"I see in the near future a crisis approaching that unnerves me and causes
me to tremble for the safety of my country. As a result of the war, corporations
have been enthroned and an era of corruption in high places will follow,
and the money power of the country will endeavor to prolong its reign by
working upon the prejudices of the people until all wealth is aggregated
in a few hands and the Republic is destroyed."
-- Abraham Lincoln
Isn’t inequality merely the price of America being No. 1?
... That’s almost certainly false... Prior to about 20 years ago, most economists
thought that inequality greased the wheels of progress.
Wealth
Inequality in America Overwhelmingly now, people who study it empirically
think that it’s sand in the wheels. ... Inequality breeds conflict,
and conflict breeds wasted resources”
Imagine if the people of the Soviet Union had never heard of communism. The
ideology that dominates our lives has, for most of us, no name. Mention it in
conversation and you'll be rewarded with a shrug. Even if your listeners have
heard the term before, they will struggle to define it. Neoliberalism: do you
know what it is?
Its anonymity is both a symptom and cause of its power. It has played a major
role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring
of wealth and power, of which the
Panama
Papers offer us merely a glimpse, the slow collapse of public health and education,
resurgent child poverty,
the epidemic of loneliness , the collapse of ecosystems, rejection of the current
neoliberal elite by majority of American people and the rise of candidates like
Donald Trump . But we respond to these developments as if they emerge in isolation,
apparently unaware that they have all been either catalyzed or exacerbated by the
same coherent philosophy; a philosophy that has – or had – a name. What greater
power can there be than to operate namelessly?
One of the key property of
neoliberalism is that it recasts inequality as virtuous. The market ensures that
everyone gets what they deserve. If you deserve to die, so be it. Of cause that
does not apply to the financial oligarchy which is above the law and remains unpunished
even for very serious crimes. This fate is reserved for bottom 99% of population.
Neoliberalism sees competition as the defining characteristic of human relations, In other words
neoliberal economic model uses "unable to compete in the labor market" label for poor
people in the same way Nazi used concept of
Untermensch
for Slavic people.
That also mean that for those outside top 20% of population the destiny is brutal exploitation not
that different then in slave societies. It victimizes and artfully creates complex
of inferiority among poor people trying to brainwash that they themselves are
guilty in their status and that their children do not deserve better. This is why
subsidies for colleges are cut. Unfortunately now even lower middle class is coming
under tremendous pressure and essentially is moved into poverty. Disappearance of
well-paid middle class "white collar" jobs such as IT jobs and recently oil sector
jobs and conversion of many jobs to temp or to outsourcing/off-shoring model
is a fact that can't be denied. Rise in inequality in the USA for that last twenty
years of neoliberalism domination is simply dramatic and medial income per family
actually dropped.
Everything is moving in the direction of a pretty brutal joke: poor
Americans just got a new slave-owners. And now slaves are not distinguished by the color of
their skin.
The economic status of Wal Mart employees (as well as employees of
many other retailers, who are predominantly women) are not that different from slaves. In "rich" states like
NY and NJ Wal-Mart cashiers are paid around $9 an hour. That's around $18K a year if you can get
40hours a week (big if), You can't survive on those money
living alone and renting an apartment. Two people might be able to survive if they share the
apartment costs. And forget about that if you have a child (aka "single mothers" as a
new face of the US poverty). You can survive
only with additional social programs like food stamps. In other words the federal
state subsidizes Wal-Mart, increasing their revenue at taxpayers expense.
Piketty thinks a rentier society (which is another definition of neoliberal society)
contradicts the meritocratic worldview of democratic societies and is toxic for
democracy as it enforces "one dollar one vote" election process (corporation buy
politicians; ordinary people just legitimize with their votes pre-selected by elite
candidates, see
Two Party
System as Polyarchy):
“…no ineluctable force standing in the way to extreme concentration
of wealth…if growth slows and the return on capital increases [as] tax competition
between nations heats up…Our democratic societies rest on a meritocratic worldview,
or at any rate, a meritocratic hope, by which I mean a belief in a society
in which inequality is based more on merit and effort than on kinship and rents.
This belief and hope play a very crucial role in modern society, for a simple
reason: in a democracy the professed equality of rights of all citizens contrasts
sharply with the very real inequality of living conditions, and in order to
overcome this contradiction it is vital to make sure that social inequalities
derive from ration and universal principles rather than arbitrary contingencies.
Inequalities must therefore be just and useful to all, at least in the realm
of discourse and as far as possible in reality as well…Durkheim predicted that
modern democratic society would not put for long with the existence of inherited
wealth and would ultimately see to it that the ownership of property ended at
death.” p. 422
A neo-liberal point discussed in Raymond Plant's book on neo-liberalism is that
if a fortune has been made through no injustice, then it is OK. So we should not
condemn the resulting distribution of wealth, as fantastically concentrated as it
may be. That that's not true, as such cases always involve some level of injustice,
if only by exploiting some loophole in the current laws. Piketty is correct that
to the extent that citizens understood the nature of a rentier society they would
rise in opposition to it. The astronomical pay of "super-managers" cannot be justified
in meritocratic terms. CEO's can capture boards and force their incentive to grow
faster then company profits. Manipulations with shares buyback are used to
meet "targets". So neoliberal extreme is definitely bad.
At the same time we now know the equality if not achievable and communism was
a pipe dream that actually inflicted cruelty on a lot of people in the name of unachievable
utopia. But does this means that inequality, any level of inequality, is OK. It
does not look this way and we can actually argue that extremes meet.
But collapse of the USSR lead to triumph of neoliberalism which is all about
rising inequality. Under neoliberalism the wealthy and their academic servants,
see inequality as a noble outcome. They want to further enrich top 1%, shrink middle
class making it less secure, and impoverish poor. In other words they promote under
the disguise of "free market" Newspeak a type of economy which can be called a
plantation economy. In this type of the economy all the resources and power
are in the hands of a wealthy planter class who then gives preference for easy jobs
and the easy life to their loyal toadies. The wealthy elites like cheap labor. And
it's much easier to dictate their conditions of employment when unemployment is
high. Keynesian economics values the middle class and does not value unemployment
or cheap labor. Neoliberals like a system that rewards them for their loyalty to
the top 1% with an easier life than they otherwise merit. In a meritocracy where
individuals receive public goods and services that allow them to compete on a level
playing field, many neoliberal toadies would be losers who cannot compete.
In a 2005 report to investors three analysts at Citigroup advised that “the
World is dividing into two blocs—the Plutonomy and the rest … In a plutonomy
there is no such animal as “the U.S. consumer” or “the UK consumer", or indeed the
“Russian consumer”.
In other words there are analysts that believe that we are moving to a replay
of Middle Ages on a new, global level, were there are only rich who do the lion
share of the total consumption and poor, who does not matter.
We can also state, that under neoliberal regime the sources
of American economic inequality are largely political. In other words they are the
result of deliberate political decision of the US elite to shape markets in neoliberal
ways, and dismantle New Deal.
Part of this "shaping the markets in neoliberal ways" was corruption of academic
economists. Under neoliberalism most economists are engaged in what John Kenneth
Galbraith called "the economics of innocent fraud." With the important correction
that there is nothing innocent in their activities. Most of them, especially "neoclassical"
economists are prostitutes for financial oligarchy. So their prescription and analysis
as for the reasons of high unemployment should be taken with due skepticism.
We also know that power corrupts and absolute power corrupts absolutely. That
means that existence of aristocracy might not be optimal for society "at large".
But without moderating influence of the existence of the USSR on appetites of the
US elite, they engage is audacious struggle for accumulation as much power and wealth
as possible. In a way that situation matches the situation in 1920th, which was
known to be toxic.
But society slowly but steadily moves in this direction since mid 80th. According
to the official wage statistics for 2012
http://www.ssa.gov , 40% of
the US work force earned less than $20,000, 53% earned less than $30,000, and 73%
earned less than $50,000. The median US wage or salary was $27,519 per year.
The amounts are in current dollars and they are "total" compensation amounts subject
to state and federal income taxes and to Social Security and Medicare payroll taxes.
In other words, the take home pay is less.
In other word the USA is now entered an inequality bubble, the bubble with the
financial oligarchy as new aristocracy, which strives for absolute control of all
layers of the government. The corruption has a systemic character. It take not only
traditional form of the intermarriage between Wall street and DC power brokers (aka
revolving doors). It also create a caste of guard labor to protect oligarchy.
Some researchers point out that neoliberal world is increasingly characterized
by a three-tiered social structure(net4dem.org):
The first tier is made up of some 30–40% of the population in core (G7)
countries and around 5-10% (the elite) in peripheral countries.
It is those who hold “tenured” employment in the global economy and are able
to maintain, and even expand, their consumption.
The second tier, some 30% in the core and 20–30% in the periphery,
form a growing army of “casualized” workers, who face chronic insecurity in
the conditions of their employment and the absence of any collective insurance
against risks. which previously were offloaded to the welfare state.
The third tier, some 30% of the population in the core capitalist countries,
and some 50% or more in peripheral countries, represents those structurally
excluded from productive activity and completely unprotected neither from
side effects of dismantling of welfare, nor from the cruelty of police state.
They represent the “superfluous” population of global capitalism (see,
inter alia, Hutton, 1995; Hoogvelt, 1997).
This process of stratification and fossilization of "haves" and "haves-not" is
now pretty much established in the USA. The US population can be partitioned into
five distinct classes, or strata:
Lower class (poor) bottom 20%. Those folks have income close to official
poverty line, which varies from state to state. In "expensive states" like NJ
and NY this category ranks much higher then national level, up to 40%. Official
figures from a Census Bureau that state that in 2010 twelve states had poverty
rates above 17%, up from five in 2009, while ten metropolitan areas had poverty
rates over 18%. Texas had the highest poverty rate, at 33.4%, followed by Fresno,
California, at 26.8%.
According to figures published by the Social Security
Administration in October 2011, the median income for American workers in 2010
was $26,364, just slightly above the official poverty level of $22,025
for a family of four. Most single parent families with children fall
into this category. Many single earner families belong to this category too.
The median income figure reflects the fact that salaries of 50% of all workers
are less then $26,364 and gives a much truer picture of the real social
conditions in the United States than the more widely publicized average income,
which was $39,959 in 2010. This figure is considerably higher than median
income because the distribution of income is so unequal—a relative handful of
ultra-high income individuals pulls up the average.
Liquid Asset Poverty Rate is around 43%. This is calculated as
a "percentage of households without sufficient liquid assets to subsist
at the poverty level for three months in the absence of income." In
2009 in USA it is around 43%. Edward Lambert (Economist's
View Video Eichengreen on Dollar Dominance) stated:
He touched upon the importance of liquidity in the financial markets...
but he didn't mention liquidity of households. There is very low household
consumption in China.
There is a liquidity problem in the US households. That affects credit.
and maybe household liquidity makes no difference to a currency being
a safe haven. Still, if liquidity of financial markets is so important,
it should also be important for households.
The liquid asset poverty
rate in the US was 43.1% in 2009. What could it be now considering that
the savings rate is back to below 4%?
"Liquid Asset Poverty Rate... Definition... Percentage of
households without sufficient liquid assets to subsist at the poverty
level for three months in the absence of income."
Lower middle class (60%). Depending on class model used, the middle
class may constitute anywhere from 25% to 66% of households. Typically includes
households with incomes above $46,326 (all households) or $67,348 (dual earners
households) per year. The latter is more realistic. In order for two earners
family to qualify each earner should get approximately $34K a year or more ($17
per hour wage with 40 hours workweek). Per household member income is around
$23.5K
The lower middle class... these are people in technical and lower-level
management positions who work for those in the upper middle class as lower
managers, craftspeople, and the like. They enjoy a reasonably comfortable
standard of living, although it is constantly threatened by taxes and inflation.
Generally, they have a Bachelor's and sometimes Masters college degree.
—Brian K. William, Stacy C. Sawyer and Carl M. Wahlstrom, Marriages,
Families & Intimate Relationships, 2006 (Adapted from Dennis Gilbert
1997; and Joseph Kahl 1993)[4]
Upper
middle class (top 20%). The includes households with incomes above 91K
per year.
Large percentage of those are educated two income families
(when both members of the household have bachelor degree or better). Most
graduates of Ivy League schools belongs to this category.
Important subgroup of upper middle class istop 10% (
millionaires). There was 3.4m millionaires in the USA in 2013, approximately
10% of population. Millionaire households constituted roughly seven
percent of all American households.Half of all millionaire households
in the US are headed by retirees.
There are 12 million people on the planet that had investible assets
of more than $1 million dollars. Collectively, this group controls $46.2
trillion dollars (2012). A quarter of them live in America (3.4m); followed
by almost a sixth in Japan (1.9m) and a twelfth in Germany (over 1m). China
and Great Britain round out the top 5.
Upper class (elite): top 1%. Annual comes (AGI) for this group
exceed $380K per year. Commonly called multimillionaires (net worth two
millions or more). In 2010 controlled at least 25% of total nation income (23.5%
in 2007, 8.9% in 1979) . Top 1% owns more than 90% of combined or 33.8% of
the nation private wealth.
Super rich (top 0.01%, oligarchs, super-elite, or top 1000 families).
A close to this category of super-rich are billionaires. US is home of 425
billionaires, while Russia and China have 95 and 96 correspondingly. The average
worth of the world's billionaires is now $3.5 billion, or $500 million more
than last year.(
Forbes)
To get to the top 400 (Forbes
400 list) in the USA you need 1.3 billion. Top 400 families have
as much wealth as lower half of the US population. The combined
net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion.
The combined net worth of the poorest 50% of American households: $1.6 trillion.
Real number of billionaires in the USA is probably much higher. Billionaires
want to keep a low profile for lots of reasons -- from personal safety concerns
to not wanting financial competitors to know what they're up to.
The youngest billionaire is the founder of the online social networking
site Facebook -- 25-year-old American Mark Zuckerberger, whose net worth
is estimated at $9 billion.
Share of consumption for families outside upper middle class (with income, say,
below $91K per year (80% of US households) is much less then commonly assumed. That
means that in the USA consumer spending are driven by upper class and as such
is pretty much isolated from decline of wages of lower 80% of population.
The median household income in the United States is around $50K.
Weiner's book is more than worth its price simply as an armchair tour of
interesting places and cultures and mores, deftly and briefly described. But
he has a more serious and important point to make. While the social cohesion
that the values of the clan promote is alluring, they are ultimately at odds
with the values of individual autonomy that only the much-maligned modern liberal
state can offer.
Even the state's modern defenders tend to view it, at best, as a necessary
evil. It keeps the peace, upholds (somewhat) international order, and manages
the complexity of modern life in ways that allow individuals to get on with
their journeys of personal fulfillment.
Weiner shows (in too brief but nevertheless eloquent ways) that this
reductive view of the state is insufficient to resist the seductive appeal of
the clan, and that it will be for the worse if we can't find ways to combat
this allure within the legal structures of modern liberalism.
Read alongside James Ault's masterful participant study of fundamentalist
Baptism, Spirit
and Flesh, and draw your own conclusions.
Of course the elite is worried about security of their ill-gotten gains. And
that's partially why the USA need such huge totally militarized police force and
outsize military. Police and military are typical guard labor, that protects private
wealth of the US plutocrats. Add to this equally strong private army of security
contractors.
Other suggested that not only the USA, but the global neoliberal society is deeply
sick with the same disease that the US society expected in 20th (and like previously
with globalism of robber barons age, the triumph of neoliberalism in 1990th was
and is a global phenomenon).
High inequality logically leads to dramatic increase of guard labor and inevitable
conversion of state into National Security State. Which entail total surveillance over the
citizens as a defining factor. Ruling elite is always paranoid, but
neoliberal elite proved to be borderline psychopathic. They do not want merely
security, they want to crush all the resistance.
Butler Shaffer wrote recently that the old state system in the United States
is dying before our very eyes:
A system that insists on controlling others through increasing levels of
systematic violence; that loots the many for the aggrandizement of the few;
that regulates any expressions of human behavior that are not of service to
the rulers; that presumes the power to wage wars against any nation of its choosing,
a principle that got a number of men hanged at the Nuremberg trials; and finally,
criminalizes those who would speak the truth to its victims, has no moral energy
remaining with which to sustain itself.
It is pretty clear that the USA became a society where there is de facto
royalty. In the form of the strata which Roosevelt called "Economic
royalists". Jut look at third generation of Walton family or Rocafeller family.
Remember the degenerative Soviet Politburo, or, for a change, unforgettable dyslexic
President George W Bush ? The painful truth is that in the most unequal nations
including the UK and the US – the intergenerational transmission of income is very
strong (in plain language they have a heredity-based aristocracy). See
Let them eat cake.
In more equal societies such as Denmark, the tendency of privilege to breed privilege
is much lower but also exists and is on the rise. As Roosevelt observed in a similar
situation of 30th:
These economic royalists complain that we seek to overthrow the institutions
of America. What they really complain of is that we seek to take away their
power.
Neoliberalism and
its ideology(Randism)
undermined social cohesion, making society members more hostile to each other and
as such less willing to defend the country in case of real danger.Betrayal
of the country is no longer an unspeakable crime.
The purpose of government should be to foster a "civil society". The slogan of
the "oligarchic right" is "me first", or, as in Paul Ryan's adoration of
Ayn Rand, greed is good. Objectivism became kind of new civic religion,
with the goal of maximizing the wealth of a single individual at the expense of
the civil society is a virtue. And those new social norms (instilled by MSM) allow
the fat cats simply to stole from everybody else without fear of punishment. See
an outburst from Stephen Schwarzman. If there are two societies inside of the
country with bridges burned, the bottom part is less willing to spill blood for
the upper part. And having a contractual army has its own set of dangers, as it
spirals into
high level of militarism (being in war is a new normal for the USA during the
last 30 years or so), which while enriching part of the elite bankrupts the country.
The quality of roads is a testament of this process.
Countervailing mechanisms and forces are destroyed. Plutocrats now can
shape the conversation by buying up newspapers and television channels as well as
funding political campaigns. The mousetrap of high inequality became irreversible
without external shocks. The more unequal our societies become, the more we all
become prisoners of that inequality. The key question is: Has our political system
been so degraded by misinformation and disinformation that it can no longer function
because it lost the touch with reality? The stream of outright falsehoods that MSM
feed the lemmings (aka society members) is clearly politically motivated. But a
side effect (externality) of all that brainwashing efforts is that nobody including
players at the top of the government now understands what's going on. Look at Obama
and Joe Biden.
As the growth of manufacturing base slowed down and return on capital dropped,
the elite wants less government social spending. They wants to end popular government
programs such as Social Security, no matter how much such cuts would cause economic
dislocation and strains in the current social safety net. The claims are that these
programs are "Waste" and could be cut without anyone, but the "moochers" noticing
the effects. They use the economic strain felt by many in the economy to promote
these cuts. They promise that cuts to vital programs will leave more money in the
pockets of the average person. In reality, the increase in money will be marginal,
but the effects on security and loss of "group purchasing power" economy of scale
will make the cuts worse than worthless (Economist's
View Paul Krugman Moment of Truthiness)
The US system of voting (winner take all) leads inexorably to Two party
system. Third parties are only spoilers. Protest votes in the current system
are COUNTERPRODUCTIVE (i.e. they help the evil, not the merely bad). Deliberate
and grotesque gerrymandering further dilutes protest votes.
Again, I would like to stress that rich consumers, few in number, getting the
gigantic slice of income and the most of consumption (that's why the US consumption
was so resilient during two last financial crises). There are the rest, the “non-rich”,
accounting for surprisingly small bites of the national pie.
The question arise "Why we should care?". Most of the readers of this page are
not at the bottom bracket anyway. Many are pretty high up. Here is one possible
answer:
But should we care? There are two reasons we might: process and outcome.
We might worry that the gains of the rich are ill-gotten: the result
of the old-boy network, or fraud, or exploiting the largesse of the taxpayer.
Or we might worry that the results are noxious: misery and envy, or
ill-health, or dysfunctional democracy, or slow growth as the rich sit on
their cash, or excessive debt and thus financial instability.
It is very difficult to understand the real situation with inequality in the
USA today without experiencing long term unemployed.
Or if you forced into job of a WalMart cashier or other low paid employee. Job
that does not provide a living minimum wage. You need to watch this YouTube video
Wealth Inequality
in America to understand the reality.
The video was posted anonymously by someone using the YouTube handle
politizane. It is pretty clear that not only the USA became a society where
there is de facto royalty, economic royalty but also a strata of people completely
deprived. An Outcaste.
And the royalty became recklessly like it should promoting to the top the likes
of recovered alcoholic Bush II or "private equity shark" Romney (and remember who
Romney father was).
In the current circumstances education is no longer the answer to rising inequality.
Instead of serving as a social lift it, at least in some cases, became more of a
social trap. This is connected with neoliberal transformation of education. With
the collapse of post-war public funded educational model and privatization of the
University education students face a pretty cruel world. World in which they are
cows to milk. Now universities became institutions very similar to McDonalds ( or,
in less politically correct terms, Bordellos of Higher Learning). Like McDonalds
they need to price their services so that to receive nice profit and they to make
themselves more attractive to industry they intentionally feed students with overspecialized
curriculum instead of concentrating on fundamentals and the developing the ability
to understand the world. Which was a hallmark of university education of the past.
Since 1970th Neo-Liberal
University model replaced public funded university model (Dewey
model). It is now collapsing as there are not that many students, who are able (and
now with lower job prospects and tale of graduates working as bartender, willing)
to pay infated tuition fees. That means that higher education again by-and-large
became privilege of the rich and upper middle class.
Lower student enrollment first hit minted during dot-com boom expensive private
colleges, who hunt for people with government support (such a former members of
Arm forces). It remains viable only in elite universities, which traditionally serve
the top 1% and rich foreigners. As David Schultz wrote in his article (Logos,
2012):
Yet the Dewey model began to collapse in middle of the 1970s. Perhaps it
was the retrenchment of the SUNY and CUNY systems in New York under Governor
Hugh Carey in 1976 that began the end of the democratic university.What caused its retrenchment was the fiscal crisis of the 1970s.
The fiscal crisis of the 1970s was born of numerous problems. Inflationary
pressures caused by Vietnam and the energy embargoes of the 1970s, and recessionary
forces from relative declines in American economic productivity produced significant
economic shocks, including to the public sector where many state and local governments
edged toward bankruptcy.
Efforts to relieve declining corporate profits and productivity initiated
efforts to restructure the economy, including cutting back on government services.
The response, first in England under Margaret Thatcher and then in the United
States under Ronald Reagan, was an effort to retrench the state by a package
that included decreases in government expenditures for social welfare programs,
cutbacks on business regulations, resistance to labor rights, and tax cuts.
Collectively these proposals are referred to as Neo-liberalism and their
aim was to restore profitability and autonomy to free markets with the belief
that unfettered by the government that would restore productivity.
Neo-liberalism had a major impact on higher education. First beginning
under President Carter and then more so under Ronald Reagan, the federal and
state governments cut taxes and public expenditures. The combination of
the two meant a halt to the Dewey business model as support for public institutions
decreased and federal money dried up.
From a high in the 1960s and early 70s when states and the federal government
provided generous funding to expand their public systems to educate the Baby
Boomers, state universities now receive only a small percentage of their money
from the government. As I pointed out in my 2005 Logos “The Corporate University
in American Society” article in 1991, 74% of the funding for public universities
came from states, in 2004; it was down to 64%, with state systems in Illinois,
Michigan and Virginia down to 25%, 18%, and 8% respectively. Since then, the
percentages have shrunk even more, rendering state universities public
institutions more in name than in funding.
Higher education under Neo-liberalism needed a new business model and it
found it in the corporate university. The corporate university is one
where colleges increasingly use corporate structures and management styles to
run the university. This includes abandoning the American Association
of University Professors (AAUP) shared governance model where faculty had an
equal voice in the running of the school, including over curriculum, selection
of department chairs, deans, and presidents, and determination of many of the
other policies affecting the academy. The corporate university replaced
the shared governance model with one more typical of a business corporation.
For the corporate university, many decisions, including increasingly those
affecting curriculum, are determined by a top-down pyramid style of authority.
University administration often composed not of typical academics but those
with business or corporate backgrounds had pre-empted many of the decisions
faculty used to make. Under a corporate model, the trustees, increasingly
composed of more business leaders than before, select, often with minimal input
from the faculty, the president who, in turn, again with minimal or no faculty
voice, select the deans, department heads, and other administrative personnel.
Neoliberalism professes the idea the personal greed can serve positive society
goals, which is reflected in famous neoliberal slogan "greed is good". And university
presidents listen. Now presidents of neoliberal universities do not want to get
$100K per year salary, they want one, or better several, million dollar salary of
the CEO of major corporation (Student
Debt Grows Faster at Universities With Highest-Paid Leaders, Study Finds - NYTimes.com)
At the 25 public universities with the highest-paid presidents, both student
debt and the use of part-time adjunct faculty grew far faster than at the average
state university from 2005 to 2012, according to a
new study by the Institute for Policy Studies, a left-leaning Washington
research group.
The study, “The One Percent at State U: How University Presidents Profit
from Rising Student Debt and Low-Wage Faculty Labor,” examined the relationship
between executive pay, student debt and low-wage faculty labor at the 25
top-paying public universities.
The co-authors, Andrew Erwin and Marjorie Wood, found that administrative
expenditures at the highest-paying universities outpaced spending on scholarships
by more than two to one. And while adjunct faculty members became more numerous
at the 25 universities, the share of permanent faculty declined drastically.
“The high executive pay obviously isn’t the direct cause of higher student
debt, or cuts in labor spending,” Ms. Wood said. “But if you think about it
in terms of the allocation of resources, it does seem to be the tip of a very
large iceberg, with universities that have top-heavy executive spending also
having more adjuncts, more tuition increases and more administrative spending.”
... ... ...
The Chronicle of Higher Education’s annual
survey of public university presidents’ compensation, also released Sunday,
found that nine chief executives earned more than $1 million in total compensation
in 2012-13, up from four the previous year, and three in 2010-11. The median
total compensation of the 256 presidents in the survey was $478,896, a 5 percent
increase over the previous year.
... ... ...
As in several past years, the highest-compensated president, at $6,057,615
in this period, was E. Gordon Gee, who
resigned from Ohio State last summer amid trustee complaints about frequent
gaffes. He has since become the president of West Virginia University.
This trick requires dramatic raising of tuition costs. University bureaucracy
also got taste for better salaries and all those deans, etc want to be remunerated
like vice presidents. So raising the tuition costs became the key existential idea
of neoliberal university. Not quality of education, but tuition costs now are the
key criteria of success. And if you can charge students $40K per semester it is
very, very good. If does not matter that most population get less then $20 an hour.
The same is true for professors, who proved to be no less corruptible. And some
of them, such as economic departments, simply serve as prostitutes for financial
oligarchy. So they were corrupted even before that rat race for profit. Of course
there are exceptions. But they only prove the rule.
As the result university tuition inflation outpaced inflation by leaps and bounds.
At some point amount that you pay (and the level of debt after graduation) becomes
an important factor in choosing the university. So children of "have" and "have
nots" get into different educational institutions and do not meet each other. In
a way aristocracy returned via back door.
Neoliberal university professes "deep specialization" to create "ready for the
market" graduates. And that creates another problem: education became more like
stock market game and that makes more difficult for you to change you specialization
late in the education cycle. But early choice entail typical stock market problem:
you might miss the peak of the market or worse get into prolonged slump as graduates
in finance learned all too well in 2008. That's why it is important not to accumulate
too much debt: this is a kind of "all in" play in poker. You essentially bet that
in a particular specialty there will be open positions with high salary, when you
graduate. If you lose this bet you are done.
As a result of this "reaction to the market trends" by neoliberal universities,
when universities bacem appendixes of HR of large corporations students need to
be more aware of real university machinery then students in 50th or 60th of the
last century. And first of all assume that it is functioning not to their benefits.
One problem for a student is that there are now way too many variables that you
do not control. Among them:
Will it be a sizable market for graduates for the given specialty in
four years from now (late specialization and attempt to get a job after
bachelor degree might help here; in this case the selection of the master degree
specialization can become more realistic).
What will be the general health of national economy on the moment of
graduation? Remeber about students who graduated in 2008.
The total price of education (and by extension the size of the debt
you get on the day of graduation from the college).
Whether you become a victim of rip offs sponsored by the university administration.
Although this is a slight exaggeration, but the working hypothesis for student
a modern neoliberal university should probably be "This is a hostile environment -- Beware financial ripoffs". That might involve gentle pushing you into
obtaining worthless specialty or other intricate ways to screw you based on
your lack of life experience, poor understanding of academic environment and
natural youth maximalism. Loading you with loans to the max is another dirty
trick. In private universities this is a new art that is polished to perfection
and widely practiced on unsuspecting lemmings.
