who are leaders would be, all sides could abide that decision easily. It is when PIC intervenes that things get ugly.
Open primaries make the political parties accountable to the voters. Open primaries make it harder for the PIC to control who gets into office, and reduces the leverage of big donors. Open primaries reflect the will of the states and the nation – not the vested interests (read bank accounts) of the PIC.
That is why you when you hear someone oppose open primaries , it is a clear sign they are from the Political Industrial Complex and not from Main Street. For example:
Without doubt, one of the most troublesome aspects of the current system is its gross inefficiency. Whereas generations ago selecting a nominee took relatively little time and money , today's process has resulted in a near-permanent campaign. Because would-be nominees have to win primaries and open caucuses in several states, they must put together vast campaign apparatuses that spread across the nation, beginning years in advance and raising tens of millions of dollars.
The length of the campaign alone keeps many potential candidates on the sidelines. In particular, those in positions of leadership at various levels of our government cannot easily put aside their duties and shift into full-time campaign mode for such an extended period.
It is amazing how this kind of thinking can be considered legitimate. Note how independent voters are evil in the mind of the PIC, and only government leaders need apply. Not surprising, their answer is to control access to the ballot:
During the week of Lincoln's birthday (February 12), the Republican Party would hold a Republican Nomination Convention that would borrow from the process by which the Constitution was ratified. Delegates to the convention would be selected by rank-and-file Republicans in their local communities , and those chosen delegates would meet, deliberate, and ultimately nominate five people who, if willing, would each be named as one of the party's officially sanctioned finalists for its presidential nomination. Those five would subsequently debate one another a half-dozen times.
Brexit became a political force because the European Union was not accountable to the voters. The EU members are also selected by members of the European PIC – not citizens of the EU. Without direct accountability to all citizens (a.k.a. – voters) there is no democracy – just a variant of communism:
During the Russian Civil War (1918–1922), the Bolsheviks nationalized all productive property and imposed a policy named war communism, which put factories and railroads under strict government control, collected and rationed food, and introduced some bourgeois management of industry . After three years of war and the 1921 Kronstadt rebellion, Lenin declared the New Economic Policy (NEP) in 1921, which was to give a "limited place for a limited time to capitalism." The NEP lasted until 1928, when Joseph Stalin achieved party leadership, and the introduction of the Five Year Plans spelled the end of it. Following the Russian Civil War, the Bolsheviks, in 1922, formed the Union of Soviet Socialist Republics (USSR), or Soviet Union, from the former Russian Empire.
Following Lenin's democratic centralism, the Leninist parties were organized on a hierarchical basis, with active cells of members as the broad base; they were made up only of elite cadres approved by higher members of the party as being reliable and completely subject to party discipline .
Emphasis mine. Note how communism begins with government control of major industries. The current con job about Global Warming is the cover-excuse for a government grab of the energy sector. Obamacare is an attempt to grab the healthcare sector. And Wall Street already controls the banking sector. See a trend yet?
This is then followed by imposing a rigid hierarchy of "leaders" at all levels of politics – so no opposing views can gain traction. Party discipline uber alles!
Our nation is in the grip of such poisonous thinking. The DNC with its "Super Delegates" already has a way to control who will be their candidate. In an irony to beat all ironies, the DNC's Super Delegates were able to stop Bernie Sanders...
The reason Trump is still rising (and I believe will win handily) is he clearly represents the original image of America: a self made success story based on capitalism and the free market.
His opponent is the epitome of the Political Industrial Complex – a cancer that has eaten away America's free market foundation and core strength. A person who wants to impose government on the individual.
How could the choice be any starker, any clearer?
Sep 18, 2016 | www.theamericanconservative.com
The American Conservative
In one of our first "adult" conversations, when I asked earnestly about equality, Nisbet insisted on making a bright-line distinction between what was possible, equal opportunity and equality before the law, and what was not, a coercive dream of managed, equal outcomes.
During the McGovern years, contesting equality's self-evident virtues was shocking coming from a senior professor and established social critic. But as I listened to Nisbet's faultless reasoning, that was the moment, I realized a good while later, I became a "conservative" in mind.
The growth of national government during the 1960s through massive military and administrative expansion, Nisbet feared, prefigured "the centralized state of the masses," empowered by the "crumbling of the pre-democratic strata of values and institutions" that "alone made political freedom possible." Worse, he thought, a growing number of clients might welcome its power and largess at the expense of family and freedom.
Centralization, egalitarianism, and coercive multiculturalism were not the right answers, Nisbet would reiterate throughout his career. What induced social harmony and individual fulfillment, he observed-long before Robert Putnam wrote Bowling Alone (2000)-were communities of churches and schools, volunteer groups, families, and tribes. Localism, kinship, and liberty make a society secure. Leviathan smothers the human spirit through sheer size, regulation, bureaucracy, and fiat.
If unobtainable forms of equality become cornerstones of national policy, he argued, the onslaught on institutions to try to achieve the impossible would be unlimited. Intrusive state power promising to cure inequality would let government take on powers formerly reserved to other authorities. Stripped of religion, the public was imbibing liberal elixirs that rendered individuals blameless, turning them into victims of a society that "glistens with corruption," he once said to me. Guilt and wishful thinking quickened the politics of equality.
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The success of his 1975 book, Twilight of Authority , was rather a surprise. The writing, as with much of Nisbet, ranges from dense and stilted to lucid and aphoristic. It is not an easy book. But its discursive, prescient, panoramic indictment of shifting authorities found a distinguished audience, and it drew him further into debate over socio-cultural policies.
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Nisbet had no patience for sloth. His youthful circumstances had been Depression rough, and he escaped a troubled household. With studied poise, he was unfailingly civil, with measured, formal manners, and considerable sangfroid.
He thought that boredom was civilization's number-one self-poisoner. Wealth and leisure could undermine the collective good sense of the masses, he felt, stimulating euphoria at a cost. Efforts to offset boredom-through video games, television, sports, pornography, or drugs-could be fatal to community. Facebook's artificial communities and the politics of Twitter, he might say, give the illusion of social cement while causing the real thing to crack.
Much of what Nisbet foresaw decades ago has come to be. Americans surf big-screen HDTV channels, seeking relief and distraction. Hoping politics will make things right, the nation follows the plot like a serial-some on Fox, others on CNN-accepting politics as a televised reality show.
Gilbert T. Sewall, director of the American Textbook Council, is co-author of The USA Since 1945: After Hiroshima and editor of The Eighties: A Reader .
Sep 18, 2016 | www.scribd.com
This is where cultural nationalism comes in. Only it can serve to mask, and bridge, the divides within the 'cartel of anxiety' in a neoliberal context.
Cultural nationalism is a nationalism shorn of its civic-egalitarian and developmentalist thrust, one reduced to its cultural core. It is structured around the culture of thee conomically dominant classes in every country, with higher or lower positions accorded to other groups within the nation relative to it. These positions correspond, on the whole, to the groups' economic positions, and as such it organises the dominant classes, and concentric circles of their allies, into a collective national force. It also gives coherence to, and legitimises, the activities of the nation-state on behalf of capital, or sections thereof, in the international sphere.
Indeed, cultural nationalism is the only ideology capable of being a legitimising ideology under the prevailing global and national political economy.
Neoliberalism cannot perform this role since its simplicities make it harsh not just towards the lower orders, but give it the potential for damaging politically important interests amongst capitalist classes themselves. The activities of the state on behalf of this or that capitalist interest necessarily exceed the Spartan limits that neoliberalism sets. Such activities can only be legitimised as being 'in the national interest.'
Second, however, the nationalism that articulates these interests is necessarily different from, but can easily (and given its function as a legitimising ideology, it must be said, performatively) be mis-recognised as, nationalism as widely understood: as being in some real sense in the interests of all members of the nation. In this form, cultural nationalism provides national ruling classes a sense of their identity and purpose, as well as a form of legitimation among thelower orders.
As Gramsci said, these are the main functions of every ruling ideology. Cultural nationalism masks, and to a degree resolves, the intense competition between capitals over access to the state for support domestically and in the international arena – in various bilateral and multilateral fora – where it bargainsfor the most favoured national capitalist interests within the global and imperial hierarchy.
Except for a commitment to neoliberal policies, the economic policy content of this nationalism cannot be consistent: within the country, and inter-nationally, the capitalist system is volatile and the positions of the various elements of capital in the national and international hierarchies shift constantly as does the economic policy of cultural nationalist governments. It is this volatility that also increases the need for corruption – since that is how competitive access of individual capitals to the state is today organised.
Whatever its utility to the capitalist classes, however, cultural nationalism can never have a settled or secure hold on those who are marginalised or sub-ordinated by it. In neoliberal regimes the scope for offering genuine economic gains to the people at large, however measured they might be, is small.
This is a problem for right politics since even the broadest coalition of the propertied can never be an electoral majority, even a viable plurality. This is only in the nature of capitalist private property. While the left remains in retreat or disarray, elec-toral apathy is a useful political resource but even where, as in most countries, political choices are minimal, the electorate as a whole is volatile. Despite, orperhaps because of, being reduced to a competition between parties of capital, electoral politics in the age of the New Right entails very large electoral costs, theextensive and often vain use of the media in elections and in politics generally, and political compromises which may clash with the high and shrilly ambitiou sdemands of the primary social base in the propertied classes. Instability, uncertainty ...
What is "Globalization" and "Free Trade" really?… Does it encompass the slave trade, trading in narcotics, deforestation and export of a nation's tropical hardwood forests, environmentally damaging transnational oil pipelines or coal ports, fisheries depletion, laying off millions of workers and replacing them and the products they make with workers and products made in a foreign country, trading with an enemy, investing capital in a foreign country through a subsidiary or supplier that abuses its workers to the point that some commit suicide, no limits on or regulation of financial derivatives and transnational financial intermediaries?… the list is endless.
As always, the questions are "Cui bono?"… "Who benefits"?… How and Why they benefit?… Who selects the short-term "Winners" and "Losers"? And WRT those questions, the final sentence of this post hints at its purpose.
Yeah, how is European colonialism - starting in, what, like the 15th century, or something - not "globalisation"? What about the Roman and Persian and Selucid empires? Wasn't that globalisation? I think we've pretty much always lived in a globalised world, one way or another (if "globalised world" even makes sense).
Bring back the broader, and more meaningful conception of Political Economy and some actual understanding can be gained. The study of economics cannot be separated from the political dimension of society. Politics being defined as who gets what in social interactions.
What folly. All this complexity and strident study of minutia to bring about what end? Human history on this planet has been about how societies form, develop, then recede form prominence. This flow being determined by how well the society provided for its members or could support their worldview. Talk about not seeing the forest for the trees.
The neoliberal experiment has run its course. Milton Friedman and his tribe had their alternative plan ready to go and implemented it when they could- to their great success. The best looting system developed-ever. This system only works with the availability of abundant resources and the mental justifications to support that gross exploitation. Both of which are reaching limits.
Only by thinking, and communicating in the broader terms of political economy can we hope to understand our current conditions. Until then, change will be difficult to enact. Hard landings for all indeed.
If only the Milton Friedman tribe had interested itself in sports instead of economics. They could have argued that referees and umpires should be removed from the game for greater efficiency of play, and that sports teams would follow game rules by self-regulation.
LA Mike September 17, 2016 at 8:15 pmsd
While in traffic, I was thinking about that today. For some time now, I've viewed the traffic intersection as being a good example of the social contract. We all agree on its benefits. But today, I thought about it in terms of the Friedman Neoliberals.
Why should they have to stop at red lights. Wouldn't the whole thing just work out more efficiently if you leave traffic lights and rules out of it? Just let everyone figure it out at each light, survival of the fittest.I Have Strange Dreams
Something I have wondered for some time, how does tourism fit into trade? With increasingly free movement of people as tourists whose spending impacts nations GDP, where does it fit in to discussions on globalization and trade?
Other things to consider:
– negative effects of immigration (skilled workers leave developing countries where they are most needed)
– environmental pollution
– destruction of cultures/habitats
– importation of western diet leading to decreased health
– spread of disease (black death, hiv, ebola, bird flu)
– resource wars
How are these "externalities" calculated?
Sep 16, 2016 | news.slashdot.org(computerworld.com) 338 Posted by manishs on Friday September 09, 2016 @01:14PM from the big-questions dept. Earlier this week, University of California hired India-based IT company HCL to outsource some of its work offshore . As part of the announcement, it announced that it was laying off 17 percent of UCSF's total IT staff. The U.S. lawmaker, Rep. Zoe Lofgren (D-Calif) and the IEEE-USA find the outsourcing job "wrong." dcblogs writes: A decision by the University of California to lay off IT employees and send their jobs overseas is under fire from U.S. Rep. Zoe Lofgren (D-Calif) and the IEEE-USA. "How are they [the university] going to tell students to go into STEM fields when they are doing as much as they can to do a number on the engineers in their employment?" said U.S. Rep. Zoe Lofgren (D-Calif). Peter Eckstein, the president of the IEEE-USA, said what the university is doing "is just one more sad example of corporations, a major university system in this case, importing non-Americans to eliminate American IT jobs." The university recently informed about 80 IT workers at its San Francisco campus, including contract employees and vendor contractors, that it hired India-based HCL, under a $50 million contract, to manage infrastructure and networking-related services. The affected employees will leave their jobs in February, after they train their contractor replacements.
dcblogs writes from a report via Computerworld: The University of California is laying off a group of IT workers at its San Francisco campus as part of a plan to move work offshore. Laying off IT workers as part of a shift to offshore is somewhere between rare and unheard-of in the public sector. The layoffs will happen at the end of February, but before the final day arrives the IT employees expect to train foreign replacements from India-based IT services firm HCL. The firm is working under a university contract valued at $50 million over five years. This layoff affects 17% of UCSF's total IT staff, broken down this way: 49 IT permanent employees will lose their jobs, along with 12 contract employees and 18 vendor contractors. This number also includes 18 vacant IT positions that won't be filled, according to the university. Governments and publicly supported institutions, such as UC, have contracted with offshore outsourcers, but usually it's for new IT work or to supplement an existing project. The HCL contract with UCSF can be used by other UC campuses, which means the layoffs may expand across its 10 campuses. HCL is a top user of H-1B visa workers.
Sep 16, 2016 | news.slashdot.org(gizmodo.com) 419 Posted by manishs on Tuesday September 06, 2016 @12:40PM from the goodbye dept. Reader Joe_Dragon shares a Gizmodo report: ITT Technical Institute is officially closing all of its campuses following federal sanctions imposed against the company. The for-profit college announced the changes in a statement: "It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service . With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected."
ITT Tech announced it was closing all of its campuses just one week after it stopped enrolling students following a federal crackdown on for-profit colleges. ITT Tech and other higher education companies like it have been widely criticized for accepting billions of dollars in government grants and loans while failing to provide adequate job training for its students. Last year, ITT Tech received an estimated $580 million in federal money (aka taxpayer dollars), according to the Department of Education.
Sep 16, 2016 | economistsview.typepad.comby Dave Elder-Vass at Understanding Society: September 15, 2016Guest post by Dave Elder-Vass : [Dave Elder-Vass accepted my invitation to write a response to my discussion of his recent book, Profit and Gift in the Digital Economy ( link ). Elder-Vass is Reader in sociology at Loughborough University and author as well of The Causal Power of Social Structures: Emergence, Structure and Agency and The Reality of Social Construction , discussed here and here . Dave has emerged as a leading voice in the philosophy of social science, especially in the context of continuing developments in the theory of critical realism. Thanks, Dave!]Peter K. : , Thursday, September 15, 2016 at 01:37 PM
We need to move on from existing theories of the economy
Let me begin by thanking Dan Little for his very perceptive review of my book Profit and Gift in the Digital Economy . As he rightly says, it's more ambitious than the title might suggest, proposing that we should see our economy not simply as a capitalist market system but as a collection of "many distinct but interconnected practices". Neither the traditional economist's focus on firms in markets nor the Marxist political economist's focus on exploitation of wage labour by capital is a viable way of understanding the real economy, and the book takes some steps towards an alternative view.
Both of those perspectives have come to narrow our view of the economy in multiple dimensions. Our very concept of the economy has been derived from the tradition that began as political economy with Ricardo and Smith then divided into the Marxist and neoclassical traditions (of course there are also others, but they are less influential). Although these conflict radically in some respects they also share some problematic assumptions, and in particular the assumption that the contemporary economy is essentially a capitalist market economy, characterised by the production of commodities for sale by businesses employing labour and capital. As Gibson-Graham argued brilliantly in their book The End Of Capitalism (As We Knew It): A Feminist Critique of Political Economy , ideas seep into the ways in which we frame the world, and when the dominant ideas and the main challengers agree on a particular framing of the world it is particularly difficult for us to think outside of the resulting box. In this case, the consequence is that even critics find it difficult to avoid thinking of the economy in market-saturated terms.
The most striking problem that results from this (and one that Gibson-Graham also identified) is that we come to think that only this form of economy is really viable in our present circumstances. Alternatives are pie in the sky, utopian fantasies, which could never work, and so we must be content with some version of capitalism – until we become so disillusioned that we call for its complete overthrow, and assume that some vague label for a better system can be made real and worthwhile by whoever leads the charge on the Bastille. But we need not go down either of these paths once we recognise that the dominant discourses are wrong about the economy we already have.
To see that, we need to start defining the economy in functional terms: economic practices are those that produce and transfer things that people need, whether or not they are bought and sold. As soon as we do that, it becomes apparent that we are surrounded by non-market economic practices already. The book highlights digital gifts – all those web pages that we load without payment, Wikipedia's free encyclopaedia pages, and open source software, for example. But in some respects these pale into insignificance next to the household and family economy, in which we constantly produce things for each other and transfer them without payment. Charities, volunteering and in many jurisdictions the donation of blood and organs are other examples.
If we are already surrounded by such practices, and if they are proliferating in the most dynamic new areas of our economy, the idea that they are unworkably utopian becomes rather ridiculous. We can then start to ask questions about what forms of organising are more desirable ethically. Here the dominant traditions are equally warped. Each has a standard argument that is trotted out at every opportunity to answer ethical questions, but in reality both standard arguments operate as means of suppressing ethical discussions about economic questions. And both are derived from an extraordinarily narrow theory of how the economy works.
For the mainstream tradition, there is one central mechanism in the economy: price equilibration in the markets, a process in which prices rise and fall to bring demand and supply into balance. If we add on an enormous list of tenuous assumptions (which economists generally admit are unjustified, and then continue to use anyway), this leads to the theory of Pareto optimality of market outcomes: the argument that if we used some other system for allocating economic benefits some people would necessarily be worse off. This in turn becomes the central justification for leaving allocation to the market (and eliminating 'interference' with the market).
There are many reasons why this argument is flawed. Let me mention just one. If even one market is not perfectly competitive, but instead is dominated by a monopolist or partial monopolist, then even by the standards of economists a market system does not deliver Pareto optimality, and an alternative system might be more efficient. And in practice capitalists constantly strive to create monopolies, and frequently succeed! Even the Financial Times recognises this: in today's issue (Sep 15 2016) Philip Stevens argues, "Once in a while capitalism has to be rescued from the depredations of, well, capitalists. Unconstrained, enterprise curdles into monopoly, innovation into rent-seeking. Today's swashbuckling "disrupters" set up tomorrow's cosy cartels. Capitalism works when someone enforces competition; and successful capitalists do not much like competition".
So the argument for Pareto optimality of real market systems is patently false, but it continues to be trotted out constantly. It is presented as if it provides an ethical justification for the market economy, but its real function is to suppress discussion of economic ethics: if the market is inherently good for everyone then, it seems, we don't need to worry about the ethics of who gets what any more.
The Marxist tradition likewise sees one central mechanism in the economy: the extraction of surplus from wage labour by capitalists. Their analysis of this mechanism depends on the labour theory of value, which is no more tenable that mainstream theories of Pareto optimality (for reasons I discuss in the book). Marxists consistently argue as if any such extraction is ethically reprehensible. Marx himself never provides an ethical justification for such a view. On the contrary, he claims that this is a scientific argument and disowns any ethical intent. Yet it functions in just the same way as the argument for Pareto optimality: instead of encouraging ethical debate about who should get what in the economy, Marxists reduce economic ethics to the single question of the need to prevent exploitation (narrowly conceived) of productive workers.
We need to sweep away both of these apologetics, and recognise that questions of who gets what are ethical issues that are fundamental to justice, legitimacy, and political progress in contemporary societies. And that they are questions that don't have easy 'one argument fits all' answers. To make progress on them we will have to make arguments about what people need and deserve that recognise the complexity of their social situations. But it doesn't take a great deal of ethical sophistication to recognise that the 1% have too much when many in the lower deciles are seriously impoverished, and that the forms of impoverishment extend well beyond underpaying for productive labour.
I'm afraid that I have written much more than I intended to, and still said very little about the steps I've taken in the book towards a more open and plausible way of theorising how the economy works. I hope that I've at least added some more depth to the reasons Dan picked out for attempting that task."This in turn becomes the central justification for leaving allocation to the market (and eliminating 'interference' with the market)."Peter K. -> Peter K.... , Thursday, September 15, 2016 at 01:39 PM
Krugman is a neoliberal, although a softer, kinder neoliberal much better than Mankiw, Cowen or the Republicans.
"pgl -> Peter K....
Please find me a Krugman discussion where he says nothing can be done about income inequality. This is so straw man that the winds have blown this stupid lie away.
Reply Thursday, September 15, 2016 at 12:59 PM"
Wisdom, Courage and the Economy
by Paul Krugman
AUG. 15, 2016
It's fantasy football time in political punditry, as commentators try to dismiss Hillary Clinton's dominance in the polls - yes, Clinton Derangement Syndrome is alive and well - by insisting that she would be losing badly if only the G.O.P. had nominated someone else. We will, of course, never know. But one thing we do know is that none of Donald Trump's actual rivals for the nomination bore any resemblance to their imaginary candidate, a sensible, moderate conservative with good ideas.
Let's not forget, for example, what Marco Rubio was doing in the memorized sentence he famously couldn't stop repeating: namely, insinuating that President Obama is deliberately undermining America. It wasn't all that different from Donald Trump's claim that Mr. Obama founded ISIS. And let's also not forget that Jeb Bush, the ultimate establishment candidate, began his campaign with the ludicrous assertion that his policies would double the American economy's growth rate.
Which brings me to my main subject: Mrs. Clinton's economic vision, which she summarized last week. It's very much a center-left vision: incremental but fairly large increases in high-income tax rates, further tightening of financial regulation, further strengthening of the social safety net.
It's also a vision notable for its lack of outlandish assumptions. Unlike just about everyone on the Republican side, she isn't justifying her proposals with claims that they would cause a radical quickening of the U.S. economy. As the nonpartisan Tax Policy Center put it, she's "a politician who would pay for what she promises."
So here's my question: Is the modesty of the Clinton economic agenda too much of a good thing? Should accelerating U.S. economic growth be a bigger priority?
For while the U.S. has done reasonably well at recovering from the 2007-2009 financial crisis, longer-term economic growth is looking very disappointing. Some of this is just demography, as baby boomers retire and growth in the working-age population slows down. But there has also been a somewhat mysterious decline in labor force participation among prime-age adults and a sharp drop in productivity growth.