On the deep level neoliberal university is not interested to help you to find
specialization and place in life where can unleash your talents. You are just a
paying customers much like in McDonalds, and university interests are such they
might try to push you in wrong direction or load you with too much debt.
If there is deep mismatch as was with computer science graduates after crash
of dot-com boom, or simply bad job market due to economy stagnation and
you can't find
the job for your new specialty (or if you got "junk" specialty with inherent
high level of unemployment among professionals) and you have substantial education
debt, then waiting tables or having some other MacJob is a real disaster for you.
As with such selaries you simply can't pay it back. So controlling the level of
debt is very important and in this sence parents financial help is now necessary.
In other words education became more and more "rich kids game".
That does not mean that university education should be avoided for those from
families with modest means. On the contrary it provides unique experience and help
a person to mature in multiple ways difficult to achieve without it. It is still
one of the best ways to get vertical mobility. But unless parents can support you
you need to try to find the most economical way to obtain it without acquiring too
much debt. This is you first university exam. And if you fail it you are in trouble.
For example, computer science education is a great way to learn quite a few things
necessary for a modern life. But the price does matter and prestige of the university
institution that you attend is just one of the factors you should consider in your
evaluation. It should not be the major factor ("vanity fair") unless your parents
are rich and can support you. If you are good you can get later a master degree
in a prestigious university after graduation from a regular college. Or even Ph.D.
County colleges are greatly underappreciated and generally provide pretty high
standard of education, giving ability to students to save money for the first two
years before transferring to a four year college. They also smooth the transition
as finding yourself among people who are only equal or superior then you (and have
access to financial respource that you don't have) is a huge stress. The proverb
say that it is better to be first in the village then last in the town has some
truth in it. Prestigious universities might provide a career boost (high fly companies
usually accept resumes only from Ivy League members), but they cost so much that
you need to be a son or daughter of well-to-do parents to feel comfortably in them.
Or extremely talented. Also amount of career boost that elite universities provide
depends on whom your parents are and what connections they have. It does not depend
solely on you and the university. Again, I would like to stress that you should
resist "vanity fair" approach to your education: a much better way is to try to
obtain BS in a regular university and them try to obtain MS and then, if you are
good, PHD, in a prestigious university. Here is a fragment of an interesting discussion
that covers this topic (Low Mobility Is Not a Social Tragedy?,
Feb 13, 2013 ; I recommend you to read the whole discussion ):
kievite:
I would like to defend Greg Clack.
I think that Greg Clack point is that the number of gifted children is
limited and that exceptionally gifted children have some chance for
upper move in almost all, even the most hierarchical societies (story
of Alexander Hamilton was really fascinating for me, the story of Mikhail
Lomonosov
http://en.wikipedia.org/wiki/Mikhail_Lomonosov was another one -- he
went from the very bottom to the top of Russian aristocracy just on the
strength of his abilities as a scientist). In no way the ability to "hold
its own" (typical for rich families kids) against which many here expressed
some resentment represents social mobility. But the number of kids who went
down is low -- that's actually proves Greg Clack point:
(1) Studies of social mobility using surnames suggest two things.
Social mobility rates are much lower than conventionally estimated.
And social mobility rates estimated in this way vary little across societies
and time periods. Sweden is no more mobile than contemporary England
and the USA, or even than medieval England. Social mobility rates seem
to be independent of social institutions (see the other studies on China,
India, Japan and the USA now linked here).
Francisco Ferreira rejects this interpretation, and restates the
idea that there is a strong link between social mobility rates and inequality
in his interesting post.
What is wrong with the data Ferreira cites? Conventional estimates
of social mobility, which look at just single aspects of social status
such as income, are contaminated by noise. If we measure mobility on
one aspect of status such as income, it will seem rapid.
But this is because income is a very noisy measure of the underlying
status of families. The status of families is a combination of their
education, occupation, income, wealth, health, and residence. They will
often trade off income for some other aspect of status such as occupation.
A child can be as socially successful as a low paid philosophy professor
as a high paid car salesman. Thus if we measure just one aspect of status
such as income we are going to confuse the random fluctuations of income
across generations, influenced by such things as career choices between
business and philosophy, with true generalised social mobility.
If these estimates of social mobility were anywhere near correct
as indicating true underlying rates of social mobility, then we would
not find that the aristocrats of 1700 in Sweden are still overrepresented
in all elite occupations of Sweden. Further, the more equal
is income in a society, the less signal will income give of the true
social status of families. In a society such as Sweden, where the difference
in income between bus drivers and philosophy professors is modest, income
tells us little about the social status of families. It is contaminated
much more by random noise. Thus it will appear if we measure social
status just by income that mobility is much greater in Sweden than in
the USA, because in the USA income is a much better indicator of the
true overall status of families.
The last two paragraphs of Greg Clark article cited by Mark Thoma are
badly written and actually are somewhat disconnected with his line of thinking
as I understand it as well as with the general line of argumentation of
the paper.
Again, I would like to stress that a low intergenerational mobility
includes the ability of kids with silver spoon in their mouth to keep a
status close to their parent. The fact that they a have different starting
point then kids from lower strata of society does not change that.
I think that the key argument that needs testing is that the number of
challengers from lower strata of the society is always pretty low and is
to a large extent accommodated by the societies we know (of course some
societies are better then others).
Actually it would be interesting to look at the social mobility data
of the USSR from this point of view.
But in no way, say, Mark Thoma was a regular kid, although circumstances
for vertical mobility at this time were definitely better then now. He did
possessed some qualities which made possible his upward move although his
choice of economics was probably a mistake ;-).
Whether those qualities were enough in more restrictive environments
we simply don't know, but circumstances for him were difficult enough as
they were.
I stopped reading after that. I teach at a high school in a town with
a real mix of highly elite families, working class families, and poor families,
and I can tell you that the children of affluent parents are not obviously
more gifted than the children of poor families. They do, however, have
a lot more social capital, and they have vastly more success. But the limitations
on being "gifted" are irrelevant.
According to an extensive study (Turkheimer et al., 2003) of 50,000 pregnant
women and the children they went on to have (including enough sets of twins
to be able to study the role of innate genetic differences), variation
in IQ among the affluent seems to be largely genetic.
Among the poor, however, IQ has very little to do with genes -- probably
because the genetic differences are swamped and suppressed by the environmental
differences, as few poor kids are able to develop as fully as they
would in less constrained circumstances.
All you said is true. I completely agree that "...few poor kids are
able to develop as fully as they would in less constrained circumstances."
So there are losses here and we should openly talk about them.
Also it goes without saying that social capital is extremely important
for a child. That's why downward mobility of children from upper classes
is suppressed, despite the fact that some of them are plain vanilla stupid.
But how this disproves the point made that"exceptionally gifted
children have some chance for upper move in almost all, even the most hierarchical
societies"? I think you just jumped the gun...
mrrunangun:
The early boomers benefitted from the happy confluence of the postwar
boom, LBJ's Great Society efforts toward financial assistance for those
seeking to advance their educations, and the 1964 Civil Rights Act which
opened opportunities for marginalized social groups in institutions largely
closed to them under the prewar social customs in the US.
The US Supreme Court is made up of only Jews and Catholics as of this
writing, a circumstance inconceivable in the prewar America. Catholics were
largely relegated to separate and unequal institutions. Jews' opportunities
were limited by quotas and had a separate set of institutions of their own
where their numbers could support such. Where their numbers were not sufficient,
they were often relegated to second rate institutions.
Jewish doctors frequently became the leading men in the Catholic hospitals
in Midwestern industrial towns where they were unwelcome in the towns' main
hospitals. Schools, clubs, hospitals, professional and commercial organizations
often had quota or exclusionary policies. Meritocracy has its drawbacks,
but we've seen worse in living memory.
College textbook publishing became a racket with the growth of neoliberalism.
That means at least since 1980. And it is pretty dirty racket with willing accomplishes
in form of so called professors like Greg Mankiw. For instance, you can find a used
5th edition Mankiw introductory to Microeconomics for under $4.00, while a new 7th
edition costs over $200. An interesting discussion of this problem can be found
at
Thoughts on High-Priced Textbooks'
And it is as isolated as the aristocracies of bygone days, isolation reinforced
by newly minted royalty withdrawal into gated estates, Ivy League Universities,
and private planes.
They are not openly suggesting that no child should rise above the status of
parents, presumably in terms of wealth, education, and opportunity. But their policies
are directed toward this goal. If you are born to poor parents in the USA, all bets
are off -- your success is highly unlikely, and your servile status, if not poverty
is supposedly pre-destined by poor generic material that you got.
This is of course not because the children of the elite inherit the talent, energy,
drive, and resilience to overcome the many obstacles they will face in life from
their parents. Whatever abilities they have (and regression to the mean is applicable
to royalty children too), they are greatly supplemented, of course, by the easy
opportunities, valuable connections, and access to power. That's why the result
of SAT in the USA so strongly correlated with the wealth of parents. And a virtual
freedom from prosecution does not hurt either, in case they have inherited a penchant
for sociopathy, or something worse, along with their many gifts.
The view that the children of the poor will not do well, because they are genetically
inferior became kind of hidden agenda. These are the pesky 99% just deserve to be
cheated and robbed by the elite, because of the inherent superiority of the top
one percent. There is no fraud in the system, only good and bad breeding, natural
predators and prey.
This line of thinking rests on the assumption that I succeed, therefore I am.
And if you do not, well, so be it. You will be low-paid office slave or waiter in
McDonalds with a college diploma as it is necessary for the maximization of profits
of the elite. There is no space at the top for everybody. Enjoy the ride... Here
is an typical expression of such views:
"Many commentators automatically assume that low intergenerational mobility
rates represent a social tragedy. I do not understand this reflexive wailing
and beating of breasts in response to the finding of slow mobility rates.
The fact that the social competence of children is highly predictable once
we know the status of their parents, grandparents and great-grandparents is
not a threat to the American Way of Life and the ideals of the open society
The children of earlier elites will not succeed because they are born with
a silver spoon in their mouth, and an automatic ticket to the Ivy League.
They will succeed because they have inherited the talent, energy, drive,
and resilience to overcome the many obstacles they will face in life. Life is
still a struggle for all who hope to have economic and social success. It is
just that we can predict who will be likely to possess the necessary characteristics
from their ancestry."
Greg Clark, The Economist, 13 Feb. 2013
Mr. Clark is now a professor of economics and was the department chair
until 2013 at the University of California, Davis. His areas of research are
long term economic growth, the wealth of nations, and the economic history of
England and India.
And another one:
"During this time, a growing professional class believed that scientific
progress could be used to cure all social ills, and many educated people accepted
that humans, like all animals, were subject to natural selection.
Darwinian evolution viewed humans as a flawed species that required pruning
to maintain its health. Therefore negative eugenics seemed to offer a rational
solution to certain age-old social problems."
David Micklos, Elof Carlson, Engineering American Society: The Lesson of
Eugenics
If we compare this like of thinking with the thinking of eightieth century and
you will see that the progress is really limited:
“With savages, the weak in body or mind are soon eliminated; and those that
survive commonly exhibit a vigorous state of health. We civilized men, on the
other hand, do our utmost to check the process of elimination; we build asylums
for the imbecile, the maimed, and the sick; we institute poor-laws; and our
medical men exert their utmost skill to save the life of every one to the last
moment.
There is reason to believe that vaccination has preserved thousands, who
from a weak constitution would formerly have succumbed to small-pox. Thus the
weak members of civilised societies propagate their kind. No one who has attended
to the breeding of domestic animals will doubt that this must be highly injurious
to the race of man.
It is surprising how soon a want of care, or care wrongly directed, leads
to the degeneration of a domestic race; but excepting in the case of man himself,
hardly any one is so ignorant as to allow his worst animals to breed.
The aid which we feel impelled to give to the helpless is mainly an incidental
result of the instinct of sympathy, which was originally acquired as part of
the social instincts, but subsequently rendered, in the manner previously indicated,
more tender and more widely diffused. Nor could we check our sympathy, if so
urged by hard reason, without deterioration in the noblest part of our nature.
The surgeon may harden himself whilst performing an operation, for he knows
that he is acting for the good of his patient; but if we were intentionally
to neglect the weak and helpless, it could only be for a contingent benefit,
with a certain and great present evil.
Hence we must bear without complaining the undoubtedly bad effects of the
weak surviving and propagating their kind; but there appears to be at least
one check in steady action, namely the weaker and inferior members of society
not marrying so freely as the sound; and this check might be indefinitely increased,
though this is more to be hoped for than expected, by the weak in body or mind
refraining from marriage.”
Charles Darwin, The Descent of Man
So all this screams of MSM about dropping consumer spending is just a smoke screen.
In oligarchic republic which USA represents, consumption is heavily shifted to top
20% and as such is much less dependent of the conditions of the economy. And top
20% can afford $8 per gallon gas (European price) without any problems.
John Barkley Rosser, Jr. With Marina V. Rosser and Ehsan Ahmed, argued
for a two-way positive link between income inequality (economic inequality)
and the size of an underground economy in a nation (Rosser, Rosser, and
Ahmed, 2000).
Globally in 2005, top fifth (20%) of the world accounted for 76.6% of total private
consumption (20:80 Pareto rule). The poorest fifth just 1.5%. I do not think the
USA differs that much from the rest of the world.
There was two famous Citigroup Plutonomy research reports (2005 and 2006) featured
in in Capitalism: A Love Story . Here is how Yves Smith summarized the findings
(in her post
High Income Disparity Leads to Low Savings Rates)
On the one hand, the authors, Ajay Kapur, Niall Macleod, and Narendra Singh
get some credit for addressing a topic surprisingly ignored by mainstream economists.
There have been some noteworthy efforts to measure the increase in concentration
of income and wealth in the US most notably by Thomas Piketty and Edmund Saez.
But while there have been some efforts to dispute their findings (that the rich,
particularly the top 1%, have gotten relatively MUCH richer in the last 20 years),
for the most part discussions of what to make of it (as least in the US) have
rapidly descended into theological debates. One camp laments the fall in economic
mobility (a predictable side effect), the corrosive impact of perceived unfairness,
and the public health costs (even the richest in high income disparity countries
suffer from shortened life spans). The other camp tends to focus on the Darwinian
aspects, that rising income disparity is the result of a vibrant, open economy,
and the higher growth rates that allegedly result will lift help all workers.
Yet as far as I can tell, there has been virtually no discussion of the macroeconomy
effects of rising income and wealth disparities, or to look into what the implications
for investment strategies might be. One interesting effect is that with rising
inequality the share of "guard labor" grows very quickly and that puts an upper
limit on the further growth of inequality (half of the citizens cannot be guards
protecting few billionaires from the other half).
Now the fact that the Citi team asked a worthwhile question does not mean
they came up with a sound answer. In fact, he reports are almost ludicrously
funny in the way they attempt to depict what they call plutonomy as not merely
a tradeable trend (as in leading to some useful investment ideas), but as a
Brave New Economy development. I haven't recalled such Panglossian prose since
the most delirious days of the dot-com bubble:
We will posit that:
1) the world is dividing into two blocs – the plutonomies, where
economic growth is powered by and largely consumed by the wealthy few, and
the rest. Plutonomies have occurred before in sixteenth century
Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties
in the U.S.
What are the common drivers of Plutonomy? Disruptive technology-driven
productivity gains, creative financial innovation, capitalist-friendly cooperative
governments, an international dimension of immigrants and overseas conquests
invigorating wealth creation, the rule of law, and patenting inventions.
Often these wealth waves involve great complexity, exploited best by the
rich and educated of the time…..Most “Global Imbalances” (high current account
deficits and low savings rates, high consumer debt levels in the Anglo-Saxon
world, etc) that continue to (unprofitably) preoccupy the world’s intelligentsia
look a lot less threatening when examined through the prism of plutonomy.
The risk premium on equities that might derive from the dyspeptic “global
imbalance” school is unwarranted – the earth is not going to be shaken off
its axis, and sucked into the cosmos by these “imbalances”. The earth
is being held up by the muscular arms of its entrepreneur-plutocrats, like
it, or not..
Yves here. Translation: plutonomy is such a great thing that the entire stock
market would be valued higher if everyone understood it. And the hoops the reports
go through to defend it are impressive. The plutomony countries (the notorious
Anglo-Saxon model, the US, UK, Canada and Australia) even have unusually risk-seeking
populations (and that is a Good Thing):
…a new, rather out-of-the box hypothesis suggests that dopamine differentials
can explain differences in risk-taking between societies. John Mauldin,
the author of “Bulls-Eye Investing” in an email last month cited this work.
The thesis: Dopamine, a pleasure-inducing brain chemical, is linked with
curiosity, adventure, entrepreneurship, and helps drive results in uncertain
environments. Populations generally have about 2% of their members with
high enough dopamine levels with the curiosity to emigrate. Ergo, immigrant
nations like the U.S. and Canada, and increasingly the UK, have high dopamine-intensity
populations.
Yves here. What happened to “Give me your tired, your poor/Your huddled masses
yearning to breathe free/The wretched refuse of your teeming shore”? Were the
Puritans a high dopamine population? Doubtful. How about the Irish emigration
to the US, which peaked during its great famine?
Despite a good deal of romanticization standing in for analysis, the report
does have one intriguing, and well documented finding: that the plutonomies
have low savings rates. Consider an fictional pep rally chant:
We’re from Greenwich
We’re invincible
Living off our income
Never touch the principal
Think about that. If you are rich, you can afford to spend all your income.
You don’t need to save, because your existing wealth provides you with a more
than sufficient cushion.
The ramifications when you have a high wealth concentration are profound.
From the October 2005 report:
In a plutonomy, the rich drop their savings rate, consume a larger fraction
of their bloated, very large share of the economy. This behavior overshadows
the decisions of everybody else. The behavior of the exceptionally rich
drives the national numbers – the “appallingly low” overall savings rates,
the “over-extended consumer”, and the “unsustainable” current accounts that
accompany this phenomenon….
Feeling wealthier, the rich decide to consume a part of their capital
gains right away. In other words, they save less from their income, the
wellknown wealth effect. The key point though is that this new lower savings
rate is applied to their newer massive income. Remember they got a much
bigger chunk of the economy, that’s how it became a plutonomy. The consequent
decline in absolute savings for them (and the country) is huge when this
happens. They just account for too large a part of the national economy;
even a small fall in their savings rate overwhelms the decisions of all
the rest.
Yves here. This account rather cheerily dismisses the notion that there might
be overextended consumers on the other end of the food chain. Unprecedented
credit card delinquencies and mortgage defaults suggest otherwise. But behaviors
on both ends of the income spectrum no doubt played into the low-savings dynamic:
wealthy who spend heavily, and struggling average consumers who increasingly
came to rely on borrowings to improve or merely maintain their lifestyle. And
let us not forget: were encouraged to monetize their home equity, so they actually
aped the behavior of their betters, treating appreciated assets as savings.
Before you chide people who did that as profligate (naive might be a better
characterization), recall that no one less than Ben Bernanke was untroubled
by rising consumer debt levels because they also showed rising asset levels.
Bernanke ignored the fact that debt needs to be serviced out of incomes, and
households for the most part were not borrowing to acquire income-producing
assets. So unless the rising tide of consumer debt was matched by rising incomes,
this process was bound to come to an ugly end.
Also under Bush country definitely moved from oligarchy to plutocracy. Bush
openly claimed that "have more" is his base. The top 1% of earners have captured
four-fifths of all new income.
An interesting question is whether the extremely unequal income distribution
like we have now make the broader society unstable. Or plebs is satisfied with "Bread
and circuses" (aka house, SUV, boat, Daytona 500 and 500 channels on cable)
as long as loot from the other parts of the world is still coming...
Donald made a point I was going to. I would go a bit further though. It’s not
clear to me that economic inequality is not desired for its own sake by the
some of the elite. After all, studies suggest that once you get past the
level of income needed for a reasonably comfortable life – about $40K for a
single person in the US - the quest for money is mostly about status.
Meeting your needs is not necessarily zero sum, but status is: my status
can only be higher than yours to the extent that yours is lower than mine.
The more inequality there is, the more status differentiation there
is. Of course, there are other sources of status than money, but I’m
talking specifically about people who value money for the status it confers.
This is in addition to the “Donner Party Conservatism” calls to make sure the
incentives to work are as strong as possible (to be fair, I think tolerating
some inequality for the sake of incentives is worthwhile, but we seem to be
well beyond that).
For example currently the USA is No.3 in Gini measured inequality
(cyeahoo,
Oct 16, 2009), but still the society is reasonably stable:
Gini score: 40.8 GDP 2007 (US$ billions): 13,751.4 Share of income or expenditure (%)
Poorest 10%: 1.9
Richest 10%: 29.9 Ratio of income or expenditure, share of top 10% to lowest 10%: 15.9
What is really surprising is how low the average American salary is: just
$26,352 or ~$2,200 a month. This is equal approximately to $13 an hour.
At the same time:
There are roughly 150,000 households in the United States with a net worth
of at least $20 million.
In 2004, the last time the Fed provided data, there were 649,000 American
households worth $10 million or more, a nearly 300 percent jump since 1992.
More than 49,000 Americans are said to have more than $50 million.
125,000 more households in the $25 million to $50 million range.
Some interesting facts about upper class (top 1% of the US population). First of
all this is pretty self-isolated group (a nation within a nation). They associate
almost exclusively with members of their own social and economic standing, few members
of the bottom 90% of Americans have ever even personally met a member of the upper
class.
In 1985 there were 13 US billionaires- today there are more than a 1,000.
The richest 1% of Americans (the upper class) have income over $380K
and control more wealth than 90% of the U.S. population combined (owned
34.6% of all privately held wealth,). The next 19% own 50% which means
that 20% of people control 85% of total wealth, leaving only 15% to the bottom
80% (wage and salary workers).
The earners in the top 1 percent in income distribution bracket make
20% of the money.
Private jet travel is the fastest growing luxury market segment. Over 15%
of all flights in the U.S. are by private jet. There are more than 1,000 daily
private jet flights in key markets such as South Florida, New York and Los Angeles.-
(Elite Traveler Magazine).
Now about top 400:
2007 was the first year that making Forbes magazine's list of 400
richest Americans required more than $1 billion. (The cutoff was $1.3
billion.)
In 2005, the top 400 earners in America collectively piled up $214 billion,
more than the GDP of 149 nations.
Here are some interesting hypothesis about affect of inequality of the society:
It's not ratio of poorest 10% to highest 10% that matter. It's the
ratio of top 10% to middle class. Without a strong middle class, the
democracy is not sustainable. The weakness of this hypothesis is that it does
not tell what kind of democracy is not sustainable without the strong middle
class. Also Asian states successfully demonstrated society progress is possible
without or, more correctly, with very little democracy.
As economicinequality grows beyond certain level, nations
might become increasingly politically unstable. First of all the level
of instability depends probably on the level of mass communication available
in the society: ancient societies were much more unequal that any of modern
societies and still they were pretty stable. Supporting evidence includes the
USSR: as mass communications dramatically increased due to personal computers
and Internet, the society lost internal stability despite the fact that economic
difficulties it experiences were far less prominent that in the past.
At some point the anger creates destructive tendencies in society that are
self-sustainable no matter what police force is available for the state (like
nationalistic forces that blow out the USSR). In the meantime society experiences
apathy and decline in all societal dimensions (mass alcoholism and hidden opposition
to any productivity rising initiatives in the USSR). At the same time ruling
elite became less and less intellectually astute ( dominated by gerontocrats
in the USSR) and at some point pretty detached from reality ("let them eat cake").
After inequality reaches certain level (critical mass) society became
permanently stratified and rigid and that negatively affects the quality of
the elite.Supporting evidence includes the USSR with its deteriorating
"nomenclature". Recent research drawing on a series of studies from Europe,
the United States and Australia has concluded that among comparable countries,
the United States has an unusually rigid social system and limited possibilities
for social mobility.
In a very unequal society, the people at the top have to spend a lot
of time and energy keeping the lower classes obedient and productive.
High inequality also changes the composition of labor in a very negative way.
because it leads to an excess of what is calls “guard labor.”
In a 2007 paper on the subject, Samuel Bowles and co-author Arjun Jayadev, an
assistant professor at the University of Massachusetts, made an eye opening
finding: Roughly 1 in 10 Americans is employed to keep fellow citizens
in line and protect private wealth from would-be Robin Hoods.
I’m surprised a thoughtful guy like Glenn Greenwald would make such an unsubstantiated
link between collapsing public services for American peasants and a collapse
of America’s global (indirect) imperial realm. Is there really a historic
link between the quality of a nation’s services to its citizens and its global
power? If so the Scandinavian countries would have been ruling the world
for the past fifty years. If anything there is probably a reverse correlation.
None of the great historic imperial powers, such as the British, Roman, Spanish,
Russian, Ottoman, Mongolian, Chinese, Islamic, or Persian, were associated with
egalitarian living conditions for anyone outside of the elite. So from
a historic point of view, the ability to divert resources away from the peasants
and towards the national security state is a sign of elite power and
should be seen as a sign increased American imperial potential.
Now if America’s global power was still based on economic production then
an argument could be made that closing libraries and cancelling the 12th grade
would lower America’s power potential. But as we all know that is no longer
the case and now America’s power is as the global consumer of excess production.
Will a dumber peasantry consume even more? I think there is a good chance that
the answer is yes.
Now a limit could be reached to how far the elite can lower their peasant’s
standard of living if these changes actually resulted in civil disorder that
demanded much energy for American elites to quell. But so far that is
far from the case. Even a facile gesture such as voting for any other political
party except the ruling Republicrats seems like a bridge too far for 95% of
the peasants to attempt. No, the sad truth is that American elites, thanks to
their exceptional ability to deliver an ever increasing amount of diverting
bread and circuses, have plenty of room to further cut standards of living and
are nowhere near reaching any limits.
What the reductions in economic and educational options will result in are
higher quality volunteers into America’s security machinery, which again obviously
raise America’s global power potential. This, along with an increasingly ruthless
elite, should assure that into the medium term America’s powerful position will
remain unchallenged. If one colors in blue on a world map all the countries
under de facto indirect US control then one will start to realize the extent
of US power. The only major countries outside of US control are Iran, North
Korea, Syria, Cuba, and Venezuela. Iraq and Afghanistan are recent converts
to the blue column but it far from certain whether they will stay that way.
American elites will resist to the bitter end any country falling from the blue
category. But this colored world map is the best metric for judging US global
power.
In the end it’s just wishful thinking to link the declining of the American
peasant’s standard of living with a declining of the American elite’s global
power. I wouldn’t be surprised to see this proven in an attack on Iran in the
near future.
Higher pay inequality feeds organized crime (and here we assume that banksters
are different from the organized crime, which is probably a very weak hypothesis
;-). That's why Peter Drucker was probably right. He thought that top execs
shouldn't get more than 25 times the average salary in the company (which would
cap it around $2 millions). I would suggest a metric based on multiple from
the average of lower 50% full time jobs for a particular firm (for example in Wal
Mart that would cashers and cleaners, people who are living in Latin American style
poverty, if they are single mothers as many are). One of the particular strengths
of the idea of the maximum wage base on average of lower 50% of salaries is that
if senior managers want to increase their own pay, they have to increase that of
the lower-paid employees too.
And in a way financial industry itself became an organized crime. The notion
of exorbitant wages prevalent in financial industry (and, before it, pioneered by
in high-tech companies during dot-com boom via stock options) is based on the idea
that some people are at least hundred times more productive then the others. In
some professions like programming this is true and such people do exists. But any
sufficiently large company is about team work. No matter what job a person does
and no matter how many hours they work, there is no possible way that an single
individual will create a whole product. It's a team effort. That means that neither
skill nor expertise or intelligence can justify the payment of 200, 300 or even
400 times the wages of the lowest-paid 20% workers in any large organization.
This is especially questionable for financial professionals because by
and large they are engaged in non-productive. often harmful for the society as whole
redistribution activities, the same activities that organized crime performs.
Moreover, modern traders are actually play a tremendously destructive role as subprime
crisis (and before it saving and loans debacle) aptly demonstrated. which make them
indistinguishable in this societal roles from cocaine pushers on the streets.
Drucker's views on the subject are probably worth revisiting. Rick Wartzman wrote
in his Business Week article
Put a Cap on CEO Pay' that "those who understand that what comes with their
authority is the weight of responsibility, not "the mantle of privilege," as writer
and editor Thomas Stewart described Drucker's view. It's their job "to do
what is right for the enterprise—not for shareholders alone, and certainly not for
themselves alone."
Large pay also attracts sociopathic personalities. Sociopathic personalities at
the top of modern organizations is another important but rarely discussed danger.