The result, according to the Congressional Budget Office, is that the growth rate of potential G.D.P. - what the economy could produce at full employment - has declined from around 3.5 percent per year in the late 1990s to around 1.5 percent now. And some people I respect believe that trying to get that rate back up should be a big goal of policy.
But as I was trying to think this through, I realized that I had Reinhold Niebuhr's famous Serenity Prayer running through my head: "Grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference." I know, it's somewhat sacrilegious applied to economic policy, but still.
After all, what do we actually know how to do when it comes to economic policy? We do, in fact, know how to provide essential health care to everyone; most advanced countries do it. We know how to provide basic security in retirement. We know quite a lot about how to raise the incomes of low-paid workers.
I'd also argue that we know how to fight financial crises and recessions, although political gridlock and deficit obsession has gotten in the way of using that knowledge.
On the other hand, what do we know about accelerating long-run growth? According to the budget office, potential growth was pretty stable from 1970 to 2000, with nothing either Ronald Reagan or Bill Clinton did making much obvious difference. The subsequent slide began under George W. Bush and continued under Mr. Obama. This history suggests no easy way to change the trend.
Now, I'm not saying that we shouldn't try. I'd argue, in particular, for substantially more infrastructure spending than Mrs. Clinton is currently proposing, and more borrowing to pay for it. This might significantly boost growth. But it would be unwise to count on it.
Meanwhile, I don't think enough people appreciate the courage involved in focusing on things we actually know how to do, as opposed to happy talk about wondrous growth.
When conservatives promise fantastic growth if we give them another chance at Bushonomics, one main reason is that they don't want to admit how much they would have to cut popular programs to pay for their tax cuts. When centrists urge us to look away from questions of distribution and fairness and focus on growth instead, all too often they're basically running away from the real issues that divide us politically.
So it's actually quite brave to say: "Here are the things I want to do, and here is how I'll pay for them. Sorry, some of you will have to pay higher taxes." Wouldn't it be great if that kind of policy honesty became the norm?
"For while the U.S. has done reasonably well at recovering from the 2007-2009 financial crisis,"Peter K. -> Peter K.... , Thursday, September 15, 2016 at 01:41 PM
"Now, I'm not saying that we shouldn't try. I'd argue, in particular, for substantially more infrastructure spending than Mrs. Clinton is currently proposing, and more borrowing to pay for it. "
Then why was he for Hillary over Bernie Sanders who did campaign on substantially more infrastructure spending?
Instead Krugman argues that we need to lower our hopes and expectations.
"According to the budget office, potential growth was pretty stable from 1970 to 2000, with nothing either Ronald Reagan or Bill Clinton did making much obvious difference. "
So the market price mechanism rules and we government can't do much?
No queue PGL to tell us that Krugman was saying something that he obviously wasn't.Peter K. -> Peter K.... , Thursday, September 15, 2016 at 01:44 PM
What is Hillary going to try to do about inequality and distributional issues?
Family leave? Raise taxes on the rich?
Anything else besides minor tweaks and tax incentives?
A public option for health care?
"So here's my question: Is the modesty of the Clinton economic agenda too much of a good thing? Should accelerating U.S. economic growth be a bigger priority?"Far East Famine017 said in reply to Peter K.... , Thursday, September 15, 2016 at 01:46 PM
Her agenda is unambitious. It is "center-left" as Krugman puts it which is partly why her poll numbers are in the dumps.
" It's very much a center-left vision: incremental but fairly large increases in high-income tax rates, further tightening of financial regulation, further strengthening of the social safety net."
Point me to a blog post where Krugman spells out exactly where he explains how Clinton proposes to do things.
He doesn't.Peter K. -> Far East Famine017... , Thursday, September 15, 2016 at 01:54 PM
Raise taxes on the rich?
Anything else besides minor tweaks and tax
President Trump has proposed a $25000 standard deduction for each of us, but $50,000 for married couples who prove that they have consummated. Hey! IRS Agents like to watch.
How does one prove consummation? Video? Pelvic exams? Bedsheets?Far East Famine017 said in reply to Peter K.... , Thursday, September 15, 2016 at 06:24 PManne -> Far East Famine017... , Thursday, September 15, 2016 at 02:54 PM
Tell them what you are about to tell them!
Tell them what you have told them!
But first you have to get their attention. Sorry about the consummation voyeur rib, but getting folks to listen is one of the primary concerns here.
Crazy gibberish encourages more of the same and is destructive. The name alone is destructive. The content is mean nonsense. Enough.Far East Famine017 said in reply to anne... , Thursday, September 15, 2016 at 06:16 PManne -> Far East Famine017... , Thursday, September 15, 2016 at 06:25 PM
a $25000 standard deduction
Can you see how this minimum federal standard-deduction is de-fang-ed by lower state-standard-deduction? Tell me something!
When state minimum wage is $5 / hour but federal minimum wage is $9 / hour, does employer hiring in same state have to pay $5 or $9? Do you see how that works?
State's rights are dissolved by the federal statute.
This dissolution of state's rights means that Congress could as easily pass a law to establish minimum standard-deduction for all state's income tax collection. Tell me something else!
Would such a minimum standard deduction on all state income tax collection cause any unemployment? Would it bankrupt any small businesses?
Of course not! By contrast, the federal minimum wage regulation does cause unemployment, does close down some employers of entry level workers, a danger to employment and poverty.
Economics is all about opportunity costs. The opportunity cost of federal minimum wage is the possibility of federal minimum standard deduction, a more harmless subsidy.
State's rights are dissolved by the federal statute.anne -> Far East Famine017... , Thursday, September 15, 2016 at 06:27 PM
This dissolution of state's rights means that Congress could as easily pass a law to establish minimum standard-deduction for all state's income tax collection. Tell me something else!
Would such a minimum standard deduction on all state income tax collection cause any unemployment? Would it bankrupt any small businesses?
Of course not! By contrast, the federal minimum wage regulation does cause unemployment, does close down some employers of entry level workers, a danger to employment and poverty.
[ Ah, understood. A clever and important argument that I am thinking through. Like the rational for the federal Earned Income Tax Credit. ]
I am grateful. ]https://en.wikipedia.org/wiki/Earned_income_tax_creditBen Groves -> Peter K.... , Thursday, September 15, 2016 at 02:26 PM
The United States federal earned income tax credit or earned income credit (EITC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children. For a person or couple to claim one or more persons as their qualifying child, requirements such as relationship, age, and shared residency must be met. In the 2013 tax year, working families, if they have children, with annual incomes below $37,870 to $51,567 (depending on the number of dependent children) may be eligible for the federal EITC. Childless workers who have incomes below about $14,340 ($19,680 for a married couple) can receive a very small EITC benefit.Growth is a fixed investment. The investments have been made. Especially older societies, consumption and leisure become more important the nature of purchases change.Peter K. : , Thursday, September 15, 2016 at 01:52 PM
I see Space Exploration as the only thing that will change that narrative. That would probably create another computer revolution, industrial revolution kind of change. People just aren't into it thought. People are happy with the dopamine economy and just want to get high.Krugman:Ben Groves : , Thursday, September 15, 2016 at 02:21 PM
"Second, less relevant to Sims but very relevant to other helicopter people, a deficit ultimately financed by inflation is just as much of a burden on households as one ultimately financed by ordinary taxes, because inflation is a kind of tax on money holders. From a Ricardian point of view, there's no difference.
So I'm trying to figure out exactly what Sims is saying. What, ahem, is his model?"
Inflation hits people with savings who don't have debt.
Inflation helps people with debt by eating away at the principle. Inflation signals tight job markets with growing incomes as well. That's why you have price pressures. That's why low inflation and loose job markets can be just as bad as deflation.
Who taxes hit depends on how the government has set up its tax system. Some people and corporations like Apple, Mitt Romney and presumably Trump pay little in taxes.
Krugman the neoliberal.
Capitalism was invented by Sephardic Jews who immigrated to Iberia in the 15th and 16th century. They eventually invented market based economy.anne -> Ben Groves... , Thursday, September 15, 2016 at 02:41 PM
By 1600's they had a swirling business sector located in Amsterdam and William the Orange spread it into England during the latter 17th century, creating the Bank of England in 1694 and became the worlds central bank via commodity money.
There is nothing to see here people. It is ponzi scheme and nothing more. Capitalism has only made it because of liberalism. You have to be open to market expansion and have the resources to make it work. It is why "konservatism" is a farce. One, the konservatives were the ones that pushed the decaying "feudal" aristocracy to merge with the merchant caste in the first place and create the bourgeois, despite the aristocracy being the birth place of most of the technology we have now. This morphed into what we call capitalism. Basically the Jews are the Parasites(Finance), "Whites"(the capitalists, which has a abnormal % of homosexuals) the Host and the non-whites the cattle(mass famines and genocide during the 19th and 20th century are what really powered the manpower behind anti-capitalism. Aka the British Empire led to 150 million deaths globally. All global fraternities and organizations like the Skull in Bones to the Council of Foreign relations are a conservative institutions. Yet, those cons won't admit it. As Butler said about his Pacific "campaigns" is is all about spreading capitalism. It is indeed a racket.
These same forces are what created "Protestantism" and "Mormanism", which were a global financed movement. First led by Catholic turncoat Martin Luther, who was financed by the Jews, then run by Jewish John Cohen(Calvin) who spread the judeo-christian revolution globally. This also led to the farce of "sovereignty" nonsense Mormons have tried to use in the last 40 years to push a plutocracy. Then the other bible thumpers caught on. Destroy the nation, bring on the market totalitarianism. Dumb sheep.Do you understand that this writing is crazily, horridly, violently prejudiced, madly anti-Semitic? Do you understand just how clinically mad this is?cm -> anne... , Thursday, September 15, 2016 at 10:48 PM
This writing reflects a need for professional help. Such help is available and should immediately be sought.
This prejudice reflects a dangerous illness. Do seek assistance.
Do not write like this ever again.This is what we have long been used to from Mr. Groves. Ramblings in this style pretty much comment on their own merit and don't need to be graced with rebuttals, as that implies an acknowledgement that at some level a sort of identifiable argument was made.BenIsNotYoda : , Thursday, September 15, 2016 at 03:49 PM
Harvard Study pooh poohs the recovery:Paine : , Thursday, September 15, 2016 at 06:09 PM
"America's economic performance peaked in the late 1990s, and erosion in crucial economic indicators such as the rate of economic growth, productivity growth, job growth, and investment began well before the Great Recession.
Workforce participation, the proportion of Americans in the productive workforce, peaked in 1997. With fewer working-age men and women in the workforce, per-capita income for the U.S. is reduced.
Median real household income has declined since 1999, with incomes stagnating across virtually all income levels. Despite a welcome jump in 2015, median household income remains below the peak attained in 1999, 17 years ago. Moreover, stagnating income and limited job prospects have disproportionately affected lower-income and lower-skilled Americans, leading inequality to rise."
and something I have been going hoarse saying:
"The U.S. lacks an economic strategy, especially at the federal level. The implicit strategy has been to trust the Federal Reserve to solve our problems through monetary policy."
the charts alone are worth the effort to check out this excellent study.I really like thisPublius : , Thursday, September 15, 2016 at 07:58 PM
" Neither the traditional economist's focus on firms in markets nor the Marxist political economist's focus on exploitation of wage labour by capital is a viable way of understanding the real economy, and the book takes some steps towards an alternative view. "
It is the quintessence of heterodox ambitionsWhy did East Asia become Star Trek instead of the US? Why didn't the hopeful visions of mid-1960's America become reality for the Americans? Read Ha Joon Chang if you want to know why East Asia is on track to be as rich as the US/USSR portrayed in 2001 Space Odyssey. Western provincialism, or perhaps the corruption of economists by looting banks (as documented by Charles Ferguson) has led Western economists to offer really, really terrible advice to their own governments: free trade forever, don't worry about massive deindustrialization, there will be new jobs, there's no chance the US ends up like Mali.kaleberg : , Thursday, September 15, 2016 at 08:45 PMOne of the big problems of economics is how little of our society it explains. Exactly how many people of either sex actually sit down and decide to have children based on a return on investment calculation? How many people spend time with their friends and families based on some kind of maximization function? When you visit a dying friend or family member at the hospital is this the result of some gift exchange calculus? What about the time one spends listening to music, watching a baseball game or browsing Facebook?cm -> kaleberg ... , Thursday, September 15, 2016 at 11:02 PM
It might help to start with anthropology and think about human societies and their organization. Start with something like the Lynds' Middletown books to get away from the implicit exoticism that the term anthropology invokes. Societies have certain basic functions: raising children, caring for those who cannot care for themselves, earning a living, spending free time, recognizing one's place in the universe, participating in civil society and so on. Economics only looks at a tiny piece of this, just part of the earning a living section. It's as if chemists never studied anything except hydrogen molecules.
Economics really does need some new thinking. Starting with Pareto optimality is simply the argument that we live in the best of all possible worlds. It is so transparently bogus that it is hard to believe that anyone ever took it seriously. Oil lamps were hard on torch makers and the automobile destroyed the buggy whip business. We need an economic system to regulate the production and allocation of goods and services, but we also need child custody laws and burial customs.
I'm a capitalist at heart, but I view capitalism as I view fire. There is nothing quite like fire for cooking food, lighting the dark, scaring wild animals, firing pottery and so on, but fire also needs to be carefully controlled, constantly monitored and subject to societal sanction.Economics fashions itself (or is being fashioned) as a science, and as such has to restrict itself to measurable, identifiable, and (in principle) predictable phenomena.reason : , -1
What you are describing is more in the realm of philosophy, psychology, and moral judgement.
The problem starts when the economics profession and related occupations (business media, etc.) pretend to have identified "market mechanisms" as the unifying theory of society and world, including "explaining" social dynamics in terms of "objective/rational" market transactions and motivations.
But the desire for grand unified theories and "whole truths" is ever strong, lending credence and support to such efforts.
Now is the time to push for my leisure theory of value. All goods and services traded in the economy are intermediate goods, and value is actually created during leisure time!
Jun 28, 2016 | jessescrossroadscafe.blogspot.com"...a full 95% of the cash that went to Greece ran a trip through Greece and went straight back to creditors which in plain English is banks. So, public taxpayers money was pushed through Greece to basically bail out banks...So austerity becomes a side effect of a general policy of bank bailouts that nobody wants to own. That's really what happened, ok?Although I may not agree with every particular that Mark Blyth may say, directionally he is exactly correct in diagnosing the problems in Europe.
Why are we peddling nonsense? Nobody wants to own up to a gigantic bailout of the entire European banking system that took six years. Austerity was a cover.
If the EU at the end of the day and the Euro is not actually improving the lives of the majority of the people, what is it for? That's the question that they've brought no answer to.
...the Hamptons is not a defensible position. The Hamptons is a very rich area on Long Island that lies on low lying beaches. Very hard to defend a low lying beach. Eventually people are going to come for you.
What's clear is that every social democratic party in Europe needs to find a new reason to exist. Because as I said earlier over the past 20 years they have sold their core constituency down the line for a bunch of floaters in the middle who don't protect them or really don't particularly care for them. Because the only offers on the agenda are basically austerity and tax cuts for those who already have, versus austerity, apologies, and a minimum wage."
And yes, I am aware that the subtitles are at times in error, and sometimes outrageously so. Many of the errors were picked up and corrected in the comments.
No stimulus, no plans, no official actions, no monetary theories can be sustainably effective in revitalizing an economy that is as bent as these have become without serious reform at the first.
This was the lesson that was given by Franklin Roosevelt's New Deal. There will be no lasting recovery without it; it is a sine qua non . One cannot turn their economy around when the political and business structures are systemically corrupt, and the elites are preoccupied with looting it, and hiding their spoils offshore.
www.nakedcapitalism.comLLambert Strether Post author
"Massachusetts Senator Elizabeth Warren on Thursday requested a formal investigation into why the Obama administration did not bring criminal charges individuals and corporation involved in the 2007-2008 financial crisis" [International Business Times]. Why now? Liz edging her hat toward the ring if Clinton comes up lame?
I can see two possible interpretations for this.
First, as much as I hate to draw the analogy, she could be positioning herself to take the reigns after a loss in the way that Richard Nixon, Paul Ryan, and later Bill Clinton did. Richard Nixon sat back and concentrated on building up credibility as Barry Goldwater melted down and then quietly stepped in to take over the party after the loss to set up his eventual run. Paul Ryan quietly permitted or perhaps aided the coup against Boehner. And Bill Clinton, through the DLC teed up his control of the party after Dukakis lost.
Second, with Wells-Fargo and bank fraud once again in the news she could be working to keep prior decisions current both to force better action this time or to nudge the Clinton and Trump into making promises of stronger action in the future.
It seems to me that both those objectives would be served by continuing to hammer on Wells Fargo, so the question "Why now?" isn't really answered in your comment.
But if you wanted to take out an option on running a full-throated populist campaign - and throwing bankers in jail would be wildly popular across the entire political spectrum (except Clinton's 10%-ers on up) - in the unhappy event that the party's candidate came up lame, then calling for an account of regulatory decision making in 2009 would be one way to signal that. Note also that would call Obama's "legacy" into question, too; the whole "stand between you and the pitchforks" thing. This is a big deal.
Sep 15, 2016 | economistsview.typepad.comChris Sagers at ProMarket:American Antitrust Is Having a Moment: Some Reactions to Commissioner Ohlhausen's Recent Views : Over the summer, Federal Trade Commissioner Maureen Ohlhausen took me and several others to task in a speech , subsequently published as a journal article ... The theme we'd all written about is whether we in the United States have a "monopoly problem," and whether federal policy should try to do something about it. ...
Commissioner Ohlhausen had some pretty strong words. ... Specifically, she implies a very strong presumption against public interference in private markets, as indicated by her argument that there is not yet sufficient evidence that we have a monopoly problem. The argument seems to be that we must wait until we are very, very sure, beyond any reasonable econometric doubt, apparently, that there's something wrong before we step in. ...She is mistaken, and she ignores roughly a library-full of well-known..., sophisticated empirical work. ...In the end, the irony of these remarks is captured in this point: Commissioner Ohlhausen is pretty witheringly dismissive of a certain kind of evidence of market power, and implies that it would not support increased enforcement unless it can overcome a high methodological bar. But for her own countervailing evidence that in fact American markets are "fierce[ly] competiti[ve]," she says this: "Consider the new economy, which is a hotbed of technological innovation. That environment does not strike me as one lacking competition."In other words, the presumption against antitrust is so strong that evidence of harm must meet the most exacting standards of social science. To prove that markets are in fact competitive, however, needs nothing more than seat-of-the-pants anecdotes. Again, I mean no disrespect, and I think we have an honest difference of opinion. But this stance is not social science, and it is not good, empirically founded public policy. It is just ideology. ...It's definitely true that the agencies have brought a bunch of challenges to a bunch of nasty mergers, and perhaps total enforcement numbers have gone up a bit. But that is because we are in the midst of a merger wave in which parties have been proposing breathtakingly massive, overwhelmingly consolidating horizontal deals. While there is a track record to be proud of in the administration's enforcement, especially, as the commissioner observes, in the Commission's campaign against hospital mergers, reverse-payment deals, SEP problems, and patent trolls, and who knows how many other matters, the fact remains that by and large the administration has mostly not taken action that any administration would not have taken, including the Reagan and both Bush administrations. ...
Posted by Mark Thoma on Wednesday, September 14, 2016 at 10:44 AM in Economics , Market Failure , Regulation | Permalink Comments (25)
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CommentsYou can follow this conversation by subscribing to the comment feed for this post. DrDick : , Wednesday, September 14, 2016 at 11:13 AMIf we were actually serious about antitrust, which we very much should be, we would not only block most of these mergers, but break up many of existing behemoths (like the big banks, the media giants, Comcast, and many others).pgl -> DrDick... , Wednesday, September 14, 2016 at 11:18 AMI'm all for breaking up the behemoths when they are indeed stifling competition. The Reagan Revolution to anti-trust was based on a contention that some mergers were about efficiency effects. I think this argument is sometimes overblown but it is not per se false. I do object (see below) to the weak evidence that goes like this. Collective shareholder value rose so ergo the merger is about efficiency effects. Anyone who argues that (see Don Luskin and the premium ice cream proposed merger) is not very bright.DeDude -> pgl... , Wednesday, September 14, 2016 at 11:49 AMExactly. Corporations being able to suck more profit out of the costumers (and as a result share prices rising) is the proof that anti-trust has failed. In a fully functional competitive market companies do not make much profit.pgl -> DeDude... , Wednesday, September 14, 2016 at 12:07 PMAccounting profits? Maybe you should read that paper by the commissioner as she makes a very clear statement about what accounting profit would look like in a competitive market. And it is not zero. Return to capital? Hello?DeDude -> pgl... , Wednesday, September 14, 2016 at 12:30 PMNo if it was zero the whole thing breaks down. However, a small return on capital is an indication that companies are forced to cut prices because of competition- and that is a healthy market. So yes there is (some but) not much profit in a fully functional competitive market.pgl -> DeDude... , Wednesday, September 14, 2016 at 12:36 PMLet's define "small return". Standard financial economics puts this at the risk-free rate plus a premium for bearing systematic risk. OK - the risk-free return now is quite small. Say 2%. But if the risk premium is say 4%, then we are talking about a 6% expected return to assets. If that is what you mean by small - cool.DeDude -> pgl... , Wednesday, September 14, 2016 at 12:49 PM
Of course I have seen a lot of "professionals" argue for much higher returns. Of course these professionals would flunk a Finance 101 class.I don't think the risk premium needs to be more than about 2% unless/until the economy enter a phase where demand outstrips supply (and more investment money needs to be attracted). If there is a glut of investment money then the price of it (=risk free returns) should go down.pgl -> DeDude... , Wednesday, September 14, 2016 at 02:05 PMThis is the kind of thinking that got Hassett and Glassman to tell us about DOW 36000. Some people overestimate the risk premium but 2% is what a regulated utility or a leasing company gets. And neither bears commercial risk. Dude - you can make up whatever number your heart desires but there is market evidence on these things.DeDude -> pgl... , Wednesday, September 14, 2016 at 06:25 PMExactly - even those are hugely overcompensated for this supposed risk.Gibbon1 -> DeDude... , Wednesday, September 14, 2016 at 04:14 PMAbility to better suck profit out of a captive base of customers is an efficiency of a sort. Instead of investing in risky new business processes or technologies one merely has to buy out your competitors. This is practically risk free.pgl : , Wednesday, September 14, 2016 at 11:15 AM
A comment about this:kurt : , Wednesday, September 14, 2016 at 11:21 AM
"Though she says that "[e]fficiencies are real"-citing no evidence for it in a speech critical of everyone else for failure to supply evidence-there is in fact no meaningful proof that consolidation generates social benefits. Especially in the case of mergers, a large and sophisticated empirical literature has been hunting for decades for evidence that mergers produce "efficiencies" or other benefits. The evidence has not been found. At least with respect to deals among publicly traded firms, the evidence tends to suggest that mergers do no good on average for shareholders of either acquiring or target firms, and if there were some efficiencies or larger social benefits, they should be measurable as benefits to shareholders. The empirical evidence has therefore confirmed the popular wisdom shared on Wall Street for years-that all this activity is not serving any good social purpose, though it might be helping executives and their bankers quite a lot."