"I'm not talking about the bitter feelings of the people on the plant floor,"
Drucker told a reporter in 2004. "They're convinced that their bosses are crooks
anyway. It's the mid-level management that is incredibly disillusioned" by CEO
compensation that seems to have no bounds. " This is especially true, Drucker explained
in an earlier interview, when CEOs pocket huge sums while laying off workers.
That kind of action, he said, is "morally unforgivable." There can be exceptions
but they should be in middle management not in top management ranks.
Put it all together, and the picture became really discouraging. We have an ill-informed
or misinformed electorate, politicians who gleefully add to the misinformation,
watchdogs who are afraid to bark and guards on each and every corner. Mousetrap
is complete.
Transforming American politics, September 16, 2010
This review is from: Winner-Take-All Politics: How Washington Made the
Rich Richer--and Turned Its Back on the Middle Class (Hardcover) This is
a transformative book. It's the best book on American politics that I've
read since Rick Perlstein's Before the Storm. Not all of it is original
(the authors seek to synthesize others' work as well as present their own,
but provide due credit where credit is due). Not all of its arguments are
fully supported (the authors provide a strong circumstantial case to support
their argument, but don't have smoking gun evidence on many of the relevant
causal relations). But it should transform the ways in which we think about
and debate the political economy of the US.
The underlying argument is straightforward. The sources of American
economic inequality are largely political - the result of deliberate political
decisions to shape markets in ways that benefit the already-privileged at
the expense of a more-or-less unaware public. The authors weave
a historical narrative which Kevin Drum (who says the same things that I
am saying about the book's importance) summarizes cogently here. This is
not necessarily original - a lot of leftwing and left-of-center writers
have been making similar claims for a long time. What is new is both the
specific evidence that the authors use, and their conscious and deliberate
effort to reframe what is important about American politics.
First - the evidence. Hacker and Pierson draw on work by economists like
Picketty and Saez on the substantial growth in US inequality (and on comparisons
between the US and other countries), but argue that many of the explanations
preferred by economists (the effects of technological change on demand for
skills) simply don't explain what is going on. First, they do not explain
why inequality is so top-heavy - that is, why so many of the economic benefits
go to a tiny, tiny minority of individuals among those with apparently similar
skills. Second, they do not explain cross national variation - why the differences
in the level of inequality among advanced industrialized countries, all
of which have gone through more-or-less similar technological shocks, are
so stark. While Hacker and Pierson agree that technological change is part
of the story, they suggest that the ways in which this is channeled in different
national contexts is crucial. And it is here that politics plays a key role.
Many economists are skeptical that politics explains the outcome, suggesting
that conventional forms of political intervention are not big enough to
have such dramatic consequences. Hacker and Pierson's reply implicitly points
to a blind spot of many economists - they argue that markets are not `natural,'
but instead are constituted by government policy and political institutions.
If institutions are designed one way, they result in one form of market
activity, whereas if they are designed another way, they will result in
very different outcomes. Hence, results that appear like `natural' market
operations to a neo-classical economist may in fact be the result of political
decisions, or indeed of deliberate political inaction. Hacker and Pierson
cite e.g. the decision of the Clinton administration not to police derivatives
as an example of how political coalitions may block reforms in ways that
have dramatic economic consequences.
Hence, Hacker and Pierson turn to the lessons of ongoing political science
research. This is both a strength and a weakness. I'll talk about the weakness
below - but I found the account of the current research convincing, readable
and accurate. It builds on both Hacker and Pierson's own work and the work
of others (e.g. the revisionist account of American party structures from
Zaller et al. and the work of Bartels). This original body of work is not
written in ways that make it easily accessible to non-professionals - while
Bartels' book was both excellent and influential, it was not an easy read.
Winner-Take-All Politics pulls off the tricky task of both presenting the
key arguments underlying work without distorting them and integrating them
into a highly readable narrative.
As noted above, the book sets out (in my view quite successfully) to
reframe how we should think about American politics. It downplays
the importance of electoral politics, without dismissing it, in favor of
a focus on policy-setting, institutions, and organization.
First and most important - policy-setting. Hacker and Pierson
argue that too many books on US politics focus on the electoral circus.
Instead, they should be focusing on the politics of policy-setting.
Government is important, after all, because it makes policy decisions
which affect people's lives. While elections clearly play an important
role in determining who can set policy, they are not the only moment
of policy choice, nor necessarily the most important. The actual processes
through which policy gets made are poorly understood by the public,
in part because the media is not interested in them (in Hacker and Pierson's
words, "[f]or the media, governing often seems like something that happens
in the off-season").
And to understand the actual processes of policy-making, we need
to understand institutions. Institutions make it more or less easy
to get policy through the system, by shaping veto points. If one wants
to explain why inequality happens, one needs to look not only at the
decisions which are made, but the decisions which are not made, because
they are successfully opposed by parties or interest groups. Institutional
rules provide actors with opportunities both to try and get policies
that they want through the system and to stymie policies that they do
not want to see enacted. Most obviously in the current administration,
the existence of the filibuster supermajority requirement, and the willingness
of the Republican party to use it for every significant piece of legislation
that it can be applied to means that we are seeing policy change through
"drift." Over time, policies become increasingly disconnected from their
original purposes, or actors find loopholes or ambiguities through which
they can subvert the intention of a policy (for example - the favorable
tax regime under which hedge fund managers are able to treat their income
at a low tax rate). If it is impossible to rectify policies to deal
with these problems, then drift leads to policy change - Hacker and
Pierson suggest that it is one of the most important forms of such change
in the US.
Finally - the role of organizations. Hacker and Pierson suggest
that organizations play a key role in pushing through policy change
(and a very important role in elections too). They typically trump voters
(who lack information, are myopic, are not focused on the long term)
in shaping policy decisions. Here, it is important that the organizational
landscape of the US is dramatically skewed. There are many very influential
organizations pushing the interests of business and of the rich. Politicians
on both sides tend to pay a lot of attention to them, because of the
resources that they have. There are far fewer - and weaker - organizations
on the other side of the fight, especially given the continuing decline
of unions (which has been hastened by policy decisions taken and not
taken by Republicans and conservative Democrats).
In Hacker and Pierson's account, these three together account for
the systematic political bias towards greater inequality. In simplified
form: Organizations - and battles between organizations over policy as well
as elections - are the structuring conflicts of American politics. The interests of the rich are represented by far more powerful organizations
than the interests of the poor and middle class. The institutions
of the US provide these organizations and their political allies with a
variety of tools to promote new policies that reshape markets in their interests.
This account is in some ways neo-Galbraithian (Hacker and Pierson refer
in passing to the notion of `countervailing powers'). But while it lacks
Galbraith's magisterial and mellifluous prose style, it is much better than
he was on the details.
Even so (and here begin the criticisms) - it is not detailed enough.
The authors set the book up as a whodunit: Who or what is responsible for
the gross inequalities of American economic life? They show that the other
major suspects have decent alibis (they may inadvertently have helped the
culprit, but they did not carry out the crime itself. They show that their
preferred culprit had the motive and, apparently, the means. They find good
circumstantial evidence that he did it. But they do not find a smoking gun.
For me, the culprit (the American political system) is like OJ. As matters
stand, I'm pretty sure that he committed the crime. But I'm not sure that
he could be convicted in a court of law, and I could be convinced that I
was wrong, if major new exculpatory evidence was uncovered.
The lack of any smoking gun (or, alternatively, good evidence against
a smoking gun) is the direct result of a major failure of American intellectual
life. As the authors observe elsewhere, there is no field of American political
economy. Economists have typically treated the economy as non-political.
Political scientists have typically not concerned themselves with the American
economy. There are recent efforts to change this, coming from economists
like Paul Krugman and political scientists like Larry Bartels, but they
are still in their infancy. We do not have the kinds of detailed and systematic
accounts of the relationship between political institutions and economic
order for the US that we have e.g. for most mainland European countries.
We will need a decade or more of research to build the foundations of one.
Hence, while Hacker and Pierson show that political science can get us
a large part of the way, it cannot get us as far as they would like us to
go, for the simple reason that political science is not well developed enough
yet. We can identify the causal mechanisms intervening between some specific
political decisions and non-decisions and observed outcomes in the economy.
We cannot yet provide a really satisfactory account of how these particular
mechanisms work across a wider variety of settings and hence produce the
general forms of inequality that they point to. Nor do we yet have a really
good account of the precise interactions between these mechanisms and other
mechanisms.
None of this is to discount the importance of this book. If it has the
impact it deserves, it will transform American public arguments about politics
and policymaking. I cannot see how someone who was fair minded could come
away from reading this book and not be convinced that politics plays a key
role in the enormous economic inequality that we see. And even if it is
aimed at a general audience, it also challenges academics and researchers
in economics, political science and economic sociology both to re-examine
their assumptions about how economics and politics work, and to figure out
ways better to engage with the key political debates of our time as Hacker
and Pierson have done. If you can, buy it.
Great Faulkner's Ghost (Washington, DC)
This review is from: Winner-Take-All Politics: How Washington Made the
Rich Richer--and Turned Its Back on the Middle Class (Hardcover) Many people
have observed that American politics and the American economy reached some
kind of turning point around 1980, which conveniently marks the election
of Ronald Reagan. Some also pointed to other factors such as the deregulation
of stock brokerage commissions in 1975 and the high inflation of the 1970s.
Other analysts have put the turning point back in 1968, when Richard Nixon
became President on the back of a wave of white, middle-class resentment
against the 1960s. Hacker and Pierson, however, point the finger at the
1970s. As they describe in Chapter 4, the Nixon presidency saw the high-water
market of the regulatory state; the demise of traditional liberalism occurred
during the Carter administration, despite Democratic control of Washington,
when highly organized business interests were able to torpedo the Democratic
agenda and begin the era of cutting taxes for the rich that apparently has
not yet ended today.
Why then? Not, as popular commentary would have it, because public opinion
shifted. Hacker and Pierson cite studies showing that public opinion on
issues such as inequality has not shifted over the past thirty years; most
people still think society is too unequal and that taxes should be used
to reduce inequality. What has shifted is that Congressmen are now
much more receptive to the opinions of the rich, and there is actually a
negative correlation between their positions and the preferences of their
poor constituents (p. 111). Citing Martin Gilens, they write, "When
well-off people strongly supported a policy change, it had almost three
times the chance of becoming law as when they strongly opposed it. When
median-income people strongly supported a policy change, it had hardly any
greater chance of becoming law than when they strongly opposed it" (p. 112).
In other words, it isn't public opinion, or the median voter, that matters;
it's what the rich want.
That shift occurred in the 1970s because businesses and the super-rich
began a process of political organization in the early 1970s that enabled
them to pool their wealth and contacts to achieve dominant political influence
(described in Chapter 5). To take one of the many statistics they
provide, the number of companies with registered lobbyists in Washington
grew from 175 in 1971 to nearly 2,500 in 1982 (p. 118). Money pouring
into lobbying firms, political campaigns, and ideological think tanks created
the organizational muscle that gave the Republicans a formidable institutional
advantage by the 1980s. The Democrats have only reduced that advantage
in the past two decades by becoming more like Republicans-more business-friendly,
more anti-tax, and more dependent on money from the super-rich. And that
dependency has severely limited both their ability and their desire to fight
back on behalf of the middle class (let alone the poor), which has few defenders
in Washington.
At a high level, the lesson of Winner-Take-All Politics is similar to
that of 13 Bankers: when looking at economic phenomena, be they the financial
crisis or the vast increase in inequality of the past thirty years, it's politics that matters, not just abstract economic forces. One of the singular victories of the rich has been convincing the rest
of us that their disproportionate success has been due to abstract economic
forces beyond anyone's control (technology, globalization, etc.), not old-fashioned
power politics. Hopefully the financial crisis and the recession that has
ended only on paper (if that) will provide the opportunity to teach people
that there is no such thing as abstract economic forces; instead, there
are different groups using the political system to fight for larger shares
of society's wealth. And one group has been winning for over thirty years.
Citizen John (USA)
In Winner-Take-All Politics, two political science professors explain
what caused the Middle Class to become vulnerable. Understanding this phenomenon
is the Holy Grail of contemporary economics in the U.S.
Some may feel this book is just as polarizing as the current state of
politics and media in America. The decades-long decline in income taxes
of wealthy individuals is cited in detail. Wage earners are usually subjected
to the FICA taxes against all their ordinary income (all or almost their
entire total income). But the top wealthy Americans may have only a
small percentage (or none) of their income subjected to FICA taxes.
Thus Warren Buffett announced that he pays a lower tax rate than his secretary.
Buffett has cited income inequality for "poisoning democracy."
When you search the Net for Buffett quotes on inequality, you get a lot
of results showing how controversial he became for stating the obvious.
Drawing attention to the inequity of the tax regime won him powerful enemies.
Those same people are not going to like the authors for writing Winner-Take-All.
They say these political science people are condescending because they presume
to tell people their political interests.
Many of studies of poverty show how economic and political policies generally
favor the rich throughout the world, some of which are cited in this book.
Military spending and financial bailouts in particular favor the wealthy.
Authors Jacob Hacker and Paul Pierson document a long U.S. policy trend
favoring wealthy Americans. This trend resulted in diminished middle class
access to quality healthcare and education, making it harder to keep up
with the wealthy in relative terms. Further, once people have lost basic
foundations of security, they are less willing and able to take on more
risk in terms of investing or starting a business.
The rise of special interests has been at the expense of the middle class,
according to the authors. Former President Carter talked about this and
was ridiculed. Since then government has grown further from most of us.
Even federal employees are not like most of us anymore. In its August 10,
2010 issue, USA Today discussed government salaries: "At a time when workers'
pay and benefits have stagnated, federal employees' average compensation
has grown to more than double what private sector workers earn, a USA TODAY
analysis finds."
An excellent documentary showing how difficult it is to address income
inequality is One Percent, by Jamie Johnson of the Johnson & Johnson family.
Collapse: How Societies Choose to Fail or Succeed, by Pulitzer Prize-winner
Jared Diamond Collapse: How Societies Choose to Fail or Succeed shows examples
of what can happen when a society disregards a coming disaster until too
late. I hope that Winner-Take-All will prompt people to demand more of elected
officials and to arrest the growing income gap for the sake of our democracy.
4.5 stars-Wall Street speculators control both parties,
September 19, 2010
See all my reviews
This review is from: Winner-Take-All Politics: How Washington Made the
Rich Richer--and Turned Its Back on the Middle Class (Hardcover)
This book basically argues that Wall Street controls both political parties
through the use of massive campaign contributions and lobbyists who buy
off both the Republicans and Democrats in the White House,Senate and House.This
is essentially correct but obvious.Anyone can go back to the 1976 Jimmy
Carter campaign and simply verify that the majority of his campaign funds
and advisors came from Wall Street.This identical conclusion also holds
with respect to Ronald Reagan,George H W Bush,Bill Clinton,George W Bush
and Barack Obama. The only Presidents/Presidential candidates not dominated
by Wall Street since 1976 were Gerald Ford, Walter Mondale, Ross Perot,
Ralph Nader and Pat Buchanan.
For instance,it is common knowledge to anyone who carefully checks to
see where the money is coming from that Wall Street financiers, hedgefunds,
private equity firms and giant commercial banks are calling the shots. For
example, one could simply read the July 9,2007 issue of FORTUNE magazine
to discover who the major backers of John McCain, Hillary Clinton and Barack
Obama were. One could also have read Business Week(2-25-2008) or the Los
Angeles Times of 3-21-2008.Through February, 2008 the major donors to the
McCain campaign were 1)Merrill Lynch, 2) Citigroup, 3)Goldman Sachs, 4)J
P Morgan Chase and 5)Credit Suisse
The major donors to the Hillary Clinton campaign were 1)Goldman Sachs,
2)Morgan Stanley, 3)Citigroup, 4)Lehman Brothers and 5)J P Morgan Chase.
Guess who were the major donors to the Obama campaign ? If you guessed
1)Goldman Sachs,2)UBS Ag,3)J P Morgan Chase ,4)Lehman Brothers and 5)Citigroup,
then you are correct.
It didn't matter who became President-Hillary Clinton,Barack Obama or
John McCain.All three had been thoroughly vetted by Wall Street. The campaign
staffs of all three candidates ,especially their economic and finance advisors,
were all Wall Street connected. Wall Street would have been bailed out regardless
of which party won the 2008 election.
Obama is not going to change anything substantially in the financial
markets. Neither is Rep. Barney Frank, Sen. Chris Dodd, Sen. Kerry or Sen.
Schumer, etc. Nor is any Republican candidate going to make any changes,
simply because the Republican Party is dominated even more so by Wall Street(100%)
than the Democratic Party(80%). The logical solution would be to support
a Third Party candidate, for example, Ross Perot .
One aspect of the book is deficient. True conservatives like Ross Perot,
Pat Buchanan and Lou Dobbs have been warning about the grave dangers of
hallowing out and downsizing the American Manufacturing -Industrial sector,
with the consequent offshoring and/or loss of many millions of American
jobs, for about 20 years at the same time that the " financial services
" sector has exploded from 3% of the total service sector in 1972 to just
under 40% by 2007. This is what is causing the great shrinkage in the middle
class in America .
This review is from: Winner-Take-All Politics: How Washington Made
the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)
This is a phenomenal book and everyone interested in how American politics
works (or more accurately, doesn't work) should pick it up. It's both really
smart and really accessible to a lay audience, which is rare for a political
science book.
Extreme economic inequality and the near paralysis of our governing institutions
has lead to a status-quo that is almost entirely indifferent to the needs
of working families. Hacker & Pierson chronicle the rise of this corrupt
system and the dual, yet distinct, roles the Republican and Democratic Parties
have played in abetting it.
4.0 out of 5 stars Interesting and Timely, but Also Off-Base in Some
Regards, September 15, 2010
See all my reviews
This review is from: Winner-Take-All Politics: How Washington Made the
Rich Richer--and Turned Its Back on the Middle Class (Hardcover)
The thirty-eight biggest Wall Street companies earned $140 billion in 2009,
a record that all taxpayers who contributed to their bailouts can be proud
of. Among those, Goldman Sachs paid its employees an average $600,000, also
a record, and at least partially attributable to our bailout of AIG, which
promptly gave much of the money to Goldman. Prior to that, the top 25 hedge
fund managers earned an average of $892 million in 2007. "Winner-Take-All
Politics" is framed as a detective story about how we got to inequality
levels where the top 300,000 (0.1%) receive over 20% of national income,
vs. 13.5% for the bottom 180 million (60% of the population).
Between
1947 and 1973, real family median income essentially doubled, and the growth
percentage was virtually the same for all income levels. In the mid-1970s,
however, economic inequality began to increase sharply and middle-incomes
lagged. Increased female workforce participation rates and more overtime
helped cushion the stagnation or decline for many (they also increased the
risk of layoffs/family), then growing credit card debt shielded many families
from reality. Unfortunately, expectations of stable full-time employment
also began shrinking, part-time, temporary, and economic risk-bearing (eg.
taxi drivers leasing vehicles and paying the fuel costs; deliverymen 'buying'
routes and trucks) work increased, workers covered by employer-sponsored
health insurance fell from 69% in 1979 to 56% in 2004, and retirement coverage
was either been dropped entirely or mostly converted to much less valuable
fix-contribution plans for private sector employees. Some exceptions have
occurred that benefit the middle and lower-income segments - Earned Income
Tax Credit (EITC), Medicaid, and Medicare were initiated or expanded, but
these have not blunted the overall trend. Conversely, welfare reform, incarceration
rates rising 6X between 1970 and 2000, bankruptcy reform, and increased
tax audits for EITC recipients have also added to their burden, Social Security
is being challenged again (despite stock market declines, enormous transition
costs, and vastly increased overhead costs and fraud opportunity), and 2009's
universal health care reform will be aggressively challenged both in the
courts and Washington.
Authors Hacker and Pierson contend that growing inequality is not the
'natural' product of market rewards, but mostly the artificial result of
deliberate government policies, strongly influenced by industry lobbyists
and donations, new and expanded conservative 'think tanks,' and inadequate
media coverage that focused more on the 'horse race' aspects of various
initiatives than their content and impact. First came the capital gains
tax cuts under President Carter, then deregulation of the financial industry
under Clinton, the Bush tax cuts of 2001 and 2003, and the financial bailouts
in 2008-09. The authors contend that if the 1970 tax structure remained
today, the top gains would be considerably less.
But what about the fact that in 1965 CEOs of large corporations only
earned about 24X the average worker, compared to 300+X now? Hacker and Pierson
largely ignore the role of board-room politics and malfeasance that have
mostly allowed managers to serve themselves with payment without regard
to performance and out of proportion to other nations. In 2006, the 20 highest-paid
European managers made an average $12.5 million, only one-third as much
as the 20 highest-earning U.S. executives. Yet, the Europeans led larger
firms - $65.5 billion in sales vs. $46.5 billion for the U.S. Asian CEOs
commonly make only 10X-15X what their base level employees make. Jiang Jianqing,
Chairman of the Industrial and Commercial Bank of China (world's largest),
made $234,700 in 2008, less than 2% of the $19.6 million awarded Jamie Dimon,
CEO of the world's fourth-largest bank, JPMorgan Chase.
"Winner-Take-All Politics" also provides readers with the composition
of 2004 taxpayers in the top 0.1% of earners (including capital gains).
Non-finance executives comprised 41% of the group, finance professionals
18.4%, lawyers 6%, real estate personages 5%, physicians 4%, entrepreneurs
4%, and arts and sports stars 3%. The authors assert that this shows education
and skills levels are not the great dividers most everyone credits them
to be - the vast majority of Americans losing ground to the super-rich includes
many well-educated individuals, while the super-rich includes many without
a college education (Sheldon Adelson, Paul Allen, Edgar Bronfman, Jack Kent
Cook, Michael Dell, Walt Disney, Larry Ellison, Bill Gates, Wayne Huizenga,
Steve Jobs, Rush Limbaugh, Steve Wozniak, and Mark Zuckerberg).
Authors Hacker and Pierson are political science professors and it is
understandable that they emphasize political causes (PACs, greater recruitment
of evangelical voters, lobbying - eg. $500 million on health care lobbying
in 2009, filibusters that allow senators representing just 10% of the population
to stop legislation and make the other side look incompetent, etc.) for
today's income inequality. However, their claim that foreign trade is "largely
innocent" as a cause is neither substantiated nor logical. Foreign trade
as practiced today pads corporate profits and executive bonuses while destroying/threatening
millions of American jobs and lowering/holding down the incomes of those
affected. Worse yet, the authors don't even mention the impact of millions
of illegal aliens depressing wage rates while taking jobs from Americans,
nor do they address the canard that tax cuts for and spending by the super-wealthy
are essential to our economic success (refuted by Moody's Analytics and
Austan Goolsbee, Business Week - 9/13/2010). They're also annoyingly biased
towards unions, ignoring their constant strikes and abuses in the 1960s
and 1970s, major contributions to G.M., Chrysler, and legacy airline bankruptcies,
and current school district, local, and state financial difficulties.
Bottom-Line: It is a sad commentary on the American political
system that growing and record levels of inequality are being met by populist
backlash against income redistribution and expanding trust in government,
currently evidenced by those supporting extending tax cuts for the rich
and railing against reforming health care to reduce expenditures from 17.3+%
of GDP to more internationally competitive levels (4-6%) while improving
patient outcomes. "Winner-Take-All Politics" is interesting reading, provides
some essential data, and point out some evidence of the inadequacy of many
voters. However, the authors miss the 'elephant in the room' - American-style
democracy is not viable when at most 10% of citizens are 'proficient' per
functional literacy tests ([...]), and only a small proportion of them
have the time and access required to sift through the flood of half-truths,
lies, and irrelevancies to objectively evaluate 2,000+ page bills and other
political activity. (Ideology-dominated economic professionals and short-term
thinking human rights advocates are two others.)
Comments (2)
"Americans live in Russia, but they think they live in Sweden." -
Chrystia Freeland, March 26, 2011
See all my reviews
This review is from: Winner-Take-All Politics: How Washington Made
the Rich Richer--and Turned Its Back on the Middle Class (Hardcover)
No one should doubt the rising income inequality in America, which the
authors trace back to the late 1970s since the latter part of Carter's presidency
in what they call the "30 Year War". Zachary Roth, in a March 4th Time magazine
article stated "A slew of conservative economists of unimpeachable academic
credentials--including Martin Feldstein of Harvard, Glenn Hubbard, who was
President Bush's top economic adviser, and Federal Reserve chair Ben Bernanke--have
all acknowledged that inequality is on the rise."
And why should we care that most of the after tax income growth since
30 years ago has gone the way of the richest Americans in a "winner-take-all"
economy? Because as Supreme Court justice biographer Melvin Urofsky stated,
"in a democratic society the existence of large centers of private power
is dangerous to the continuing vitality of a free people." (p. 81)
Because if unchecked, a new economic aristocracy may replace the old hereditary
aristocracy America's Founders fought to defeat (p. 298). Because unequal
societies are unhappy societies, and inequality can foster individual resentment
that may lead to a pervasive decline in civility and erosion of culture.
And why should we be concerned that this trend in rising inequality may
not experience the period of renewal the authors are optimistic about? Because
unlike the shock of the 1930s' Great Depression that served as the impetus
for the politics of middle class democracy, the potential shockwaves of
the 2008 Great Recession were tempered by massive government stimulus, resulting
in no meaningful financial reform, and an extension of the tax cuts for
the wealthy. And because of the lottery mentality of a large swath of the
population which opposes tax increases on the rich. One day, they or their
children too can share in the American dream. According to an October 2000
Time-CNN poll, 19 percent of Americans were convinced they belonged to the
richest 1 percent. Another 20 percent thought they'd make the rank of the
top 1 percent at some point in their lives. That's quite a turnover in the
top 1 percent category to accommodate 20 percent of the population passing
through.
Mr. Hacker and Mr. Pierson have put together powerful arguments on the
root causes of income inequality in the U.S., its political and economic
ramifications, and to a lesser extent, a roadmap to returning democracy
to the masses. This is an eye opening and disturbing, yet informative book,
even for readers who may disagree with their opinions.
3.0 out of 5 stars great history of big money influence on policy
but needs more analysis of the ways policy affects the winner-take-all economy,
September 21, 2011
See all my reviews
This review is from: Winner-Take-All Politics: How Washington Made the
Rich Richer--and Turned Its Back on the Middle Class (Hardcover)
Writing:
A bit hokey and repetitive for the first couple chapters. Much better
after that. Stick with it if you're interested in the subject.
Content:
This book does a very good job explaining how and why certain special
interest groups (notably those that represent the wealthiest .1%) have come
to have such a stranglehold on government, particularly Congress. I
come away with a clear understanding of how the wealthiest citizens are
able to exert their influence over legislative policy and enforcement at
the federal level.
What I would have liked more of are better explanations of the mechanisms
through which government policies exacerbate the winner-take-all economy.
Tax policy (rates and loopholes) is the most obvious answer, and the book
provides plenty of stats on the regression of tax policy over the past 30
years.
But complicated, interesting, and largely missing from public discourse
is why PRE-TAX incomes have become so much more radically skewed during
that time. This is certainly touched on - the authors are deliberate in
saying it's not JUST tax policy that's contributing to increased inequality
- but I would've liked much more analysis of the other policy-driven factors.
"Deregulation" is too general an explanation to paint a clear picture.
The authors make it clear that they believe the increasing divide in
pre-tax incomes (the winner-take-all economy) is not the inevitable result
of technological changes and of differences in education ("the usual suspects"),
but of policy decisions made at the state and, especially, federal levels.
Personally, I wasn't fully convinced that technological change has little
or nothing to do with the skew (though I agree that while education goes
a long way toward explaining the gap between poor and middle class, it doesn't
explain much of the gap between middle class and super rich). But I do believe,
as they do, that public policy plays a large role in influencing the extent
of inequality in pre-tax incomes, even beyond more obvious market-impacting
factors like union influence, and mandates including the minimum wage, restrictions
on pollution, workplace safety and fairness laws, etc.