The conservative (Reagan) approach to anti-trust did indeed ask DOJ and FTC to consider whether the merger was about beneficial efficiency effects v. anti-competitive effects. But let's suppose two firms merged and their collective value did rise benefiting shareholders. That does not prove the efficiency effects dominate. No – mergers that lead to less competition will often raise shareholder value even if there are no efficiency effects. Those mergers should be disallowed.
Proof of Monopoly Power - Verizon and ATT's pricing and apparent lack of any interest in maintaining or even knowing where their physical plant is installed. Also - see directTV's recent price increases.pgl -> kurt... , Wednesday, September 14, 2016 at 12:07 PMCan you hear me now? Oh wait - the Verizon dude now works for Sprint.El Epicúreo Del Taco : , Wednesday, September 14, 2016 at 11:26 AMAmerican markets are "fierce[ly] competiti[ve]," she says this: "Consider the new economy, which is a hotbed of technological innovation. That environment does not strike me as one lacking competition."DeDude : , Wednesday, September 14, 2016 at 11:46 AM
In other words, the presumption against antitrust is so strong
You are assumed properly competing until proved monopoly-based. The burden of proof is on the victims. Tell me something!
Does the government always appear as crystal clear as the mirror of Alice? When we look at local, county, state, and federal rulers, do we always see ourselves? Our own bias? Our own agenda? The government apes its voters.
Do you see how today's polity is begging for less competition? Less free trade from our trading partners? Do you see how we want to make a monopoly out of America? Build a fence around it so that nobody is allowed to buy anything from anyone other than our monopoly?
We have identified the enemy, ourselves.
Yes you need at least a dozen independent businesses delivering the same (substitutable) products to ensure that there is indeed a competitive market that will not be gamed against the consumers. This is not just needed to ensure that consumers will be offered a fair price, but also to ensure that companies will be forced to continue to innovate and offer better and better products. The oversight of mergers has been a scandal and needs to be tightened by new laws. Obviously we have to make the "dozen rule" a law rather than just common sense guidance.pgl -> DeDude... , Wednesday, September 14, 2016 at 12:10 PMThe dozen rule? Where did that come from? Depends on the market but I would hope we have more than 12 suppliers of beer. BTW - it would be nice to have 12 health insurance companies but we could break up this oligopoly with such one more - the government aka the public option.DeDude -> pgl... , Wednesday, September 14, 2016 at 12:34 PMYes some products can benefit from more variation, but at least with 12 suppliers you would not have anybody able to corner the market. The dozen rule is mine, that is how I get my eggs. If Ohlhausen can just make it up - so can I.pgl -> DeDude... , Wednesday, September 14, 2016 at 12:37 PMDo you remember the 1970's? Something called OPEC? But yea - I buy my eggs by the dozen too.pgl -> DeDude... , Wednesday, September 14, 2016 at 12:39 PMSpeaking of breakfast, consider the maple syrup cartel:DeDude -> pgl... , Wednesday, September 14, 2016 at 12:52 PM
http://fortune.com/2016/02/26/maple-syrup-cartelYes cartels (regardless of number of members) also have to be broken up - for markets and capitalism to work properly.Tom aka Rusty : , Wednesday, September 14, 2016 at 12:59 PMThe FTC has ignored a many major health care mergers but has gone litigation guns a blazin' into small mergers in such less-than-major metro centers as Moscow Idaho and Toledo Ohio.pgl -> Tom aka Rusty... , Wednesday, September 14, 2016 at 02:06 PM
Is there a "too big to litigate" standard?Rusty calling for rational regulation as in the FTC doing its job. Stop the presses!Tom aka Rusty said in reply to pgl... , Thursday, September 15, 2016 at 04:53 AMI'm just asking for coherent policy, something often missing from the Obama administration.Anon : , Wednesday, September 14, 2016 at 08:30 PMThe sad fact is that the right-wing Law and Economics scholars have literally been trained to believe that the only correct null hypothesis is "free markets are good". When the null is not rejected with a 95% confidence interval, they actually think they've won the argument, while you're sitting there scratching your head saying, but when the null hypothesis is "free markets are bad", we can't reject that either. I've never seen logic get much traction with this crowd, because they are literally willing to tell you that economics demonstrates that "free markets are good", so that's the correct null.reason : , -1
It's very sad, but also very common when talking to lawyers. In fact, I often wonder whether the right-wing didn't create the "Law and Economics" movement in order to slow the exposure of the legal profession to the actual tools of modern economic analysis.It would be a start if we would simply stop seeing hostile takeovers as something positive (you know ex-ante efficiency improvements) and start seeing them for the interference in natural selection that they actually are (no 40-40 foresight exists).
"But part of the answer lies in something Americans have a hard time talking about: class. Trade is a class issue. The trade agreements we have entered into over the past few decades have consistently harmed some Americans (manufacturing workers) while just as consistently benefiting others (owners and professionals). …
To understand "free trade" in such a way has made it difficult for people in the bubble of the consensus to acknowledge the actual consequences of the agreements we have negotiated over the years."
Sep 15, 2016 | equitablegrowth.org]. "The researchers use data collected from a national sample of hourly retail workers at eight brick-and-morter companies, all of which are among the largest 15 retail employers in the United States." Readers will remember our recent post on sleep here .
May 18, 2015 | michaelperelman.wordpress.com
Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change.
... ... ...
On the ideological front, the South adopted a shallow, but rigid libertarian perspective which resembled modern neoliberalism. Samuel Johnson may have been the first person to see through the hypocrisy of the hollowness of southern libertarianism. Responding to the colonists' complaint that taxation by the British was a form of tyranny, Samuel Johnson published his 1775 tract, "Taxation No Tyranny: An answer to the Resolutions and Address of the American Congress," asking the obvious question, "how is it that we hear the loudest yelps for liberty among the drivers of Negroes?" In The Works of Samuel Johnson, LL. D.: Political Tracts. Political Essays. Miscellaneous Essays (London: J. Buckland, 1787): pp. 60-146, p. 142.
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By the late 19th century, David A Wells, an industrial technician who later became the chief economic expert in the federal government, by virtue of his position of overseeing federal taxes. After a trip to Europe, Wells reconsidered his strong support for protectionism. Rather than comparing the dynamism of the northern states with the technological backward of their southern counterparts, he was responding to the fear that American industry could not compete with the cheap "pauper" labor of Europe. Instead, he insisted that the United States had little to fear from, the competition from cheap labor, because the relatively high cost of American labor would ensure rapid technological change, which, indeed, was more rapid in the United States than anywhere else in the world, with the possible exception of Germany. Both countries were about to rapidly surpass England's industrial prowess.
The now-forgotten Wells was so highly regarded that the prize for the best economics dissertation at Harvard is still known as the David A Wells prize. His efforts gave rise to a very powerful idea in economic theory at the time, known as "the economy of high wages," which insisted that high wages drove economic prosperity. With his emphasis on technical change, driven by the strong competitive pressures from high wages, Wells anticipated Schumpeter's idea of creative destruction, except that for him, high wages rather than entrepreneurial genius drove this process.
Although the economy of high wages remained highly influential through the 1920s, the extensive growth of government powers during World War I reignited the antipathy for big government. Laissez-faire economics began come back into vogue with the election of Calvin Coolidge, while the once-powerful progressive movement was becoming excluded from the ranks of reputable economics.
... ... ...
With Barry Goldwater's humiliating defeat in his presidential campaign, the famous Powell Memo helped to spark a well-financed movement of well-finance right-wing political activism which morphed into right-wing political extremism both in economics and politics. Symbolic of the narrowness of this new mindset among economists, Milton Friedman's close associate, George Stigler, said in 1976 that "one evidence of professional integrity of the economist is the fact that it is not possible to enlist good economists to defend minimum wage laws." Stigler, G. J. 1982. The Economist as Preacher and Other Essays (Chicago: University of Chicago Press): p. 60.
In short, neoliberalism was surging ahead and the economy of high wages was now beyond the pale. These new conditions gave new force to the southern "yelps of liberty." The social safety net was taken down and reconstructed as the flag of neoliberalism. The one difference between the rhetoric of the slaveholders and that of the modern neoliberals was that entrepreneurial superiority replaced racial superiority as their battle cry.
One final irony: evangelical Christians were at the forefront of the abolitionist movement. Today, some of them are providing the firepower for the epidemic of neoliberalism.
Jul 05, 2016 | people.umass.eduDepartment of Economics and Political Economy Research Institute Thompson Hall University of Massachusetts Amherst, MA 01003 U.S.A. Telephone 413-545-1248 Fax 413-545-2921 Email email@example.com August, 2000 This paper was published in Rethinking Marxism, Volume 12, Number 2, Summer 2002, pp. 64-79.
Research assistance was provided by Elizabeth Ramey and Deger Eryar. Research funding was provided by the Political Economy Research Institute of the University of Massachusetts at Amherst. Globalization and Neoliberalism 1 For some two decades neoliberalism has dominated economic policymaking in the US and the UK. Neoliberalism has strong advocates in continental Western Europe and Japan, but substantial popular resistance there has limited its influence so far, despite continuing US efforts to impose neoliberal policies on them. In much of the Third World, and in the transition countries (except for China), the US has been successful in dictating neoliberal policies, acting partly through the IMF and World Bank and partly through direct pressure.
Neoliberalism is an updated version of the classical liberal economic thought that was dominant in the US and UK prior to the Great Depression of the 1930s. From roughly the mid 1930s to the mid 1970s a new "interventionist" approach replaced classical liberalism, and it became the accepted belief that capitalism requires significant state regulation in order to be viable. In the 1970s the Old Religion of classical liberalism made a rapid comeback, first in academic economics and then in the realm of public policy.
Neoliberalism is both a body of economic theory and a policy stance. Neoliberal theory claims that a largely unregulated capitalist system (a "free market economy" not only embodies the ideal of free individual choice but also achieves optimum economic performance with respect to efficiency, economic growth, technical progress, and distributional justice. The state is assigned a very limited economic role: defining property rights, enforcing contracts, and regulating the money supply.1 State intervention to correct market failures is viewed with suspicion, on the ground that such intervention is likely to create more problems than it solves.
The policy recommendations of neoliberalism are concerned mainly with dismantling what remains of the regulationist welfare state. These recommendations include deregulation of business; privatization of public activities and assets; elimination of, or cutbacks in, social welfare programs; and reduction of taxes on businesses and the investing class. In the international sphere, neoliberalism calls for free movement of goods, services, capital, and money (but not people) across national boundaries. That is, corporations, banks, and individual investors should be free to move their property across national boundaries, and free to acquire property across national boundaries, although free cross-border movement by individuals is not part of the neoliberal program. How can the re-emergence of a seemingly outdated and outmoded economic theory be explained? At first many progressive economists viewed the 1970s lurch toward liberalism as a temporary response to the economic instability of that decade. As corporate interests decided that the Keynesian regulationist approach no longer worked to their advantage, they looked for an alternative and found only the old liberal ideas, which could at least serve as an ideological basis for cutting those state programs viewed as obstacles to profit-making. However, neoliberalism has proved to be more than just a temporary response. It has outlasted the late 1970s/early 1980s right-wing political victories in the UK (Thatcher) and US (Reagan). Under a Democratic Party administration in the US and a Labor Party government in the UK in the 1990s, neoliberalism solidified its position of dominance.
This paper argues that the resurgence and tenacity of neoliberalism during the past two decades cannot be explained, in an instrumental fashion, by any favorable effects of neoliberal policies on capitalist economic performance. On the contrary, we will present a case that neoliberalism has been harmful for long-run capitalist economic performance, even judging economic performance from the perspective of the interests of capital. It will be argued that the resurgence and continuing dominance of neoliberalism can be explained, at least in part, by changes in the competitive structure of world capitalism, which have resulted in turn from the particular form of global economic integration that has developed in recent decades. The changed competitive structure of capitalism has altered the political posture of big business with regard to economic policy and the role of the state, turning big business from a supporter of state-regulated capitalism into an opponent of it.
The Problematic Character of Neoliberalism
Neoliberalism appears to be problematic as a dominant theory for contemporary capitalism. The stability and survival of the capitalist system depends on its ability to bring vigorous capital accumulation, where the latter process is understood to include not just economic expansion but also technological progress. Vigorous capital accumulation permits rising profits to coexist with rising living standards for a substantial part of the population over the long-run.2 However, it does not appear that neoliberalism promotes vigorous capital accumulation in contemporary capitalism. There are a number of reasons why one would not expect the neoliberal model to promote rapid accumulation. First, it gives rise to a problem of insufficient aggregate demand over the long run, stemming from the powerful tendency of the neoliberal regime to lower both real wages and public spending. Second, the neoliberal model creates instability on the macroeconomic level by renouncing state counter-cyclical spending and taxation policies, by reducing the effectiveness of "automatic stabilizers" through shrinking social welfare programs,3 and by loosening public regulation of the financial sector. This renders the system more vulnerable to major financial crises and depressions. Third, the neoliberal model tends to intensify class conflict, which can potentially discourage capitalist investment.4
The historical evidence confirms doubts about the ability of the neoliberal model to promote rapid capital accumulation. We will look at growth rates of gross domestic product (GDP) and of labor productivity. The GDP growth rate provides at least a rough approximation of the rate of capital accumulation, while the labor productivity growth rate tells us something about the extent to which capitalism is developing the forces of production via rising ratios of means of production to direct labor, technological advance, and improved labor skills.5 Table 1 shows average annual real GDP growth rates for six leading developed capitalist countries over two periods, 1950-73 and 1973-99. The first period was the heyday of state-regulated capitalism, both within those six countries and in the capitalist world-system as a whole. The second period covers the era of growing neoliberal dominance. All six countries had significantly faster GDP growth in the earlier period than in the later one.
While Japan and the major Western European economies have been relatively depressed in the 1990s, the US is often portrayed as rebounding to great prosperity over the past decade. Neoliberals often claim that US adherence to neoliberal policies finally paid off in the 1990s, while the more timid moves away from state-interventionist policies in Europe and Japan kept them mired in stagnation. Table 2 shows GDP and labor productivity growth rates for the US economy for three subperiods during 1948-99.6 Column 1 of Table 2 shows that GDP growth was significantly slower in 1973-90 B a period of transition from state-regulated capitalism to the neoliberal model in the US B than in 1948-73. While GDP growth improved slightly in 1990-99, it remained well below that of the era of state-regulated capitalism. Some analysts cite the fact that GDP growth accelerated after 1995, averaging 4.1% per year during 1995-99 (US Bureau of Economic Analysis, 2000). However, it is not meaningful to compare a short fragment of the 1990s business cycle expansion to the longrun performance of the economy during 1948-73.7
Column 2 of Table 1 shows that the high rate of labor productivity growth recorded in 1948- 73 fell by more than half in 1973-90. While there was significant improvement in productivity growth in the 1990s, it remained well below the 1948-73 rate, despite the rapid spread of what should be productivity-enhancing communication and information-management technologies during the past decade.
The evidence from GDP and labor productivity growth rates supports the claim that the neoliberal model is inferior to the state regulationist model for key dimensions of capitalist economic performance. There is ample evidence that the neoliberal model has shifted income and wealth in the direction of the already wealthy. However, the ability to shift income upward has limits in an economy that is not growing rapidly. Neoliberalism does not appear to be delivering the goods in the ways that matter the most for capitalism's long-run stability and survival.
The Structure of Competition and Economic Policy
The processes through which the dominant economic ideology and policies are selected in a capitalist system are complex and many-sided. No general rule operates to assure that those economic policies which would be most favorable for capitalism are automatically adopted. History suggests that one important determinant of the dominant economic ideology and policy stance is the competitive structure of capitalism in a given era. Specifically, this paper argues that periods of relatively unconstrained competition tend to produce the intellectual and public policy dominance of liberalism, while periods of relatively constrained, oligopolistic market relations tend to promote interventionist ideas and policies.
A relation in the opposite direction also exists, one which is often commented upon. That is, one can argue that interventionist policies promote monopoly power in markets, while liberal policies promote greater competition. This latter relation is not being denied here. Rather, it will be argued that there is a normally-overlooked direction of influence, having significant historical explanatory power, which runs from competitive structure to public policy. In the period when capitalism first became well established in the US, during 1800-1860, the government played a relatively interventionist role. The federal government placed high tariffs on competing manufactured goods from Europe, and federal, state, and local levels of government all actively financed, and in some cases built and operated, the new canal and rail system that created a large internal market. There was no serious debate over the propriety of public financing of transportation improvements in that era -- the only debate was over which regions would get the key subsidized routes.
Once capitalism had become well established in the US after the Civil War, it entered a period of cutthroat competition and wild accumulation known as the Robber Baron era. In this period a coherent anti-interventionist liberal position emerged and became politically dominant. Despite the enormous inequalities, the severe business cycle, and the outrageous and often unlawful behavior of the Goulds and Rockefellers, the idea that government should not intervene in the economy held sway through the end of the 19th century.
From roughly 1890 to 1903 a huge merger wave transformed the competitive structure of US capitalism. Out of that merger wave emerged giant corporations possessing significant monopoly power in the manufacturing, mining, transportation, and communication sectors. US industry settled down to a more restrained form of oligopolistic rivalry. At the same time, many of the new monopoly capitalists began to criticize the old Laissez Faire ideas and support a more interventionist role for the state.8 The combination of big business support for state regulation of business, together with similar demands arising from a popular anti-monopoly movement based among small farmers and middle class professionals, ushered in what is called the Progressive Era, from 1900-16. The building of a regulationist state that was begun in the Progressive Era was completed during the New Deal era a few decades later, when once again both big business leaders and a vigorous popular movement (this time based among industrial workers) supported an interventionist state. Both in the Progressive Era and the New Deal, big business and the popular movement differed about what types of state intervention were needed. Big business favored measures to increase the stability of the system and to improve conditions for profit-making, while the popular movement sought to use the state to restrain the power and privileges of big business and provide greater security for ordinary people. The outcome in both cases was a political compromise, one weighted toward the interests of big business, reflecting the relative power of the latter in American capitalism.
Small business has remained adamantly opposed to the big, interventionist state, from the Progressive Era through the New Deal down to the present. This division between big and small business is chronicled for the Progressive Era in Weinstein (1968). In the decades immediately following World War II one can observe this division in the divergent views of the Business Roundtable, a big business organization which often supported interventionist programs, and the US Chambers of Commerce, the premier small business organization, which hewed to an antigovernment stance.
What explains this political difference between large and small business? When large corporations achieve significant market power and become freed from fear concerning their immediate survival, they tend to develop a long time horizon and pay attention to the requirements for assuring growing profits over time.9 They come to see the state as a potential ally. Having high and stable monopoly profits, they tend to view the cost of government programs as something they can afford, given their potential benefits. By contrast, the typical small business faces a daily battle for survival, which prevents attention to long-run considerations and which places a premium on avoiding the short-run costs of taxation and state regulation. This explains the radically different positions that big business and small business held regarding the proper state role in the economy for the first two-thirds of the twentieth century.
This long-standing division between big business and small business appeared to vanish in the US starting in the 1970s. Large corporations and banks which had formerly supported foundations that advocated an active government role in the economy, such as the Brookings Institution, became big donors to neoliberal foundations such as the American Enterprise Institute and the Heritage Foundation. As a result, such right-wing foundations, which previously had to rely mainly on contributions from small business, became very wealthy and influential.10 It was big business=s desertion of the political coalition supporting state intervention and its shift to neoliberalism that rebuilt support for neoliberal theories and policies in the US, starting in the 1970s. With business now unified on economic policy, the shift was dramatic. Big grants became available for economics research having a neoliberal slant. The major media shifted their spin on political developments, and the phrase "government programs" now could not be printed except with the word "bloated" before it.
This switch in the dominant economic model first showed up in the mid 1970s in academic economics, as the previously marginalized Chicago School spread its influence far beyond the University of Chicago. This was soon followed by a radical shift in the public policy arena. In 1978- 79 the previously interventionist Carter Administration began sounding the very neoliberal themes B deregulation of business, cutbacks in social programs, and general fiscal and monetary austerity B that were to become the centerpiece of Reagan Administration policies in 1981. What caused the radical change in the political posture of big business regarding state intervention in the economy? This paper argues that a major part of the explanation lies in the effects of the globalization of the world capitalist economy in the post-World War II period.
Globalization and Competition
Globalization is usually defined as an increase in the volume of cross-border economic interactions and resource flows, producing a qualitative shift in the relations between national economies and between nation-states (Baker et. al., 1998, p. 5; Kozul-Wright and Rowthorn, 1998, p. 1). Three kinds of economic interactions have increased substantially in past decades: merchandise trade flows, foreign direct investment, and cross-border financial investments. We will briefly examine each, with an eye on their effects on the competitive structure of contemporary capitalism.
Table 3 shows the ratio of merchandise exports to gross domestic product for selected years from 1820 to 1992, for the world and also for Western Europe, the US, and Japan. Capitalism brought a five-fold rise in world exports relative to output from 1820-70, followed by another increase of nearly three-fourths by 1913. After declining in the interwar period, world exports reached a new peak of 11.2% of world output in 1973, rising further to 13.5% in 1992. The 1992 figure was over fifty per cent higher than the pre-World War I peak.
Merchandise exports include physical goods only, while GDP includes services, many of which are not tradable, as well as goods. In the twentieth century the proportion of services in GDP has risen significantly. Table 4 shows an estimate of the ratio of world merchandise exports to the good-only portion of world GDP. This ratio nearly tripled during 1950-92, with merchandise exports rising to nearly one-third of total goods output in the latter year. The 1992 figure was 2.6 times as high as that of 1913.
Western Europe, the US, and Japan all experienced significant increases in exports relative to GDP during 1950-92, as Table 3 shows. All of them achieved ratios of exports to GDP far in excess of the 1913 level. While exports were only 8.2% of the total GDP of the US in 1992, exports amounted to 22.0% of the non-service portion of GDP that year (Economic Report of the President, 1999, pp. 338, 444).
Many analysts view foreign direct investment as the most important form of cross-border economic interchange. It is associated with the movement of technology and organizational methods, not just goods. Table 5 shows two measures of foreign direct investment. Column 1 gives the outstanding stock of foreign direct investment in the world as a percentage of world output. This measure has more than doubled since 1975, although it is not much greater today than it was in 1913. Column 2 shows the annual inflow of direct foreign investment as a percentage of gross fixed capital formation. This measure increased rapidly during 1975-95. However, it is still relatively low in absolute terms, with foreign direct investment accounting for only 5.2 per cent of gross fixed capital formation in 1995.
Not all, or even most, international capital flows take the form of direct investment. Financial flows (such as cross-border purchases of securities and deposits in foreign bank accounts) are normally larger. One measure that takes account of financial as well as direct investment is the total net movement of capital into or out of a country. That measure indicates the extent to which capital from one country finances development in other countries. Table 6 shows the absolute value of current account surpluses or deficits as a percentage of GDP for 12 major capitalist countries. Since net capital inflow or outflow is approximately equal to the current account deficit or surplus (differing only due to errors and omissions), this indicates the size of net cross-border capital flows. The ratio nearly doubled from 1970-74 to 1990-96, although it remained well below the figure for 1910-14.