Off the top of my head, here are some regulatory issues that affect market
outcomes and can influence the extent of winner-take-all effects in the
marketplace (a few of these may have been mentioned in the book, but none
were discussed in detail):
the enforcement of antitrust laws and other means of encouraging
pro-consumer competition in the marketplace, such as cracking down on
explicit or implicit price-fixing and collusion schemes [concentration
of market share and/or collusion will certainly contribute to winner-take-all
effects at the expense of consumers, small businesses and the dynamics
of the economy as a whole.]
regulations that seek to minimize conflicts of interest in the corporate
world, particularly those with far-reaching effects [i.e. some policy
makers and regulators are in a position to decide whether it makes sense
for bond ratings agencies with the authority they have over so many
investment decisions to be paid, in negotiable fashion, by the companies
whose bonds they rate. i'd wager the status quo exacerbates winner-take-all
and not in a way that rewards the right things - but i'd be glad to
hear an intellectually honest counter-argument]
net neutrality [should internet service providers be allowed to
favor their corporate partners' websites to the point that eventually
you'll no longer be able to publish a blog and expect that anyone will
be able to access it expediently?]
insurance regulation [should we rely on reputation threat alone
to discourage insurer's from stiffing their policyholders' legitimate
claims? status quo we don't, but there are those who argue against regulation
of insurers]
broad macroeconomic goals, such as relative balance between imports
and exports, or attempts to encourage educational institutions to help
align workforce skills with projected job opportunities for instance
- enforced preferably through various incentives rather than mandates
[the U.S. isn't big on this at the moment but many other rich countries
are, in varying forms]
preferential treatment of small businesses to help them compete
with "the big boys", thereby increasing competition in the market and
job-creation
preferential treatment of businesses who do various things deemed
to be in the public interest
intellectual property laws (the extent of patent, copyright, trademark
rights)
securities law, including bans on insider trading, front-running,
etc
food safety and labeling laws
allocation and extent of government-sponsored R&D in industries
deemed important or potentially beneficial to the public
restrictions on what can be bought and sold [almost no one would
argue judge's decisions should be for sale to the highest bidder. how
about cigarette sales to kids, should that be allowed? heroin to anyone?
spots in the class of a competitive public university?]
And many more. I know regulatory issues like that play huge roles in
the distribution of pre-tax "market" incomes, but I'd like to have a better
understanding of how, and also to be better able to articulate how in response
to those who seem to believe taxes (and perhaps obvious restrictions, such
as on pollution or the minimum wage) are the only significant means through
which governments influence wealth disparities.
There wasn't a whole lot of discussion of these or similar regulatory
issues in the book. I would like to see another edition, or perhaps another
book entirely, that does. Please let me know if you have any recommendations.
20141223 : US shows Malthus just 220 years early ( The labor of moderately educated US workers is rewarded considerably less now than in 1979, even as the country has got much richer. In other words, Thomas Malthus' gloomy prophecies, written in 1798, were not wrong. They were merely early... )
"You load 16 tons and whaddaya get??
Another day older and deeper in debt
Saint Peter don'tcha call me 'Cause-I can't go…
I owe my soul to the Company Store" -- "Sixteen
Tons"
"... "The USHA was empowered to advance loans amounting to 90% of project costs, at low-interest and on 60-year terms. By the end of 1940, over 500 USHA projects were in progress or had been completed, with loan contracts of $691 million. The goal was to make the program self-sustainable through the collection of rents: one-half of rent from the tenants themselves, one-third paid by contributions from the Federal government; and one-sixth paid by annual contributions made by the localities themselves." ..."
The first thing that popped into my head for whatever reason was a little bit in Roald
Dahl's Dickensian little childhood autobiography, Boy .
"At Prep School in those days, a parcel of tuck was sent once a week by anxious mothers
to their ravenous little sons, and an average tuck-box would probably contain, at almost
any time, half a home-made currant cake, a packet of squashed-fly biscuits, a couple of
oranges, an apple, a banana, a pot of strawberry jam or Marmite, a bar of chocolate, a bag
of Liquorice Allsorts, and a tin of Bassett's lemonade powder. An English school in those
days was purely a money-making business owned and operated by the Headmaster. It suited
him, therefore, to give the boys as little food as possible himself and to encourage the
parents in various cunning ways to feed their offspring by parcel post from home.
'By all means, my dear Mrs Dahl, do send your boy some little treats now and
again,' he would say. 'Perhaps a few oranges and apples once a week' – fruit was very
expensive – 'and a nice currant cake, a large currant cake perhaps because
small boys have large appetites, do they not, ha-ha-ha Yes, yes, as often as you
like. More than once a week if you wish Of course he'll be getting plenty
of good food here, the best there is, but it never tastes quite the same as home
cooking, does it? I'm sure you wouldn't want him to be the only one who doesn't get a
lovely parcel from home every week."
It won't fix homelessness. 1 in 5 Los Angeles community college students is homeless and 1
in 10 Cal State students are homeless.
The thing is though not necessarily free community college is cheap anyway about $200 a
class, and Cal State about 7k a year. One might be able to afford housing if they didn't have
this expense? ONLY if they could pay for housing with student loans. In other words Houston
we might have much bigger problems.
Here's my question: When?
When will the overworked, distracted, and misinformed denizens of this great nation declare
they have had enough?
That the richest society on Earth adds to the coffers of its billionaires, let's its
corporations run offshore and tax-free, supplies unlimited munificence on its military death
machine while its students starve, its populace moves further and further to financial
precarity, its water and highway systems grind to a halt, its health care system generates
infant mortality worse than Bulgaria.
What exactly is the tipping point?
Say hello to my little friend, "United States Housing Authority" ??? ;-)
All I'm saying is that we have the power to fix everything , and we can look back
to many things that were part of FDR's New Deal as guide posts to bigger and better solutions
that are desperately needed today.
"The USHA was empowered to advance loans amounting to 90% of project costs, at
low-interest and on 60-year terms. By the end of 1940, over 500 USHA projects were in
progress or had been completed, with loan contracts of $691 million. The goal was to make the
program self-sustainable through the collection of rents: one-half of rent from the tenants
themselves, one-third paid by contributions from the Federal government; and one-sixth paid
by annual contributions made by the localities themselves."
This where I believe Basic Income in tandem with a JG could provide a symbiotic
relationship. You can give students a BI to (help) cover expenses beyond free tuition so they
(and/or their families) could get affordable housing or subsidized university housing.
I'd call this person* a "raging regressive leftist" instead of a centrist: the latter
tends to do excessive navel-gazing while the former blames those racist white people for
anything and everything.
Then again, I was born in Europe, live in Europe, engage in live "politicking" in Europe, so
my experiences with American politics come mostly from the internet.
On topic: getting your first degree in my country is mostly free in state-funded colleges
and universities. Mostly, because 1: the applicant needs to meet a minimum point** threshold,
2: the applicant needs to meet the institutions's own threshold*** for that given department,
3: the applicant needs to rank high enough compared to the rest, because admissions are
limited by nature, 4: the applicant needs to maintain a high enough GPA to stay in a state
funded slot for their given department, and lastly, 5: there are some departments that
receive no funding at all, and choosing one of those means paying by default.
During my university years, I've never met anyone who had to starve, not even the poorest
students. There were, and are, several different scholarship programs aside from the usual
"get a real high GPA and you'll receive a free price if you're lucky" ones. Students can
usually get a student job in our larger cities, and depending on the department, there are
some other ways to earn some money: engineering and IT students often get picked by larger
firms in their sophomore or senior year, and even if they don't, there's always someone in
need of some help with those killer assignments.
The problem here is housing. Dorm spaces are limited, and renting a room is relatively
expensive costing somewhere around $500 USD per month in a country with a $22000 USD yearly
median income (estimate by OECD). Getting a degree was widely regarded as a means of upward
mobility by my father's generation, but the years after the destruction of the Iron Curtain
proved them wrong. And of course, they knew nothing about the Free Western States.
*While I see a woman, these are the people who'd bite my face off for misgendering them.
No such thing in continental Europe, for now.
**There's a minimum threshold of 260 points. Base points are calculated from high school
grades, third and fourth year, and the high school diploma's grades. Bonus points are awarded
for state accredited language certificates, high placements on certain students'
competitions, and other degrees.
***Institutions apply their own thresholds based on the quantity and quality of their
applicants.
When I was a graduate student at UCLA the food on campus was pretty cheap and the salads
were sold by the size of the bowl, not by weight. We all became expert at piling those bowls
high.
When I taught at CU Boulder, the food on campus was expensive and the salads were weighed.
A healthy salad could easily cost you eleven bucks, so I stopped eating campus food and took
sandwiches to work instead.
The increase in food prices seems to have parallelled the increase in fees over those
forty years.
However, I would make another observation: many young people, in my experience, when they
are stressed or working hard, tend to forget to eat – irrespective of how well-off they
are. And many of the students I taught had been addicted at high school to "attention
deficit" drugs like Ritalin and Adderol, which, being forms of speed, are
appetite-suppressants.
Two of my daughters graduated from a university in a university town in Nova Scotia in the
late1990s. That university set up its own food bank many years ago, to supplement the food
banks set up by two churches and the town and county. Housing was still available (small
town, student, faculty and school money spent locally), from shared apartments to rooming
houses. In any sizable city in Canada or the US, those options for students may not now be
available at all, because of greedy landlords, gentrification, and Air B'nb.
On the other hand, during the 1930s, my father-in-law was living in Vancouver, a teenager.
He frequently told us stories of the many poor students who lived on or just off the beaches
in the western part of the city, in shanties of driftwood and scraps while attending
university. Try that now, in any city.
So, you see, today's undergraduates are in many ways even worse off than "great
depression" students. Their possible makeshift accommodations have been legislated away.
Robbing the future of our nation to pay the fatcats. What a wonderful way to run a
country! If We the People- loosely defined as the other 90%- don't step up and take our
country back, we won't have one to speak of in another decade.
All of us obtain our knowledge of the world by two different channels. Some things we
discover from our own personal experiences and the direct evidence of our senses, but most
information comes to us via external sources such as books and the media, and a crisis may
develop when we discover that these two pathways are in sharp conflict. The official media of
the old USSR used to endlessly trumpet the tremendous achievements of its collectivized
agricultural system, but when citizens noticed that there was never any meat in their shops,
"Pravda" became a watchword for "Lies" rather than "Truth."
Now consider the notion of "anti-Semitism." Google searches for that word and its close
variants reveal over 24 million hits, and over the years I'm sure I've seen that term tens of
thousands of times in my books and newspapers, and heard it endlessly reported in my electronic
media and entertainment. But thinking it over, I'm not sure that I can ever recall a single
real-life instance I've personally encountered, nor have I heard of almost any such cases from
my friends or acquaintances. Indeed, the only persons I've ever come across making such claims
were individuals who bore unmistakable signs of serious psychological imbalance.
When the daily newspapers are brimming with lurid tales of hideous demons walking among us
and attacking people on every street corner, but you yourself have never actually seen one, you
may gradually grow suspicious.
Indeed, over the years some of my own research has uncovered a sharp contrast between image
and reality. As recently as the late 1990s, leading mainstream media outlets such as The
New York Times were still denouncing a top Ivy League
school such as Princeton for the supposed anti-Semitism of its college admissions policy,
but a few years ago when I carefully investigated that issue in quantitative terms for my
lengthy Meritocracy
analysis I was very surprised to reach a polar-opposite conclusion. According to the best
available evidence, white Gentiles were over 90% less likely to be enrolled at Harvard and the
other Ivies than were Jews of similar academic performance, a truly remarkable finding. If the
situation had been reversed and Jews were 90% less likely to be found at Harvard than seemed
warranted by their test scores, surely that fact would be endlessly cited as the absolute
smoking-gun proof of horrendous anti-Semitism in present-day America.
We are in the point when capitalist system (which presented itself as asocial system that created a large middle class)
converted into it opposite: it is social system that could not deliver that it promised and now want to distract people from this
sad fact.
The Trump adopted tax code is a huge excess: we have 40 year when corporation paid less taxes. This is last moment when they
need another gift. To give them tax is crazy excess that reminding
Louis XV of France. Those gains are going in buying of socks. And real growth is happening elsewhere in the world.
After WW2 there were a couple of decades of "golden age" of US capitalism when in the USA middle class increased considerably.
That was result of pressure of working class devastated by Great Depression. Roosevelt decided that risk is too great and he
introduced social security net. But capitalist class was so enraged that they started fighting it almost immediately after the
New Deal was introduced. Business class was enrages with the level of taxes and counterattacked. Tarp act and McCarthyism were
two successful counterattacks. McCarthyism converting communists and socialists into agents of foreign power.
The quality of jobs are going down. That's why Trump was elected... Which is sad. Giving your finger to the
neoliberal elite does not solve their problem
Notable quotes:
"... Finally, if everybody tries to save themselves (protection), we have a historical example: after the Great Depression that happened in Europe. And most people believe that it was a large part of what led to WWII after WWI, rather than a much saner collective effort. But capitalism doesn't go for collective efforts, it tends to destroy itself by its own mechanisms. There has to be a movement from below. Otherwise, there is no counter force that can take us in another direction. ..."
"... When Trump announced his big tariffs on China, we saw the stock market dropped 700 points in a day. That's a sign of the anxiety, the danger, even in the minds of capitalists, about where this is going. ..."
"... Everything is done to avoid asking the question to what degree the system we have in place - capitalism is its name - is the problem. It's the Russians, it's the immigrants, it's the tariffs, it's anything else, even the pornstar, to distract us from the debate we need to have had that we haven't had for a half a century, which puts us in a very bad place. We've given a free pass to a capitalist system because we've been afraid to debate it. And when you give a free pass to any institution you create the conditions for it to rot, right behind the facade. ..."
"... The Trump presidency is the last gasp, it's letting it all hang out. A [neoliberal] system that's gonna do whatever it can, take advantage of this moment, grab it all before it disappears. ..."
In another interesting interview with Chris Hedges, Richard Wolff explains why the Trump presidency is the last resort of a system
that is about to collapse:
Finally, if everybody tries to save themselves (protection), we have a historical example: after the Great Depression that happened
in Europe. And most people believe that it was a large part of what led to WWII after WWI, rather than a much saner collective effort.
But capitalism doesn't go for collective efforts, it tends to destroy itself by its own mechanisms. There has to be a movement from
below. Otherwise, there is no counter force that can take us in another direction.
So, absent that counter force we are going to see this system spinning out of control and destroying itself in the very way its
critics have for so long foreseen it well might.
When Trump announced his big tariffs on China, we saw the stock market dropped 700 points in a day. That's a sign of the anxiety,
the danger, even in the minds of capitalists, about where this is going. If we hadn't been a country with two or three decades of
a middle class - working class paid really well - maybe we could have gotten away with this. But in a society that has celebrated
its capacity to do what it now fails to do, you have an explosive situation.
Everything is done to avoid asking the question to what degree the system we have in place - capitalism is its name - is the problem.
It's the Russians, it's the immigrants, it's the tariffs, it's anything else, even the pornstar, to distract us from the debate we
need to have had that we haven't had for a half a century, which puts us in a very bad place. We've given a free pass to a capitalist
system because we've been afraid to debate it. And when you give a free pass to any institution you create the conditions for it
to rot, right behind the facade.
The Trump presidency is the last gasp, it's letting it all hang out. A [neoliberal] system that's gonna do whatever it can, take advantage
of this moment, grab it all before it disappears.
In France, it was said
'Après moi, le déluge' (after me the
catastrophe). The storm will break.
What about part-times who are are exploited to the mex and paied very little... This is
sophistry to assume that everybody has full time job in compemporary America.
...A single person taking a minimum wage job would earn an annual income of $15,080. A
married couple would earn $30,160. By the way, according to the Bureau of Labor Statistics,
less than 4 percent of hourly workers in 2016 were paid the minimum wage. That means that over
96 percent of workers earned more than the minimum wage. Not surprising is the fact that among
both black and white married couples, the poverty rate is in the single digits. Most poverty is
in female-headed households.
The fact that Mark Zuckerberg is so rich is annoying, and his separateness from Main Street may not be a great thing socially,
but in an economic sense, his fortune did not "come from" the paychecks of ordinary workers...
It damn sure did. It came straight out of their pension funds. Thousands of pension funds across the world bought faang stocks
and those workers will be getting fucked in the end while while zuck heads back to hawaii with their money. look at elon, his
company hasn't made dime one in profit but he is a billionaire. amzn, with a p/e of 228. they didn't get that p/e without millions
of ordinary folk buying their overpriced stock. it is pure ponzi-nomics with fascist overtones and the maggots are cashing out
big time.
The greatest fortunes in history have been built in the last 10 years with 0% interest rates. You were spot on about pensions,
they were the casualties, almost every private pension in the country bankrupted by 0% rates so that these fucks could amass unimaginable
wealth.
Now the filthy commoner scum have the audacity to suggest that they should pay taxes on it. Where will the madness end?
All my friends Jews knew this was going to happen. They were buying stocks like crazy when I was telling them to buy gold and
get ready for a big reset that never happened. Ten years later they are all multimillionaires and I lost half of my money buying
gold...
institutions bought their shares with real earned money. bezos did not. as far as i'm concerned being a ceo is a license to
steal. bezos damn sure didn't earn that money because he is smarter or works harder than anyone else. look at how he treats his
workers. what an asshole.
It's even worse than that. So much worse. Facebook was stolen by the Satanic Judaic Zionist crowd. Research it. Another gentleman
invented it. The Jews stole it, like they've stolen pretty much everything else. No wonder Napoleon said that "The Jews are the
master robbers of the modern age". And beyond the criminal vile theft, you have what they are using it for. And that is?
Using it for the 911'd cows in America. And that is you. The Satanic Jews are murdering you and robbing you blind. They 911'd
you physically with the Twin Towers. Now they're doing it mentally and financially with Facebook, a control system grid -- a gate
to herd cattle which they view you as. They are herding you. You'll be 911'd again in larger and larger numbers until the Satanic
Judaic is removed from the World Stage.
Zuckerberg is a planted punk Zionist spook. You're going to have to clear the world of all of these Satanic Judaic ladies and
gentlemen. First the idea needs to come in to show how and why. This is underway.
Ever since the housing crisis I been waiting for the world to become a better place. I see now that I been fooling myself into
believing that we live in a civilized and honest world. Nobody gives a shit about anyone nor anything, people only care about
themselves...
"... Well, it comes down to the myths we've been sold. Myths that are ingrained in our social programming from birth, deeply entrenched, like an impacted wisdom tooth. These myths are accepted and basically never questioned. ..."
"... Our media outlets are funded by weapons contractors, big pharma, big banks, big oil and big, fat hard-on pills. (Sorry to go hard on hard-on pills, but we can't get anything resembling hard news because it's funded by dicks.) The corporate media's jobs are to rally for war, cheer for Wall Street and froth at the mouth for consumerism. It's their mission to actually fortify belief in the myths I'm telling you about right now. Anybody who steps outside that paradigm is treated like they're standing on a playground wearing nothing but a trench coat. ..."
"... The criminal justice system has become a weapon wielded by the corporate state. This is how bankers can foreclose on millions of homes illegally and see no jail time, but activists often serve jail time for nonviolent civil disobedience. Chris Hedges recently noted , "The most basic constitutional rights have been erased for many. Our judicial system, as Ralph Nader has pointed out, has legalized secret law, secret courts, secret evidence, secret budgets and secret prisons in the name of national security." ..."
"... This myth (Buying will make you happy) is put forward mainly by the floods of advertising we take in but also by our social engineering. Most of us feel a tenacious emptiness, an alienation deep down behind our surface emotions (for a while I thought it was gas). That uneasiness is because most of us are flushing away our lives at jobs we hate before going home to seclusion boxes called houses or apartments. We then flip on the TV to watch reality shows about people who have it worse than we do (which we all find hilarious). ..."
"... According to Deloitte's Shift Index survey : "80% of people are dissatisfied with their jobs" and "[t]he average person spends 90,000 hours at work over their lifetime." That's about one-seventh of your life -- and most of it is during your most productive years. ..."
"... Try maintaining your privacy for a week without a single email, web search or location data set collected by the NSA and the telecoms. ..."
Our society should've collapsed by now. You know that, right?
No society should function with this level of inequality (with the possible exception of one of those prison planets in a "Star
Wars" movie). Sixty-three percent of Americans
can't afford a $500 emergency
. Yet Amazon head Jeff Bezos is now
worth a record $141 billion . He could literally end world hunger for multiple years and still have more money left over than
he could ever spend on himself.
Worldwide,
one in
10 people only make $2 a day. Do you know how long it would take one of those people to make the same amount as Jeff Bezos has?
193 million years . (If they only buy single-ply toilet paper.) Put simply, you cannot comprehend the level of inequality in our
current world or even just our nation.
So shouldn't there be riots in the streets every day? Shouldn't it all be collapsing? Look outside. The streets aren't on fire.
No one is running naked and screaming (usually). Does it look like everyone's going to work at gunpoint? No. We're all choosing to
continue on like this.
Why?
Well, it comes down to the myths we've been sold. Myths that are ingrained in our social programming from birth, deeply entrenched,
like an impacted wisdom tooth. These myths are accepted and basically never questioned.
I'm going to cover eight of them. There are more than eight. There are probably hundreds. But I'm going to cover eight because
(A) no one reads a column titled "Hundreds of Myths of American Society," (B) these are the most important ones and (C) we all have
other shit to do.
Myth No. 8 -- We have a democracy.
If you think we still have a democracy or a democratic republic, ask yourself this: When was the last time Congress did something
that the people of America supported that did not align with corporate interests? You probably can't do it. It's like trying to think
of something that rhymes with "orange." You feel like an answer exists but then slowly realize it doesn't. Even the Carter Center
and former President Jimmy Carter believe that America has been
transformed into
an oligarchy : A small, corrupt elite control the country with almost no input from the people. The rulers need the myth that
we're a democracy to give us the illusion of control.
Myth No. 7 -- We have an accountable and legitimate voting system.
Gerrymandering, voter purging, data mining, broken exit polling, push polling, superdelegates, electoral votes, black-box machines,
voter ID suppression, provisional ballots, super PACs, dark money, third parties banished from the debates and two corporate parties
that stand for the same goddamn pile of fetid crap!
What part of this sounds like a legitimate election system?
No, we have what a large Harvard study called the
worst election system in the Western world . Have you ever seen where a parent has a toddler in a car seat, and the toddler has
a tiny, brightly colored toy steering wheel so he can feel like he's driving the car? That's what our election system is -- a toy
steering wheel. Not connected to anything. We all sit here like infants, excitedly shouting, "I'm steeeeering !"
And I know it's counterintuitive, but that's why you have to vote. We have to vote in such numbers that we beat out what's stolen
through our ridiculous rigged system.
Myth No. 6 -- We have an independent media that keeps the rulers accountable.
Our media outlets are funded by weapons contractors, big pharma, big banks, big oil and big, fat hard-on pills. (Sorry to go hard
on hard-on pills, but we can't get anything resembling hard news because it's funded by dicks.) The corporate media's jobs are to
rally for war, cheer for Wall Street and froth at the mouth for consumerism. It's their mission to actually fortify belief in the
myths I'm telling you about right now. Anybody who steps outside that paradigm is treated like they're standing on a playground wearing
nothing but a trench coat.
Myth No. 5 -- We have an independent judiciary.
The criminal justice system has become a weapon wielded by the corporate state. This is how bankers can foreclose on millions
of homes illegally and see no jail time, but activists often serve jail time for nonviolent civil disobedience. Chris Hedges
recently noted , "The most basic constitutional
rights have been erased for many. Our judicial system, as Ralph Nader has pointed out, has legalized secret law, secret courts, secret
evidence, secret budgets and secret prisons in the name of national security."
If you're not part of the monied class, you're pressured into releasing what few rights you have left. According to
The New
York Times , "97 percent of federal cases and 94 percent of state cases end in plea bargains, with defendants pleading guilty
in exchange for a lesser sentence."
That's the name of the game. Pressure people of color and poor people to just take the plea deal because they don't have a million
dollars to spend on a lawyer. (At least not one who doesn't advertise on beer coasters.)
Myth No. 4 -- The police are here to protect you. They're your friends .
That's funny. I don't recall my friend pressuring me into sex to get out of a speeding ticket. (Which is essentially still
legal in 32
states .)
The police in our country are primarily designed to do two things: protect the property of the rich and perpetrate the completely
immoral war on drugs -- which by definition is a war on our own people .
We lock up more people than
any other country on earth
. Meaning the land of the free is the largest prison state in the world. So all these droopy-faced politicians and rabid-talking
heads telling you how awful China is on human rights or Iran or North Korea -- none of them match the numbers of people locked up
right here under Lady Liberty's skirt.
Myth No. 3 -- Buying will make you happy.
This myth (Buying will make you happy) is put forward mainly by the floods of advertising we take in but also by our social engineering. Most of us feel a
tenacious emptiness, an alienation deep down behind our surface emotions (for a while I thought it was gas). That uneasiness is because
most of us are flushing away our lives at jobs we hate before going home to seclusion boxes called houses or apartments. We then
flip on the TV to watch reality shows about people who have it worse than we do (which we all find hilarious).
If we're lucky, we'll make enough money during the week to afford enough beer on the weekend to help it all make sense. (I find
it takes at least four beers for everything to add up.) But that doesn't truly bring us fulfillment. So what now? Well, the ads say
buying will do it. Try to smother the depression and desperation under a blanket of flat-screen TVs, purses and Jet Skis. Now does
your life have meaning? No? Well, maybe you have to drive that Jet Ski a little faster! Crank it up until your bathing suit flies
off and you'll feel alive !
The dark truth is that we have to believe the myth that consuming is the answer or else we won't keep running around the wheel.
And if we aren't running around the wheel, then we start thinking, start asking questions. Those questions are not good for the ruling
elite, who enjoy a society based on the daily exploitation of 99 percent of us.
Myth No. 2 -- If you work hard, things will get better.
According to Deloitte's Shift
Index survey : "80% of people are dissatisfied with their jobs" and "[t]he average person spends 90,000 hours at work over their
lifetime." That's about one-seventh of your life -- and most of it is during your most productive years.
Ask yourself what we're working for. To make money? For what? Almost none of us are doing jobs for survival anymore. Once upon
a time, jobs boiled down to:
I plant the food -- >I eat the food -- >If I don't plant food = I die.
But nowadays, if you work at a café -- will someone die if they don't get their super-caf-mocha-frap-almond-piss-latte? I kinda
doubt they'll keel over from a blueberry scone deficiency.
If you work at Macy's, will customers perish if they don't get those boxer briefs with the sweat-absorbent-ass fabric? I doubt
it. And if they do die from that, then their problems were far greater than you could've known. So that means we're all working to
make other people rich because we have a society in which we have to work. Technological advancements can do most everything that
truly must get done.
So if we wanted to, we could get rid of most work and have tens of thousands of more hours to enjoy our lives. But we're not doing
that at all. And no one's allowed to ask these questions -- not on your mainstream airwaves at least. Even a half-step like universal
basic income is barely discussed because it doesn't compute with our cultural programming.
Scientists say it's quite possible artificial intelligence will take away
all human jobs in 120 years . I think they know that will
happen because bots will take the jobs and then realize that 80 percent of them don't need to be done! The bots will take over and
then say, "Stop it. Stop spending a seventh of your life folding shirts at Banana Republic."
One day, we will build monuments to the bot that told us to enjoy our lives and leave the shirts wrinkly.
And this leads me to the largest myth of our American society.
Myth No. 1 -- You are free.
... ... ...
Try sleeping in your car for more than a few hours without being harassed by police.
Try maintaining your privacy for a week without a single email, web search or location data set collected by the NSA and the telecoms.
Try signing up for the military because you need college money and then one day just walking off the base, going, "Yeah, I was
bored. Thought I would just not do this anymore."
Try explaining to Kentucky Fried Chicken that while you don't have the green pieces of paper they want in exchange for the mashed
potatoes, you do have some pictures you've drawn on a napkin to give them instead.
Try using the restroom at Starbucks without buying something while black.
We are less free than a dog on a leash. We live in one of the hardest-working, most unequal societies on the planet with more
billionaires than ever .
Meanwhile,
Americans
supply 94 percent of the paid blood used worldwide. And it's almost exclusively coming from very poor people. This abusive vampire
system is literally sucking the blood from the poor. Does that sound like a free decision they made? Or does that sound like something
people do after immense economic force crushes down around them? (One could argue that sperm donation takes a little less convincing.)
Point is, in order to enforce this illogical, immoral system, the corrupt rulers -- most of the time -- don't need guns and tear
gas to keep the exploitation mechanisms humming along. All they need are some good, solid bullshit myths for us all to buy into,
hook, line and sinker. Some fairy tales for adults.
815M people chronically malnourished according to the UN. Bezos is worth $141B.
$141B / 815M people = $173 per person. That would definitely not feed them for "multiple years". And that's only if Bezos could
fully liquidate the stock without it dropping a penny.
" Point is, in order to enforce this illogical, immoral system, the corrupt rulers -- most of the time -- don't
need guns and tear gas to keep the exploitation mechanisms humming along. All they need are some good, solid bullshit myths for
us all to buy into, hook, line and sinker. Some fairy tales for adults. "
Seems like there's tear gas in the air and guns are going to be used soon. The myths are dying on the tongues of the liars.
Molon Labe!....and I'm usually a pacifist.
"American Society Would Collapse If It Weren't For Invasions Of Foreign Countries, Murdering Their People, Stealing Their Oil
Then Blaming Them For Making The US Do It."
Well, in a world driven by oil, it is entirely bogus to suggest that citizens have to work their asses off. That was the whole
point of the bill of goods that was sold to us in the late 70's and early 80'. More leisure time, more time for your family and
personal interests.
Except! It never happened. All they fucking did was reduce real wages and force everyone from the upper middle class down,
into a shit hole.
But, they will pay for their folly. Guaran-fucking-teed.
As one who has hoed many rows of cotton in 115F temperatures as well as picking cotton during my childhood and early adolescence
during weekends and school holidays, I concur. It was a very powerful inducement to get a good education back when schools actually
taught things and did not tolerate backtalk or guff from students instead of babysitting them. It worked, and I ended up writing
computer software for spacecraft, which was much fun than working in the fields.
"... Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances. ..."
Neoliberalism sees competition as the defining characteristic of human relations. It
redefines citizens as consumers, whose democratic choices are best exercised by buying and
selling, a process that rewards merit and punishes inefficiency. It maintains that "the market"
delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should
be minimised, public services should be privatised. The organisation of labour and collective
bargaining by trade unions are portrayed as market distortions that impede the formation of a
natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility
and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more
equal society are both counterproductive and morally corrosive. The market ensures that
everyone gets what they deserve.
We internalise and reproduce its creeds. The rich persuade themselves that they acquired
their wealth through merit, ignoring the advantages – such as education, inheritance and
class – that may have helped to secure it. The poor begin to blame themselves for their
failures, even when they can do little to change their circumstances.
Never mind structural unemployment: if you don't have a job it's because you are
unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out,
you're feckless and improvident. Never mind that your children no longer have a school playing
field: if they get fat, it's your fault. In a world governed by competition, those who fall
behind become defined and self-defined as losers.
Among the results, as Paul Verhaeghe documents in his book What About Me? are epidemics of
self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia.
Perhaps it's unsurprising that Britain, in which neoliberal ideology has been most rigorously
applied, is the loneliness capital of Europe. We are all neoliberals now.
"... By Enrico Verga, a writer, consultant, and entrepreneur based in Milan. As a consultant, he concentrates on firms interested in opportunities in international and digital markets. His articles have appeared in Il Sole 24 Ore, Capo Horn, Longitude, Il Fatto Quotidiano, and many other publications. You can follow him on Twitter @enricoverga . ..."
"... Continuing flows of low-cost labor can be useful for cutting costs. West Germany successfully absorbed East Germany after the fall of the Berlin Wall, but the dirty secret of this achievement is the exploitation of workers from the former East, as Reuters reports . ..."
"... The expansion of the EU to Poland (and the failed attempt to incorporate the Ukraine) has allowed many European businesses to shift local production to nations where the average cost of a blue or white collar worker is much lower ( by 60-70% on average ) than in Western European countries. ..."
"... The middle class is a silent mass that for many years has painfully digested globalization, while believing in the promises of globalist politicians," explains Luciano Ghelfi, a journalist of international affairs who has followed Lega from its beginnings. Ghelfi continues: ..."
"... I think unrestrained globalization has taken a hit. In Italy as well, as we have seen recently, businesses are relocating abroad. And the impoverished middle class finds itself forced to compete for state resources (subsidies) and jobs which can be threatened by an influx of economic migrants towards which enormous resources have been dedicated – just think of the 4.3 billion Euros that the last government allocated toward economic migrants. ..."
"... In all of this, migrants are more victims than willing actors, and they become an object on which the fatigue, fear, and in the most extreme cases, hatred of the middle class can easily focus. ..."
"... If for the last twenty years, with only occasional oscillation, the pro-globalization side has been dominant in the West, elections are starting to swing the balance in a new direction. ..."
"... "Klein analyzes a future (already here to some degree) in which multinational corporations freely fish from one market or another in an effort to find the most suitable (i.e. cheapest) labor force." ..."
"... never export their way out of poverty and misery ..."
By Enrico Verga,
a writer, consultant, and entrepreneur based in Milan. As a consultant, he
concentrates on firms interested in opportunities in international and digital markets. His
articles have appeared in Il Sole 24 Ore, Capo Horn, Longitude, Il Fatto Quotidiano, and many
other publications. You can follow him on Twitter @enricoverga .
International commerce, jobs, and economic migrants are propelled by a common force:
profit.
In recent times, the Western middle class (by which I mean in particular industrial workers
and office employees) has lost a large number of jobs and has seen its buying power fall. It
isn't true that migrants are the source of all evil in the world. However, under current
conditions, they become a locus for the exasperation of the population at twenty years of
pro-globalization politics. They are tragically placed in the role of the straw that breaks the
camel's back.
Western businesses have slipped jobs overseas to countries with low labor costs, while the
middle class has been pushed into debt in order to try to keep up. The Glass-Steagall law and
other brakes on American banks were abolished by a cheerleader for globalization, Bill Clinton,
and these banks subsequently lost all restraints in their enthusiasm to lend. The cherry on top
of the sundae was the real estate bubble and ensuing crash of 2008.
A damning picture of the results of 20 years of globalization is provided by
Forbes , capitalism's magazine par excellence. Already in 2016, the surprise victory of
Trump led to questions about whether the blond candidate's win was due in part to the straits
of the American middle class, impoverished as a result of the pro-globalization politics of
figures like Clinton and Obama.
Further support for this thesis is furnished by the
New York Times , describing the collapse of the stars-and-stripes middle class. Its
analysis is buttressed by lengthy research from the very mainstream
Pew Center , which agrees that the American middle class is vanishing.
And Europe? Although the European middle class has been squeezed less than its American
counterpart, for us as well the picture doesn't look good. See for example the
analysis of the Brookings Institute , which discusses not only the flagging economic
fortunes of the European middle class, but also the fear of prosperity collapsing that
currently grips Europe.
Migrants and the Shock Doctrine
What do economic migrants have to do with any of this?
Far be it from me to criticize large corporations, but clearly they – and their
managers and stockholders – benefit from higher margins. Profits (revenue minus costs and
expenses) can be maximized by reducing expenses. To this end, the costs of acquiring goods
(metals, agricultural products, energy, etc.) and services (labor) need to fall steadily.
In the quest to lower the cost of labor, the most desirable scenario is a sort of blank
slate: to erase ongoing arrangements with workers and start over from zero, building a new
"happy and productive" economy. This operation can be understood as a sort of "shock
doctrine."
The term "economic shock therapy" is based on an analogy with electroshock therapy for
mental patients. One important analysis of it comes from Naomi Klein , who became
famous explaining in 2000 the system of fashion production through subsidiaries that don't
adhere to the safety rules taken so seriously in Western countries (some of you may recall the
scandal of
Benetton and Rana Plaza , where more than a thousand workers at a Bangladesh factory
producing Benetton (and other) clothes were crushed under a collapsing building).
Klein analyzes a future (already here to some degree) in which multinational corporations
freely fish from one market or another in an effort to find the most suitable (i.e. cheapest)
labor force. Sometimes relocating from one nation to another is not possible, but if you can
bring the job market of other countries here in the form of a low-cost mass of people competing
for employment, then why bother?
The Doctrine in Practice
Continuing flows of low-cost labor can be useful for cutting costs. West Germany
successfully absorbed East Germany after the fall of the Berlin Wall, but the dirty secret of
this achievement is the exploitation of workers
from the former East, as Reuters reports .
The expansion of the EU to Poland (and the failed attempt to incorporate the Ukraine) has
allowed many European businesses to
shift local production to nations where the average cost of a blue or white collar worker
is much lower (
by 60-70% on average ) than in Western European countries.
The migrant phenomenon is a perfect counterpoint to a threadbare middle class, given its
role as a success story within the narrative of globalization.
Economic migrants are eager to obtain wealth on the level of the Western middle class
– and this is of course a legitimate desire. However, to climb the social ladder, they
are willing to do anything: from accepting low albeit legal salaries to picking tomatoes
illegally (
as Alessandro Gassman, son of the famous actor, reminded us ).
The middle class is a silent mass that for many years has painfully digested globalization,
while believing in the promises of globalist politicians," explains Luciano Ghelfi, a
journalist of international affairs who has followed Lega from its beginnings. Ghelfi
continues:
This mirage has fallen under the blows it has received from the most serious economic
crisis since the Second World War. Foreign trade, easy credit (with the American real estate
bubble of 2008 as a direct consequence), peace missions in Libya (carried out by
pro-globalization French and English actors, with one motive being in my opinion the
diversion of energy resources away from [the Italian] ENI) were supposed to have created a
miracle; they have in reality created a climate of global instability.
Italy is of course not untouched by this phenomenon. It's easy enough to give an
explanation for the Five Stars getting votes from part of the southern electorate that is
financially in trouble and might hope for some sort of subsidy, but the North? The choice of
voting center right (with a majority leaning toward Lega) can be explained in only one way
– the herd (the middle class) has tried to rise up.
I asked him, "So in your opinion, is globalization in stasis? Or is it radically
changing?" He replied:
I think unrestrained globalization has taken a hit. In Italy as well, as we have seen
recently, businesses are relocating abroad. And the impoverished middle class finds itself
forced to compete for state resources (subsidies) and jobs which can be threatened by an
influx of economic migrants towards which enormous resources have been dedicated – just
think of the 4.3 billion Euros that the last government allocated toward economic
migrants.
This is an important element in the success of Lega: it is a force that has managed to
understand clearly the exhaustion of the impoverished middle class, and that has proposed a
way out, or has at least elaborated a vision opposing the rose-colored glasses of
globalization.
In all of this, migrants are more victims than willing actors, and they become an object on
which the fatigue, fear, and in the most extreme cases, hatred of the middle class can easily
focus.
What Conflicts Are Most Relevant Today?
At the same time, if we observe, for example in Italy, the positions taken by the
(pro-globalization?) Left, it becomes easier to understand why the middle class and also many
blue collar workers are abandoning it. Examples range from the unfortunate declarations of
deputy Lia Quartapelle on
the need to support the Muslim Brotherhood to the explanations of the former president of
the Chamber of Deputies, Laura Boldrini, on how the status of economic migrant should be seen as a model for the
lifestyle of all Italians . These remarks were perhaps uttered lightly (Quartapelle
subsequently took her post down and explained that she had made a mistake), but they are
symptomatic of a certain sort of pro-globalization cultural "Left" that finds talking to
potential voters less interesting than other matters.
From Italy to America (where
Hillary Clinton was rejected after promoting major international trade arrangements that
she claimed would benefit middle-class American workers) to the UK (where Brexit has been taken as a sort of
exhaust valve), the middle class no longer seems to be snoring.
We are currently seeing a political conflict between globalist and nationalist forces.
Globalists want more open borders and freer international trade. Nationalists want protection
for work and workers, a clamping down on economic migrants, and rules with teeth aimed at
controlling international trade.
If for the last twenty years, with only occasional oscillation, the pro-globalization side
has been dominant in the West, elections are starting to swing the balance in a new
direction.
Meanwhile, many who self-identify as on the Left seem utterly uninterested in the concerns
of ordinary people, at least in cases where these would conflict with the commitment to
globalization.
If the distinction between globalism and nationalism is in practice trumping other
differences, then we should not let ourselves be distracted by bright and shiny objects, and
keep our focus on what really matters.
From the Forbes link:
"The first downside of international trade that even proponents of freer trade must
acknowledge is that while the country as a whole gains some people do lose."
More accurate to say a tiny, tiny, TINY percentage gain.
Nice how they use the euphemism "country as a whole" for GDP. Yes, GDP goes up – but
that word that can never be uttered by American corporate media – DISTRIBUTION –
that essentially ALL gains in GDP have gone to the very top. AND THAT THIS IS A POLITICAL
DECISION, not like the waves of the ocean or natural selection. There is plenty that could be
done about it – BUT it STARTS with WANTING to do something effective about it .
Nice how they use the euphemism "country as a whole" for GDP.
Fresno Dan,
You have identified one of my pet peeves about economists and their fellow traveler
politicians. They hide behind platitudes, and the former are more obnoxious about that.
Economists will tell people that they just don't understand all that complexity, and that in
the name of efficiency, etc, free trade and the long slide toward neo-liberal hell must
continue.
I think the assertion that all economic gains have gone to the very top is not accurate.
According to 'Unintended Consequences' by Ed Conard, the 'composition of the work force has
shifted to demographics with lower incomes' between 1980 and 2005. If you held the workforce
of 1980 steady through 2005, wages would be up 30% in real terms, not including benefits.
I think the author has highlighted some home truths in the article. I once remember
several years ago just trying to raise the issue of immigration* and its impact on workers on
an Irish so-called socialist forum. Either I met silence or received a reply along the lines:
'that when socialists rule the EU we'll establish continental wide standards that will ensure
fairness for everyone'. Fairy dust stuff. I'm not anti immigrant in any degree but it seems
unwise not to understand and mitigate the negative aspects of policies on all workers. Those
chickens are coming home to roost by creating the type of political parties (new or
established) that now control the EU and many world economies.
During the same period many younger middle and upper middle class Irish extolled the
virtues, quite openly, of immigration as way of lowering the power and wages of existing
Irish workers so that the costs of building homes, labour intensive services and the like
would be concretely reduced; and that was supposed to be a good thing for the material well
being of these middle and upper middle classes. Sod manual labour.
One part of the working class was quite happy to thrown another part of the working class
under the bus and the Left**, such as it was and is, was content to let it happen. Then
established Leftist parties often facilitated the rightward economic process via a host of
policies, often against their own stated policies in election manifestos. The Left appeared
deceitful. The Irish Labour party is barely alive and subsisting on die-hard traditionalists
for their support by those who can somehow ignore the deceit of their party. Surreaslist
stuff from so-called working class parties,
And now the middle-middle classes are ailing and we're supposed to take notice. Hmmm. Yet,
as a Leftist, myself, it is incumbent upon us to address the situation and assist all
workers, whatever their own perceived status.
*I'm an immigrant in the UK currently, though that is about to change next year.
** Whether the "Left", such as the Irish Labour Party, was just confused or bamboozled
matters not a jot. After the financial crises that became an economic crisis, they zealously
implemented austerity policies that predominantly cleared the way for a right wing political
landscape to dominate throughout Europe. One could be forgiven for thinking that those who
called themselves Leftists secretly believed that only right wing, neo-liberal economic
policies were correct. And I suppose, being a bit cynical, that a few politicos were paid
handsomely for their services.
I think its easy to see why the more middle class elements of the left wing parties never
saw immigration as a problem – but harder to see why the Trade Unions also bought into
this. Partly I think it was a laudable and genuine attempt to ensure they didn't buy into
racism – when you look at much trade union history, its not always pleasant reading
when you see how nakedly racist some early trade union activists were, especially in the US.
But I think there was also a process whereby Unions increasingly represented relatively
protected trades and professions, while they lost ground in more vulnerable sectors, such as
in construction.
I think there was also an underestimation of the 'balancing' effect within Europe. I think
a lot of activists understimated the poverty in parts of Europe, and so didn't see the
expansion of the EU into eastern Europe as resulting in the same sort of labour arbitrage
thats occurred between the west and Asia. I remember the discussions over the enlargement of
the EU to cover eastern Europe and I recall that there seemed to be an inbuilt assumption
(certainly in the left), that rising general prosperity would ensure there would be no real
migration impact on local jobs. This proved to be entirely untrue.
Incidentally, in my constituency (Dublin Central) in past elections the local Labour party
was as guilty as any of pandering to the frequent racism encountered on the doorsteps in
working class areas. But it didn't do them much good. Interestingly, SF was the only party
who would consistently refuse to pander (At least in Dublin), making the distinction between
nationalist and internationalist minded left wingers even more confusing.
Yes, one has to praise the fact that the Unions didn't pander to racism – but that's
about all the (insert expletive of choice) did correctly.
Your other points, as ever, are relevant and valid but (and I must but) I tend to think
that parties like Labour were too far "breezy" about the repercussions about labour
arbitrage. But that's water under the bridge now.
Speaking about SF and the North West in general, they have aggressively canvassed recent
immigrants and have not tolerated racism among their ranks. Their simple reasoning was that
is unthinkable that SF could tolerate such behaviour amongst themselves when they has waged a
campaign against such attitudes and practices in the six counties. (SF are no saints, often
fumble the ball badly, and are certainly not the end-all-be-all, but this is something they
get right).
It has to be understood that much of immigration is occurring because of war, famine,
collapsing societies (mostly due to massive wealth inequality and corrupt governments).
Immigration is not the cause of the economic issues in the EU, it's a symptom (or a feature
if you're on top). If you don't correct the causes – neo-liberalism, kleptocracy,
rigged game – what ever you want to call it, then you too will become an immigrant in
your own country (and it will be a third world country by the time the crooks on top are
done).
Don't get caught up in the blame the other poor people game. It's a means to get the
powerless to fight among themselves. They are not in charge, they are victims just like
you.
Having spent a lot of time in the Indian subcontinent and Afghanistan and Iraq I have to
say that rampant overpopulation plays a big part. Anyone who can get out is getting out. It
makes sense. And with modern communications they all know how life is in Europe or the US in
contrast to the grinding horror that surrounds them.
But Conan tells me that Haiti is a tropical paradise! (my brother too spent a lot of time
in Afghanistan and Iraq working with the locals during his deployments)
"Twitter liberalism" is doing itself by not recognizing that much of the developing world
IS a corrupt cesspool.
Instead of railing against Trump, the Twitter-sphere needs to rail against the bipartisan
policies that drive corruption, and economic dislocations and political dislocations. and
rail against religious fundamentalism that hinders family planning.
But if you actually do that, rail against bipartisan neoliberal policies on social media
and IRL, the conservatives are far less hostile than the die-hard Dems. This is especially
true now, with all the frothing at the mouth and bloodlust about Russia. Its raised their
"it's ALL *YOUR* FAULT"-ism by at least an order of magnitude.
Actually, that's been true since the 18th C., at least for the US. TV may make it more
vivid, and Europe has changed places, but most Americans have immigrant ancestors, most often
from Europe.
However, it does seem that the policy of the EU, especially under the influence of Mutti
Merkel, signalled a free-for-all immigration stance over the last several years, completely
ignoring the plight of existing workers (many of whom would be recent immigrants themselves
and the children of immigrants). That the so-called Left either sat idly by or jumped on
Mutti's band wagon didn't do them any favours with working people. Every country or customs
union has and needs to regulate its borders. It also makes some sense to monitor labour
markets when unfavourable conditions appear.
It appears that only the wealthy are largely reaping the rewards of the globalist
direction trade has taken. These issues need to be addressed by the emerging Left political
parties in the West. Failure to address these issues must, I would contend, play into the
hands of the more right wing parties whose job is to often enrich the local rich.
But, bottom line, your are correct workers do not come out well when blaming other workers
for economies that have been intentionally created to produce favourable conditions for the
few over the many.
It's a blade with two sides.
There are push factors like the wars and poor countries. However neither of these causes can
be fixed. Not possible. Europe can gnash their teeth all they want, not even when they did
the unthinkable and put the US under sanctions for their warcrimes would the US ever stop.
First there would be color revolutions in western europe.
As important as the push factors are the pull ones. 90% or so of all refugees 2015 went to
Germany. Some were sent to other countries by the EU, these too immediately moved to Germany
and didn't stay where they were assigned. So the EU has to clean up their act and would need
to put the last 10 or so US presidents and administrations before a judge in Den Haag for
continued war crimes and crimes against humanity (please let me my dreams). The EU would also
need to clean up their one sided trade treaties with Africa and generally reign in their own
corporations. All that is however not enough by far and at most only half the battle. Even
when the EU itself all did these things, the poverty would remain and therefore the biggest
push factor. Humans always migrate to the place where the economy is better.
The pull factors is however at least as big. The first thing to do is for Germany to fix
their laws to be in sync with the other EU countries. At this point, Germany is utterly
alone, at most some countries simply don't speak out against german policy since they want
concessions in other areas. Main one here is France with their proposed EU and Euro reforms
but not alone by far.
Nationalists want protection for work and workers, a clamping down on economic
migrants, and rules with teeth aimed at controlling international trade.
Socialism in one country is a Stalinist theory, and falling back upon it in fear of
international capital is not only regressive but (assuming we aren't intentionally ignoring
history) relective of a defensive mentality.
In other words, this kind of thinking is the thinking of the whipped dog cringing before
the next blow.
Or perhaps they want to regulate and control the power of capital in their country. Which
is an entirely impossible proposition considering that capital can flee any jurisdiction and
cross any border. After all, transnational capital flows which were leveraged to the hilt in
speculative assets played an oversized role in generating the financial crisis and subsequent
crash.
It wouldn't be the first time I've been called a Stalinist though.
And why would we care whether it's a "Stalinist" theory? For that matter, although worker
ownership would solve some of these problems, we needn't be talking about socialism, but
rather about more functional capitalism.
Quite a leap in that last sentence; you haven't actually established anything of the
sort.
Personally, I believe capitalism needs to go away, but for it, or any other economic
system, to work, we would need a fair, equal, just, enforced rule of law that
everyone would be under, wouldn't we?
Right now the blessed of our various nations do not want this, so they make so that one
set is unfair, unequal, unjust, harshly enforced on most of their country's population while
they get the gentle rules.
For a society to function long term, it needs to have a fair and just set of rules that
everyone understands and follow, although the rules don't have to equal; people will tolerate
different levels of punishments and strictness of the rules. The less that is the case the
more dysfunctional, and usually the more repressive it is. See the Western Roman Empire, the
fall of just about every Chinese dynasty, the Russian Empire, heck even the American War of
Independence, and the American Civil War. In example, people either actively worked to
destroy the system or did not care to support it.
Thank you for the article, a pretty lucid analysis of the recent electoral results in
Italy and trends elsewhere. Although I would have liked to read something about people voting
the way they do because they are xenophobe fascist baby-eating pedophile racist Putin
friends. Just for fun.
Funny how the author's company promotes "Daily international job vacancies in UNDP, FAO,
UN, UNCTAD, UNIDO and the other Governative Organization, Non Governative Organization,
Multinationals Corporations. Public Relations, Marketing, Business Development."
Precisely the sort of jobs that infuriates the impoverishing middle classes.
As recently as 2015, Bernie Sanders defended not only border security, but also national
sovereignty. Asked about expanded immigration, Sanders flipped the question into a critique
of open-borders libertarianism: "That's a Koch brothers proposal which says essentially there
is no United States."
Unfortunately the ethnic division of the campaign and Hillary's attack seems to have led him
to change his mind.
That's probably due to the fact that just about everybody can't seem to differentiate
between immigration and mass migration. The latter issue is a matter of distributing the pain
of a collapsing order. state failure, and climate change while the former is simply engaging
in the comfortable rhetoric of politics dominated by the American middle class.
1 people vote they like. im not updated if the voters eat babies but i'll check and let u
know.
2 My company is not dream job. It is a for free ( and not making a penny) daily bulleting
that using a fre soft (paper.li) collect international qualified job offers for whoever is
willing to work in these sector.
i'm not pro or contro migrants. i actually only reported simple fact collating differents
point :)
Economic migrants seek prosperity and are justified in doing so, yet they can also be
seen as pawns in an international strategy that destroys the negotiating leverage of
workers. The resulting contradictions potentially render conventional political
classifications obsolete.
This appears on the homepage, but not here.
In any case, the 10% also seek prosperity. They are said to be the enablers of the 1%.
Until the left alters its thinking to reflect the crucial information presented in this
video, information more clearly and comprehensively spelled out in "Reclaiming the State" by
Mitchell and Fazi, resurgent rightwing nationalism will be the only outlet for those who
reject global neoliberalism's race to the bottom. It's that simple and sad.
To paint this as two pro-globalisation (within which you place the left) and
pro-nationalism is simplistic and repositions the false dichotomy of left vs right with
something just as useless. We should instead seek to speak to the complexities of the modern
political spectrum. This is an example of poor journalism and analysis and shouldn't have
been posted here, sorry Yves.
Thanks for your opinion. Check the format of this place: articles selected for information
or provoking thoughts, in support of a general position of driving toward betterment of the
general welfare, writ large.
The political economy is at least as complex as the Krebs or citric acid cycle that
biology students and scientists try to master. There are so many moving parts and
intersecting and competing interests that in the few words that the format can accommodate,
regarding each link, it's a little unkind to expect some master work of explication and
rhetorical closure every time.
The Krebs cycle is basically driven by the homeostatic thrust, bred of billions of years
of refinement, to maintain the healthy functioning and prolong life of the organism. There's
a perceivable axis to all the many parts of respiration, digestion, energy flows and such,
all inter-related with a clear organizing principle at the level of the organism. On the
record, it's hardly clear that at the level of the political economy, and all the many parts
that make it up, there is sufficient cohesion around a set of organizing principles that
parallel the drive, at the society and species level, to regulate and promote the energy
flows and interactions that would keep things healthy and prolong the life of the larger
entity. Or that their is not maybe a death wish built into the "cultural DNA" of most of the
human population.
Looks a lot to me that we actually have been invested (in both the financial and military
senses of the word) by a bunch of different cancer processes, wild and unregulated
proliferation of ecnomic and political tumor tissues that have invaded and undermined the
healthy organs of the body politic. Not so clear what the treatments might be, or the
prognosis. It is a little hopeful, continuing the biological analogy, that the equivalents of
inflammation and immune system processes appear to be overcoming the sneaky tricks that
cancer genes and cells employ to evade being identified and rendered innocuous.
Yes, "invested in a bunch of cancer processes" is a good description of allowing excessive
levels of predatory wealth. Thus you end up with a bunch of Jay Gould hyper capitalists whose
guiding principle is: I can always pay one half of the working class to kill the other half.
Divide and conquer rules.
It's mostly simply wrong. This doesn't describe the political views of almost anyone near
power anywhere as far as I can tell:
"Globalists want more open borders and freer international trade. Nationalists want
protection for work and workers, "
Most of the nationalist forces are on the right and give @#$# all for workers rights.
Really they may be anti-immigrant but they are absolutely anti-worker.
The middle class does not really exist, it was a concept invented by capitalists to
distract the workers from their essential unity as fellow wage slaves. Some make more wages,
some make less wages but they all have their surplus value, the money left over after they
have enough to take care of themselves, taken by the capitalist and used for his ends even
though he may not have worked in the value creation process at all.
Economic migrants are members of the working class who have been driven from their home
country to somewhere else by the capitalist system. While the article does mention capitalist
shock doctrine methods for establishing imperialism and correctly notes that economic
migrants are victims, it then goes on to try to lay a weak and insidious argument against
them. The author goes on citing multiple different cases of worker wages being driven lower
or stagnating, many of these cases have differing and sometimes complex reasons for why this
happened. But migrants and globalization are to blame he says and that our struggle is
nationalism vs globalism. He refuses to see what is staring him in the face, workers produce
surplus value for society, more workers produce more surplus value. If society finds itself
wealthier with more workers then why do workers wage fall or stagnate? He does note correctly
that this is due to the workers now having a weaker bargaining position with the capitalist,
but he seems to conclude from this without stating outrightly that we should then reject the
economic migrants because of this.
However, we could instead conclude that if more workers produce more surplus value but yet
their wages fall because the capitalist takes a larger share of the overall pot, that the
problem is not more workers but instead the capitalist system itself which was rigged to
exploit workers everywhere. Plus the workers bargaining position only weakens with a greater
number of them if they are all just bargaining for themselves, but if they were to bargain
togather collectively then there bargaining position has actually only grown even
stronger.
Also he falsly equates democratic party policies with leftists, instead of correctly
noting that the democratic party represents capitalist interests from a centrist position and
not the left. The strength of global capitalism can only be fought by a global coalition of
the working class. The struggle of Mexican and American workers are interrelated to each
other and the same goes for that of European and Middle Eastern workers. The time has come
for the left to raise the rallying cry of its great and glorious past.
You claim, as if it were obvious, that "economic migrants are members of the working class
who have been driven from their home country to somewhere else by the capitalist system."
Are all economic migrants therefore bereft of agency?
If the borders of the US were abruptly left completely open, a huge number of people would
enter the country tomorrow, for economic reasons. Would they all have been "driven" here, or
would they have some choice in the matter?
When you say, "he refuses to say what is staring him in the face, that [ ] more workers
produce more surplus value," you are not only taking a gratuitously pedantic tone, you are
actually not making a coherent critique. If economic migrants move from one country to
another, the total pool of workers in the world has not increased; while according to your
logic, if all the workers in the world were to move to Rhode Island, Rhode Island would
suddenly be swimming in the richness of surplus value.