Cross-border gross capital movements have grown much more rapidly than cross-border net capital movements.11 In recent times a very large and rapidly growing volume of capital has moved back and forth across national boundaries. Much of this capital flow is speculative in nature, reflecting growing amounts of short-term capital that are moved around the world in search of the best temporary return. No data on such flows are available for the early part of this century, but the data for recent decades are impressive. During 1980-95 cross-border transactions in bonds and equities as a percentage of GDP rose from 9% to 136% for the US, from 8% to 168% for Germany, and from 8% to 66% for Japan (Baker et. al., 1998, p. 10). The total volume of foreign exchange transactions in the world rose from about $15 billion per day in 1973 to $80 billion per day in 1980 and $1260 billion per day in 1995. Trade in goods and services accounted for 15% of foreign exchange transactions in 1973 but for less than 2% of foreign exchange transactions in 1995 (Bhaduri, 1998, p. 152).
While cross-border flows of goods and capital are usually considered to be the best indicators of possible globalization of capitalism, changes that have occurred over time within capitalist enterprises are also relevant. That is, the much-discussed rise of the transnational corporation (TNC) is relevant here, where a TNC is a corporation which has a substantial proportion of its sales, assets, and employees outside its home country.12 TNCs existed in the pre-World War I era, primarily in the extractive sector. In the post-World War II period many large manufacturing corporations in the US, Western Europe, and Japan became TNCs.
The largest TNCs are very international measured by the location of their activities. One study found that the 100 largest TNCs in the world (ranked by assets) had 40.4% of their assets abroad, 50.0% of output abroad, and 47.9% of employment abroad in 1996 (Sutcliffe and Glyn, 1999, p. 125). While this shows that the largest TNCs are significantly international in their activities, all but a handful have retained a single national base for top officials and major stockholders.13 The top 200 TNCs ranked by output were estimated to produce only about 10 per cent of world GDP in 1995 (Sutcliffe and Glyn, 1999, p. 122).
By the close of the twentieth century, capitalism had become significantly more globalized than it had been fifty years ago, and by some measures it is much more globalized than it had been at the previous peak of this process in 1913. The most important features of globalization today are greatly increased international trade, increased flows of capital across national boundaries (particularly speculative short-term capital), and a major role for large TNCs in manufacturing, extractive activities, and finance, operating worldwide yet retaining in nearly all cases a clear base in a single nation-state.
While the earlier wave of globalization before World War I did produce a capitalism that was significantly international, two features of that earlier international system differed from the current global capitalism in ways that are relevant here. First, the pre-world War I globalization took place within a world carved up into a few great colonial empires, which meant that much of the so-called "cross-border" trade and investment of that earlier era actually occurred within a space controlled by a single state. Second, the high level of world trade reached before World War I occurred within a system based much more on specialization and division of labor. That is, manufactured goods were exported by the advanced capitalist countries in exchange for primary products, unlike today when most trade is in manufactured goods. In 1913 62.5% of world trade was in primary products (Bairoch and Kozul-Wright, 1998, p. 45). By contrast, in 1970 60.9% of world exports were manufactured goods, rising to 74.7% in 1994 (Baker et. al., 1998, p. 7).
Some analysts argue that globalization has produced a world of such economic interdependence that individual nation-states no longer have the power to regulate capital. However, while global interdependence does create difficulties for state regulation, this effect has been greatly exaggerated. Nation-states still retain a good deal of potential power vis-a-vis capitalist firms, provided that the political will is present to exercise such power. For example, even such a small country as Malaysia proved able to successfully impose capital controls following the Asian financial crisis of 1997, despite the opposition of the IMF and the US government. A state that has the political will to exercise some control over movements of goods and capital across its borders still retains significant power to regulate business. The more important effect of globalization has been on the political will to undertake state regulation, rather than on the technical feasibility of doing so. Globalization has had this effect by changing the competitive structure of capitalism. It appears that globalization in this period has made capitalism significantly more competitive, in several ways. First, the rapid growth of trade has changed the situation faced by large corporations. Large corporations that had previously operated in relatively controlled oligopolistic domestic markets now face competition from other large corporations based abroad, both in domestic and foreign markets. In the US the rate of import penetration of domestic manufacturing markets was only 2 per cent in 1950; it rose to 8% in 1971 and 16% by 1993, an 8-fold increase since 1950 (Sutcliffe and Glyn, 1999, p. 116).
Second, the rapid increase in foreign direct investment has in many cases placed TNCs production facilities in the home markets of their foreign rivals. General Motors not only faces import competition from Toyota and Honda but has to compete with US-produced Toyota and Honda vehicles. Third, the increasingly integrated and open world financial system has thrown the major banks and other financial institutions of the leading capitalist nations increasingly into competition with one another.
Globalization appears to be one factor that has transformed big business from a supporter to an opponent of the interventionist state. It has done so partly by producing TNCs whose tie to the domestic markets for goods and labor is limited. More importantly, globalization tends to turn big business into small business. The process of globalization has increased the competitive pressure faced by large corporations and banks, as competition has become a world-wide relationship.17 Even if those who run large corporations and financial institutions recognize the need for a strong nationstate in their home base, the new competitive pressure they face shortens their time horizon. It pushes them toward support for any means to reduce their tax burden and lift their regulatory constraints, to free them to compete more effectively with their global rivals. While a regulationist state may seem to be in the interests of big business, in that it can more effectively promote capital accumulation in the long run, in a highly competitive environment big business is drawn away from supporting a regulationist state.
Globalization has produced a world capitalism that bears some resemblance to the Robber Baron Era in the US. Giant corporations battle one another in a system lacking well defined rules. Mergers and acquisitions abound, including some that cross national boundaries, but so far few world industries have evolved the kind of tight oligopolistic structure that would lay the basis for a more controlled form of market relations. Like the late 19th century US Robber Barons, today's large corporations and banks above all want freedom from political burdens and restraints as they confront one another in world markets.18
The above interpretation of the rise and persistence of neoliberalism attributes it, at least in part, to the changed competitive structure of world capitalism resulting from the process of globalization. As neoliberalism gained influence starting in the 1970s, it became a force propelling the globalization process further. One reason for stressing the line of causation running from globalization to neoliberalism is the time sequence of the developments. The process of globalization, which had been reversed to some extent by political and economic events in the interwar period, resumed right after World War II, producing a significantly more globalized world economy and eroding the monopoly power of large corporations well before neoliberalism began its second coming in the mid 1970s. The rapid rise in merchandise exports began during the Bretton Woods period, as Table 3 showed. So too did the growing role for TNC's. These two aspects of the current globalization had their roots in the postwar era of state-regulated capitalism. This suggests that, to some extent, globalization reflects a long-run tendency in the capital accumulation process rather than just being a result of the rising influence of neoliberal policies. On the other hand, once neoliberalism became dominant, it accelerated the process of globalization. This can be seen most clearly in the data on cross-border flows of both real and financial capital, which began to grow rapidly only after the 1960s.
Other Factors Promoting Neoliberalism
The changed competitive structure of capitalism provides part of the explanation for the rise from the ashes of classical liberalism and its persistence in the face of widespread evidence of its failure to deliver the goods. However, three additional factors have played a role in promoting neoliberal dominance. These are the weakening of socialist movements in the industrialized capitalist countries, the demise of state socialism, and the long period that has elapsed since the last major capitalist economic crisis. There is space here for only some brief comments about these additional factors.
The socialist movements in the industrialized capitalist countries have declined in strength significantly over the past few decades. While Social Democratic parties have come to office in several European countries recently, they no longer represent a threat of even significant modification of capitalism, much less the specter of replacing capitalism with an alternative socialist system. The regulationist state was always partly a response to the fear of socialism, a point illustrated by the emergence of the first major regulationist state of the era of mature capitalism in Germany in the late 19th century, in response to the world=s first major socialist movement. As the threat coming from socialist movements in the industrialized capitalist countries has receded, so too has to incentive to retain the regulationist state.
The existence of a powerful bloc of Communist-run states with an alternative "state socialist" socioeconomic system tended to push capitalism toward a state regulationist form. It reinforced the fear among capitalists that their own working classes might turn against capitalism. It also had an impact on relations among the leading capitalist states, promoting inter-state unity behind US leadership, which facilitated the creation and operation of a world-system of state-regulated capitalism.19 The demise of state socialism during 1989-91 removed one more factor that had reinforced the regulationist state.
The occurrence of a major economic crisis tends to promote an interventionist state, since active state intervention is required to overcome a major crisis. The memory of a recent major crisis tends to keep up support for a regulationist state, which is correctly seen as a stabilizing force tending to head off major crises. As the Great Depression of the 1930s has receded into the distant past, the belief has taken hold that major economic crises have been banished forever. This reduces the perceived need to retain the regulationist state.
If neoliberalism continues to reign as the dominant ideology and policy stance, it can be argued that world capitalism faces a future of stagnation, instability, and even eventual social breakdown.20 However, from the factors that have promoted neoliberalism one can see possible sources of a move back toward state-regulated capitalism at some point. One possibility would be the development of tight oligopoly and regulated competition on a world scale. Perhaps the current merger wave might continue until, as happened at the beginning of the 20th century within the US and in other industrialized capitalist economies, oligopoly replaced cutthroat competition, but this time on a world scale. Such a development might revive big business support for an interventionist state. However, this does not seem to be likely in the foreseeable future. The world is a big place, with differing cultures, laws, and business practices in different countries, which serve as obstacles to overcoming the competitive tendency in market relations. Transforming an industry=s structure so that two to four companies produce the bulk of the output is not sufficient in itself to achieve stable monopoly power, if the rivals are unable to communicate effectively with one another and find common ground for cooperation. Also, it would be difficult for international monopolies to exercise effective regulation via national governments, and a genuine world capitalist state is not a possibility for the foreseeable future.
If state socialism re-emerged in one or more major countries, perhaps this might push the capitalist world back toward the regulationist state. However, such a development does not seem likely. Even if Russia or Ukraine at some point does head in that direction, it would be unlikely to produce a serious rival socioeconomic system to that of world capitalism.
A more likely source of a new era of state interventionism might come from one of the remaining two factors considered above. The macro-instability of neoliberal global capitalism might produce a major economic crisis at some point, one which spins out of the control of the weakened regulatory authorities. This would almost certainly revive the politics of the regulationist state. Finally, the increasing exploitation and other social problems generated by neoliberal global capitalism might prod the socialist movement back to life at some point. Should socialist movements revive and begin to seriously challenge capitalism in one or more major capitalist countries, state regulationism might return in response to it. Such a development would also revive the possibility of finally superceding capitalism and replacing it with a system based on human need rather than private profit.
Apr 11, 2016 | economistsview.typepad.comLarry Summers:What's behind the revolt against global integration? : Since the end of World War II, a broad consensus in support of global economic integration as a force for peace and prosperity has been a pillar of the international order. ...Tom aka Rusty : , Monday, April 11, 2016 at 07:15 AM
This broad program of global integration has been more successful than could reasonably have been hoped. ... Yet a revolt against global integration is underway in the West. ...
One substantial part of what is behind the resistance is a lack of knowledge. ...The core of the revolt against global integration, though, is not ignorance. It is a sense - unfortunately not wholly unwarranted - that it is a project being carried out by elites for elites, with little consideration for the interests of ordinary people. ...
Elites can continue on the current path of pursuing integration projects and defending existing integration, hoping to win enough popular support that their efforts are not thwarted. On the evidence of the U.S. presidential campaign and the Brexit debate, this strategy may have run its course. ...
Much more promising is this idea: The promotion of global integration can become a bottom-up rather than a top-down project. The emphasis can shift from promoting integration to managing its consequences. This would mean a shift from international trade agreements to international harmonization agreements, whereby issues such as labor rights and environmental protection would be central, while issues related to empowering foreign producers would be secondary. It would also mean devoting as much political capital to the trillions of dollars that escape taxation or evade regulation through cross-border capital flows as we now devote to trade agreements. And it would mean an emphasis on the challenges of middle-class parents everywhere who doubt, but still hope desperately, that their kids can have better lives than they did.Is Summers really this naive?Jedgar Mihelic : , Monday, April 11, 2016 at 07:21 AMI think some fellows already had this idea: "Much more promising is this idea: The promotion of global integration can become a bottom-up rather than a top-down project" -- "Workers of the World, Unite. You have nothing to lose but your chains!" ~Marx/Engels, 1848pgl -> Jedgar Mihelic ... , Monday, April 11, 2016 at 07:28 AMKrugman sort of said this when he saw that apparel multinationals were shifting jobs out of China to Bangladesh. Like $3 an hour is just way too high for workers.pgl : , Monday, April 11, 2016 at 07:32 AMA large part of the concern over free trade comes from the weak economic performances around the globe. Summers could have addressed this. Jared Bernstein and Dean Baker - both sensible economists - for example recently called on the US to do its own currency manipulation so as to reverse the US$ appreciation which is lowering our net exports quite a bit.Peter -> pgl... , Monday, April 11, 2016 at 08:12 AM
What they left out is the fact that both China and Japan have seen currency appreciations as well. If we raise our net exports at their expense, that lowers their economic activity. Better would be global fiscal stimulus. I wish Larry had raised this issue here.The "populists" are raging against global trade which benefits the world poor. The Very Serious economists know what is really going on and have to interests of the poor at heart. Plus they are smarter than the "populists" who are just dumb hippies.likbez -> pgl... , Monday, April 11, 2016 at 04:48 PM
pgl,Kgaard : , Monday, April 11, 2016 at 07:32 AM
And what about neocolonialism and debt slavery ? http://historum.com/blogs/solidaire/245-debt-slavery-neo-colonialism-neoliberalism.html
=== quote ===
One of the most fundamental reasons for the poverty and underdevelopment of Africa (and of almost all "third world" countries) is neo-colonialism, which in modern history takes the shape of external debt.
When countries are forced to pay 40,50,60% of their government budgets just to pay the interests of their enormous debts, there is little room for actual prosperity left.
International debtors are the modern colonialists, sucking the marrow of countries; no armies are needed anymore to keep those countries subjugated. Debt is the modern instrument of enslavement, the international banks, corporations and hedge funds the modern colonial powers, and its enforcers are instruments like the Global Bank, the IMF, and the corrupt, collaborationist governments (and totalitarian regimes) of those countries, supported and propped up by these neo-colonials.
In reality, not much has changed since the fall of the great colonial empires. In paper, countries have gained their sovereignty, but in reality they are enslaved to the international credit system.
The only thing that has changed, is that now the very colonial powers of the past, are threatened to become debt colonies themselves. You see, global capitalism and credit system has no country, nationality, colour; it only recognises the colour of money, earned at all cost by the very few, on the expense of the vast, unsuspected and lulled masses.
Debt had always been a very efficient way of control, either on a personal, or state level. And while most of us are aware of the implementations of personal debt and the risks involved, the corridors of government debt are poorly lit, albeit this kind of debt is affecting all citizens of a country and in ways more profound and far reaching into the future than those of private debt.
Global capitalism was flourishing after WW2, and reached an apex somewhere in the 70's.
The lower classes in the mature capitalist countries had gained a respectable portion of the distributed wealth, rights and privileges inconceivable several decades before. The purchasing power of the average American for example, was very satisfactory, fully justifying the American dream. Similar phenomena were taking place all over the "developed" world.Cover your a$$ much Larry? No mention of mass immigration? No mention of the elites' conscious, planned attack on homogeneous societies in Western Europe, the US, and now Japan?anne -> Kgaard... , Monday, April 11, 2016 at 07:44 AMThere is of course no reasonable answering to prejudice, since prejudice is always unreasonable, but should there be a question, when was the last time that, say, the United States or the territory that the US now covers was a homogeneous society?anne -> anne... , Monday, April 11, 2016 at 09:06 AM
Before the US engulfed Spanish peoples? Before the US engulfed African peoples? Before the US engulfed Indian peoples? When did the Irish, just to think of a random nationality, ruin "our" homogeneity?
I could continue, but how much of a point is the in being reasonable?Correcting:Kgaard -> anne... , Monday, April 11, 2016 at 11:21 AM
I could continue, but how much of a point is there in being reasonable?The US was 88% European as of 1960. As of 1800 it was like 90% English. So yes, it was basically a homogeneous society prior to the immigration act of 1965. Today it is extremely hard for Europeans to get into the US -- but easier for non-Europeans. Now why would that be? Hmm ....Benedict@Large -> pgl... , Monday, April 11, 2016 at 08:56 AM
Also ... What is your definition of prejudice?The only trade that is actually free is trade not covered by laws and/or treaties. All other trade is regulated trade.Ben Groves -> pgl... , Monday, April 11, 2016 at 10:10 AM
Here's a good rule to follow. When someone calls something the exact opposite of what it is, in all probability they are trying to hustle your wallet.
Has anyone been trying to hustle the wallets of the people who became ISIS? Oh please. That's a stupid question to even ask.
So is free trade, as in regulated trade that is called the opposite of what it is, responsible for ISIS? Of course it is.ISIS was invented by Wall Street who financed them. ISIS is a scam, just like Bin Laden's group, just like "COMMUNISM!!!!" to control people. To manipulate them.DrDick : , Monday, April 11, 2016 at 07:35 AM
It is like using the internet to think you are "edgy". Some dudes like psuedo-science scam artist Mike Adams are uncovering secrets to this witty viewer............then you wonder why society is degenerating. What should happen with Mike Adams is, he should be beaten up and castrated. My guess he would talk then. Boy would his idiot followers get a surprise and that surprise would have results other than "poor mikey, he was robbed".
This explains why guys like Trump get delegates. Not because he uses illegal immigrants in his old businesses, not because of some flat real wages going over 40 years, not because he is a conman marketer.........he makes them feel safe. That is purely it. I think its pathetic, but that is what happens in a emasculated world. Safety becomes absolute concern. "Trump makes me feel safe".
Guys, the bourgeois state is a protection racket and always has been. It makes you feel safe, secure and "feel like man". So we can enjoy every indulgent individual lust the world has to offer. Then comes in dialectics of what that protection racket should do.
To me, the bourgeois state is nothing more than a protection racket for the rich, something you should not forget.I find it rather precious that Summers pretends not to understand why people hate TPP. I do not think there is any real widespread antipathy toward global integration, though it does pose some rather substantial systemic dangers, as we saw in the global financial collapse. What people, including me, oppose is how that integration is structured. These agreements are about is not "free trade", but removing all restrictions on global capital and that is a big problem.pgl -> DrDick ... , Monday, April 11, 2016 at 07:57 AMOK - some substance finally. TPP is not free trade. It is protectionism for the rich.DrDick -> pgl... , Monday, April 11, 2016 at 11:10 AMActually, this is my first actual response to the post itself, but you were too busy being and a*****e to notice. All or most modern "free trade" agreements are like that. What people oppose is agreements which impoverish them and enrich capital.JF -> DrDick... , Monday, April 11, 2016 at 03:52 PMI think this is what Summers is saying. The new era requires much more thought about looking from the bottom's perspective.Dan Kervick -> pgl... , Monday, April 11, 2016 at 03:33 PM
Summers is speaking wisdom, keep it up, but I am surprised.This has become a popular line, and it's not exactly false. But so what if it were a "free trade" agreement? More free trade arrangement are not always better trade arrangements. People have seen the results of the labor race to the bottom caused by earlier free trade agreements; and now they are guessing we're going to get the same kind of race to the bottom with TPP when we have to put all of our environmental laws and other domestic regulations into capitalist competition with backward countries.Denis Drew : , Monday, April 11, 2016 at 07:38 AM" The promotion of global integration can become a bottom-up rather than a top-down project. "Peter : , Monday, April 11, 2016 at 08:31 AM
" ... whereby issues such as labor rights and environmental protection would be central ... "
Now if we could just adopt that policy internally in the United States first we could then (and only then) support it externally across the world.
Easy approach: (FOR THE TEN MILLIONTH TIME!) progressive states (WA, OR, CA, NV, IL, NY, MD) could simply treat union busting the same way any OTHER major muscling or manipulation of the free market is treated: make it a felony. FYI (for those who are not aware) states can add to federal labor protections, just not subtract.
A completely renewed, re-constituted democracy would be born.
Biggest obstacle to this being done in my (crackpot?) view: human males. Being instinctive pack hunters, before they check out any idea they, first, check in with the pack (all those other boys who are also checking in with the pack) -- almost automatically infer impossibility to overcome what they see (correctly?) as wheels within wheels of inertia.
Self-fulfilling prophecy: nothing (not the most obvious, SHOULD BE easiest possible to get support for actions) ever gets done.http://jaredbernsteinblog.com/new_path_forward/anne : , Monday, April 11, 2016 at 09:12 AM
I'm not the only one seeking a new path forward on trade.
by Jared Bernstein
April 11th, 2016 at 9:20 am
Here's Larry's view of the way forward:
"The promotion of global integration can become a bottom-up rather than a top-down project. The emphasis can shift from promoting integration to managing its consequences. This would mean a shift from international trade agreements to international harmonization agreements, whereby issues such as labor rights and environmental protection would be central, while issues related to empowering foreign producers would be secondary. It would also mean devoting as much political capital to the trillions of dollars that escape taxation or evade regulation through cross-border capital flows as we now devote to trade agreements. And it would mean an emphasis on the challenges of middle-class parents everywhere who doubt, but still hope desperately, that their kids can have better lives than they did.
Good points, all. "Bottom-up" means what I've been calling a more representative, inclusive process. But what's this about "international harmonization?""
It's a way of saying that we need to reduce the "frictions" and thus costs between trading partners at the level of pragmatic infrastructure, not corporate power. One way to think of this is TFAs, not FTAs. TFAs are trade facilitation agreements, which are more about integrating ports, rail, and paperwork than patents that protect big Pharma.
It's refreshing to see mainstreamers thinking creatively about the anger that's surfaced around globalization. Waiting for the anger to dissipate and then reverting back to the old trade regimes may be the preferred path for elites, but that path may well be blocked. We'd best clear a new, wider path, one that better accommodates folks from all walks of life, both here and abroad."
"What's Behind The Revolt Against Global Integration?" -- Washington Post editors title.Longtooth : , Monday, April 11, 2016 at 01:41 PM
"Global trade should be remade from the bottom up" -- Lawrence Summers title.
I find the difference in titles important in showing just how slanted Washington Post editors are.Summers: "Pie in the Sky" So trade negotiations would have to be lead by labor advocates and environmental groups -- sounds great to me, but I can't for the life of me figure out why the goods and service producers (i.e. capital owners) would have any incentive to promote trade under such a negotiated trade agreement... or that trade would actually occur. You'd have to eliminate private enterprise incentives to profit I think.. not something the U.S.'s "individualism" god can't tolerate.pgl -> Longtooth... , Monday, April 11, 2016 at 01:46 PMImagine a trade deal negotiated by the AFL-CIO. Labor wins a lot and capital owners lose a little. We can all then smile and say to the latter - go get your buddies in Congress more serious about the compensation principle. Turn the table!kthomas -> pgl... , Monday, April 11, 2016 at 03:01 PMNot being rude, but I fail to understand your response.Peter -> kthomas... , Monday, April 11, 2016 at 03:51 PM
AFL-CIO? turn the table?It's okay. He's drunk again.New Deal democrat : , Monday, April 11, 2016 at 03:07 PM"consensus in support of global economic integration as a force for peace and prosperity "George H. Blackford :
"The Great Illusion" ( https://en.m.wikipedia.org/wiki/The_Great_Illusion )
That increased trade is a bulwark against war rears its ugly head again.
The above book which so ironically delivered the message was published in 1910.
Alas, the Kaiser, the Tsar, and the Emperor did not act in accord with its tenets. Either increased global trade is irrelevant to war and peace, or World War I didn't happen. Your pick which to believe.Our problems began back in the 1970s when we abandoned the Bretton Woods international capital controls and then broke the unions, cut taxes on corporations and upper income groups, and deregulated the financial system. This eventually led a stagnation of wages in the US and an increase in the concentration of income at the top of the income distribution throughout the world: http://www.rwEconomics.com/Ch_1.htm
The export-led growth model that began in the 1990s seriously exacerbated this problem as it proved to be unsustainable: http://www.rwEconomics.com/htm/WDCh_2.htm
When combined with tax cuts and financial deregulation it led to increasing debt relative to income in the importing countries that caused the financial catastrophe we went through in 2008, the economic stagnation that followed, and the social unrest we see throughout the world today. This, in turn, created a situation in which the full utilization of our economic resources can only be maintained through an unsustainable increase in debt relative to income: http://www.rwEconomics.com/htm/WDCh3e.htm
This is what has to be overcome if we are to get out of the mess the world is in today, and it's not going to be overcome by pretending that it's just going to go away if people can just become educated about the benefits of trade. At least that's not the way it worked out in the 1930s: http://www.rwEconomics.com/LTLGAD.htm
Nov 15, 2011 | aljazeera.com
Decades of neoliberal economic policies have concentrated wealth and are now spurring a global backlash.
Politics, US & Canada, Latin America, Chile, Egypt
ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. The massive popular protests that shook the globe this year have much in common, though most of the reporting on them in the mainstream media has obscured the similarities.
Whether in Egypt or the United States, young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity
ANN ARBOR, MICHIGAN - From Tunis to Tel Aviv, Madrid to Oakland, a new generation of youth activists is challenging the neoliberal state that has dominated the world ever since the Cold War ended. The massive popular protests that shook the globe this year have much in common, though most of the reporting on them in the mainstream media has obscured the similarities.
Whether in Egypt or the United States, young rebels are reacting to a single stunning worldwide development: the extreme concentration of wealth in a few hands thanks to neoliberal policies of deregulation and union busting. They have taken to the streets, parks, plazas and squares to protest against the resulting corruption, the way politicians can be bought and sold, and the impunity of the white-collar criminals who have run riot in societies everywhere. They are objecting to high rates of unemployment, reduced social services, blighted futures and above all the substitution of the market for all other values as the matrix of human ethics and life.
Pasha the Tiger
In the "glorious thirty years" after World War II, North America and Western Europe achieved remarkable rates of economic growth and relatively low levels of inequality for capitalist societies, while instituting a broad range of benefits for workers, students and retirees. From roughly 1980 on, however, the neoliberal movement, rooted in the laissez-faire economic theories of Milton Friedman, launched what became a full-scale assault on workers' power and an attempt, often remarkably successful, to eviscerate the social welfare state.
Neoliberals chanted the mantra that everyone would benefit if the public sector were privatised, businesses deregulated and market mechanisms allowed to distribute wealth. But as economist David Harvey argues, from the beginning it was a doctrine that primarily benefited the wealthy, its adoption allowing the top one per cent in any neoliberal society to capture a disproportionate share of whatever wealth was generated.
In the global South, countries that gained their independence from European colonialism after World War II tended to create large public sectors as part of the process of industrialization. Often, living standards improved as a result, but by the 1970s, such developing economies were generally experiencing a levelling-off of growth. This happened just as neoliberalism became ascendant in Washington, Paris and London as well as in Bretton Woods institutions like the International Monetary Fund. This "Washington consensus" meant that the urge to impose privatisation on stagnating, nepotistic postcolonial states would become the order of the day.
Egypt and Tunisia, to take two countries in the spotlight for sparking the Arab Spring, were successfully pressured in the 1990s to privatise their relatively large public sectors. Moving public resources into the private sector created an almost endless range of opportunities for staggering levels of corruption on the part of the ruling families of autocrats Zine El Abidine Ben Ali in Tunis and Hosni Mubarak in Cairo. International banks, central banks and emerging local private banks aided and abetted their agenda.
It was not surprising then that one of the first targets of Tunisian crowds in the course of the revolution they made last January was the Zitouna bank, a branch of which they torched. Its owner? Sakher El Materi, a son-in-law of President Ben Ali and the notorious owner of Pasha, the well-fed pet tiger that prowled the grounds of one of his sumptuous mansions. Not even the way his outfit sought legitimacy by practicing "Islamic banking" could forestall popular rage. A 2006 State Department cable released by WikiLeaks observed, "One local financial expert blames the [Ben Ali] Family for chronic banking sector woes due to the great percentage of non-performing loans issued through crony connections, and has essentially paralysed banking authorities from genuine recovery efforts." That is, the banks were used by the regime to give away money to his cronies, with no expectation of repayment.
Tunisian activists similarly directed their ire at foreign banks and lenders to which their country owes $14.4bn. Tunisians are still railing and rallying against the repayment of all that money, some of which they believe was borrowed profligately by the corrupt former regime and then squandered quite privately.
Tunisians had their own one per cent, a thin commercial elite, half of whom were related to or closely connected to President Ben Ali. As a group, they were accused by young activists of mafia-like, predatory practices, such as demanding pay-offs from legitimate businesses, and discouraging foreign investment by tying it to a stupendous system of bribes. The closed, top-heavy character of the Tunisian economic system was blamed for the bottom-heavy waves of suffering that followed: cost of living increases that hit people on fixed incomes or those like students and peddlers in the marginal economy especially hard.
It was no happenstance that the young man who immolated himself and so sparked the Tunisian rebellion was a hard-pressed vegetable peddler. It's easy now to overlook what clearly ties the beginning of the Arab Spring to the European Summer and the present American Fall: the point of the Tunisian revolution was not just to gain political rights, but to sweep away that one per cent, popularly imagined as a sort of dam against economic opportunity.
Tahrir Square, Zuccotti Park, Rothschild Avenue
The success of the Tunisian revolution in removing the octopus-like Ben Ali plutocracy inspired the dramatic events in Egypt, Libya, Yemen, Syria and even Israel that are redrawing the political map of the Middle East. But the 2011 youth protest movement was hardly contained in the Middle East. Estonian-Canadian activist Kalle Lasn and his anti-consumerist colleagues at the Vancouver-based Adbusters Media Foundation were inspired by the success of the revolutionaries in Tahrir Square in deposing dictator Hosni Mubarak.
Their organisation specialises in combatting advertising culture through spoofs and pranks. It was Adbusters magazine that sent out the call on Twitter in the summer of 2011 for a rally at Wall Street on September 17, with the now-famous hash tag #OccupyWallStreet. A thousand protesters gathered on the designated date, commemorating the 2008 economic meltdown that had thrown millions of Americans out of their jobs and their homes. Some camped out in nearby Zuccotti Park, another unexpected global spark for protest.
The Occupy Wall Street movement has now spread throughout the United States, sometimes in the face of serious acts of repression, as in Oakland, California. It has followed in the spirit of the Arab and European movements in demanding an end to special privileges for the richest one per cent, including their ability to more or less buy the US government for purposes of their choosing. What is often forgotten is that the Ben Alis, Mubaraks and Gaddafis were not simply authoritarian tyrants. They were the one per cent and the guardians of the one per cent, in their own societies - and loathed for exactly that.
Last April, around the time that Lasn began imagining Wall Street protests, progressive activists in Israel started planning their own movement. In July, sales clerk and aspiring filmmaker Daphne Leef found herself unable to cover a sudden rent increase on her Tel Aviv apartment. So she started a protest Facebook page similar to the ones that fuelled the Arab Spring and moved into a tent on the posh Rothschild Avenue where she was soon joined by hundreds of other protesting Israelis. Week by week, the demonstrations grew, spreading to cities throughout the country and culminating on September 3 in a massive rally, the largest in Israel's history. Some 300,000 protesters came out in Tel Aviv, 50,000 in Jerusalem and 40,000 in Haifa. Their demands included not just lower housing costs, but a rollback of neoliberal policies, less regressive taxes and more progressive, direct taxation, a halt to the privatisation of the economy, and the funding of a system of inexpensive education and child care.
Many on the left in Israel are also deeply troubled by the political and economic power of right-wing settlers on the West Bank, but most decline to bring the Palestinian issue into the movement's demands for fear of losing support among the middle class. For the same reason, the way the Israeli movement was inspired by Tahrir Square and the Egyptian revolution has been downplayed, although "Walk like an Egyptian" signs - a reference both to the Cairo demonstrations and the 1986 Bangles hit song - have been spotted on Rothschild Avenue.
Most of the Israeli activists in the coastal cities know that they are victims of the same neoliberal order that displaces the Palestinians, punishes them and keeps them stateless. Indeed, the Palestinians, altogether lacking a state but at the complete mercy of various forms of international capital controlled by elites elsewhere, are the ultimate victims of the neoliberal order. But in order to avoid a split in the Israeli protest movement, a quiet agreement was reached to focus on economic discontents and so avoid the divisive issue of the much-despised West Bank settlements.
There has been little reporting in the Western press about a key source of Israeli unease, which was palpable to me when I visited the country in May. Even then, before the local protests had fully hit their stride, Israelis I met were complaining about the rise to power of an Israeli one per cent. There are now 16 billionaires in the country, who control $45bn in assets, and the current crop of 10,153 millionaires is 20 per cent larger than it was in the previous fiscal year. In terms of its distribution of wealth, Israel is now among the most unequal of the countries in the Organisation for Economic Cooperation and Development. Since the late 1980s, the average household income of families in the bottom fifth of the population has been declining at an annual rate of 1.1 per cent. Over the same period, the average household income of families among the richest 20 per cent went up at an annual rate of 2.4 per cent.
While neoliberalism has produced more unequal societies throughout the world, nowhere else has the income of the poor declined quite so strikingly. The concentration of wealth in a few hands profoundly contradicts the founding principles of Israel's Labour Zionism, and results from decades of right-wing Likud policies punishing the poor and middle classes and shifting wealth to the top of society.
The indignant ones
European youth were also inspired by the Tunisians and Egyptians - and by a similar flight of wealth. I was in Barcelona on May 27, when the police attacked demonstrators camped out at the Placa de Catalunya, provoking widespread consternation. The government of the region is currently led by the centrist Convergence and Union Party, a moderate proponent of Catalan nationalism. It is relatively popular locally, and so Catalans had not expected such heavy-handed police action to be ordered. The crackdown, however, underlined the very point of the protesters, that the neoliberal state, whatever its political makeup, is protecting the same set of wealthy miscreants.
Spain's "indignados" (indignant ones) got their start in mid-May with huge protests at Madrid's Puerta del Sol Plaza against the country's persistent 21 per cent unemployment rate (and double that among the young). Egyptian activists in Tahrir Square immediately sent a statement of warm support to those in the Spanish capital (as they would months later to New York's demonstrators). Again following the same pattern, the Spanish movement does not restrict its objections to unemployment (and the lack of benefits attending the few new temporary or contract jobs that do arise). Its targets are the banks, bank bailouts, financial corruption and cuts in education and other services.
Youth activists I met in Toledo and Madrid this summer denounced both of the country's major parties and, indeed, the very consumer society that emphasised wealth accumulation over community and material acquisition over personal enrichment. In the past two months Spain's young protesters have concentrated on demonstrating against cuts to education, with crowds of 70,000 to 90,000 coming out more than once in Madrid and tens of thousands in other cities. For marches in support of the Occupy Wall Street movement, hundreds of thousands reportedly took to the streets of Madrid and Barcelona, among other cities.
The global reach and connectedness of these movements has yet to be fully appreciated. The Madrid education protesters, for example, cited for inspiration Chilean students who, through persistent, innovative, and large-scale demonstrations this summer and fall, have forced that country's neoliberal government, headed by the increasingly unpopular billionaire president Sebastian Pinera, to inject $1.6bn in new money into education. Neither the crowds of youth in Madrid nor those in Santiago are likely to be mollified, however, by new dorms and laboratories. Chilean students have already moved on from insisting on an end to an ever more expensive class-based education system to demands that the country's lucrative copper mines be nationalised so as to generate revenues for investment in education. In every instance, the underlying goal of specific protests by the youthful reformists is the neoliberal order itself.
The word "union" was little uttered in American television news coverage of the revolutions in Tunisia and Egypt, even though factory workers and sympathy strikes of all sorts played a key role in them. The right-wing press in the US actually went out of its way to contrast Egyptian demonstrations against Mubarak with the Wisconsin rallies of government workers against Governor Scott Walker's measure to cripple the bargaining power of their unions.
The Egyptians, Commentary typically wrote, were risking their lives, while Wisconsin's union activists were taking the day off from cushy jobs to parade around with placards, immune from being fired for joining the rallies. The implication: the Egyptian revolution was against tyranny, whereas already spoiled American workers were demanding further coddling.
The American right has never been interested in recognising this reality: that forbidding unions and strikes is a form of tyranny. In fact, it wasn't just progressive bloggers who saw a connection between Tahrir Square and Madison. The head of the newly formed independent union federation in Egypt dispatched an explicit expression of solidarity to the Wisconsin workers, centering on worker's rights.
At least, Commentary did us one favour: it clarified why the story has been told as it has in most of the American media. If the revolutions in Tunisia, Egypt and Libya were merely about individualistic political rights - about the holding of elections and the guarantee of due process - then they could be depicted as largely irrelevant to politics in the US and Europe, where such norms already prevailed.
If, however, they centered on economic rights (as they certainly did), then clearly the discontents of North African youth when it came to plutocracy, corruption, the curbing of workers' rights, and persistent unemployment deeply resembled those of their American counterparts.
The global protests of 2011 have been cast in the American media largely as an "Arab Spring" challenging local dictatorships - as though Spain, Chile and Israel do not exist. The constant speculation by pundits and television news anchors in the US about whether "Islam" would benefit from the Arab Spring functioned as an Orientalist way of marking events in North Africa as alien and vaguely menacing, but also as not germane to the day to day concerns of working Americans. The inhabitants of Zuccotti Park in lower Manhattan clearly feel differently.
Facebook flash mobs
If we focus on economic trends, then the neoliberal state looks eerily similar, whether it is a democracy or a dictatorship, whether the government is nominally right of centre or left of centre. As a package, deregulation, the privatisation of public resources and firms, corruption and forms of insider trading and interference in the ability of workers to organise or engage in collective bargaining have allowed the top one per cent in Israel, just as in Tunisia or the US, to capture the lion's share of profits from the growth of the last decades.
Observers were puzzled by the huge crowds that turned out in both Tunis and Tel Aviv in 2011, especially given that economic growth in those countries had been running at a seemingly healthy five per cent per annum. "Growth", defined generally and without regard to its distribution, is the answer to a neoliberal question. The question of the 99 per cent, however, is: Who is getting the increased wealth? In both of those countries, as in the US and other neoliberal lands, the answer is: disproportionately the one per cent.
If you were wondering why outraged young people around the globe are chanting such similar slogans and using such similar tactics (including Facebook "flash mobs"), it is because they have seen more clearly than their elders through the neoliberal shell game.
Juan Cole is the Richard P. Mitchell Professor of History and the director of the Centre for South Asian Studies at the University of Michigan. His latest book, Engaging the Muslim World, is just out in a revised paperback edition from Palgrave Macmillan. He runs the Informed Comment website.
A version of this article was first published on Tom Dispatch.
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.
May 27, 2014 | The World Financial Review
World capitalism is experiencing the worst crisis in its 500 year history. Global capitalism is a qualitatively new stage in the open ended evolution of capitalism characterised by the rise of transnational capital, a transnational capitalist class, and a transnational state. Below, William I. Robinson argues that the global crisis is structural and threatens to become systemic, raising the specter of collapse and a global police state in the face of ecological holocaust, concentration of the means of violence, displacement of billions, limits to extensive expansion and crises of state legitimacy, and suggests that a massive redistribution of wealth and power downward to the poor majority of humanity is the only viable solution.
The New Global Capitalism and the 21st Century Crisis
The world capitalist system is arguably experiencing the worst crisis in its 500 year history. World capitalism has experienced a profound restructuring through globalisation over the past few decades and has been transformed in ways that make it fundamentally distinct from its earlier incarnations. Similarly, the current crisis exhibits features that set it apart from earlier crises of the system and raise the stakes for humanity. If we are to avert disastrous outcomes we must understand both the nature of the new global capitalism and the nature of its crisis. Analysis of capitalist globalisation provides a template for probing a wide range of social, political, cultural and ideological processes in this 21st century. Following Marx, we want to focus on the internal dynamics of capitalism to understand crisis. And following the global capitalism perspective, we want to see how capitalism has qualitatively evolved in recent decades.
The system-wide crisis we face is not a repeat of earlier such episodes such as that of the the 1930s or the 1970s precisely because capitalism is fundamentally different in the 21st century. Globalisation constitutes a qualitatively new epoch in the ongoing and open-ended evolution of world capitalism, marked by a number of qualitative shifts in the capitalist system and by novel articulations of social power. I highlight four aspects unique to this epoch.1
First is the rise of truly transnational capital and a new global production and financial system into which all nations and much of humanity has been integrated, either directly or indirectly. We have gone from a world economy, in which countries and regions were linked to each other via trade and financial flows in an integrated international market, to a global economy, in which nations are linked to each more organically through the transnationalisation of the production process, of finance, and of the circuits of capital accumulation. No single nation-state can remain insulated from the global economy or prevent the penetration of the social, political, and cultural superstructure of global capitalism. Second is the rise of a Transnational Capitalist Class (TCC), a class group that has drawn in contingents from most countries around the world, North and South, and has attempted to position itself as a global ruling class. This TCC is the hegemonic fraction of capital on a world scale. Third is the rise of Transnational State (TNS) apparatuses. The TNS is constituted as a loose network made up of trans-, and supranational organisations together with national states. It functions to organise the conditions for transnational accumulation. The TCC attempts to organise and institutionally exercise its class power through TNS apparatuses. Fourth are novel relations of inequality, domination and exploitation in global society, including an increasing importance of transnational social and class inequalities relative to North-South inequalities.
Cyclical, Structural, and Systemic Crises
Most commentators on the contemporary crisis refer to the "Great Recession" of 2008 and its aftermath. Yet the causal origins of global crisis are to be found in over-accumulation and also in contradictions of state power, or in what Marxists call the internal contradictions of the capitalist system. Moreover, because the system is now global, crisis in any one place tends to represent crisis for the system as a whole. The system cannot expand because the marginalisation of a significant portion of humanity from direct productive participation, the downward pressure on wages and popular consumption worldwide, and the polarisation of income, has reduced the ability of the world market to absorb world output. At the same time, given the particular configuration of social and class forces and the correlation of these forces worldwide, national states are hard-pressed to regulate transnational circuits of accumulation and offset the explosive contradictions built into the system.
Is this crisis cyclical, structural, or systemic? Cyclical crises are recurrent to capitalism about once every 10 years and involve recessions that act as self-correcting mechanisms without any major restructuring of the system. The recessions of the early 1980s, the early 1990s, and of 2001 were cyclical crises. In contrast, the 2008 crisis signaled the slide into astructural crisis. Structural crises reflect deeper contradictions that can only be resolved by a major restructuring of the system. The structural crisis of the 1970s was resolved through capitalist globalisation. Prior to that, the structural crisis of the 1930s was resolved through the creation of a new model of redistributive capitalism, and prior to that the structural crisis of the 1870s resulted in the development of corporate capitalism. A systemic crisis involves the replacement of a system by an entirely new system or by an outright collapse. A structural crisis opens up the possibility for a systemic crisis. But if it actually snowballs into a systemic crisis – in this case, if it gives way either to capitalism being superseded or to a breakdown of global civilisation – is not predetermined and depends entirely on the response of social and political forces to the crisis and on historical contingencies that are not easy to forecast. This is an historic moment of extreme uncertainty, in which collective responses from distinct social and class forces to the crisis are in great flux.
Hence my concept of global crisis is broader than financial. There are multiple and mutually constitutive dimensions – economic, social, political, cultural, ideological and ecological, not to mention the existential crisis of our consciousness, values and very being. There is a crisis of social polarisation, that is, of social reproduction. The system cannot meet the needs or assure the survival of millions of people, perhaps a majority of humanity. There are crises of state legitimacy and political authority, or of hegemony and domination. National states face spiraling crises of legitimacy as they fail to meet the social grievances of local working and popular classes experiencing downward mobility, unemployment, heightened insecurity and greater hardships. The legitimacy of the system has increasingly been called into question by millions, perhaps even billions, of people around the world, and is facing expanded counter-hegemonic challenges. Global elites have been unable counter this erosion of the system's authority in the face of worldwide pressures for a global moral economy. And a canopy that envelops all these dimensions is a crisis of sustainability rooted in an ecological holocaust that has already begun, expressed in climate change and the impending collapse of centralised agricultural systems in several regions of the world, among other indicators.
By a crisis of humanity I mean a crisis that is approaching systemic proportions, threatening the ability of billions of people to survive, and raising the specter of a collapse of world civilisation and degeneration into a new "Dark Ages."2Global capitalism now couples human and natural history in such a way as to threaten to bring about what would be the sixth mass extinction in the known history of life on earth.
This crisis of humanity shares a number of aspects with earlier structural crises but there are also several features unique to the present:
- The system is fast reaching the ecological limits of its reproduction. Global capitalism now couples human and natural history in such a way as to threaten to bring about what would be the sixth mass extinction in the known history of life on earth.3 This mass extinction would be caused not by a natural catastrophe such as a meteor impact or by evolutionary changes such as the end of an ice age but by purposive human activity. According to leading environmental scientists there are nine "planetary boundaries" crucial to maintaining an earth system environment in which humans can exist, four of which are experiencing at this time the onset of irreversible environmental degradation and three of which (climate change, the nitrogen cycle, and biodiversity loss) are at "tipping points," meaning that these processes have already crossed their planetary boundaries.
- The magnitude of the means of violence and social control is unprecedented, as is the concentration of the means of global communication and symbolic production and circulation in the hands of a very few powerful groups. Computerised wars, drones, bunker-buster bombs, star wars, and so forth, have changed the face of warfare. Warfare has become normalised and sanitised for those not directly at the receiving end of armed aggression. At the same time we have arrived at the panoptical surveillance society and the age of thought control by those who control global flows of communication, images and symbolic production. The world of Edward Snowden is the world of George Orwell; 1984 has arrived;
- Capitalism is reaching apparent limits to its extensive expansion. There are no longer any new territories of significance that can be integrated into world capitalism, de-ruralisation is now well advanced, and the commodification of the countryside and of pre- and non-capitalist spaces has intensified, that is, converted in hot-house fashion into spaces of capital, so that intensive expansion is reaching depths never before seen. Capitalism must continually expand or collapse. How or where will it now expand?
- There is the rise of a vast surplus population inhabiting a "planet of slums,"4 alienated from the productive economy, thrown into the margins, and subject to sophisticated systems of social control and to destruction – to a mortal cycle of dispossession-exploitation-exclusion. This includes prison-industrial and immigrant-detention complexes, omnipresent policing, militarised gentrification, and so on;
- There is a disjuncture between a globalising economy and a nation-state based system of political authority. Transnational state apparatuses are incipient and have not been able to play the role of what social scientists refer to as a "hegemon," or a leading nation-state that has enough power and authority to organise and stabilise the system. The spread of weapons of mass destruction and the unprecedented militarisation of social life and conflict across the globe makes it hard to imagine that the system can come under any stable political authority that assures its reproduction.