When you say, "we could instead conclude that [..] the problem is not more workers but
instead the capitalist system itself which was rigged to exploit workers everywhere," you are
straw-manning the author but also making a purely rhetorical argument. If you think the
capitalist system can be replaced with a better one within the near future, then you can work
toward that; but in the meanwhile, nations, assuming that they will continue to exist, will
either have open borders or something short of that, and these decisions do affect
the lives of workers.
When you say he "falsly equates democratic party policies with leftists," the false
equivalence is coming from you. The article barely touches on the Democratic Party, and
instead draws most of its examples from Europe, especially Italy. In Italy, the public
figures he mentions call themselves part of the sinistra and are generally referred
to that way. You might perhaps feel that they are not entitled to that name (and in fact, the
article sometimes places "left" in quotation marks), but you should at least read the article
and look them up before discussing the matter.
From the article: "Meanwhile, many who self-identify as on the Left seem utterly
uninterested in the concerns of ordinary people, at least in cases where these would conflict
with the commitment to globalization."
To Be Fair, Verga clearly is skeptical about those claims to be "on the Left," as he
should be. Nonetheless, his initial mention of Democratic exemplars of globalization triggers
American reflexes.
Something before this failed to post; was rejected as a double post.
In brief: corporate globalization is a conservative, Republican policy that Bill Clinton
imposed on the Dems, where it has since become doctrine, since it pays. It's ultimately the
reason I'm a Green, not a Democrat, and in a sense the reason there IS a Green Party in the
US.
The author points to stagnant middle class income in USA and Western Europe but fail to
look the big picture. Middle class income has increased sharply in the past decades in Asia
and Eastern Europe. Overall the gain huge, even though life is tougher in richer
countries.
Overall the gain huge, even thought life is tougher in richer countries.
Please accept my apologies for saying this. I don't mean to offend. I just have to point
out something.
Many in the Democratic Party, as well as the left, are pointing to other countries and
peoples as well as the American 9.9% and saying things are great, why are you complaining?
With the not so hidden implications, sometimes openly stated that those who do are losers and
deplorables.
Saying that middle class incomes are merely stagnant is a sick, sick joke as well as an
untruth. As an American, I do not really care about the middle classes in Asia and Eastern
Europe. Bleep the big picture. The huge gains comes with a commensurate increase in homeless
in the United States, and a falling standard of living for most the of the population,
especially in the "wealthy" states, like my state of California. Most of us are using
fingernails to stay alive and homed. If those gains had not been caused by the losses, I
would be very please to see them. As it is, I have to live under President Trump and worry
about surviving. Heck, worry about the rest of my family doing so.
"Saying that middle class incomes are merely stagnant is a sick, sick joke as well as an
untruth."
+10,000
I mean I actually do care somewhat about the people of the world, but we here in "rich
countries" are being driven to homelessness at this point and told the goddamn lie that we
live in a rich country, rather than the truth that we live in a plutocracy with levels of
inequality approaching truly 3rd world. We are literally killing ourselves because we have to
live in this plutocracy and our one existence itself is not even worth it anymore in this
economic system (and we are lacking even a few of the positives of many other 3rd world
countries). And those that aren't killing ourselves still can't find work, and even if we do,
it doesn't pay enough to meet the most basic necessities.
1. It is unfortunate that Verga raises the rising cost of material inputs but fails to
meaningfully address the issue. One of the drivers of migration, as mentioned in Comments
above, is the population volcano currently erupting. Labor is cheap and globalization
possible in large part because the world population has grown from 2 Billion to over 7
Billion in the past 60-odd years. This slow-growing mountain of human beings has created
stresses on material inputs which are having a negative impact on the benefits derived from
declining labor costs. This becomes a death-spiral as capital seeks to balance the rising
cost of raw materials and agricultural products by driving down the cost of labor ever
further.
2. Verga touches on the interplay of Nationalism and Racism in the responses of political
parties and institutions in Italy and elsewhere. Voters appear to be abandoning Left and
left-ish parties because the Left have been unable to come up with a definintion of national
sovereignty that protects worker rights largely due to the importance of anti-racism in
current Left-wing thought. Working people were briefly bought-off with cheap consumer goods
and easy credit, but they now realize that low-wage migrant and off-shore workers mean that
even these goodies are now out of reach. The only political alternative currently on offer is
a brand of Nationalism defined by Racism -- which becomes acceptable to voters when the
alternative is Third-World levels of poverty for those outside the 1% and their 9%
enablers.
I don't see any simple solutions. Things may get very ugly.
I certainly see that policies tampering down free trade, both of capital and labor, can
benefit workers within a particular country. However, especially in the context of said
policies in "Western" countries, this can tend towards a, protect the working class within
the borders, leave those outside of it in impoverished squalor. Which doesn't mesh well with
the leftist goal of global class consciousness. Much like the racially segregated labor
policies of yesteryear, it's playing a zero-sum game with the working class while the
ownership class gets the "rising tide lifts all boats" treatment.
So how do we protect workers within the sovereign, while not doing so at the cost of the
workers outside of it? Schwieckart has an interesting idea, that tariffs on imports are used
to fund non-profits/higher education/cooperatives in the country of export. However, I think
we'd need something a bit more fine-tuned than that.
It has always baffled me that governments enable this global musical chairs game with the
labor market. Nearly all Western governments allow tax dodging by those who benefit the most
from their Navies, Armies, Patents, and Customs enforcement systems. However, it is the
working class that carries the brunt of that cost while corporations off-shore their
profits.
A simple-minded fix might be to start taxing foreign profits commensurate with the cost of
enabling those overseas profits.
Interesting that a corporation is a person just like us mortals when it is to their
advantage, but unlike us humans, they can legally escape taxation on much of their income
whereas a human being who is a US citizen cannot. A human citizen is generally taxed by the
US on all income regardless of its source. OTOH, corporations (among other means) routinely
transfer intellectual property to a non tax jurisdiction and then pay artificial payments to
that entity for the rights to use such property. It is a scam akin to a human creating a tax
deduction by transferring money from one pocket to another. Yes, proper taxation of
corporations is a simple-minded fix which is absolutely not simple to legislate. Nice try
though. Something else to ponder: Taxation without representation was said to be a major
factor in our war of independence from Britain. Today no one seems to be concerned that we
have evolved into representation without taxation. Doesn't see right to me.
"Klein analyzes a future (already here to some degree) in which multinational
corporations freely fish from one market or another in an effort to find the most suitable
(i.e. cheapest) labor force."
FWIW I don't think it's productive to talk about things like immigration in (or to) the US
in terms of just the here – as in what should/could we be doing here
to fix the problem. It's just as much if not more about the there . If we
view the global economic order as an enriched center feeding off a developing periphery, then
fixing the periphery should be first aim. #Wall or #NoBorders are largely incendiary
extremes. Ending Original Sin and creating some
sort of supranational
IOU/credit system (not controlled by World Bank or IMF!) will end the economic imbalance
and allow countries who will never export their way out of poverty and misery a way
to become equal first world nation states. With this equality, there will be less economic
migration, less peripheral poverty and potentially less political unrest. It's a gargantuan
task to be sure, but with rising Socialist sentiment here and abroad, I'd like to think we
are at least moving in the right direction.
If the rich were properly taxed then social tensions would be greatly reduced and if the
revenue raised were used to help the poorest in society much distress could be
alleviated.
I worry that debate on migration/globalisation is being encouraged to distract attention
from this issue.
I may indeed have taken a gratuitously pedantic tone and could have chosen a better one,
for that i apologise. I do however believe that much of my critique still stands, I will try
to go through your points one by one.
"Are all economic migrants therefore bereft of agency?"
Not all but many are, especially the ones that most people are complaining about. Many of
them are being driven from their home countries not simply for a better life but so they can
have something approaching a life at all. While to fully prove this point would require an
analysis of all the different migrants and their home country conditions, I do feel that if
we are talking about Syrian refugees, migrants from Africa risking their lives crossing the
Mediteranian sea, or CentralAmerican refugees than yes i do think these people to an extent
have had their agency taken from them by global events. For Syrians, by being caught in an
imperialist power struggle which while the civil war may not have been caused by it, it
certainly has been prolonged because of it. Not too mention America played a very significant
role in creating the conditions for ISIS, and western European powers don't have completely
clean hands either due to their long history of brutal imperialism in the mideast. Africa of
course also has an extensive past of colonization and suffers from a present of colonization
and exploitation as well. For Central Americans there is of course the voracious american
drug market as well as our politicians consistent appetite for its criminalisation to blame.
There is also of course global climate change. Many of these contributing conditions are not
being dealt with and so i believe that the migrations we have witnessed these last few years
are only the first ining of perhaps even greater migrations to come. How we deal with it now,
could determine whether our era is defined by mass deaths or something better. So to the
extent that i believe many of these migrants have agency is similiar to how a person climbing
onto the roof of there house to escape a flood does.
If the borders of the US were left completely open then, yes, there would most likely be a
rush of people at first but over time they would migrate back and forth according to their
needs, through the opening of the border they would gain agency. People often think that a
country not permitting its citizens to leave is wrong and immoral, but if most countries
close their borders to the people of a country going through great suffering, then it seems
to me that is essentially the same even if the rhetoric may be different. The likeliness of
this is high if the rich countries close there borders, since if the rich countries like the
US and Italy feel they can not take them in, then its doubtful countries on the way that are
much poorer will be able to either.
At the begining of your article you stated that "International commerce, jobs, and
economic migrants are propelled by a common force: profit." This is the capitalist system,
which is a system built upon the accumulation of capital, which are profits invested in
instruments of labor, aka machines and various labor enhancements. Now Rhode island is quite
small so there are geographical limitations of course, but if that was not an issue then yes.
Wage workers in the capitalist system produce more value than they consume, if this was not
the case they would not be hired or be hired for long. So if Rhode Island did not have the
geographical limitations that it does, then with more workers the overall pot of valuable
products and services would increase per capita in relation to the population. If the workers
are divided and not unified into cohesive and responsive institutions to fight for there
right share of the overall pie, which I believe should be all of it, then most of the gain to
society will go to the capitalist as increased profits. So it is not the migrant workers who
take from the native but instead actually the capitalist who exploits and trys to magnify
there difference. So if the capitalist system through imperialism helped to contribute to the
underlying conditions driving mass migration, and then it exploits there gratitude and
willingness to work for less than native workers, than I believe it follows that they will
wish to drive native anger towards the migrants with the ultimate goal of allowing them to
exploit the migrant workers at an even more severe level. This could be true within the
country, such as the US right now where the overarching result of anti-immigrant policies has
been to not get rid of them but to drive there exploitation more into the shadows, or through
mass deportations back to their home country followed by investments to exploit their
desperation at super low wages that will then compete with the rich country workers, it is
also possible they will all just die and everyone will look away. Either way the result will
still be lower wages for rich country workers, it seems to me the only way out of the impass
is for the native workers to realize their unity with migrant workers as exploited workers
and instead of directing that energy of hostility at each other instead focus it upon the
real root which is the capitalists themselves. Without the capitalists, more workers, held
withing certain geographic limitations of course, would in fact only enrich each other.
So while nations may indeed continue to exist for awhile, the long term benefit of native
workers is better served by making common cause with migrants against their mutual oppressors
then allowing themselves to be stirred up against them. Making this argument to workers is
much harder, but its the most beneficial if it can be made successfully.
This last point i do agree i may have been unfair to you, historically I believe the left
generally referred to anarchists, socialists and communists. So I often dislike the way
modern commentators use the left to refer to anything from a center right democrat like
Hillary Clinton all the way to the most hard core communist, it can make understanding
political subtleties difficult since anarchists, socialists and communists have radically
different politics than liberals, much more so than can be expressed along a linear line. But
as you point out you used quotes which i admit i did not notice, and of course one must
generally use the jargon of the times in order to be understood.
Overall i think my main critique was that it seemed that throughout your article you were
referencing different negative symptoms of capitalism but was instead taking that evidence
for the negatives of globalism. I may come from a more radical tradition than you may be used
to, but i would consider globalism to be an inherent aspect of capitalism. Capitalism in its
algorithmic quest for ever increasing profits generally will not allow its self to be bound
for long by people, nations, or even the physical and environmental limitations of the earth.
While one country may be able to restrict it for a time unless it is overcome completely it
will eventually reach out globally again. The only way to stop it is a prolonged struggle of
the international working class cooperating with each other against capitalism in all its
exploitive forms. I would also say that what we are seeing is not so much globalism vs
nationalism but instead a rearrangement of the competing imperial powers, Russia, China, US,
Germany and perhaps the evolution of multiple competing imperialisms similiar in nature to
pre- world war times but that may have to wait for later.
A great deal of your article did indeed deal with Italy which I did not address but I felt
that your arguments surrounding migrants was essentially of a subtle right wing nature and it
needed to be balanced by a socialist counter narrative. I am very glad that you took the time
to respond to my critique I know that putting analysis out there can be very difficult and i
am thankful for your response which has allowed me to better express and understand my
viewpoint. Once again I apoligise if I used some overly aggressive language and i hope your
able to get something out of my response as well.
I appreciate the more reflective tone of this reply. I believe there are still some
misreadings of the article, which I will try to clarify.
For one thing, I am not the author of the article! Enrico Verga is the author. I merely
translated the article. Enrico is Italian, however, and so for time zone reasons will be
unable to respond to your comments for a while. I am happy to write a bit on this in the
meantime.
You make two arguments.
The first is that many or most migrants are fleeing desperate circumstances. The article
speaks however consistently of "economic migrants" – there are some overlapping issues
with refugees, but also significant differences. Clearly there are many people who are
economically comfortable in their home countries and who would still jump at a chance to get
US citizenship if they could (look up EB-5 fraud for one example). Saying this does not imply
some sort of subtle critique of such people, but they are not a myth.
I actually found your second argument more thought-provoking. As I understand you, you are
suggesting something like the following. You support completely open borders. You acknowledge
that this would lead at first to massive shifts in population, but in the long run you say
things would stabilize. You acknowledge that this will lead to "lower wages for rich country
workers," but say that we should focus on the fact that it is only within the capitalist
system that this causality holds. You also suggest that it would probably lead, under current
conditions, to workers having their anger misdirected at migrants and therefore supporting
more reactionary policies.
Given that the shift to immediate open borders would, by this analysis, be highly
detrimental to causes you support, why do you favor it? Your reasons appear to be (1) it's
the right thing to do and we should just do it, (2) yes, workers might react in the way
described, but they should not feel that way, and maybe we can convince them not to feel that
way, (3) things will work themselves out in the long run.
I am a bit surprised at the straightforwardly idealistic tone of (1) and (2). As for (3),
as Keynes said, in the long run we are all dead. He meant by this that phenomena that might
in theory equilibrate over a very long time can lead to significant chaos in the short run;
this chaos can meanwhile disrupt calculations about the "long term" and spawn other
significant negative consequences.
Anyone who is open to the idea of radically new economic arrangements faces the question
of how best to get there. You are perhaps suggesting that letting global capital
reign supreme, unhindered by the rules and restrictions of nation-states, will in the long
run allow workers to understand their oppression more clearly and so increase their openness
to uniting against it. If so, I am skeptical.
I will finally point out that a part of the tone of your response seems directed at the
impression that Enrico dislikes migrants, or wants other people to resent them. I see nothing
in the article that would suggest this, and there are on the other hand several passages in
which Enrico encourages the reader to empathize with migrants. When you suggest that his
arguments are "essentially of a subtle right wing nature," you are maybe reacting to this
misreading; in any case, I'm not really sure what you are getting at, since this phrase is so
analytically imprecise that it could mean all sorts of things. Please try to engage with the
article with arguments, not with vague epithets.
There is a bit of a dissonance here. Human rights has been persistently used by
neoliberals to destabilize other regions for their own ends for decades now with little
protest. And when the standard playbook of coups and stirring up trouble does not work its
war and total destruction as we have seen recently in Iraq, Libya and Syria for completely
fabricated reasons.
Since increased migration is the obvious first consequence when entire countries are
decimated and in disarray one would expect the countries doing the destruction to accept the
consequences of their actions but instead we have the same political forces who advocate
intervention on 'human rights grounds' now demonizing migrants and advocating openly racist
policies.
One can understand one mistake but 3 mistakes in a row! And apparently we are not capable
of learning. The bloodlust continues unabated for Iran. This will destabilize an already
destabilized region and cause even more migration to Europe. There seems to be a fundamental
contradiction here, that the citizens of countries that execute these actions and who who
protest about migrants must confront.
Maybe they should pay trillions of dollars of reparations for these intervention so these
countries can be rebuilt and made secure again so migrants can return to their homes. Maybe
the UN can introduce a new fund with any country considering destabilizing another country,
for instance Iran, to first deposit a trillion dollars upfront to deal with the human
fallout. Or maybe casually destabilizing and devastating entire countries, killing millions
of people and putting millions more in disarray should be considered crimes against humanity
and prosecuted so they are not repeated.
"... $2.00 a Day: Living on Almost Nothing in America ..."
"... Nickel and Dimed: On (Not) Getting By in America ..."
"... , is the Anne and Bernard Spitzer Professor of International Relations at the Powell School, City College of New York, and Senior Research Fellow at Columbia University's Saltzman Institute of War and Peace Studies. He is the author, most recently, of ..."
So effectively has the Beltway establishment captured the concept of national security that,
for most of us, it automatically conjures up images of terrorist groups, cyber warriors, or
"rogue states." To ward off such foes, the United States maintains a historically unprecedented
constellation
of military bases abroad and, since 9/11, has waged wars in Afghanistan, Iraq, Syria, Libya,
and elsewhere that have gobbled up nearly
$4.8 trillion . The 2018 Pentagon budget already totals $647 billion -- four times what China, second
in global military spending, shells out and more than the next 12 countries combined,
seven of them American allies. For good measure, Donald Trump has added an additional
$200 billion to projected defense expenditures through 2019.
Yet to hear the hawks tell it, the United States has never been less secure. So much for
bang for the buck.
For millions of Americans, however, the greatest threat to their day-to-day security isn't
terrorism or North Korea, Iran, Russia, or China. It's internal -- and economic. That's
particularly true for the 12.7% of Americans
(43.1 million of them) classified as poor by the government's criteria : an income below $12,140
for a one-person household, $16,460 for a family of two, and so on until you get to the
princely sum of $42,380 for a family of eight.
Savings aren't much help either: a third of Americans have no
savings at all and another third have less than $1,000 in the bank. Little wonder that
families struggling to cover the cost of food alone increased from 11% (36
million) in 2007 to 14% (48 million) in 2014.
The Working Poor
Unemployment can certainly contribute to being poor, but millions of Americans endure
poverty when they have full-time jobs or even hold down more than one job. The latest figures
from the Bureau of Labor Statistics show that there are 8.6 million "working poor,"
defined by the government as people who live below the poverty line despite being employed at
least 27 weeks a year. Their economic insecurity doesn't register in our society, partly
because working and being poor don't seem to go together in the minds of many Americans -- and
unemployment has fallen reasonably steadily. After approaching 10% in 2009, it's now at only
4% .
Help from the government? Bill Clinton's 1996 welfare " reform "
program , concocted in partnership with congressional Republicans, imposed time limits on
government assistance, while tightening eligibility criteria for it. So, as Kathryn Edin and
Luke Shaefer show in their disturbing book, $2.00 a Day: Living on
Almost Nothing in America , many who desperately need help don't even bother to apply.
And things will only get worse in the age of Trump. His 2019 budget includes deep cuts in
a raft of anti-poverty programs.
Anyone seeking a visceral sense of the hardships such Americans endure should read Barbara
Ehrenreich's 2001 book Nickel and Dimed: On
(Not) Getting By in America . It's a gripping account of what she learned when, posing
as a "homemaker" with no special skills, she worked for two years in various low-wage jobs,
relying solely on her earnings to support herself. The book brims with stories about people who
had jobs but, out of necessity, slept in rent-by-the-week fleabag motels, flophouses, or even
in their cars, subsisting on vending machine snacks for lunch, hot dogs and instant noodles for
dinner , and forgoing basic dental care or health checkups. Those who managed to get permanent
housing would choose poor, low-rent neighborhoods close to work because they often couldn't
afford a car. To maintain even such a barebones lifestyle, many worked more than one job.
Though politicians prattle on about how times have changed for the better, Ehrenreich's book
still provides a remarkably accurate picture of America's working poor. Over the past decade
the proportion of people who exhausted their monthly paychecks just to pay for life's
essentials actually increased from 31% to 38%. In
2013, 71%
of the families that had children and used food pantries run by Feeding America, the largest
private organization helping the hungry, included at least one person who had worked during the
previous year. And in America's
big cities , chiefly because of a widening gap between rent and wages, thousands of working
poor remain
homeless , sleeping in shelters, on the streets, or in their vehicles, sometimes along with
their families. In New York City, no outlier when it comes to homelessness among the working
poor, in
a third of the families with children that use homeless shelters at least one adult held a
job.
The Wages of Poverty
The working poor cluster in certain occupations. They are salespeople in retail stores,
servers or preparers of fast food, custodial staff, hotel workers, and caregivers for children
or the elderly. Many make less than $10 an hour and lack
any leverage, union or otherwise, to press for raises. In fact, the percentage of unionized workers in such
jobs remains in the single digits -- and in retail and food preparation, it's under 4.5%.
That's hardly surprising, given that private sector union membership has
fallen by 50% since 1983 to only 6.7% of the workforce.
Low-wage employers like it that way and -- Walmart being the
poster child for this -- work diligently to make it ever harder for employees to join unions.
As a result, they rarely find themselves under any real pressure to increase wages, which,
adjusted for inflation, have stood still or even decreased since
the late 1970s. When employment is " at-will
," workers may be fired or the terms of their work amended on the whim of a company and without
the slightest explanation. Walmart announced this year that it would hike its hourly wage to
$11 and that's welcome news. But this had nothing to do with collective bargaining; it was a
response to the drop in the unemployment rate, cash flows from the Trump tax cut for
corporations (which saved Walmart as much as $2
billion ), an increase in minimum wages in a number of states, and pay increases by an arch
competitor, Target. It was also accompanied by the
shutdown of 63 of Walmart's Sam's Club stores, which meant layoffs for 10,000 workers. In
short, the balance of power almost always favors the employer, seldom the employee.
As a result, though the United States has a per-capita income of $59,500
and is among the wealthiest countries in the world, 12.7% of
Americans (that's 43.1 million people), officially are impoverished. And that's generally
considered a significant undercount. The Census Bureau establishes the poverty rate by figuring
out an annual no-frills family food budget, multiplying it by three, adjusting it for household
size, and pegging it to the Consumer Price Index. That, many economists believe, is a woefully
inadequate way of estimating poverty. Food prices haven't risen dramatically over the past 20
years, but the cost of other necessities like medical care (especially if you lack insurance)
and housing have: 10.5% and 11.8% respectively between
2013 and 2017 compared to an only 5.5% increase for food.
Include housing and medical expenses in the equation and you get the Supplementary
Poverty Measure (SPM), published by the Census Bureau since 2011. It reveals that a larger
number of Americans are poor: 14%
or 45 million in 2016.
Dismal Data
For a fuller picture of American (in)security, however, it's necessary to delve deeper into
the relevant data, starting with hourly wages, which are the way more than 58% of adult workers are
paid. The good news: only 1.8 million , or 2.3% of
them, subsist at or below minimum wage. The not-so-good news: one-third of all workers earn
less than $12 an hour and
42% earn less than $15. That's $24,960 and $31,200 a year. Imagine raising a family on such
incomes, figuring in the cost of food, rent, childcare, car payments (since a car is often a
necessity simply to get to a job in a country with inadequate public transportation), and
medical costs.
The problem facing the working poor isn't just low wages, but the widening gap between wages
and rising prices. The government has increased the hourly federal minimum wage more than 20
times since it was set at 25 cents under the 1938 Fair Labor Standards Act. Between 2007 and
2009 it rose to $7.25, but over the past decade that sum lost nearly 10% of
its purchasing power to inflation, which means that, in 2018, someone would have to work
41 additional days to make the equivalent of the 2009 minimum wage.
Workers in the lowest 20% have lost the most ground, their inflation-adjusted
wages falling by nearly 1% between 1979 and 2016, compared to a 24.7% increase for the top
20%. This can't be explained by lackluster productivity since, between 1985 and 2015, it
outstripped pay raises, often substantially, in every economic sector except mining.
Yes, states can mandate higher minimum wages and 29 have,
but 21 have not, leaving many low-wage workers struggling to cover the costs of two essentials
in particular: health care and housing.
Even when it comes to jobs that offer health insurance, employers have been shifting ever
more of its cost onto their workers through higher deductibles and out-of-pocket expenses, as
well as by requiring them to cover more of the premiums. The percentage of workers who paid at
least 10% of their earnings to cover such costs -- not counting premiums -- doubled
between 2003 and 2014.
This helps explain why, according to the
Bureau of Labor Statistics , only 11% of workers in the bottom 10% of wage earners even
enrolled in workplace healthcare plans in 2016 (compared to 72% in the top 10%). As a
restaurant server who makes $2.13 an hour before tips -- and whose husband earns $9 an hour at
Walmart --
put it , after paying the rent, "it's either put food in the house or buy insurance."
The Affordable Care Act, or ACA (aka Obamacare), provided subsidies to help people with low
incomes cover the cost of insurance premiums, but workers with employer-supplied healthcare, no
matter how low their wages,
weren't covered by it. Now, of course,
President Trump , congressional
Republicans , and a Supreme Court in which right-wing justices are going to be even
more influential will be intent on poleaxing the ACA.
It's housing, though, that takes the biggest bite out of the paychecks of low-wage workers.
The majority of them are renters. Ownership remains for many a pipe dream. According to a
Harvard study , between 2001 and 2016, renters who made $30,000-$50,000 a year and paid
more than a third of their earnings to landlords (the threshold for qualifying as "rent
burdened") increased from 37% to 50%. For those making only $15,000, that figure rose to
83%.
In other words, in an ever more unequal America, the number of low-income workers struggling
to pay their rent has surged. As the Harvard analysis shows, this is, in part, because the
number of affluent renters (with incomes of $100,000 or more) has leapt and, in city after
city, they're driving the demand for, and building of, new rental units. As a result, the
high-end share of new rental construction soared from a third to nearly two-thirds of all units
between 2001 and 2016. Not surprisingly, new low-income rental units dropped from two-fifths to
one-fifth of the total and, as the pressure on renters rose, so did rents for even those modest
dwellings. On top of that, in places
like New York City , where demand from the wealthy shapes the housing market, landlords
have found ways -- some within the law, others not -- to get rid of low-income tenants.
Public housing and housing
vouchers are supposed to make housing affordable to low-income households, but the
supply of public housing hasn't remotely matched demand. Consequently, waiting lists are
long and people in need languish for years before getting a shot -- if they ever do. Only a
quarter of those who qualify for such assistance receive it. As for those vouchers, getting
them is hard to begin with because of the
massive mismatch between available funding for the program and the demand for the help it
provides. And then come the other
challenges : finding landlords willing to accept vouchers or rentals that are reasonably
close to work and not in neighborhoods euphemistically labelled " distressed ."
The bottom line: more than 75% of "at-risk"
renters (those for whom the cost of rent exceeds 30% or more of their earnings) do not receive
assistance from the government. The real "risk" for them is becoming homeless, which means
relying on shelters or family and friends willing to take them in.
President Trump's proposed budget cuts will make life even harder for low-income workers
seeking affordable housing. His 2019 budget proposal slashes
$6.8 billion (14.2%) from the resources of the Department of Housing and Urban
Development's (HUD) by, among other things, scrapping housing vouchers and assistance to
low-income families struggling to pay heating bills. The president also seeks to slash funds
for the upkeep of public housing by nearly 50%. In addition, the
deficits that his rich-come-first
tax "reform" bill is virtually guaranteed to produce will undoubtedly set the stage for yet
more cuts in the future. In other words, in what's becoming the United States of Inequality,
the very phrases "low-income workers" and "affordable housing" have ceased to go together.
None of this seems to have troubled HUD Secretary Ben Carson who happily ordered a
$31,000 dining room set for his office suite at the taxpayers' expense, even as he
visited
new public housing units to make sure that they weren't too comfortable (lest the poor settle
in for long stays). Carson has
declared that it's time to stop believing the problems of this society can be fixed merely
by having the government throw extra money at them -- unless, apparently, the dining room
accoutrements of superbureaucrats aren't up to snuff.
Money Talks
The levels of poverty and economic inequality that prevail in America are not intrinsic to
either capitalism or globalization. Most other wealthy market economies in the 36-nation
Organization for Economic Cooperation and Development (OECD) have done far better than the
United States in reducing them without sacrificing innovation or creating government-run
economies.