Global Police State
How have social and political forces worldwide responded to crisis? The crisis has resulted in a rapid political polarisation in global society. Both right and left-wing forces are ascendant. Three responses seem to be in dispute.
One is what we could call "reformism from above." This elite reformism is aimed at stabilising the system, at saving the system from itself and from more radical responses from below. Nonetheless, in the years following the 2008 collapse of the global financial system it seems these reformers are unable (or unwilling) to prevail over the power of transnational financial capital. A second response is popular, grassroots and leftist resistance from below. As social and political conflict escalates around the world there appears to be a mounting global revolt. While such resistance appears insurgent in the wake of 2008 it is spread very unevenly across countries and regions and facing many problems and challenges.
Yet another response is that I term 21stcentury fascism.5 The ultra-right is an insurgent force in many countries. In broad strokes, this project seeks to fuse reactionary political power with transnational capital and to organise a mass base among historically privileged sectors of the global working class – such as white workers in the North and middle layers in the South – that are now experiencing heightened insecurity and the specter of downward mobility. It involves militarism, extreme masculinisation, homophobia, racism and racist mobilisations, including the search for scapegoats, such as immigrant workers and, in the West, Muslims. Twenty-first century fascism evokes mystifying ideologies, often involving race/culture supremacy and xenophobia, embracing an idealised and mythical past. Neo-fascist culture normalises and glamorises warfare and social violence, indeed, generates a fascination with domination that is portrayed even as heroic.
The need for dominant groups around the world to secure widespread, organised mass social control of the world's surplus population and rebellious forces from below gives a powerful impulse to projects of 21st century fascism. Simply put, the immense structural inequalities of the global political economy cannot easily be contained through consensual mechanisms of social control. We have been witnessing transitions from social welfare to social control states around the world. We have entered a period of great upheavals, momentous changes and uncertainties. The only viable solution to the crisis of global capitalism is a massive redistribution of wealth and power downward towards the poor majority of humanity along the lines of a 21st century democratic socialism, in which humanity is no longer at war with itself and with nature.
About the Author
William I. Robinson is professor of sociology, global and international studies, and Latin American studies, at the University of California-Santa Barbara. Among his many books are Promoting Polyarchy (1996), Transnational Conflicts (2003), A Theory of Global Capitalism (2004), Latin America and Global Capitalism (2008), and Global Capitalism and the Crisis of Humanity (2014).
Sep 15, 2016 | nationalinterest.orgby Robert Rector Rachel Sheffield
September 14, 2016 | The National Interest Blog
On Tuesday, the Census Bureau released its annual poverty report declaring that 43.1 million Americans lived in poverty in 2015.
We should be concerned about any American living in real material hardship, but much of what the Census reports about poverty is misleading.
Here are 15 facts about poverty in America that may surprise you. (All statistics are taken from U.S. government surveys.)- Poor households routinely report spending $2.40 for every $1 of income the Census says they have. - The average poor American lives in a house or apartment that is in good repair and has more living space than the average nonpoor person in France, Germany, or England. - Eighty-five percent of poor households have air conditioning. - Nearly three-fourths of poor households have a car or truck, and 31 percent have two or more cars or trucks. - Nearly two-thirds of poor households have cable or satellite TV. - Half have a personal computer; 43 percent have internet access. - Two-thirds have at least one DVD player - More than half of poor families with children have a video game system, such as an Xbox or PlayStation. - One-third have a wide-screen plasma or LCD TV.
(The above data on electronic appliances owned by poor households come from a 2009 government survey so the ownership rates among the poor today are most likely higher.)
Poverty and Hunger:
Activist groups spread alarming stories about widespread hunger in the nation, but in reality, most of the poor do not experience hunger or food shortages. The U.S. Department of Agriculture collects data on these topics in its household food security survey. For 2009, the survey showed:- Only 4 percent of poor parents reported that their children were hungry even once during the prior year because they could not afford food. - Some 18 percent of poor adults reported they were hungry even once in the prior year due to lack of money for food.
Poverty and Housing
The following are facts about the housing conditions of the poor.- Poverty and homelessness are sometimes confused. Over the course of a year, only 4 percent of poor persons become homeless (usually a temporary condition). - Only 9.5 percent of the poor live in mobile homes or trailers; the rest live in apartments or houses. - Forty percent of the poor own their own homes, typically, a three-bedroom house with one-and-a-half baths that is in good repair.
Facts About Extreme Poverty
- The left claims that one in 25 families with children live in " extreme poverty " on less than $2 per person per day. Government surveys of self-reported spending by families show the actual number is one in 4,469, not one in 25. The typical family allegedly in "extreme poverty" reports spending $25 for every $1 of income the left claims they have.
In Calculating Poverty, Census Ignores the Almost Entire Welfare State:
Why does the Census identify so many individuals as "poor" who do not appear to be poor in any normal sense of the term? The answer lies in the misleading way the Census measures "poverty." The Census defines a family as poor if its income falls below a specified income threshold. (For example, the poverty threshold for a family of four in 2015 was $24,036.) But in counting "income," the Census excludes nearly all welfare benefits.
In 2014, government spent over $1 trillion on means-tested welfare for poor and low income people. (This figure does not include Social Security or Medicare.) Welfare spending on cash, food, and housing was $342 billion.
The cash, food, and housing spending alone was 150 percent of the amount needed to eliminate all poverty in the U.S. But the Census ignored more than four-fifths of these benefits for purposes of measuring poverty. Effectively, the Census counts poverty in the U.S. by ignoring almost the entire welfare state.
Poverty and Self-Sufficiency
Do the higher living standards of families receiving welfare mean the welfare state is successful ? The answer is no. The real aim of welfare should be to make families self-sufficient: capable of supporting themselves above the poverty income threshold without reliance on government welfare aid.
Despite having spent over $25 trillion on means-tested welfare since the beginning of the War on Poverty under President Lyndon Johnson, many Americans are less capable of self-sufficiency today than when the War on Poverty began.
The pathways to self-sufficiency are work and marriage. We should reform the welfare state to promote these. Able-bodied recipients should be required to work or prepare for work as a condition of getting aid. Penalties against marriage in welfare programs should be removed.
Let's make welfare a hand-up, not a handout.
This first appeared in The Daily Signal here .
Apr 08, 2016 | The Washington PostYes, Donald Trump is wrong about unemployment. But he's not the only one. - The Washington Post
Listen to President Obama, and you'll hear that job growth is stronger than at any point in the past 20 years, and - as he said in his final State of the Union address - "anyone claiming that America's economy is in decline is peddling fiction."
Listen to Donald Trump and you'll hear something completely different. The billionaire Republican candidate for president told The Washington Post last week that the economy is one big Federal Reserve bubble waiting to burst, and that as for job growth, "we're not at 5 percent unemployment. We're at a number that's probably into the 20s if you look at the real number." Not only that, Trump said, but the numbers are juiced: "That was a number that was devised, statistically devised, to make politicians - and in particular, presidents - look good. And I wouldn't be getting the kind of massive crowds that I'm getting if the number was a real number."
It's easy enough to dismiss - as a phalanx of economists and analysts did - Trump's claims as yet another one of his all-too-frequent campaign lines that have little to do with reality. But with this one, at least, Trump is tapping into a deep and mostly overlooked well of popular suspicion of government numbers and a deeply held belief that what "we the people" are told about the economy by the government is lies, damn lies and statistics designed to benefit the elite at the expense of the working class. The stubborn persistence of these beliefs should be a reminder that just because the United States is doing well in general, that doesn't mean everyone in the country is. It's also a warning to experts and policymakers that in the real world, there is no "the economy," there are many, and generalizations have a way of glossing over some very rough patches.
Since the mid-20th century, when the U.S. government began keeping and compiling our modern suite of economic numbers, there has been constant skepticism of the reports, coming from different corners depending on economic trends and the broader political climate. In the 1950s and 1960s, for instance, organized labor was fairly convinced that the government was purposely underestimating inflation and the cost of living to keep Social Security payments low and wages from rising. George Meany, the powerful head of the American Federation of Labor at the time, claimed that the Bureau of Labor Statistics, which compiled both employment and inflation numbers, had "become identified with an effort to freeze wages and is not longer a free agency of statistical research."
Over the decades, those views hardened. Throughout the 1970s, as workers struggled with unemployment and stagflation, the government continually tweaked its formulas for measuring prices. By and large, these changes and new formulas were designed to make the figures more accurate in a fast-changing world. But for those who were already convinced the government was trying to paint a deliberately false picture, the tweaks and innovations were interpreted as a devious way to avoid spending money to help the ailing middle class, not trying to measure what was actually happening to design policies to help address it. The commissioner of BLS at the time, Janet Norwood, dismissed those concerns in testimony to Congress in the late 1970s, saying that when people don't get the number they want, "they feel there must be something wrong with the indicator itself."
Employment figures are sometimes seen as equally suspect. Jack Welch, the once-legendary former CEO of GE, blithely accused the Obama administration of manipulating the final employment report before the 2012 election to make the economic recovery look better than it was. "Unbelievable jobs numbers … these Chicago guys will do anything … can't debate so change numbers," he tweeted after that last October report showed better-than-expected job growth and lower-than-anticipated unemployment rate. His arguments were later fleshed out by New York Post columnist John Crudele, who went on to charge the Census Bureau (which works with BLS to create the samples for the unemployment rate) with faking and fabricating the numbers to help Obama win reelection.
These views are not fringe. Type the search terms "inflation is false" into Google, and you will get reams of articles and analysis from mainstream outlets and voices, including investment guru Bill Gross (who referred to inflation numbers as a "haute con job"). Similar results pop up with the terms "real unemployment rate," and given how many ways there are to count employment, there are legitimate issues with the headline number.
The cohort that responds to Trump reads those numbers in a starkly different light from the cohort laughing at him for it. Whenever the unemployment rate comes out showing improvement and hiring, those who are experiencing dwindling wages and shrinking opportunities might see a meticulously constructed web of lies meant to paint a positive picture so that the plight of tens of millions who have dropped out of the workforce can be ignored. The chairman of the Gallup organization, Jim Clifton, sees so many flaws with the way unemployment is measured that he has called the official rate a "Big Lie." In the Democratic presidential campaign, Bernie Sanders has also weighed in, saying the real unemployment rate is at best above 10 percent.
Beneath the anger and the distrust - which extend to a booming stock market that helps the wealthy and banks flush with profit even after the financial crisis - there lies a very real problem with how economists, the media and policymakers discuss economics. No, the bureaucrats in the Labor and Commerce departments who compile these numbers aren't a cabal engaged in a cover-up. And no, the Fed is not an Illuminati conspiracy. But the idea that a few simple big numbers that are at best averages to describe a large system we call "the economy" can adequately capture the stories of 320 million people is a fiction, one that we tell ourselves regularly, and which millions of people know to be false to their own experience.
It may be true that there is a national unemployment rate measured at 5 percent. But it is also true that for white men without a college degree, or white men who had worked factory jobs until the mid-2000s with no more than a high school education, the unemployment reality is much worse (though it's even worse for black and Hispanic men, who don't seem to be responding by flocking to Trump in large numbers). Even when those with these skill sets can get a job, the pay is woefully below a living wage. Jobs that don't pay well still count, in the stats, as jobs. Telling people who are barely getting by that the economy is just fine must appear much more than insensitive. It is insulting, and it feels like a denial of what they are experiencing.
The chords Trump strikes when he makes these claims, therefore, should be taken more seriously than the claims themselves. We need to be much more diligent in understanding what our national numbers do and do not tell us, and how much they obscure. In trying to hang our sense of what's what on a few big numbers, we risk glossing over the tens of millions whose lives don't fit those numbers and don't fit the story. "The economy" may be doing just fine, but that doesn't mean that everyone is. Inflation might be low, but millions can be struggling to meet basic costs just the same.
So yes, Trump is wrong, and he's the culmination of decades of paranoia and distrust of government reports. The economy overall is doing just fine. But people are still struggling. We don't have to share the paranoia or buy into the conspiratorial narrative to acknowledge that. A great nation, the one Trump promises to restore, can embrace more than one story, and can afford to speak to those left out of our rosy national numbers along with those whose experience reflect them.
the3sattlers, 4/8/2016 1:05 PM EDT
" The economy overall is doing just fine." Does this include QE? If the Fed is pouring billions of new money into the economy, how accurate is it to say that the economy is doing just fine?
james_harrigan, 4/8/2016 10:14 AM EDT
What a useless article. The author explains precisely nothing about what the official statistics do and do not measure, what they miss and what they capture.
Derbigdog, 4/8/2016 11:40 AM EDT
I had the same impression as well. Notice he does not mention that the Gallop number is over 10% and is based on their polling data.
captdon1, 4/8/2016 5:51 AM EDT
Not reported by WP
The first two years of Obama's presidency Democrats controlled the house and Senate. The second two years, Republicans controlled the Senate. The last two years of Obama's term, the Republicans controlled house and Senate. During this six years the national debt increase $10 TRILLION and the Government collected $9 TRILLION in taxes and borrowed $10 TRILLION. ($19 Trillion In Six Years!!!) (Where did our lovely politicians spend this enormous amount of money??? (Republicans and Democrats!)
reussere, 4/8/2016 1:43 AM EDT
Reading the comments below it strikes me again and again how far out of whack most people are with reality. It's absolutely true that using a single number for the employment rate reflects the overall average of the economy certainly doesn't measure how every person is doing, anymore than an average global temperature doesn't measure any local temperatures.
One thing not emphasized in the article is that there is a number of different statistics. The 5% figure refers to the U-3 statistic. Nearly all of the rest of the employment statistics are higher, some considerably so because they include different groups of people. But when you compare U-3 from different years, you are comparing apples and apples. The rest of the numbers very closely track with U-3. That is when U-3 goes up and down, U-6 go up and down pretty much in lockstep.
It is unfortunate that subpopulations of Americans are doing far worse (and some doing far better) than average. But that is the nature of averages after all. It is simply impossible for a single number (or even a group of a dozen different employment measurements) to accurately reflect a complex reality.
Smoothcountryside, 4/8/2016 12:04 PM EDT
The alternative measures of labor underutilization are defined as U-1 through U-6 with U-6 being the broadest measure and probably the closes to the "true" level of unemployment. Otherwise, all the rest of your commentary is correct.
southernbaked, 4/7/2016 11:02 PM EDT
Because this highly educated writer is totally bias, he left out some key parts, I personally lived though. He referred back to the late 70's twice. But never mentioned that Reagan changed how Unemployment was figured in the early 80's. He included all people in the military service, as employed. Before that, they was counted neither way. He also intentionally left out that when Obama, had the unemployed numbers dropped one month before the election, from 8.1% to 7.8% --because it was believed that no one could be reelected if it was above 8%.
Then after he was sworn in--- in January, they had to readjust the numbers back up. They blamed it on one employees mistakes-- PS. no one was fired or disciplined for fudging. Bottom line is, for every 1.8 manufacturing job, there are 2 government jobs, that is disaster. Because this writer is to young to have lived in America when it was great. When for every 1 government job, you had 3 manufacturing jobs.
I will enlighten him. I joined the workforce -- With no higher education -- when you merely walked down the road, and picked out a job. Because jobs hang on trees like apples. By 35 I COMPLETELY owned my first 3 bedroom brick house, and the 2 newer cars parked in the driveway. Anyone care to try that now ??
As for all this talk about education-- I have a bit of knowledge about that subject-- because I paid in full to send all under my roof through it. Without one dime of aide from anyone. The above writer is proof-- you can be heavily educated, and DEAD WRONG. There is nothing good about this economy. Signed, UN-affiliated to either corrupted party
Bluhorizons, 4/7/2016 9:43 PM EDT
"we're not at 5 percent unemployment. We're at a number that's probably into the 20s if you look at the real number." Trump is correct. The unemployment data is contrived from data about people receiving unemployment compensation but the people who's unemployment has ended and people who have just given up is invisible.
"It may be true that there is a national unemployment rate measured at 5 percent. But it is also true that for white men without a college degree, or white men who had worked factory jobs until the mid-2000s with no more than a high school education, the unemployment reality is much worse "
The author goes on and on about the legitimate distrust of government unemployment data and then tells us Trump is wrong. But the article convinces us Trump is right! So, this article its not really about the legitimate distrust of government data is is about the author's not liking Trump. Typical New Left bs
Aushax, 4/7/2016 8:24 PM EDT
Last jobs report before the 2012 election the number unusually dropped then was readjusted up after the election. Coincidentally?
George Mason, 4/7/2016 8:15 PM EDT
U6 is 9.8% for March 2016. We still have 94 million unemployed and you want to say its 5 % what journalistic malpractice.
F mackey, 4/7/2016 7:57 PM EDT
hey reporter,Todays WSJ, More than 40% of the student borrowers aren't making payments? WHY? easy,they owe big $ money$ & cant get a job or a well paying job to pay back the loans,hey reporter,i'd send you $10 bucks to buy a clue,but you'd probably get lost going to the store,what a %@%@%@,another reporter,who doesn't have a clue on whats going on,jmo
SimpleCountryActuary, 4/7/2016 7:57 PM EDT
This reporter is a Hillary tool. Even the Los Angeles Times on March 6th had to admit:
"Trump is partly right in saying that trade has cost the U.S. economy jobs and held down wages. He may also be correct - to a degree - in saying that low-skilled immigrants have depressed salaries for certain jobs or industries..."
If this is the quality of reporting the WaPo is going to provide, namely even worse than the Los Angeles Times, then Bezos had better fire the editorial staff and buy a new one.
Clyde4, 4/7/2016 7:34 PM EDT [Edited]
This article dismissing Trump is exactly what is wrong with journalism today - all about creating a false reality for people instead of investigating and reporting
Trump has emphasized that he is looking at the percent of the population that is participating in the workforce - and that this participation rate is currently at historical lows -- and Trump has been clear that his approach to paying down the national debt is based on getting the participation rates back to historical levels
The author completely ignored the big elephant in the room -- that is irresponsible journalism
The author may want to look into how the unemployment rate shot up in 2008 when the government extended benefits and then the unemployment rate plummeted again when unemployment benefits were decrease (around 2011, I believe) - if I were the author I would do a little research into whether the unemployment rate correlates with how much is paid out in benefits or with unemployment determined through some other approach (like surveys
dangerbird1225, 4/7/2016 7:25 PM EDT
Bunch of crap. If you stop counting those that stop looking for a job, your numbers are wrong. Period. Why didn't this apologist for statistics mention that?
watchkeptoverthewatcher, 4/7/2016 6:27 PM EDT
Ya with a labor participation rate of 63%
AtlasRocked, 4/7/2016 5:12 PM EDT
"The government can't lie about a hundred billion dollars of Social Security money stolen for the Clinton 'balanced budget', that would be a crime against the citizens, they would revolt. John, come one now. "
I didn't say it first, Senator Ernest Hollings did, on the Senate floor.
"Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000." - Senate speech, Democratic Senator Ernest Hollings, October 28, 1999
http://www.c-span.org/video/?c3319676 at 5:30
And here is how they did it: http://www.craigsteiner.us/articles/16
rgengel, 4/7/2016 5:03 PM EDT
Go to New Orleans Chicago Atlanta Los Angeles Detroit stop anybody on the street and ask if unemployment is 5% and that there is a 95% chance a guy can get a job.
Then you will have a statistic reference point. Its not a Democratic or republican issue because both of them have manipulated the system for so long its meaningless. Go Trump 2016 and get this crap sorted out with common sense plain English
AtlasRocked, 4/7/2016 4:37 PM EDT
There is plenty of evidence the figures are cooked, folks, enough to fill a book: Atlas Shouts. Don't believe trash like this article claims. GDP, unemployment and inflation are all manipulated numbers, as Campbell's Law predicts.
I can't believe the Washington Post prints propaganda like this.
TimberDave, 4/7/2016 2:23 PM EDT
I do remember when the officially-announced unemployment rate stopped including those who were no longer looking for work. That *was* a significant shift, and there's no doubt it made politicians (Reagan, I think it was) look better; of course, no President since then has reversed it, as it would instantly make themselves look worse.
astroboy_2000, 4/7/2016 1:28 PM EDT
This would be a much more intelligent article if the writer actually said what the government considers as 'employed'.
Working one hour a week, at minimum wage, is 'employed', according to the government. No wonder unemployment is at 5%.
Add in people who are working, but want and need full time jobs, add in people who have dropped out of the labor market and/or retired earlier than they wanted to, and unemployment is at least 10%. Ten seconds on Google will show you that.
The writer should be sacked for taking a very serious issue and turning it into a piece of non-informative fluff. Bad mouthing Trump and Sanders is the same as endorsing Hilly.
Manchester0913, 4/7/2016 2:12 PM EDT
The number you're referencing is captured under U6. However, U3 is the traditional measure.
Son House, 4/7/2016 2:24 PM EDT
The government doesn't claim that working one hour a week is employed. Google U 3 unemployment. Then google U 6 unemployment. You can be enlightened.
Liz in AL, 4/7/2016 7:21 PM EDT
I've found this compilation of all 6 of the "U-rates" very useful. It encompasses the most restrictive (and thus smallest) U-1 rate, though the most expansive U-6. It provides brief descriptions of what gets counted for each rate, and (at least for more recent years) provides the ability to compare at the monthly level of detail. U6 Unemployment Rate Portal Seven
This article outlines the main elements of rupture and continuity in the global political economy since the global economic crisis of 2008-2009. While the current calamity poses a more systemic challenge to neoliberal globalization than genetically similar turbulences in the semi-periphery during the 1990s, we find that evidence for its transformative significance remains mixed. Efforts to reform the distressed capitalist models in the North encounter severe resistance, and the broadened multilateralism of the G-20 is yet to provide effective global economic governance. Overall, neoliberal globalization looks set to survive, but in more heterodox and multipolar fashion. Without tighter coordination between old and emerging powers, this new synthesis is unlikely to inspire lasting solutions to pressing global problems such as an unsustainable international financial architecture and the pending environmental catastrophe, and may even fail to preserve some modest democratic and developmental gains of the recent past.
Jun 01, 2016 | www.nakedcapitalism.comdiptherio , June 1, 2016 at 2:40 pmLambert Strether Post author , June 1, 2016 at 2:53 pm
It's not hard to see the thinking behind BIG from the Silicon Valley, elite perspective. They understand that putting everybody out of work from robotics or out-sourcing is a sure-fire way to create massive discontent. They think this is a clever way of keeping the losers contented (enough to not revolt) while maintaining their elevated position within the system. They don't care what the system looks like, really, just so long as they get to sit on top. They think this is a way to avert the revolution that they know, from reading Marx and thinking about it a little, their actions are sure to lead to, ceteris paribus .
However, I think they underestimate the extent to which our continual trade deficits are predicated on the US dollar being the world's reserve currency. That status may not be in danger in the short term, but I think it's doomed to extinction over the medium term, as the BRICS and other countries maneuver their way out from under the thumb of the petro-dollar.
But the up-side is that they're mainstreaming an MMT understanding of macroeconomics and, as old John used to say, "ideas have a way of taking on a life of their own." Also, some poor people might actually end up being benefited as a side-effect of the elites trying to keep the lower orders manageable. I mean, that's really what the New Deal was about, no? FDR wasn't fighting for the working man, he just realized that exploiting them too much could crash the whole system and be much worse for his class, the elites, than a little Social Security was. FDR wasn't looking to overturn class relations, but maintain them. He just had a more nuanced understanding of self-interest than many of his class peers (that oughta get some people fuming). Still, whatever the motivation, the programs had the practical effect of making a lot of people's lives better. Why shouldn't it be the same in this situation?diptherio , June 1, 2016 at 4:00 pm
Not that I'm foily, but if you combine the abolition of cash, BIG in the form of a digital deposit, retail tracking everywhere, and the precedent (from ObamaCare) of a mandate to participate in certain markets, you can concoct quite a dystopia….diptherio , June 1, 2016 at 4:04 pm
Yeah, the "BIG Brother" jokes are just too easy.
I think we need to have a movement to defend cash. Small business owners should lead the charge, since card fees hit them the hardest. I see a possible coalition…anti-surveillance activists and guys like the owner of the pizza joint I frequent whose register bears a sign that reads "Cards accepted, Cash preferred."Romancing the Loan , June 1, 2016 at 4:18 pm
Also, a BIG would be a great excuse to start-up the Postal Bank. Everybody will get an account tied to their SSN that their BIG gets deposited in, accessible (in cash) at any post office. It might just be sell-able…at least to the public, if not to Wall Street.ChiGal , June 1, 2016 at 4:51 pm
Take it another step and have "consumer choice" in lieu of voting. I like it; a good sci-fi writer needs to get on this.aletheia33 , June 1, 2016 at 2:51 pm
Whenever I hear about TPTB doing away with cash I am reminded of Margaret Atwood's prescient (from the 80s I think!) novel about a patriarchal dystopian future, The Handmaid's Tale – freezing the bank accounts is how it all started.jrs , June 1, 2016 at 3:11 pm
"A growing body of research indicates that the financial and psychological damage from a period of joblessness can be significant and long-lasting, especially for people who remain out of work for an extended period."
quelle surprise! are poor, working, and middle-class people's well-being actually closely tied to how many days in their lives they can work? hoocoodanode?aletheia33 , June 1, 2016 at 3:24 pm
I hear they have really low well being in Europe with their 6 weeks vacations and way more holidays and stuff. They throw themselves off bridges at the start of every vacation season. Nah it's tied to having an income or not, not how many days they work.polecat , June 1, 2016 at 9:50 pm
i always forget about that because i've always worked as in independent contractor, staying sane by pretending benefits and paid holidays and vacations are not all that important in life. and i must say, lately i do see TPTB cashing in on my idea, bigtime. i should have placed some bets on that happening…MyLessThanPrimeBeef , June 1, 2016 at 3:26 pm
I haven't worked a paying job for about 14 years….the wife works the day gig, while I maintain the abode, do household repairs, garden, tend to the bees & chickens…..etc. …… I'm 'working' my way on the downslope of collapse…'avoiding the rush' as John M Greer is fond of saying…..
….still sane!aletheia33 , June 1, 2016 at 3:35 pm
That only happens to Sapiens humans.
A cat's well-being is rarely tied to how many days it is out of work.
Thus, I suspect either 1. we are not that superior or 2. we have been brainwashed.
Or both.C , June 1, 2016 at 3:01 pm
i meant, in our current industrialized, work-ethic-based western society. which not coincidentally has had a lousy mental and physical health outcome for millions of people over time.
but never mind. a rising water floats all boats.
until it doesn't.Jim Haygood , June 1, 2016 at 3:13 pm
'Hillary's fibs or lack of candor are all about bad judgments she made on issues that will not impact the future of either my family or my country. Private email servers? Cattle futures? Goldman Sachs lectures? All really stupid, but my kids will not be harmed by those poor calls. Debate where she came out on Iraq and Libya, if you will, but those were considered judgment calls, and if you disagree don't vote for her" [The Moustache of Understanding, New York Times]. You tell 'em, Tommy! Who cares about corruption? Corruption had nothing to do with Iraq!
Of course they won't. You are well-off, well-connected, and work for a virtual organ of the state that has backed her every move. You and your framily are on the inside track and will of course be protected.
It is everyone else that will be screwed.MyLessThanPrimeBeef , June 1, 2016 at 3:44 pm
Friedman is just doing his job. The Saddam's WMDs paper endorsed Hillary on Jan 31st, and is part of the campaign of lies, deceptions and cover-ups.
Journo-hos … the only surprise is that you can buy them so cheap.
As with television, it's healthier not to pollute one's mind with NYT propaganda. Reading the idiotic headlines is enough to realize that the "content" is crap.Pavel , June 1, 2016 at 4:16 pm
Sounds like everyone should work for an organ (or a virtual organ, either way) of the state. Just make sure you're well-connected (the importance of being social – don't just bury yourself in books).
Predictably, the comments on the NYT op-ed (by the "Suck on this, Iraq!" Friedman) are more thoughtful and reality-based than the author's column. Here is a sample:
Thomas Friedman on lies that hurt the country? Let's start that with the Iraq War.
I agree that the emails probably didn't hurt the country, even if they were illegal and even if she does lie about them. However, Snowden did not hurt the country either, he told the truth, and Hillary goes after him with a vengeance for doing that in ways that benefited the country, that the NYT of Pentagon Papers days should support. She does that even while she lies about her emails, and that is a relevant character issue for the power she seeks.
Libya and Syria and Ukraine were NOT just bad judgment calls. However, they were three consecutive bad judgment calls, with no good ones to offset. That still matters.
Libya and Syria and Ukraine were also lies, coming from the mouth of Hillary, and harming the country by tossing us into more wars.
–NYT comment by Mark Thomason
I really wonder how Friedman and the other NYT Iraq war cheerleaders can look at themselves in the mirror each morning. And excellent point about Snowden, of course.
profile.theguardian.comapolitical_paddy 4 May 2016 16:26
I decided to look up an answer to my question and found this http://www.bloombergview.com/articles/2012-03-18/princeton-reaps-tax-breaks-as-state-colleges-beg which suggests an effective subsidy of " $54,000 per student " at Princeton.
The author goes on to write which I find a bit odd " To me, income inequality is an overrated problem in American life, and has even propelled the American entrepreneurial spirit. "
He then seems to imply that maybe there is an emergent, de facto bad outcome: Yet it remains true that, considering all federal government policies, including tax exemptions, the rich schools have benefited more than the poor ones -- a regressive social policy that many would argue is inconsistent with using higher education as a tool in promoting the American Dream.
Anyway, direct funding of third-level education by federal and state subsidies seems like a great idea and something that I would be very happy for my tax dollars to be used towards and -- moreover -- I would be happy paying more taxes if they were put to such purposes.
Apr 02, 2015 | naked capitalism
Yves here. One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.
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
The New York Times ran the story on April Fools' Day of a jury convicting educators of gaming the test numbers and lying about their actions to investigators.
ATLANTA - In a dramatic conclusion to what has been described as the largest cheating scandal in the nation's history, a jury here on Wednesday convicted 11 educators for their roles in a standardized test cheating scandal that tarnished a major school district's reputation and raised broader questions about the role of high-stakes testing in American schools.
On their eighth day of deliberations, the jurors convicted 11 of the 12 defendants of racketeering, a felony that carries up to 20 years in prison. Many of the defendants - a mixture of Atlanta public school teachers, testing coordinators and administrators - were also convicted of other charges, such as making false statements, that could add years to their sentences.
This was complicated trial that took six months to present and required eight days of jury deliberations. It was a major commitment of investigative and prosecutorial resources. But it was not investigated and prosecuted by the FBI and AUSAs, but by state and local officials. In addition to the trial success, the prosecutors secured 21 guilty pleas.
Atlanta's public schools, of course, did not engage in "the largest cheating scandal in the nation's history." The big banks' cheating scandals left the Atlanta educators in the dust.
The two obvious questions are why the educators cheated and how they got caught. "High-stakes testing" cannot explain the scandal because we have had such tests for over 50 years. The article explains the real drivers – compensation, promotions, fear, and ego (aka "reputation").
"Officials said the cheating allowed employees to collect bonuses and helped improve the reputations of both Dr. Hall and the perpetually troubled school district she had led since 1999.
Investigators wrote in the report that Dr. Hall and her aides had 'created a culture of fear, intimidation and retaliation' that had permitted "cheating - at all levels - to go unchecked for years."
Any reader familiar with my work should be running over in their mind Citigroup's vastly larger cheating frauds that senior managers produced by using exactly the same tactics to produce hundreds of billions of dollars in fraud.
How did people become suspicious and decide to conduct a real investigation? They realized that the reported results were too good to be true. That too is directly parallel to Citi, where massive purchases of "liar's" loans known to be 90% fraudulent supposedly led to massive profits.
The dozen educators who stood trial, including five teachers and a principal, were indicted in 2013 after years of questions about how Atlanta students had substantially improved their scores on the Criterion-Referenced Competency Test, a standardized examination given throughout Georgia.
In 2009, The Atlanta Journal-Constitution started publishing a series of articles that sowed suspicion about the veracity of the test scores, and Gov. Sonny Perdue ultimately ordered an investigation.
Wow, a newspaper did a series of articles, and documented a scandal built on deceit. Imagine if the New York Times and the Wall Street Journal were to do an "unsparing" investigation into banking fraud – and into Attorney General Eric Holder's refusal to prosecute. What if they actually looked at culpability in the C-suites?
The inquiry, which was completed in 2011, led to findings that were startling and unsparing: Investigators concluded that cheating had occurred in at least 44 schools and that the district had been troubled by "organized and systemic misconduct." Nearly 180 employees, including 38 principals, were accused of wrongdoing as part of an effort to inflate test scores and misrepresent the achievement of Atlanta's students and schools.
The investigators wrote that cheating was particularly ingrained in individual schools - at one, for instance, a principal wore gloves while she altered answer sheets - but they also said that the district's top officials, including Superintendent Beverly L. Hall, bore some responsibility.
Dr. Hall, who died on March 2, insisted that she had done nothing wrong and that her approach to education, which emphasized data, was not to blame. "I can't accept that there's a culture of cheating," Dr. Hall said in an interview in 2011. "What these 178 are accused of is horrific, but we have over 3,000 teachers."
But a Fulton County grand jury later accused her and 34 other district employees of being complicit in the cheating. Twenty-one of the educators reached plea agreements; two defendants, including Dr. Hall, died before they could stand trial.
Of course, Hall's "approach to education" did not "emphasize data" – it emphasized faux data – like Citi's accounting alchemists under Robert Rubin who transmuted fraudulent net liabilities (liar's loans) into supposedly wondrously valuable assets that had zero risk (Super Senior CDO tranches).
A more general point is in order. Atlanta is the culmination of destructive national trends and failing to mention Houston in the story was unfortunate. First, the "reinventing government" movement decided the public sector was bad and the private sector was magnificent and said that the public sector should adopt private sector approaches including quite specifically "performance pay" based on quantitative measures. This brought to the public sector the perverse incentives that were ruining the private sector and about to bring on Enron-era fraud epidemic and then the most recent three fraud epidemics. Second, we were assured by proponents of the change that a concern for "reputation" would trump any perverse incentives. What the proponents failed to see, of course, was that in both the private and public sectors the way to create a superb reputation was to report inflated data.
Reputation, instead of the "trump" ensuring good conduct, was a leading motive to engage in bad conduct. Third, we were told that giving public administrators far more power to squash teachers was the key to success in education. Lord Acton warned that absolute power leads to absolute corruption whether in Atlanta or Citi's C-suite.
Houston should have been mentioned because the modern movement toward educational fraud began in Houston under Rod Paige – who became Secretary of Education based on massive fraudulent misrepresentation of data. Paige kicked off the testing insanity, claiming it would produce objective, fact-based policies based on what educational measures actually worked. As a famous takedown of Paige's claims ends – the lesson is that it was too good to be true. President Bush, however, bought it hook, line, sinker, bobber, rod, and the boat Paige rowed out in.
In any event, if Fulton County, Georgia can jail educators who lie and gimmick the data, Holder can send the elite bankers to prison on the same grounds.
lakewoebegoner, April 2, 2015 at 10:41 am
*** One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools. ***
I believe it's even simpler than that…..prosecuting teachers is perfect fodder for the local 11 o'clock news-you're prosecuting publiclly paid low-hanging fruit, the crime is understandable (versus explaining accounting fraud or intentional misvaluation of assets) and of course-my gosh, think of the children!
NotTimothyGeithner, April 2, 2015 at 11:07 am
Local DAs have incentive to prosecute large cases, and Holder made sure to make token plea deals with the banks. A successful state AG who brought down a major financial player would destroy the Obama Administration just by existing two years into the first term because there would be no excuse. Plenty of loyal Team Blue voters if pressed will explain the lack of prosecution as a GOP plot, but with a counter example in the papers they would be more demoralized than they are.
RUKidding, April 2, 2015 at 12:11 pm
Neither Team Blue or Team Red voters want to confront reality and truly see and acknowledge what's going on. The crooks in the District of Criminals have perfected their Kabuki Show of "hiding" behind each other's skirts and blaming the other side for all kinds of ills and perfidy. Tribalistic authoritarians can be lazy and not have to think for themselves and really DO something; just pass the clicker; lets all watch some "reality" tv show instead. Talk about the matrix….
An example is my rightwing family members just recently celebrating quite a bit that Harry Reid has announced his retirement – as IF that'll be this amazingly good thing. Like: what will happen then? HOW, exactly, will "things get better" just bc they can't kick Harry Reid around anymore.
Disclaimer: no love lost on my part vis Harry Reid. He's as much of a crook and worthless waste of space as all of the others, no matter which Team Jacket they wear. My take? What possible difference will it make if Reid retires or stays in the Senate indefinitely?
RUKidding, April 2, 2015 at 10:59 am
Teachers have no money. Bankers have a TON of money. Sucks to be in the 99s.
Good comments. Right now, too, teachers have been deliberately painted to be the evilest of the vile because unions! get paid too much! can't be fired! blah de blah…. it's something easy for the masses to grasp – all those dreadful overpaid teachers who can't be fired "robbing" us of our taxes, while allegedly doing a totally shitty job. Yeah right. Of course privatized school teachers would most definitely do a "better" jawb.
It's all "look over there!!!!!" while the bankers are the ones robbing us blind deaf dumb stupid etc.
And yes, Charter Schools! Another way for the crooks at the top to rip off the 99s! woot!
And the beat down goes on…..
djrichard, April 2, 2015 at 12:09 pm
I remember back when the Supreme Court was debating W vs Gore, I put it to my neighbors that W would be under the influence of big oil and other powers that be. One of my neighbors countered that Gore would be under the influence of teachers. I was the minority opinion in that conversation.
RUKidding, April 2, 2015 at 12:14 pm
No love lost on my part vis Gore, but seriously??? LIke Gore is "under the influence" of teachers??? Yeah, unions, but really? Like it's just so ridiculous. Teachers v Big Oil. Uh, er, that's pretty much like David v Goliath, but in this case Goliath/BigOil has totally crushed David/the 99s.
djrichard, April 2, 2015 at 12:37 pm
I'm surprised I found this, but I think this captures it.
Bush's bully-boy campaign tactics play to his strengths, albeit unstated and unlovely ones. Many of the polls of the president have shown that while people don't necessarily agree with the specific policies he's pursued abroad many also intuitively believe that there's no one who will hit back harder. There's some of that 'he may be a son-of-a-bitch but he's our son-of-a-bitch' quality to the president's support on national security issues.
This was from W v Kerry days. But I think the same principle was operating during W v Gore. During 2004, the idea was to continue to inflict W on the middle east. During 2000, I think the idea was to inflict W on the "deserving elements" inside the US (whatever those deserving elements are/were at the time).
Teachers if anything represent a "big tent" mind-set, one in which there are no losers, or vice-versa one in which everyone is deserving of winning. Hence teachers weren't divisive enough and therefore are/were seen as part of the "problem".
Sep 07, 2016 | www.theamericanconservative.com
The American Conservative
Since the Cold War ended, U.S. politics has seen a series of insurgent candidacies. Pat Buchanan prefigured Trump in the Republican contests of 1992 and 1996. Ralph Nader challenged the Clinton wing of the Democratic Party from the outside in 2000. Ron Paul vexed establishment Republicans John McCain and Mitt Romney in 2008 and 2012. And this year, Trump was not the only candidate to confound his party's elite: Bernie Sanders harried Hillary Clinton right up to the Democratic convention.
What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy. All have opposed large-scale free-trade agreements. (The libertarian Paul favors unilateral free trade: by his lights, treaties like NAFTA and the Trans-Pacific Partnership are not free trade at all but international regulatory pacts.) And while no one would mistake Ralph Nader's or Ron Paul's views on immigration for Pat Buchanan's or Donald Trump's, Nader and Paul have registered their own dissents from the approach to immigration that prevails in Washington.
Sanders has been more in line with his party's orthodoxy on that issue. But that didn't save him from being attacked by Clinton backers for having an insufficiently nonwhite base of support. Once again, what might have appeared to be a class conflict-in this case between a democratic socialist and an elite liberal with ties to high finance-could be explained away as really about race.
Race, like religion, is a real factor in how people vote. Its relevance to elite politics, however, is less clear. Something else has to account for why the establishment in both parties almost uniformly favors one approach to war, trade, and immigration, while outsider candidates as dissimilar as Buchanan, Nader, Paul, and Trump, and to a lesser extent Sanders, depart from the consensus.
The insurgents clearly do not represent a single class: they appeal to eclectic interests and groups. The foe they have all faced down, however-the bipartisan establishment-does resemble a class in its striking unity of outlook and interest. So what is this class, effectively the ruling class of the country?
Some critics on the right have identified it with the "managerial" class described by James Burnham in his 1941 book The Managerial Revolution . But it bears a stronger resemblance to what what others have called "the New Class." In fact, the interests of this New Class of college-educated "verbalists" are antithetical to those of the industrial managers that Burnham described. Understanding the relationship between these two often conflated concepts provides insight into politics today, which can be seen as a clash between managerial and New Class elites.
The archetypal model of class conflict, the one associated with Karl Marx, pits capitalists against workers-or, at an earlier stage, capitalists against the landed nobility. The capitalists' victory over the nobility was inevitable, and so too, Marx believed, was the coming triumph of the workers over the capitalists.
Over the next century, however, history did not follow the script. By 1992, the Soviet Union was gone, Communist China had embarked on market reforms, and Western Europe was turning away from democratic socialism. There was no need to predict the future; mankind had achieved its destiny, a universal order of [neo]liberal democracy. Marx had it backwards: capitalism was the end of history.
But was the truth as simple as that? Long before the collapse of the USSR, many former communists -- some of whom remained socialists, while others joined the right-thought not. The Soviet Union had never been a workers' state at all, they argued, but was run by a class of apparatchiks such as Marx had never imagined.
Among the first to advance this argument was James Burnham, a professor of philosophy at New York University who became a leading Trotskyist thinker. As he broke with Trotsky and began moving toward the right, Burnham recognized affinities between the Soviet mode of organization-in which much real power lay in the hands of the commissars who controlled industry and the bureaucratic organs of the state-and the corporatism that characterized fascist states. Even the U.S., under the New Deal and with ongoing changes to the balance between ownership and management in the private sector, seemed to be moving in the same direction.
Burnham called this the "managerial revolution." The managers of industry and technically trained government officials did not own the means of production, like the capitalists of old. But they did control the means of production, thanks to their expertise and administrative prowess.
The rise of this managerial class would have far-reaching consequences, he predicted. Burnham wrote in his 1943 book, The Machiavellians : "that the managers may function, the economic and political structure must be modified, as it is now being modified, so as to rest no longer on private ownership and small-scale nationalist sovereignty, but primarily upon state control of the economy, and continental or vast regional world political organization." Burnham pointed to Nazi Germany, imperial Japan-which became a "continental" power by annexing Korea and Manchuria-and the Soviet Union as examples.
The defeat of the Axis powers did not halt the progress of the managerial revolution. Far from it: not only did the Soviets retain their form of managerialism, but the West increasingly adopted a managerial corporatism of its own, marked by cooperation between big business and big government: high-tech industrial crony capitalism, of the sort that characterizes the military-industrial complex to this day. (Not for nothing was Burnham a great advocate of America's developing a supersonic transport of its own to compete with the French-British Concorde.)
America's managerial class was personified by Robert S. McNamara, the former Ford Motor Company executive who was secretary of defense under John F. Kennedy and Lyndon Johnson. In a 1966 story for National Review , "Why Do They Hate Robert Strange McNamara?" Burnham answered the question in class terms: "McNamara is attacked by the Left because the Left has a blanket hatred of the system of business enterprise; he is criticized by the Right because the Right harks back, in nostalgia if not in practice, to outmoded forms of business enterprise."
McNamara the managerial technocrat was too business-oriented for a left that still dreamed of bringing the workers to power. But the modern form of industrial organization he represented was not traditionally capitalist enough for conservatives who were at heart 19th-century classical liberals.
National Review readers responded to Burnham's paean to McNamara with a mixture of incomprehension and indignation. It was a sign that even readers familiar with Burnham-he appeared in every issue of the magazine-did not always follow what he was saying. The popular right wanted concepts that were helpful in labeling enemies, and Burnham was confusing matters by talking about changes in the organization of government and industry that did not line up with anyone's value judgements.
More polemically useful was a different concept popularized by neoconservatives in the following decade: the "New Class." "This 'new class' is not easily defined but may be vaguely described," Irving Kristol wrote in a 1975 essay for the Wall Street Journal :
It consists of a goodly proportion of those college-educated people whose skills and vocations proliferate in a 'post-industrial society' (to use Daniel Bell's convenient term). We are talking about scientists, teachers, and educational administrators, journalists and others in the communication industries, psychologists, social workers, those lawyers and doctors who make their careers in the expanding public sector, city planners, the staffs of the larger foundations, the upper levels of the government bureaucracy, and so on.
"Members of the new class do not 'control' the media," he continued, "they are the media-just as they are our educational system, our public health and welfare system, and much else."
Burnham, writing in National Review in 1978, drew a sharp contrast between this concept and his own ideas:
I have felt that this 'new class' is, so far, rather thin gruel. Intellectuals, verbalists, media types, etc. are conspicuous actors these days, certainly; they make a lot of noise, get a lot of attention, and some of them make a lot of money. But, after all, they are a harum-scarum crowd, and deflate even more quickly than they puff up. On TV they can out-talk any of the managers of ITT, GM, or IBM, or the administration-managers of the great government bureaus and agencies, but, honestly, you're not going to take that as a power test. Who hires and fires whom?
Burnham suffered a stroke later that year. Although he lived until 1987, his career as a writer was over. His last years coincided with another great transformation of business and government. It began in the Carter administration, with moves to deregulate transportation and telecommunications. This partial unwinding of the managerial revolution accelerated under Ronald Reagan. Regulatory and welfare-state reforms, even privatization of formerly nationalized industries, also took off in the UK and Western Europe. All this did not, however, amount to a restoration of the old capitalism or anything resembling laissez-faire.