Take the poverty gap, which the OECD defines as the difference between a country's official
poverty line and the average income of those who fall below it. The United States has the
second largest
poverty gap among wealthy countries; only Italy does worse.
Child poverty ? In the World Economic Forum's
ranking of 41 countries -- from best to worst -- the U.S. placed 35th. Child poverty has
declined in the United States since 2010, but a Columbia University report estimates that
19% of American kids (13.7 million) nevertheless lived in families with incomes below the
official poverty line in 2016. If you add in the number of kids in low-income households, that
number increases to 41%.
As for infant mortality , according to
the government's own Centers for Disease Control, the U.S., with 6.1 deaths per 1,000 live
births, has the absolute worst record among wealthy countries. (Finland and Japan do best with
2.3.)
And when it comes to the distribution of wealth, among the OECD countries only Turkey,
Chile, and Mexico do worse than the U.S.
It's time to rethink the American national security state with its annual
trillion-dollar budget. For tens of millions of Americans, the source of deep workaday
insecurity isn't the standard roster of foreign enemies, but an ever-more entrenched system of
inequality, still
growing , that
stacks the political deck against the least well-off Americans. They lack the bucks to hire
big-time lobbyists. They can't write lavish checks to candidates running for public office or
fund PACs. They have no way of manipulating the myriad influence-generating networks that the elite uses to shape
taxation and spending policies. They are up against a system in which money truly does talk --
and that's the voice they don't have. Welcome to the United States of Inequality.
Rajan Menon, a
TomDispatch regular, is the Anne and Bernard Spitzer Professor of
International Relations at the Powell School, City College of New York, and Senior Research
Fellow at Columbia University's Saltzman Institute of War and Peace Studies. He is the author,
most recently, of The Conceit of Humanitarian Intervention .
But Rajan ,the American can always " honor the military " at the fast food drive through,
even send a few pennies for the Wounded Warrior Project ,in addition to buying lotteries, and
writing the tithe to the Mega Churches seeking blessing for the military men and women in
uniform . They can sing with Trump"Make America Great Again " . They can come out of the
woodshed to support wars , say things against Mexican, listen to FOX,and gather around
Prospect park to celebrate birthdays , hop into a bus and continue texting to update the
status on social media . They can nod with MSNBC that they have the best freedom that any
corner of the world can afford . They if white can claim being discriminated by Asian
Americans,if black by Mexicans,if Latinos by whites .
Now it seems they could feel proud of the ability to guide China UK and Brazil/Argentina do
the right things .
Why do these experts fail to understand that our national security budget is twice that of
the Department of Defense? It is no secret, POGO runs a tally showing it's twice as much:
In past blog posts, I explained how illegal immigration is a form of slave labor. It seems
powerful people explained this to former President George W. Bush, but didn't tell him not to
repeat it in public and that Americans no longer pick cotton by hand. As a result, Bush said
this during a speech earlier this year:
"There are people willing to do jobs that Americans won't do. Americans don't want to pick
cotton at 105 degrees, but there are people who want put food on their family's tables and
are willing to do that. We ought to say thank you and welcome them."
Bush failed to note that millionaires pay only $10 an hour with no benefits for these
tough jobs, yet most field workers are US citizens or green card holders. Illegals are hired
to hold down wages and deter unions and strikes. If they would pay $20 an hour, plenty of
Americans would show up to work. Most Americans don't know that millions of white Americans
once picked cotton by hand, and picked more than Blacks or Mexicans.
Articles like this pop up here every now and then.
Something doesn't compute.
If the situation is as grim as the article says, why so many people do their best to
immigrate into USA?
Why more, just Westerners, try to immigrate into USA then Americans into those, just
Western, countries?
I've known some Americans around here where I live.
I've known many more locals who've gone to live in USA, let alone tried to get to live in
USA.
Something simply does not compute.
A simple question for an American:
If a person is prudent and sensible, is it really that hard to get by, unemployed, there?
Now, in similar topic an American did explain, some time ago, that there are so many ways
to help those unemployed/underpaid. That the social security net isn't worse, but actually
overall better, then in other Western countries.
Plus, of course, opportunities.
Again, all that data from the article I can't challenge. What doesn't make sense is net
migration, just within Western sphere.
I do know some people, several dozen I guess, who live in USA. They have been doing quite
well. From a bus driver to a top medical professional.
For a fuller picture of American (in)security, however, it's necessary to delve deeper
into the relevant data, starting with hourly wages, which are the way more than 58% of
adult workers are paid. The good news: only 1.8 million, or 2.3% of them, subsist at or
below minimum wage. The not-so-good news: one-third of all workers earn less than $12 an
hour and 42% earn less than $15. That's $24,960 and $31,200 a year. Imagine raising a
family on such incomes, figuring in the cost of food, rent, childcare, car payments (since
a car is often a necessity simply to get to a job in a country with inadequate public
transportation), and medical costs.
You forgot another expense poor communities have – governmental extraction forces
GEF. Local law enforcement target the poor with the many petty offenses(they've purposely
invented) to extract money for expanding and maintaining of their extortion racket. This no
secret or conspiracy theory, for they readily admit to it. They target the poor because they
understand that the poor do not have resources(lawyers, guns, and money) to fight back. They
target the poor because they're poor, and the poor understand this as just another bill to
pay – another added expense of living in their community.
Another indirect expense that makes all Americans a lot less rich – insurance.
Everything that moves and everything that doesn't is at least singular insured or often
double or tripled insured. Property is a good example of how one entity can be insured three
times over by the owner, renter, contractor, sub-contractor. Your body is another example of
how things "must be insured" ; no surprise when Obama care came along to do just that.
Trump makes clear statements, I too like them.
For me the USA is a third world country, the exceptions are oversized cars and gated
communities.
On one of my visits to the USA I was asked if a child could be medically treated in the
Netherlands, the choice for the parents was letting the child die, or sell their house.
In the Netherlands we have treatments that cost several hundred thousands of euro's per year,
paid for by our medical care system.
Per person we pay about € 100 per month.
Pensions, the same.
Though the EU is busy destroying the best pension systems in the world, those of the
Netherlands and the Scandinavian countries, this has not yet succeeded.
A disaster as the ENRON pension fund cannot happen here.
The USA is a great country to live in if you're rich.
And, of course, if you're willing to have the illusion that the poor have only themselves to
blame for being poor.
USA society, terrible, in my opinion, 19th century, a moneycracy.
Eisenhower in his farewell speech warned for the military industrial complex, do not have the
impression that anything changed since then.
3 weeks after the US-NATO FAILED coup attempt in Georgia (more than 2000 died), the
petrodollar [i.e., the banks) "crashed" (and Bush gave more than additional weapons [for more
than $1 Billion) to Sakashviili] .
Moreover, as Mr Kucinich explain, massive transfers occurred between certain banks
:
The USA is a great country to live in if you're rich."
And if you hold large number of slaves known as immigrants from Central and S America
Immigrants serve same purpose the slaves did . It balances the poor middle class white's rage
that can tilt the anger and hatred against the rich ( mostly white ).
This situation goes right into the creation of US It missed the social and political and
religious changes of 18 th and 19 the centuries which gave birth to pre 2000 political system
and social systems of EU .
Implosion of Soviet lent more credence to the economic-political system of USA because the
blind and the deaf evaluated it for teh blind and the deaf who missed the success of the
system on the back of African Latin American and Asian poor newly independent ) confused )
countries. Those countries provided the ingredients- moral ,economic,emotional , – to
the working white class . It b;bolstered their hatred dismissive attitude to the foreigners
and cemented their love for a hateful system that hurt actually the interest of the middle
class and poor whites but gave them a sense of connection ,belonging,and partnerships through
color language and religion- all are false .
This is the same mindset that glues the the untouchables and the poor Hindus to the RSS- BJP
– Brahmanical system of oppression
On the matter of immigration, even many commentators who support ease of migration also
oppose the extension of government benefits to immigrants.
The idea, of course, is that free movement of labor is fine, but taxpayers shouldn't have to
subsidize it. As a matter of policy, many also find it prudent that immigrants ought to be
economically self sufficient before being offered citizenship. Switzerland, for instance,
makes
it harder to pursue citizenship while receiving social benefits.
This discussion often centers around officially recognized "welfare" and social-benefits
programs such as TANF and Medicaid. But it is also recognized that taxpayer-funded benefits
exist in the form of public schooling, free clinics, and other in-kind benefits.
But there is another taxpayer-supporter program that subsidizes immigration as well: the US
military.
Translation: the US government has begun laying off immigrants from taxpayer-funded
government jobs.
It's unclear how many of these jobs have been employed, but according to the Department of
Homeland security, "[s]ince Oct. 1, 2002, USCIS has naturalized 102,266
members of the military ."
The Military as a Jobs Program
Immigrants, of course, aren't the only people who benefit from government jobs funded
through military programs.
The military has long served as a jobs programs helpful in mopping up excess labor and
padding employment numbers. As Robert Reich noted in
2011 , as the US was still coming out of the 2009 recession:
And without our military jobs program personal incomes would be dropping faster. The
Commerce Department reported Monday the only major metro areas where both net earnings and
personal incomes rose last year were San Antonio, Texas, Virginia Beach, Virginia, and
Washington, D.C. -- because all three have high concentrations of military and federal
jobs.
He's right. While the private sector must cut back and re-arrange labor and capital to deal
with the new economic realities post-recession, government jobs rarely go away.
Because of this, Reich concludes "America's biggest -- and only major -- jobs program is the
U.S. military."
Reich doesn't think this is a bad thing. He only highlights the military's role as a de
facto jobs program in order to call for more de jure jobs programs supported by federal
funding.
Given the political popularity of the military, however, it's always easy to protect funding
for the military jobs programs than for any other potential jobs programs. All the Pentagon has
to do is assure Congress that every single military job is absolutely essential, and Congress
will force taxpayers to cough up the funding.
Back during the debate over sequestration, for example, the Pentagon routinely warned
Congress that any cutbacks in military funding would lead to major jobs losses, bringing
devastation to the economy.
In other words, even the Pentagon treats the military like a jobs program when it's
politically useful.
Benefits for enlisted people go well beyond what can be seen in the raw numbers of total
employed. As Kelley Vlahos
points out at The American Conservative , military personnel receive extra hazard pay "even
though they are far from any fighting or real danger." And then there is the "Combat Zone Tax
Exclusion (CZTE) program which exempts enlisted and officers from paying federal taxes in these
45 designated countries. Again, they get the tax break -- which accounted for about $3.6
billion in tax savings for personnel in 2009 (the combat pay cost taxpayers $790 million in
2009)– whether they are really in danger or not."
Nor do the benefits of military spending go only to enlisted people. The Pentagon has long
pointed to its spending on civilian jobs in many communities, including manufacturing jobs and
white-collar technical jobs.
This, of course, has long been politically useful for the Pentagon as well, since as
political scientist Rebecca Thorpe has shown in her book
The American Warfare State , communities that rely heavily on Pentagon-funded employment
are sure to send Congressmen to Washington who will make sure the taxpayer dollars keep flowing
to Pentagon programs.
Whether you're talking to Robert Reich or some Pentagon lobbyist on Capitol Hill, the
conclusion is clear: the military is both a jobs program and a stimulus program. Cut military
spending at your peril!
Military Spending Destroys Private Sector Jobs
The rub, however, is that military spending doesn't actually improve the economy. And much
the money spent on military employment would be best spent on the private, voluntary
economy.
This has long been recognized by political scientist Seymour Melman who has discussed the
need for "economic conversion," or converting military spending into other forms of spending.
Melman
observes :
Since we know that matter and energy located in Place A cannot be simultaneously located
in Place B, we must understand that the resources used up on military account thereby
represent a preemption of resources from civilian needs of every conceivable kind.
Here, Melman is simply describing in his own way what Murray Rothbard explained in
Man, Economy, and State . Namely, government spending distorts the economy as badly as taxation
-- driving up prices for the private sector, and withdrawing resources from private sector
use.
The military actually destroys jobs in the civilian economy. The higher profits from
cost-plus military manufacturing cause manufacturers to abandon more competitive civilian
endeavors; and the permanent war economy takes engineers, capital and resources away from
civilian production.
But, as a classic case of "the seen" vs. "the unseen," it's easy to point to jobs created by
military spending. How many jobs were lost as a result of that same spending? That remains
unseen, and thus politically irrelevant.
Military fan boys will of course assure us that every single military job and every single
dollar spent on the military is absolutely essential. It's all the service of "fighting for
freedom." For instance, Mitchell Blatt writes , in the
context of immigrant recruits, "I'm not worried about the country or origin of those who are
fighting to defend us. What matters is that our military is as strong as it can be." The idea
at work here is that the US military is a lean machine, doing only what is necessary to get the
job done, and as cost effectively as possible. Thus, hiring the "best" labor, from whatever
source is absolutely essential.
This, however, rather strains the bounds of credibility. The US military is more
expensive than the next eight largest militaries combined . The US's navy is ten times
larger than the next largest navy. The US's air force is the largest in the world, and the
second largest air force belongs, not to a foreign country, but to the US Navy.
Yet, we're supposed to believe that any cuts will imperil the "readiness" of the US
military.
Cut Spending for Citizens and Non-Citizens Alike
My intent here is not to pick on immigrants specifically. The case of military layoffs for
immigrants simply helps to illustrate a couple of important points: government jobs with the
military constitute of form of taxpayer-funded subsidy for immigrants. And secondly, the US
military acts as a job program, not just for immigrants but for many native-born Americans.
In truth, layoffs in the military sector ought to be far more widespread, and hardly limited
to immigrants. The Trump Administration is wrong when it suggests that the positions now held
by immigrant recruits ought to be filled by American-born recruits. Those positions should be
left unfilled. Permanently.
No you retarded fuck, the military is a taxpayer-funed merc army supporting the overseas
hegemonic goals of American-style Corporatism . That the military is full of the sons and
daughters of poor people is only because rich whites won't send their trustfund babies to
kill brown people for oil.
No, asshole. It's about money. About cash and gold. Profit. Markets. Growth. About cheap
or free resources. Access to labor. New customers.
War makes companies rich, it might be the ONLY way they can get rich. War is waged when GM
wants to sell trucks to the Pentagon. When Boeing wants to sell jets. When MIT wants money
for arms research. When NATO wants a reason to exist. The dogs of war are loosed when oil
gets tight. When countries won't "accept our cultural freedoms". When trade agreements aren't
enough to open up new markets.
Isreal has fleeting nothing to do with it, except maybe when war aligns with their
perceived need for hegemony in their own sphere. But by loading all this on Isreal you
encourage others to miss the real fox in the henhouse. You could wipe Isreal off the Earth
tomorrow and still have wars for profit for a thousand years to come.
This nation was born in war. It has practiced war since that day and will be at war with
the rest of the world until humans are killed to the last and the last ounce of profit from
war is had.
or from systematic corruption of all US Institutions and the politicization of all US
Institutions... you need a job, you want to work here, you say this, and you do this, ... tow
the line, no politics, no whistleblowing,... and we won't blackball your ass from the
industry... got it... u got debts, keep ur nose clean!
Yes the pay sucks but you get more done before 8am than most people do in a week. But
seriously its a pretty good gig in the long run. Medical care a decent retirement system,
travel a chance to meet and integrate with different cultures and kill them...its pretty
cool.
Excluding a small percentage, the military is much like the DMV. We have a cartoon vision
of all enlisted being GI Joe, ready to grab a gun and fight evil. This in not the case at
all. Most positions are very simple, repetitive bureaucratic positions. Really is a giant
Jobs program to keep people busy.
"The idea at work here is that the US military is a lean machine, doing only what is
necessary to get the job done, and as cost effectively as possible."
Later "eqality of means" was replaced by "equality of opportunity". Still huge discrepancy in
wealth typical for neoliberalism is socially destructive. And election of Trump was partially a
reaction on neoliberalism dominance for the last 40 ears.
"... The Founders rejected egalitarianism. They understood that no one is, literally,
"created equal" to anyone else. Certainly, each and every person is created with no less or no
more dignity, measured by his or her own unique potential before God. But this is not what most
contemporary writers mean today when they talk of "equality." ..."
"... by our own maximum possibilities and potential ..."
Notable quotes:
"... The Founders rejected egalitarianism. They understood that no one is, literally, "created equal" to anyone else. Certainly, each and every person is created with no less or no more dignity, measured by his or her own unique potential before God. But this is not what most contemporary writers mean today when they talk of "equality." ..."
"... by our own maximum possibilities and potential ..."
For many Americans the Declaration of Independence is a fundamental text that tells the
world who we are as a people. It is a distillation of American belief and purpose. Pundits and
commentators, left and right, never cease reminding us that America is a new nation, "conceived
in liberty and dedicated to the proposition that all men are created equal."
Almost as important as a symbol of American belief is Abraham Lincoln's Gettysburg Address.
It is not incorrect to see a link between these two documents, as Lincoln intentionally placed
his short peroration in the context of a particular reading of the Declaration.
Lincoln bases his concept of the creation of the American nation in philosophical
principles he sees enunciated in 1776, and in particular on an emphasis on the idea of
"equality." The problem is that this interpretation, which forms the philosophical base of both
the dominant "movement conservatism" today -- neoconservatism -- and the neo-Marxist
multicultural Left, is basically false.
... ... ...
Although those authors employed the phrase "all men are created equal," and certainly that
is why Lincoln made direct reference to it, a careful analysis of the Declaration does not
confirm the sense that Lincoln invests in those few words. Contextually, the authors at
Philadelphia were asserting their historic -- and equal -- rights as Englishmen before the
Crown, which had, they believed, been violated and usurped by the British government, and it
was to parliament that the Declaration was primarily directed.
The Founders rejected egalitarianism. They understood that no one is, literally,
"created equal" to anyone else. Certainly, each and every person is created with no less or no
more dignity, measured by his or her own unique potential before God. But this is not what most
contemporary writers mean today when they talk of "equality."
Rather, from a traditionally-Christian viewpoint, each of us is born into this world with
different levels of intelligence, in different areas of expertise; physically, some are
stronger or heavier, others are slight and smaller; some learn foreign languages and write
beautiful prose; others become fantastic athletes or scientists. Social customs and traditions,
property holding, and individual initiative -- each of these factors further discriminate as we
continue in life.
None of this means that we are any less or more valued in the judgment of God, Who judges us
based on our own, very unique capabilities. God measures us by ourselves, by our own
maximum possibilities and potential , not by those of anyone else -- that is, whether we
use our own, individual talents to the very fullest (recall the Parable of the Talents in the
Gospel of St. Matthew).
"All men are created equal" is a simply a rhetorical argument against the "divine right of
kings" used to revive an ancient, fascist, Roman-style Republic style government,
where men of equal political stature are bound together as a band of brothers into a "fasces"
to form a militia, necessary to a free state like Rome once had in its beginning. No king, no
standing army.
Which is why there are fascist symbols throughout the US government, including in the US
Senate. Watch CSPAN if you don't believe me. See those fasces?
And do study what the Founders said more. Like the author of the term "all men are created
equal." He wrote in the same document:
" the merciless Indian Savages " -- Declaration of Independence
Does that sound like he thought whites and Indians were equal? Nope.
He also wrote:
"Nor is it less certain that the two races, equally free, cannot live in the same
government. Nature, habit, opinion has drawn indelible lines of distinction between
them." (Thomas Jefferson, Autobiography)
Does that sound like he thought blacks and whites were equal? Nope.
So stop spouting false Leftist propaganda about what the term "all men are created equal"
means. All it does is make you sound extremely uninformed.
Yes, there is still an America, living and breathing, somewhat piled-on by Fake
Americans at the moment. Don't give up on the Comeback Kid . You do not want to be as
bitter and wrong as the defeatist Never Trumper" Cuckservatives. The Fake Americans will
have to go back. Just like the Fake Europeans are already going back. Viktor Orban
called Italy's decision to turn away rescue ship a "great moment." And the pendulum is just
beginning to swing. The trend is your friend. Why don't you jump on the team and come on in
for the big win?
Thank you for mentioning Jaffa. I had to look him up. Only Wikipedia so far but I found
something of interest that you might like to comment on. Mention is made of Lincoln rejecting
the Douglas arguments for states's rights on the ground that (majoritarian) democracy should
not be allowed to enslave anyone. Is it possible to say that America's original sin of
slavery ensured that there was an insoluble problem left behind by the original constitution
makers plus the extension of the franchise to all adult white males?
"..a careful analysis of the Declaration does not confirm the sense that Lincoln invests in
those few words. Contextually, the authors at Philadelphia were asserting their historic --
and equal -- rights as Englishmen before the Crown, which had, they believed, been violated
and usurped by the British government,.."
Thank you Mr Cathey. As a non American, I was always puzzled by the obvious falsehood of
the statement "all men created equal" -- particularly in a nation that still legalized
slavery -- and how it could still be repeated ad nauseaum. Interesting, how one victorious
man and one victorious teaching can have such profound consequences for the way people live
and think generations later.
'All men are created equal' is almost the opposite of that other common mistake, 'no pity
for the weak'. Yet both lead to oppressive regimes. A true anthropology will lead to
different healthy political systems. A twisted one, always to repressive institutions.
"All men are created equal" is a simply a rhetorical argument against the "divine right
of kings" used to revive an ancient, fascist, Roman-style Republic style government, where
men of equal political stature are bound together as a band of brothers into a "fasces" to
form a militia, necessary to a free state like Rome once had in its beginning. No king, no
standing army.
My take is a little different, but not incompatible with yours.
The Declaration's assertion is "that all men are created equal, that they are endowed by
their Creator with certain unalienable Rights "
So, to begin with, this is not a claim that all men are created equal in ability or
character. The Founders recognized that they were not, and that ordinary social and economic
inequalities, due to innate differences in ability or character, were natural, normal, and
inevitable. The Declaration is first and foremost a legal document. It claims equality of
rights – a legal claim, not a sociological, anthropological, or
psychological one. Moreover, the rights are unalienable – that is, they cannot
be alienated – sold, bartered, or given away – because someone entitled to them
shall have moved from old England to the New World.
The grievance of the colonists was that taxes – the stamp tax, the tea tax, etc.
– had been imposed upon them by the parliament at Westminster, an assembly in which
they were not represented. Hence the slogan, "no taxation without representation." It was a
principle based in the main non-religious issue of the English civil war (1642-1649). Charles
I had attempted to levy "ship money" by royal prerogative, without the consent of Parliament.
Unlike previous levies, which had been confined to coastal towns and were raised only in time
of war, he did so in peacetime and extended the tax to inland areas. This provoked strong
resistance; some local officials refused assistance to collection of the tax. The Petition of
Right, written by Sir Edward Coke, complained:
Your subjects have inherited this freedom, that they should not be compelled to
contribute to any tax, tallage, aid, or other like charge not set by common consent, in
parliament.
Extra-parliamentary taxation was effectively ended by the Long Parliament of 1640. After
the "Glorious Revolution" of 1689, it was formally prohibited by the English Bill of
Rights.
All of this history was much more familiar to the Founders in 1776 than it is to Americans
today. The point of the claim that "all men are created equal" was simply to argue that
Englishmen, under English law, were equally entitled to representation in any assembly that
levied taxes on them, whether they were resident in England or in its colonies.
The argument for levying taxes on the colonies was that they were needed to pay for the
defense of the colonies during what we call the French and Indian War, which was in fact just
the North American theatre of what in Europe is known as the Seven Years' War. That they may
have been needed for this purpose was not in dispute. Englishmen in England were taxed to pay
for the Seven Years' War, but they were represented in the Parliament that levied the tax.
Americans were not. From their point of view the taxes levied on them were as objectionable
as ship money had been to the people of England in the time of Charles I.
The Declaration is therefore a sort of American version of the Petition of Right.
Jefferson was an admirer of Coke and undoubtedly saw the parallel. His high-flown language
about equality was meant to make the case against George III on behalf of English subjects in
North America in the same way that Coke's Petition of Right made the case against Charles I
on behalf of English subjects in England. The colonists' objection was that English subjects,
wheresoever domiciled within English jurisdiction, should have equal rights under English
law.
Jefferson never intended to proclaim the equality of negro slaves or "Indian savages" with
free whites. Jefferson's observations in his Notes on the State of Virginia make quite
clear that he did not believe them to be equals with whites in ability or character. The
Indians he regards as primitives, having some admirable and some frightful qualities, but
above all, as formidable enemies. He despairs of the intelligence of blacks; he faults black
slavery because it brings out lamentable tendencies of laziness and petty tyranny among
whites. These remarks are striking for their candor and have the ring of truth even
today.
I appreciate Mr. Cathey's work here. On Tuesday the 3rd, one of the many overemployed
sycophants in the executive ranks of the corporation which employs me deemed it necessary to
bulk-email all of us peons with the message of how vital diversity and inclusion are
to proper celebration of the 4th. Right -- because reserving mid-January through February for
the blacks, March for women or Hispanics (I forget which), and June for the tutti-fruttis
isn't nearly enough
"... The implications for today are almost painfully straightforward: the current combination of deficit spending and tax cuts spells disaster for any hopes of shrinking America's striking inequality gap . Instead, credit-card war spending is already fueling the dramatic levels of wealth inequality that have led some observers to suggest that we are living in a new Gilded Age , reminiscent of the enormous divide between the opulent lifestyles of the elite and the grinding poverty of the majority of Americans in the late nineteenth century. ..."
"... Today's wars are paid for almost entirely through loans -- 60% from wealthy individuals and governmental agencies like the Federal Reserve, 40% from foreign lenders. Meanwhile, in October 2001, when Washington launched the war on terror, the government also initiated a set of tax cuts, a trend that has only continued. The war-financing strategies that President George W. Bush began have flowed on without significant alteration under Presidents Obama and Trump. (Obama did raise a few taxes, but didn't fundamentally alter the swing towards tax cuts.) President Trump's extreme tax "reform" package, which passed Congress in December 2017 -- a gift-wrapped dream for the 1% -- only enlarged those cuts. ..."
"... However little the public may realize it, Americans are already feeling the costs of their post-9/11 wars. Those have, after all, massively increased the Pentagon's base budget and the moneys that go into the expanding national security budget , while reducing the amount of money left over for so much else from infrastructure investment to science. In the decade following September 11, 2001, military spending increased by 50% , while spending on every other government program increased only 13.5%. ..."
Credit-Card Wars
Today's War-Financing Strategies Will Only Increase Inequality
By Stephanie
Savell
In the name of the fight against terrorism, the United States is currently waging "
credit-card wars " in Afghanistan, Iraq, Syria, and elsewhere. Never before has this
country relied so heavily on deficit spending to pay for its conflicts. The consequences are
expected to be ruinous for the long-term fiscal health of the U.S., but they go far beyond the
economic. Massive levels of war-related debt will have lasting repercussions of all sorts. One
potentially devastating effect, a
new study finds, will be more societal inequality.
In other words, the staggering costs of the longest war in American history -- almost 17
years running, since the invasion of Afghanistan in October 2001 -- are being deferred to the
future. In the process, the government is contributing to this country's skyrocketing income
inequality.
Since 9/11, the U.S. has spent
$5.6 trillion on its war on terror, according to the Costs of War Project, which I co-direct, at Brown
University's Watson Institute for
International and Public Affairs . This is a far higher number than the Pentagon's
$1.5 trillion estimate,
which only counts expenses for what are known as "overseas contingency operations," or OCO --
that is, a pot of supplemental money, outside the regular annual budget, dedicated to funding
wartime operations. The $5.6 trillion figure, on the other hand, includes not just what the
U.S. has spent on overseas military operations in Iraq, Afghanistan, Pakistan, and Syria, but
also portions of Homeland Security spending related to counterterrorism on American soil, and
future obligations to care for wounded or traumatized post-9/11 military veterans. The
financial burden of the post-9/11 wars across the Greater Middle East -- and still
spreading , through Africa and other regions -- is far larger than most Americans
recognize.
During prior wars, the U.S. adjusted its budget accordingly by, among other options, raising
taxes to pay for its conflicts. Not so since 2001, when President George W. Bush launched the
"Global War on Terror." Instead, the country has accumulated a staggering amount of debt. Even
if Washington stopped spending on its wars tomorrow, it will still, thanks to those conflicts,
owe more than
$8 trillion in interest alone by the 2050s.
Putting the Gilded Age to Shame
It's hard to fathom what that enormous level of debt will do to our economy and society. A
new Costs of War study by political scientist and historian Rosella Capella Zielinski
offers initial clues about its impact here. She takes a look at how the U.S. has paid for its
conflicts from the War of 1812 through the two World Wars and Vietnam to the present war on
terror. While a range of taxes, bond sales, and other mechanisms were used to raise funds to
fight such conflicts, no financial strategy has relied so exclusively on borrowing -- until
this century. Her study also explores how each type of war financing has affected inequality
levels in this country in the aftermath of those conflicts.