The "[neo]liberal democracy" that triumphed at "the end of history"-to use Francis Fukuyama's words-was not the managerial capitalism of the mid-20th century, either. It was instead the New Class's form of capitalism, one that could be embraced by Bill Clinton and Tony Blair as readily as by any Republican or Thatcherite.
Irving Kristol had already noted in the 1970s that "this new class is not merely liberal but truly 'libertarian' in its approach to all areas of life-except economics. It celebrates individual liberty of speech and expression and action to an unprecedented degree, so that at times it seems almost anarchistic in its conception of the good life."
He was right about the New Class's "anything goes" mentality, but he was only partly correct about its attitude toward economics. The young elite tended to scorn the bourgeois character of the old capitalism, and to them managerial figures like McNamara were evil incarnate. But they had to get by-and they aspired to rule.
Burnham had observed that the New Class did not have the means-either money or manpower-to wield power the way the managers or the capitalists of old did. It had to borrow power from other classes. Discovering where the New Class gets it is as easy as following the money, which leads straight to the finance sector-practically to the doorstep of Goldman Sachs. Jerry Rubin's journey from Yippie to yuppie was the paradigm of a generation.
Part of the tale can be told in a favorable light. New Left activists like Carl Oglesby fought the spiritual aridity and murderous militarism of what they called "corporate liberalism"-Burnham's managerialism-while sincere young libertarians attacked the regulatory state and seeded technological entrepreneurship. Yet the New Class as a whole is less like Carl Oglesby or Karl Hess than like Hillary Clinton, who arguably embodies it as perfectly as McNamara did the managerial class.
Even the New Class's support for deregulation-to the advantage of its allies on Wall Street-was no sign of consistent commitment to free-market principles. On the contrary, the New Class favors new kinds of crony finance capitalism, even as it opposes the protectionism that would benefit hard industry and managerial interests. The individual-mandate feature of Obamacare and Romneycare is a prime example of New Class cronyism: government compels individuals to buy a supposedly private product or service.
The alliance between finance and the New Class accounts for the disposition of power in America today. The New Class has also enlisted another invaluable ally: the managerial classes of East Asia. Trade with China-the modern managerial state par excellence-helps keep American industry weak relative to finance and the service economy's verbalist-dominated sectors. America's class war, like many others, is not in the end a contest between up and down. It's a fight between rival elites: in this case, between the declining managerial elite and the triumphant (for now) New Class and financial elites.
The New Class plays a priestly role in its alliance with finance, absolving Wall Street for the sin of making money in exchange for plenty of that money to keep the New Class in power. In command of foreign policy, the New Class gets to pursue humanitarian ideological projects-to experiment on the world. It gets to evangelize by the sword. And with trade policy, it gets to suppress its class rival, the managerial elite, at home. Through trade pacts and mass immigration the financial elite, meanwhile, gets to maximize its returns without regard for borders or citizenship. The erosion of other nations' sovereignty that accompanies American hegemony helps toward that end too-though our wars are more ideological than interest-driven.
So we come to an historic moment. Instead of an election pitting another Bush against another Clinton, we have a race that poses stark alternatives: a choice not only between candidates but between classes-not only between administrations but between regimes.
Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan establishment, even if he goes down to defeat in November.
The New Class, after all, lacks a popular base as well as money of its own, and just as it relies on Wall Street to underwrite its power, it depends on its competing brands of identity politics to co-opt popular support. For the center-left establishment, minority voters supply the electoral muscle. Religion and the culture war have served the same purpose for the establishment's center-right faction. Trump showed that at least one of these sides could be beaten on its own turf-and it seems conceivable that if Bernie Sanders had been black, he might have similarly beaten Clinton, without having to make concessions to New Class tastes.
The New Class establishment of both parties may be seriously misjudging what is happening here. Far from being the last gasp of the demographically doomed-old, racially isolated white people, as Gallup's analysis says-Trump's insurgency may be the prototype of an aggressive new politics, of either left or right, that could restore the managerial elite to power.
This is not something that conservatives-or libertarians who admire the old capitalism rather than New Class's simulacrum-might welcome. But the only way that some entrenched policies may change is with a change of the class in power.
Daniel McCarthy is the editor of The American Conservative .
Johann , says: September 7, 2016 at 10:02 amThe New Class is parasitic and will drive the country to its final third world resting place, or worse.Dan Phillips , says: September 7, 2016 at 11:32 amExcellent analysis. What is important about the Trump phenomenon is not every individual issue, it's the potentially revolutionary nature of the phenomenon. The opposition gets this. That's why they are hysterical about Trump. The conservative box checkers do not.g , says: September 7, 2016 at 11:51 am"Donald Trump is not of the managerial class himself. But by embracing managerial interests-industrial protection and, yes, "big government"-and combining them with nationalistic identity politics, he has built a force that has potential to threaten the bipartisan establishment, even if he goes down to defeat in November."Richard Terrace , says: September 7, 2016 at 12:09 pm
My question is, if Trump is not himself of the managerial class, in fact, could be considered one of the original new class members, how would he govern? What explains his conversion from the new class to the managerial class; is he merely taking advantage of an opportunity or is there some other explanation?I'm genuinely confused by the role you ascribe to the 'managerial class' here. Going back to Berle and Means ('The Modern Corporation and Private Property') the managerial class emerged when management was split from ownership in mid C20th capitalism. Managers focused on growth, not profits for shareholders. The Shareholder revolution of the 1980s destroyed the managerial class, and destroyed their unwieldy corporations.JonF , says: September 7, 2016 at 1:13 pm
You seem to be identifying the managerial class with a kind of cultural opposition to the values of [neo]liberal capitalism. And instead of identifying the 'new class' with the new owner-managers of shareholder-driven firms, you identify them by their superficial cultural effects.
This raises a deeper problem in how you talk about class in this piece. Marx taught that you identify classes by their structural role in the system of production. I'm at a loss to see how either of the 'classes' you mention here relate to the system of production. Does the 'new class' of journalists, academics, etc. actually own anything? If not, what is the point of ascribing to them immense economic power?
I would agree that there is a new class of capitalists in America. But they are well known people like Sheldon Adelson, the Kochs, Linda McMahon, the Waltons, Rick Scott the pharmaceutical entrepreneur, Mitt Romney, Mark Zuckerberg, and many many hedge fund gazillionaires. These people represent the resurgence of a family-based, dynastic capitalism that is utterly different from the managerial variety that prevailed in mid-century.
If there is a current competitor to international corporate capitalism, it is old-fashioned dynastic family capitalism. Not Managerialism.There is no "new class". That's simply a derogatory trope of the Right. The [neo]liberal elite– educated, cosmopolitan and possessed of sufficient wealth to be influential in political affairs and claims to power grounded in moral stances– have a long pedigree in both Western and non-Western lands. They were the Scribal Class in the ancient world, the Mandarins of China, and the Clergy in the Middle Ages. This class for a time was eclipsed in the early modern period as first royal authority became dominant, followed by the power of the Capitalist class (the latter has never really faded of course). But their reemergence in the late 20th century is not a new or unique phenomenon.Kurt Gayle , says: September 7, 2016 at 2:03 pmIn a year in which "trash Trump" and "trash Trump's supporters" are tricks-to-be-turned for more than 90% of mainstream journalists and other media hacks, it's good to see Daniel McCarthy buck the "trash trend" and write a serious, honest analysis of the class forces that are colliding during this election cycle.lee , says: September 7, 2016 at 2:37 pm
Two thumbs way up for McCarthy, although his fine effort cannot save the reputation of those establishment whores who call themselves journalists. Nothing can save them. They have earned the universality with which Americans hold them in contempt.
In 1976 when Gallup began asking about "the honesty and ethical standards" of various professions only 33% of Americans rated journalists "very high or high."
By last December that "high or very high" rating for journalists had fallen to just 27%.
It is certain that by Election Day 2016 the American public's opinion of journalists will have fallen even further.An article on the ruling elite that neglects to mention this ? . . . https://www.amazon.com/Revolt-Elites-Betrayal-Democracy/dp/0393313719david helveticka , says: September 7, 2016 at 3:24 pmMost of your argument is confusing. The change I see is from a production economy to a finance economy. Wall Street rules, really. Basically the stock market used to be a place where working folk invested their money for retirement, mostly through pensions from unions and corporations. Now it's become a gambling casino, with the "house"-or the big banks-putting it's finger on the roulette wheel. They changed the compensation package of CEO's, so they can rake in huge executive compensation–mostly through stock options-to basically close down everything from manufacturing to customer service, and ship it off to contract manufacturers and outside services in oligarchical countries like mainland China and India.Sheree , says: September 7, 2016 at 6:16 pm
I don't know what exactly you mean about the "new class", basically its the finance industry against everyone else.
One thing you right-wingers always get wrong, is on Karl Marx…he was really attacking the money-changers, the finance speculators, the banks. Back in the day, so-called "capitalists" like Henry Ford or George Eastman or Thomas Edison always complained about the access to financing through the big money finance capitalists.Don't overlook the economic value of intellectual property rights (patents, in particular) in the economic equation.Commenter Man , says: September 7, 2016 at 10:19 pm
A big chunk of the 21st century economy is generated due to the intellectual property developed and owned by the New Class and its business enterprises.
The economic value of ideas and intellectual property rights is somewhat implied in McCarthy's explanation of the New Class, but I didn't see an explicit mention (perhaps I overlooked it).
I think the consideration of intellectual property rights and the value generated by IP might help to clarify the economic power of the New Class for those who feel the analysis isn't quite complete or on target.
I'm not saying that IP only provides value to the New Class. We can find examples of IP throughout the economy, at all levels. It's just that the tech and financial sectors seem to focus more on (and benefit from) IP ownership, licensing, and the information captured through use of digital technology."What do these insurgents have in common? All have called into question the interventionist consensus in foreign policy."Wayne Lusvardi , says: September 7, 2016 at 10:37 pm
But today we have this: Trump pledges big US military expansion . Trump doesn't appear to have any coherent policy, he just says whatever seems to be useful at that particular moment.[New] Class better describes the Never Trumpers. Mostly I have found them to be those involved in knowledge occupations (conservative think tanks, hedge fund managers, etc.) who have a pecuniary interest in maintaining the Global Economy as opposed to the Virtuous Intergenerational Economy that preceded. Many are dependent on funding sources for their livelihoods that are connected to the Globalized Economy and financial markets.jack , says: September 7, 2016 at 11:13 pm"mobilize working-class voters against the establishment in both parties. " = workers of the world unite.Wayne Lusvardi , says: September 7, 2016 at 11:33 pm
maybe Trump could use that…Being white is not the defining characteristic of Trumpers because it if was then how come there are many white working class voters for Hillary? The divide in the working class comes from being a member of a union or a member of the private non-unionized working class.Mitzy Moon , says: September 8, 2016 at 12:32 am
Where the real class divide shows up is in those who are members of the Knowledge Class that made their living based on the old Virtuous Economy where the elderly saved money in banks and the banks, in turn, lent that money out to young families to buy houses, cars, and start businesses. The Virtuous Economy has been replaced by the Global Economy based on diverting money to the stock market to fund global enterprises and prop up government pension funds.
The local bankers, realtors, private contractors, small savers and small business persons and others that depended on the Virtuous Economy lost out to the global bankers, stock investors, pension fund managers, union contractors and intellectuals that propounded rationales for the global economy as superior to the Virtuous Economy.
Where the class conflict between the Working and Knowledge Classes begins is where the Knowledge Class almost unilaterally decided to shift to a global economy, at the expense of the Working Class, and to the self-benefit of the Knowledge Class. Those who designed the Global Economy like Larry Summers of Harvard did not invite private or public labor to help design the new Globalist Economy. The Working Class lost out big time in job losses and getting stuck with subprime home loans that busted their marriages and created bankruptcies and foreclosures. The Knowledge Class was mostly unscathed by this class-based economic divide.Beginning in the 50's and 60's, baby boomers were warned in school and cultural media that "a college diploma would become what a high school diploma is today." An extraordinary cohort of Americans took this advice seriously, creating the smartest and most successful generation in history. But millions did not heed that advice, cynically buoyed by Republicans who – knowing that college educated people vote largely Democrat – launched a financial and cultural war on college education. The result is what you see now: millions of people unprepared for modern employment; meanwhile we have to import millions of college-educated Asians and Indians to do the work there aren't enough Americans to do.Joe , says: September 8, 2016 at 1:25 amHave to say, this seems like an attempt to put things into boxes that don't quite fit.Emil Mottola , says: September 8, 2016 at 2:15 am
Trump's distinguishing ideology, which separates him from the current elite, is something he has summed up many times – nationalism vs. Globalism.
The core of it is that the government no longer serves the people. In the United States, that is kind of a bad thing, you know? Like the EU in the UK, the people, who fought very hard for self-government, are seeing it undermined by the erosion of the nation state in favor of international beaurocracy run by elites and the well connected.Both this article and many comments on it show considerable confusion, and ideological opinion all over the map. What is happening I think is that the world is changing –due to globalism, technology, and the sheer huge numbers of people on the planet. As a result some of the rigid trenches of thought as well as class alignments are breaking down.EliteCommInc. , says: September 8, 2016 at 3:29 am
In America we no longer have capitalism, of either the 19th century industrial or 20th century managerial varieties. Money and big money is still important of course, but it is increasingly both aligned with and in turn controlled by the government. The financial industry, the new tech giants, the health insurance industry are now almost indistinguishable from the government ruling elite. The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right in a sense.
The hyperconcentration of power in Washington and a few tributary locations like Wall Street and Silicon Valley, elite academia and the media–call that the New Class if you like–means that most of America–Main Street, the flyover country has been left behind. Trump instinctively – brilliantly in some ways – tapped into the resentment that this hyperconcentration of wealth and government power has led to. That is why it cuts across right and left. The elites want to characterize this resentment as backwards and "racist," but there is also something very American from Jefferson to Jackson to Teddy Roosevelt that revolts against being lectured to and controlled by their would-be "betters."
The alienation of those left out is real and based on real erosion of the middle class and American dream under both parties' elites. The potentially revolutionary capabilities of a political movement that could unite right and left in restoring some equilibrium and opportunities to those left out is tremendous, but yet to be realized by either major party. The party that can harness these folks – who are after all the majority of Americans – will have a ruling coalition for decades. If neither party can productively harness this budding movement, we are headed for disarray, civil unrest, and potentially the dissolution of the USA.I have one condition about which, Mr. Trump would lose my support - if he flinches on immigration, I will have to bow out.Wayne Lusvardi , says: September 8, 2016 at 5:36 am
I just don't buy the contentions about color here. He has made definitive moves to ensure that he intends to fight for US citizens regardless of color. This nonsense about white racism, more bigotry in reality, doesn't pan out. The Republican party has been comprised of mostly whites since forever and nearly all white sine the late 1960's. Anyone attempting to make hay out of what has been the reality for than 40 years is really making the reverse pander. Of course most of those who have issues with blacks and tend to be more expressive about it, are in the Republican party. But so what. Black Republicans would look at you askance, should you attempt this FYI.
It's a so what. The reason you joining a party is not because the people in it like you, that is really beside the point. Both Sec Rice and General Powell, are keenly aware of who's what it and that is the supposed educated elite. They are not members of the party because it is composed of some pure untainted membership. But because they and many blacks align themselves with the ideas of the party, or what the party used to believe, anyway.
It's the issues not their skin color that matters. And blacks who cleave to the democrats despite being sold down the tubes on issues, well, for whatever reason, they just have thinner skin and the mistaken idea that the democrats deliver – thanks to Pres. Johnson. But what Pres. Johnson delivered democrats made a mockery of immediately as they stripped it of its intent and used for their own liberal ends.
I remain convinced that if blacks wanted progress all they need do is swamp the Republican party as constituents and confront whatever they thought was nonsense as constituents as they move on policy issues. Goodness democrats have embraced the lighter tones despite having most black support. That is why the democrats are importing so many from other state run countries. They could ignore blacks altogether. Sen Barbara Jordan and her deep voiced rebuke would do them all some good.
Let's face it - we are not going to remove the deeply rooted impact of skin color, once part of the legal frame of the country for a quarter of the nations populous. What Republicans should stop doing is pretending, that everything concerning skin color is the figment of black imagination. I am not budging an inch on the Daughters of the American Revolution, a perfect example of the kind of peculiar treatment of the majority, even to those who fought for Independence and their descendants.
I think that there are thousands and thousands of educated (degreed)people who now realize what a mess the educational and social services system has become because of our immigration policy. The impact on social services here in Ca is no joke. In the face of mounting deficits, the laxity of Ca has now come back to haunt them. The pressure to increase taxes weighed against the loss of manual or hard labor to immigrants legal and otherwise is unmistakable here. There's debate about rsstroom etiquette in the midst of serious financial issues - that's a joke. So this idea of dismissing people with degrees as being opposed to Mr. Trump is deeply overplayed and misunderstood. If there is a class war, it's not because of Mr. Trump, those decks were stacked in his favor long before the election cycle.
"But millions did not heed that advice, cynically buoyed by Republicans who–knowing that college educated people vote largely Democrat–launched a financial and cultural war on college education. The result is what . . . employment; meanwhile we have to import millions of college-educated Asians and Indians to do the work there aren't enough Americans to do."
Nope. Republicans are notorious for pushing education on everything and everybody. It's a signature of hard work, self reliance, self motivation and responsibility. The shift that has been tragic is that conservatives and Republicans either by a shove or by choice abandoned the fields by which we turn out most future generations - elementary, HS and college education. Especially in HS, millions of students are fed a daily diet of liberal though unchecked by any opposing ideas. And that is become the staple for college education - as it cannot be stated just how tragic this has become for the nation. There are lots of issues to moan about concerning the Us, but there is far more to embrace or at the very least keep the moaning in its proper context. No, conservatives and Republicans did engage in discouraging an education.
And there will always be a need for more people without degrees than with them. even people with degrees are now getting hit even in the elite walls of WS finance. I think I posted an article by John Maulden about the growing tensions resulting fro the shift in the way trading is conducting. I can build a computer from scratch, that's a technical skill, but the days of building computers by hand went as fast it came. The accusation that the population should all be trained accountants, book keepers, managers, data processors, programmers etc. Is nice, but hardly very realistic (despite my taking liberties with your exact phrasing). A degree is not going to stop a company from selling and moving its production to China, Mexico or Vietnam - would that were true. In fact, even high end degree positions are being outsourced, medicine, law, data processing, programming . . .
How about the changes in economy that have forced businesses to completely disappear. We will never know how many businesses were lost in the 2007/2008 financial mess. Recovery doesn't exist until the country's growth is robust enough to put people back to work full time in a manner that enables them to sustain themselves and family.
That income gap is real and its telling.
even if I bought the Karl Marx assessment. His solutions were anything but a limited assault on financial sector oligarchs and wizards. And in practice it has been an unmitigated disaster with virtually not a single long term national benefit. It's very nature has been destructive, not only to infrastructure, but literally the lifeblood of the people it was intended to rescue.Let's see if I can help Dreher clear up some confusion in his article. James Burnham's "Managerial Class" and the "New Class" are overlapping and not exclusive. By the Managerial Class Burnham meant both the executive and managers in the private sector and the Bureaucrats and functionaries in the public sector.William Burns , says: September 8, 2016 at 5:45 am
There are two middle classes in the US: the old Business Class and the New Knowledge Class. A manager would be in the Business Class and a Bureaucrat in the New Class.
The rise of managers was a "revolution" because of the rise of modernization which meant the increasing mechanization, industrialization, formalization and rationalization (efficiency) of society. Burnham's concern about the rise of the managerial revolution was misplaced; what he should have focused on was modernization.
The New Class were those in the mostly government and nonprofit sectors that depended on knowledge for their livelihood without it being coupled to any physical labor: teachers, intellectuals, social workers and psychiatrists, lawyers, media types, hedge fund managers, real estate appraisers, financial advisors, architects, engineers, etc. The New Knowledge Class has only risen since the New Deal created a permanent white collar, non-business class.
The Working Class are those who are employed for wages in manual work in an industry producing something tangible (houses, cars, computers, etc.). The Working Class can also have managers, sometimes called supervisors. And the Working Class is comprised mainly of two groups: unionized workers and private sector non-unionized workers. When we talk about the Working Class we typically are referring to the latter.
The Trumpsters should not be distinguished as being a racial group or class (white) because there are many white people who support Clinton. About 95% of Blacks vote Democratic in the US. Nowhere near that ratio of Whites are supporting Trump. So Trumps' support should not be stereotyped as White.
The number one concern to Trumpsters is that they reflect the previous intergenerational economy where the elderly lent money to the young to buy homes, cars and start small businesses. The Global bankers have shifted money into the stock market because 0.25% per year interest rates in a bank isn't making any money at all when money inflation runs at 1% to 2% (theft). This has been replaced by a Global Economy that depends on financial bubbles and arbitraging of funds.How are the elites supporting Trump different from the elites supporting financier par excellence Mitt Romney?EliteCommInc. , says: September 8, 2016 at 6:23 am"The old left–represented by Sanders–rails against this as big money coopting government, even while conservatives are exasperated by the unholy cabal of big business and big government in cohoots in the "progressive" remake of America. Both are right in a sense."Joe F , says: September 8, 2016 at 11:11 am
Why other couching this. Ten years ago if some Hollywood exec had said, no same sex marriage, no production company in your town, the town would have shrugged. Today before shrugging, the city clerk is checking the account balance. When the governors of Michigan, and Arizona bent down in me culpa's on related issue, because business interests piped in, it was an indication that the game had seriously changed. Some 3 – 5% of the population facing no real opposition has decided that that their private lives needed public endorsement and have proceeded to upend the entire social order - the game has shifted in ways I am not sure most of the public fully grasps or desires.
Same sex weddings in US military chapels - the concept still turns my stomach. Advocates control the megaphones, I don't think they control the minds of the public, despite having convinced a good many people that those who have chosen this expression are under some manner of assault – that demands a legal change - intelligent well educated, supposedly astute minded people actually believe it. Even the Republican nominee believes it.
I love Barbara Streisand, but if the election means she moves to Canada, well, so be it. Take your "drag queens" impersonators wit you. I enjoy Mr. and Mrs Pitt, I think have a social moral core but really? with millions of kids future at stake, endorsing a terminal dynamic as if it will save society's ills - Hollywood doesn't even pretend to behave royally much less embody the sensitivities of the same.
There is a lot to challenge about supporting Mr. Trump. He did support killing children in the womb and that is tragic. Unless he has stood before his maker and made this right, he will have to answer for that. But no more than a trove of Republicans who supported killing children in the womb and then came to their senses. I guess of there is one thing he and I agree on, it's not drinking.
As for big budget military, it seems a waste, but if we are going to waste money, better it be for our own citizens. His Achilles heel here is his intentions as to ISIS/ISIL. I think it's the big drain getting ready to suck him into the abyss of intervention creep.
Missile defense just doesn't work. The tests are rigged and as Israel discovered, it's a hit and miss game with low probability of success, but it makes for great propaganda.
I am supposed to be outraged by a football player stance on abusive government. While the democratic nominee is turning over every deck chair she find, leaving hundreds of thousands of children homeless - let me guess, on the bright side, George Clooney cheers the prospect of more democratic voters.
If Mr. Trumps only achievements are building a wall, over hauling immigration policy and expanding the size of the military. He will be well on his way to getting ranked one of the US most successful presidents.I never understood why an analysis needs to lard in