The implications for today are almost painfully straightforward: the current combination
of deficit spending and tax cuts spells disaster for any hopes of shrinking America's striking
inequality gap . Instead, credit-card war spending is already fueling the dramatic levels
of wealth inequality that have led some observers to suggest that we are living in a new
Gilded Age , reminiscent
of the enormous divide between the opulent lifestyles of the elite and the grinding poverty of
the majority of Americans in the late nineteenth century.
Capella Zielinski carefully breaks down what effects the methods used to pay for various
wars have had on subsequent levels of social inequality. During the Civil War, for example, the
government relied primarily on loans from private donors. After that war was over, the American
people had to pay those loans back with interest, which proved a bonanza for financial elites,
primarily in the North. Those wealthy lenders became wealthier still and everyone else, whose
taxes reimbursed them, poorer.
In contrast, during World War I, the government launched a war-bond campaign that targeted
low-income people. War savings stamps were offered for as little as 25 cents and war savings
certificates in denominations starting at $25. Anyone who could make a small down payment could
buy a war bond for $50 and cover the rest of what was owed in installments. In this way, the
war effort promoted savings and, in its wake, a striking number of low-income Americans were
repaid with interest, decreasing the inequality levels of that era.
Taxation strategies have varied quite significantly in various war periods as well. During
World War II, for instance, the government raised tax rates five times between 1940 and 1944,
levying progressively steeper ones on higher income brackets (up to 65% on incomes over $1
million). As a result, though government debt was substantial in the aftermath of a global
struggle fought on many fronts, the impact on low-income Americans could have been far worse.
In contrast, the Vietnam War era began with a tax cut and, in the aftermath of that disastrous
conflict, the U.S. had to deal with unprecedented levels of inflation. Low-income households
bore the brunt of those higher costs, leading to greater inequality.
Today's wars are paid for almost entirely through loans -- 60% from wealthy individuals
and governmental agencies like the Federal Reserve, 40% from foreign lenders. Meanwhile, in
October 2001, when Washington launched the war on terror, the government also initiated a set
of tax cuts, a trend that has only continued. The war-financing strategies that President
George W. Bush began have flowed on without significant alteration under Presidents Obama and
Trump. (Obama did raise a few taxes, but didn't fundamentally
alter the swing towards tax cuts.) President Trump's extreme tax "reform" package, which
passed Congress in December 2017 -- a gift-wrapped dream
for the 1% -- only enlarged those cuts.
In other words, in this century, Washington has combined the domestic borrowing patterns of
the Civil War with the tax cuts of the Vietnam era. That means one predictable thing: a rise in
inequality in a country in which the income inequality gap is already heading
for record territory.
Just to add to the future burden of it all, this is the first time government wartime
borrowing has relied so heavily on foreign debt. Though there is no way of knowing how this
will affect inequality here in the long run, one thing is already obvious: it will transfer
wealth outside the country.
Economist
Linda Bilmes has
argued that there's another new factor involved in Washington's budgeting of today's wars.
In every other major American conflict, after an initial period, war expenditures were
incorporated into the regular defense budget. Since 2001, however, the war on terror has been
funded mainly by supplemental appropriations (those Overseas
Contingency Operations funds), subject to very little oversight. Think of the OCO as a
slush fund
that insures one thing: the true impact of this era's war funding won't hit until far later
since such appropriations are exempt from spending caps and don't have to be
offset elsewhere in the budget.
According to Bilmes, "This process is less transparent, less accountable, and has rendered
the cost of the wars far less visible." As a measure of the invisible impact of war funding in
Washington and elsewhere, she
calculates that, while the Senate Appropriations Subcommittee on Defense discussed war
financing in 79% of its hearings during the Vietnam era, since 9/11, there have been similar
mentions at only 17% of such hearings. For its part, the Senate Finance Committee has discussed
war-funding strategy in a thoroughgoing way only once in almost 17 years.
Hidden Tradeoffs and Deferred Costs
The effect of this century's unprecedented budgetary measures is that, for the most part,
the American people don't feel the financial weight of the wars their government is waging --
or rather, they feel it, but don't recognize it for what it is. This corresponds remarkably
well with the wars themselves, fought by a non-draft
military in distant lands and largely
ignored in this country (at least since the vast public demonstrations against the coming
invasion of Iraq ended in the spring of 2003). The
blowback from those wars, the way they are coming home, has also been ignored, financially
and otherwise.
However little the public may realize it, Americans are already feeling the costs of
their post-9/11 wars. Those have, after all, massively increased the Pentagon's base budget and
the moneys that go into the expanding
national security budget , while reducing the amount of money left over for so much else
from infrastructure
investment to science. In the decade following September 11, 2001, military spending
increased by
50% , while spending on every other government program increased only 13.5%.
How exactly does this trade-off work? The National
Priorities Project explains it well. Every year the federal government negotiates levels of
discretionary spending (as distinct from mandatory spending, which largely consists of Social
Security and Medicare). In 2001, there were fewer
discretionary funds allocated to defense than to non-defense programs, but the ensuing war on
terror dramatically inflated military spending relative to other parts of the budget. In 2017,
military and national security spending accounted for 53% of discretionary spending. The 2018
congressionally approved omnibus spending package allocates $700 billion for the military and
$591 billion for non-military purposes, leaving that proportion about the same. (Keep in mind,
that those totals don't even include all the money flowing into that Overseas Contingency
Operations fund). President Trump's proposals for future spending, if accepted by Congress,
would ensure that, by 2023, the proportion of military spending would soar to
65% .
In other words, the rise in war-related military expenditures entails losses for other areas
of federal funding. Pick your issue: crumbling bridges, racial justice, housing, healthcare,
education, climate change -- and it's all being affected by how much this country spends on
war.
Nonetheless, thanks to its credit-card version of war financing, the government has
effectively deferred most of the financial costs of its unending conflicts to the future. This,
in turn, contributes to how
detached most Americans tend to feel from the very fact that their country is now eternally
at war. Political scientist and policy analyst Sarah Kreps argues that Americans become
invested in how a war is being conducted only when they're asked to pay for it. In her
examination of the history of the financing of American wars, she
writes , "The visibility and intrusiveness of taxes are exactly what make individuals
scrutinize the service for which the resources are being used." If there were war taxes today,
their unpopularity would undoubtedly lead Americans to question the costs and consequences of
their country's wars in ways now missing from today's public conversation.
Pressing for a real war budget, though, is not only a mechanism to alert Americans to the
effects (on them) of the wars their government is fighting. It is also a potential lever
through which citizens could affect the country's foreign policy and pressure elected
officials to bring those wars to an end. Some civic groups and activists from across the
political spectrum have indeed been pushing to reduce the Pentagon budget, bloated by war,
corruption , and
fear-mongering . They are, however, up against both the power of an ascendant
military-industrial complex and wars that have been organized, in their funding and in so many
other ways, not to be noticed.
Those who care about this country's economic future would be remiss not to include today's
war financing strategy among the country's most urgent fiscal challenges. Anyone interested in
improving American democracy and the well-being of its people should begin by connecting the
budgetary dots. The more money this country spends on military activities, the more public
coffers will be depleted by war-related interest payments and the less public funding there
will be for anything else. In short, it's time for Americans worried about living in a country
whose inequality gap could soon surpass that of the Gilded Age to begin paying real attention
to our " credit-card
wars ."
"... In 2015, suicides accounted for over 60 percent of gun deaths in the U.S., while homicides made up around 36 percent of that year's total. Guns are consistently the most common method by which people take their own lives. ..."
"... When veterans return home from chaotic war zones, resuming normal civilian life can present major difficulties. The stresses of wartime create a long-term, sustained "fight-or-flight" response, not only producing physical symptoms such as sweating, shaking or a racing heart rate, but inflicting a mental and moral toll as well. ..."
"... "Over the course of the year I was there, the units I was embedded with lost three men, and all of them were lost to suicide, not to enemy action," Van Buren said. "This left an extraordinary impression on me, and triggered in me some of the things that I write about." ..."
"... If you enjoyed this original article please consider making a donation to Consortium News so we can bring you more stories like this one. ..."
At War With Ourselves: The Domestic Consequences of Foreign Policies June 25, 2018 •
72 Comments
There is a direct connection between gun violence and suicide rates in the United States and America's aggressive foreign policy,
argues Will Porter.
How America's Gun Violence Epidemic May Have Roots in Overseas War Zones
By Will Porter Special to Consortium News
In recent months a string of school shootings in the United States has rekindled the debate
over gun violence, its causes and what can be done to stop it. But amid endless talk of school shootings and AR-15s, a large piece
of the puzzle has been left conspicuously absent from the debate.
Contrary to the notion that mass murderers are at the heart of America's gun violence problem, data from recent years reveals
that the majority of gun deaths are self-inflicted.
In 2015, suicides accounted for
over 60 percent of gun deaths
in the U.S., while homicides made up around 36 percent of that year's total. Guns are consistently the
most common method by which people take their own
lives.
While the causes of America's suicide-driven gun epidemic are complex and myriad, it's clear that one group contributes to the
statistics above all others: military veterans.
Beyond the Physical
According to a
2016 study conducted by the Department of Veterans Affairs, on average some 20 veterans commit suicide every single day, making
them among the most prone to take their own lives compared to people working in other professions. Though they comprise under 9 percent
of the American population, veterans
accounted for 18 percent of suicides in the U.S. in 2014.
When veterans return home from chaotic war zones, resuming normal civilian life can present major difficulties. The stresses of
wartime create a long-term, sustained "fight-or-flight" response, not only producing physical symptoms such as sweating, shaking
or a racing heart rate, but inflicting a mental and moral toll as well.
Post-Traumatic Stress Disorder (PTSD) accounts for some of the physiological effects of trauma, the "fight-or-flight" response,
but the distinct mental, moral and spiritual anguish experienced by many veterans and other victims of trauma has been termed "
moral injury ."
A better understanding of that concept and the self-harm it motivates could go a long way toward explaining, and ultimately solving,
America's suicide epidemic.
"Moral injury looks beyond the physical and asks who we are as people," Peter Van Buren, a former State Department Foreign Service
officer, said in an interview. "It says that we know right from wrong, and that when we violate right and wrong, we injure ourselves.
We leave a scar on ourselves, the same as if we poked ourselves with a knife."
While not a veteran himself, during his tenure with the Foreign Service Van Buren served for one year alongside American soldiers
at a forward operating base in Iraq. His experiences there would stick with him for life.
"Over the course of the year I was there, the units I was embedded with lost three men, and all of them were lost to suicide,
not to enemy action," Van Buren said. "This left an extraordinary impression on me, and triggered in me some of the things that I
write about."
Van Buren: A profound sense of guilt.
After retiring from the Foreign Service, Van Buren began research for his novel "
Hooper's War ," a fictional account set in WWII Japan. The book centers on American
veteran, Nate Hooper, and explores the psychological costs paid by those who survive a war. Van Buren said if he set the book in
the past, he thought he could better explore the subject matter without the baggage of current-day politics.
In his research, Van Buren interviewed Japanese civilians who were children at the time of the conflict and found surprising parallels
with the soldiers he served with in Iraq. Post-war guilt, he found, does not only afflict the combatants who fight and carry out
grisly acts of violence, but civilians caught in the crossfire as well.
For many, merely living through a conflict when others did not is cause for significant distress, a condition known as "survivor's
guilt."
"In talking with them I heard so many echoes of what I'd heard from the soldiers in Iraq, and so many echoes of what I felt myself,
this profound sense of guilt," Van Buren said.
'We Killed Them'
Whether it was something a soldier did, saw or failed to prevent, feelings of guilt can leave a permanent mark on veterans after
they come home.
Brian Ellison, a combat veteran who served under the National Guard in Iraq in 2004, said he's still troubled by his wartime experiences.
Stationed at a small, under protected maintenance garage in the town of ad-Diwaniyah in a southeastern province of Iraq, Ellison
said his unit was attacked on a daily basis.
"From the day we got there, we would get attacked every night like clockwork -- mortars, RPGs," Ellison said. "We had no protection;
we had no weapons systems on the base."
On one night in April of 2004, after a successful mission to obtain ammunition for the base's few heavy weapons, Ellison's unit
was ready to hit back.
"So we got some rounds for the Mark 19 [a belt-fed automatic grenade launcher] and we basically used it as field artillery, shot
it up in the air and lobbed it in," Ellison said. "Finally on the last night we were able to get them to stop shooting, but that
was because we killed 5 of them. At the time this was something I was proud of. We were like 'We got them, we got our revenge.'"
U.S. military poster. (Health.mil)
"In retrospect, it's like here's this foreign army, and we're in their neighborhood," Ellison said. "They're defending their neighborhood,
but they're the bad guys and we're the good guys, and we killed them. I think about stuff like that a lot."
Despite his guilt, Ellison said he was able to sort through the negative feelings by speaking openly and honestly about his experiences
and actions. Some veterans have a harder time, however, including one of Ellison's closest friends.
"He ended up going overseas like five times," Ellison said. "Now he's retired and he can't even deal with people. He can't
deal with people, it's sad. He was this funny guy, everybody's friend, easy to get along with, now he's a recluse. It's really weird
to see somebody like that. He had three young kids and a happy personality, now he's broken."
In addition to the problems created in their personal relationships, the morally injured also often turn to self-destructive habits
to cope with their despair.
"In the process of trying to shut this sound off in your head -- this voice of conscience -- many people turn to drugs and alcohol
as a way of shutting that voice up, at least temporarily," Van Buren said. "You hope at some point it shuts up permanently . . .
Unfortunately, I think that many people do look for the permanent silence of suicide as a way of escaping these feelings."
A Hero's Welcome?
By now most are familiar with the practice of celebrating veterans as heroes upon their return from war, but few realize what
psychological consequences such apparently benevolent gestures can have.
"I think the healthiest thing a vet can do is to come to terms with reality," Ellison said. "It's so easy to get swept up -- when
we came home off the plane, there was a crowd of people cheering for us. I just remember feeling dirty. I felt like 'I don't want
you to cheer for us,' but at the same time it's comforting. It's a weird dynamic. Like, I could just put this horror out of my mind
and pretend we were heroes."
"But the terrible part is that, behind that there's reality," Ellison said. "Behind that, we know what we were doing; we know
that we weren't fighting for freedom. So when somebody clings onto this 'we were heroes' thing, I think that's bad for them. They
have to be struggling with it internally. I really believe that's one of the biggest things that contributes to people committing
suicide. They're not able to talk about it, not able to bring it to the forefront and come to terms with it."
Unclear Solution
According to the 2016 VA study, 70 percent of veterans who commit suicide are not regular users of VA services.
The Department of Veteran Affairs was set up in 1930 to handle medical care, benefits and burials for veterans, but some 87 years
later, the department is plagued by scandal and mismanagement. Long wait times,
common to
many government-managed
healthcare systems, discourage veterans from seeking the department's assistance, especially those with urgent psychiatric needs.
An independent review was carried out in 2014 by the VA's Inspector General, Richard Griffin, which
found that at one Arizona VA facility, 1,700 veterans were on wait lists, waiting an average of 115 days before getting an initial
appointment.
"People don't generally seek medical help because the [VA] system is so inefficient and ineffective; everyone feels like it's
a waste of time," said a retired senior non-commissioned officer in the Special Operations Forces (SOF) who wished to remain anonymous.
"The system is so bad, even within the SOF world where I work, that I avoid going at all costs," the retired officer said. "I
try to get my guys to civilian hospitals so that they can get quality healthcare instead of military healthcare."
Beyond institutions, however, both Ellison and Van Buren agreed that speaking openly about their experiences has been a major
step on their road back to normalcy. Open dialogue, then, is not only one way for veterans and other victims of trauma to heal, it
may ultimately be the key to solving America's epidemic of gun violence.
The factors contributing to mass murders, school shootings and private crime are, no doubt, important to study, but so long as
suicide is left out of the public discourse on guns, genuine solutions may always be just out of reach.
Will Porter is a journalist who specializes in U.S. foreign policy and Middle East affairs. He writes for the Libertarian
Institute and tweets at @WKPancap.
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"... Perhaps, Lin, by voluntarily entering an establishment in order to alter one's consciousness- whether in Vietnam or America- you are signaling your surrender and defeat in the war on the "true nature of reality." ..."
I would agree that the America of the neighborhood tavern is dying but would not characterize
our political leadership as a 'rootless, criminal cabal. Criminal they maybe but they are
rooted in the Ivy League, principally Yale and Harvard, and the ideology to gain admission to
those schools. I would say skills to gain entrance but, today, it is more a matter of
ideology. Stray too far from the Clinton/Bush crony capitalist model or Obama's identity
politics and your application goes into the garbage can and with it your chance of joining
our governing elite.
Indeed. I would say this from a slightly different angle: forget about the details of
politics: constitutional monarchy, parliamentary democracy, a republic, democratic socialism,
even marxism, checks and balances, an independent judiciary, an independent central bank, a
written constitution all of these can be made to work, more or less, if the elites care about
the nation as whole. And none of these will matter if the elites no longer care, if they
value their own short-term profit over the long-term stability and strength of their nation.
Back under FDR etc., the elites of this nation were worried about communists, and
anarchists, and then Nazis. That made them care about this nation, they feared that if the
nation went down they would go down as well. So they cared about the working class. I am old
enough to remember when we used to celebrate that we had the highest wages in the world
– that was considered a magnificent joint accomplishment and proof of the greatness of
this nation. Now high American wages are routinely derided as evil, as proof that Americans
are selfish and lazy and they need to be replaced by all those wonderful third-world refugees
who have no alternative but to work for sub-poverty wages
I think the core of this rot is that the elites are no longer afraid. They no longer have
reason to care. They live in gated estates, they fly from private airports (even first class
in a public airport is not good enough/removed enough from the masses for them!), and if
things fall apart they will just sail away in their yachts, tut-tutting about how Americans
no longer deserve their presence
Perhaps, Lin, by voluntarily entering an establishment in order to alter one's
consciousness- whether in Vietnam or America- you are signaling your surrender and defeat in
the war on the "true nature of reality."
The alcohol delusion amplifies greed hatred bondage.
And is anathema to wholesome higher insights.
Whether alcohol or heroin these self- ingrained defilements are an obstruction to the
complete repose to the human spirit.
Exactly. America's leaders behave criminally because they're not scared of the population.
So there's nothing to constrain our leaders from behaving like grifters and conmen.
At some point, however, this will come to an end. Our massively skyrocketing national debt
is totally unpayable, so investors will eventually stop buying our bonds. When that happens,
our national economy and standard of living will collapse dramatically.
It's at that point when our leaders are either put in jail or flee the country.
So is capital, when the dollar will have only limited reserve currency status to the rest
of the world, the American locals will be proportionately ruled by Russian oligarchs and
Chinese priviledge.
American locals are just bulk humanity to these supranationals, they are defined by global
consumerism of the same crap the elites despise. They sweat corn syrup and palm oil and seem
to look "Pinker Steve" happy when digitally masturbating and being chemically subdued,
encased in concrete scenarios.
Now after consumerism, since it is offset by limited resources of our planet, it will be
real misery, as in plowing concrete. That must be mostly indifferent to our supranationals.
Bulk humanity is basically obsolete, and extra-ordinary lucky. If it were for the
supranational nuclei to have a long term policy, we the deplorables would be wiped away, say
three quarters of us.
They are though eagerly observing, if we not, as always, will do it ourselves to us. The
problem would die on itself. The ethnic White middle class down to the street is pointing the
way.
Nonetheless, you might have noticed that happy days aren't exactly here again. The real U.S.
unemployment figure -- all who are counted as unemployed in the "official" rate, plus
discouraged workers, the total of those employed part-time but not able to secure full-time
work and all persons marginally attached to the labor force (those who wish to work but have
given up) -- is 7.6
percent . (This is the "U-6" rate.) That total, too, is less than half of its 2010 peak and
is the lowest in several years. But this still doesn't mean the number of people actually
working is increasing.
Fewer people at work and they are making less
A better indication of how many people have found work is the "civilian labor force
participation rate." By this measure, which includes all people age 16 or older who are not in
prison or a mental institution, only 62.7 percent of the potential U.S. workforce
was actually in the workforce in May, and that was slightly lower than the previous month. This
is just about equal to the lowest this statistic has been since the
breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3
percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor
participation was lower. This number was consistently lower in the 1950s and 1960s, but in
those days one income was sufficient to support a family. Now everybody works and still can't
make ends meet.
And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the
percentage of the U.S. gross domestic product going to wages has fallen to 43 percent , according to research by
the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past
five years has been the
lowest it has been since 1929 , according to a New York Times report. And within
the inequality of wages that don't keep up with inflation or productivity gains, the worse-off
are doing worse.
The Economic Policy Institute
noted , "From 2000 to 2017, wage growth was strongest for the highest-wage workers,
continuing the trend in rising wage inequality over the last four decades." The strongest wage
growth was for those in the top 10 percent of earnings, which skewed the results sufficiently
that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may
have been low, but it wasn't as low as that -- the typical U.S. worker thus suffered a de facto
wage decrease last year.
What this sobering news tells us is that good-paying jobs are hard to come by. An EPI
researcher, Elise Gould,
wrote :
"Slow wage growth tells us that employers continue to hold the cards, and don't have to
offer higher wages to attract workers. In other words, workers have very little leverage to
bid up their wages. Slow wage growth is evidence that employers and workers both know there
are still workers waiting in the wings ready to take a job, even if they aren't actively
looking for one."
The true unemployment rates in Canada and Europe
We find similar patterns elsewhere. In Canada, the official unemployment rate held at
5.8 percent in
April , the lowest it has been since 1976, although there was a slight decrease in the
number of people working in March, mainly due to job losses in wholesale and retail trade and
construction. What is the actual unemployment rate? According to Statistics Canada's R8
figure , it is 8.6 percent. The R8 counts count people in part-time work, including those
wanting full-time work, as "full-time equivalents," thus underestimating the number of
under-employed.
At the end of 2012, the R8 figure was 9.4
percent , but an analysis published by The Globe and Mail analyzing unemployment
estimated the
true unemployment rate for that year to be 14.2 percent. If the current statistical
miscalculation is proportionate, then the true Canadian unemployment rate currently must be
north of 13 percent. "[T]he narrow scope of the Canadian measure significantly understates
labour underutilization," the Globe and Mail analysis conclude.
Similar to its southern neighbor, Canada's labor force participation
rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7
percent in 2003.
The most recent official unemployment figure in Britain 4.2 percent. The true figure is
rather higher. How much higher is difficult to determine, but a
September 2012 report by Sheffield Hallam University found that the total number of
unemployed in Britain was more than 3.4 million in April of that year although the Labour Force
Survey, from which official unemployment statistics are derived, reported only 2.5 million. So
if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is
about 5.7 percent.
The European Union reported an official unemployment rate of 7.1
percent (with Greece having the highest total at 20.8 percent). The EU's Eurostat service
doesn't provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately
provide totals for under-employed part-time workers and "potential additional labour
force"; adding these two would effectively double the true EU rate of unemployed and so the
actual figure must be about 14 percent.
Australia's official seasonally adjusted unemployment rate is 5.6 percent , according to the
country's Bureau of Statistics. The statistic that would provide a more realistic measure, the
"extended labour force under-utilisation" figure, seems to be well hidden. The most recent
figure that could be found was for February 2017, when the rate was given as 15.4 percent. As
the "official" unemployment rate at the time was 5.8 percent, it is reasonable to conclude that
the real Australian unemployment rate is currently above 15 percent.
Mirroring the pattern in North America, global employment is on the decline. The
International Labour Organization estimated the world labor force participation rate
as 61.9 percent for 2017, a steady decline from the 65.7 percent estimated for 1990.
Stagnant wages despite productivity growth around the world
Concomitant with the high numbers of people worldwide who don't have proper employment is
the stagnation of wages. Across North America and Europe, productivity is rising much faster
than wages. A 2017 study found that across those regions median real wage growth since the
mid-1980s has not kept
pace with labor productivity growth.
Not surprisingly, the United States had the largest gap between wages and productivity.
Germany was second in this category, perhaps not surprising, either, because German workers
have suffered a
long period of wage cuts (adjusted for inflation) since the Social Democratic Party
codified austerity by instituting Gerhard Schröder's "Agenda 2010" legislation. Despite
this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of
economic weakness is due to wages not
falling enough . Yes, the Fed believes your wages are too high.
The lag of wages as compared to rising productivity is an ongoing global phenomenon. A
separate statistical analysis from earlier this decade also
demonstrated this pattern for working people in Canada, the United States, Britain, France,
Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of
dollars less per week than they would if wages had kept up with productivity gains.
In an era of runaway corporate globalization, there is ever more precarity. On a global
scale, having regular employment is actually unusual. Using International Labour Organization
figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the
"global reserve army of labor" -- workers who are underemployed, unemployed or "vulnerably
employed" (including informal workers) -- totals 2.4 billion. In contrast, the world's wage
workers total 1.4 billion. Writing in their book The Endless Crisis: How
Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China , they
write:
"It is the existence of a reserve army that in its maximum extent is more than 70 percent
larger than the active labor army that serves to restrain wages globally, and particularly in
poorer countries. Indeed, most of this reserve army is located in the underdeveloped
countries of the world, though its growth can be seen today in the rich countries as well."
[page 145]
Having conquered virtually every corner of the globe and with nowhere left to expand into
nor new markets to take, capitalists will continue to cut costs -- in the first place, wages
and benefits -- in their ceaseless scrambles to sustain their accustomed profits. There is no
reform that can permanently alter this relentless internal logic of capitalism. Although she
was premature, Rosa Luxemburg's forecast of socialism or barbarism draws nearer.
"... You arrive at the Supercuts fresh from your stroll, but the nice lady who cuts your hair is looking stressed. You'll discover that she commutes an hour through jammed highways to work. The gas guy does, too, and the tile guy comes in from another state. None of them can afford to live around here. The rent is too damn high. ..."
From my Brookline home, it's a pleasant, 10-minute walk to get a haircut. Along the way, you
pass immense elm trees and brochure-ready homes beaming in their reclaimed Victorian glory.
Apart from a landscaper or two, you are unlikely to spot a human being in this wilderness of
oversize closets, wood-paneled living rooms, and Sub-Zero refrigerators.
If you do run into a
neighbor, you might have a conversation like this: "Our kitchen remodel went way over budget.
We had to fight just to get the tile guy to show up!" "I know! We ate Thai takeout for a month
because the gas guy's car kept breaking down!"
You arrive at the Supercuts fresh from your
stroll, but the nice lady who cuts your hair is looking stressed. You'll discover that she
commutes an hour through jammed highways to work. The gas guy does, too, and the tile guy comes
in from another state. None of them can afford to live around here. The rent is too damn
high.
From 1980 to 2016, home values in
Boston multiplied 7.6 times. When you take account of inflation, they generated a return of 157
percent to their owners. San Francisco returned 162 percent in real terms over the same period;
New York, 115 percent; and Los Angeles, 114 percent. If you happen to live in a neighborhood
like mine, you are surrounded by people who consider themselves to be real-estate geniuses.
(That's one reason we can afford to make so many mistakes in the home-renovation department.)
If you live in St. Louis (3 percent) or Detroit (minus 16 percent), on the other hand, you
weren't so smart. In 1980, a house in St. Louis would trade for a decent studio apartment in
Manhattan.
Today that house will buy an 80-square-foot bathroom in the Big Apple.
The returns on (the right kind of) real estate have been so extraordinary that, according to
some economists, real estate alone may account for essentially all of the increase in wealth
concentration over the past half century. It's not surprising that the values are up in the
major cities: These are the gold mines of our new economy. Yet there is a paradox. The rent is
so high that people -- notably people in the middle class -- are leaving town rather than
working the mines. From 2000 to 2009, the San Francisco Bay Area had some of the highest
salaries in the nation, and yet it lost 350,000 residents to lower-paying regions.
Across the
United States, the journalist and economist Ryan Avent writes in
The Gated City , "the best opportunities are found in one place, and for some reason
most Americans are opting to live in another."
It is well known by now that the immediate cause of the insanity is the unimaginable
pettiness of backyard politics. Local zoning regulation imposes excessive restrictions on
housing development and drives up prices. What is less well understood is how central the
process of depopulating the economic core of the nation is to the intertwined stories of rising
inequality and falling social mobility.
Real-estate inflation has brought with it a commensurate increase in economic segregation.
Every hill and dale in the land now has an imaginary gate, and it tells you up front exactly
how much money you need to stay there overnight. Educational segregation has accelerated even
more. In my suburb of Boston, 53 percent of adults have a graduate degree. In the suburb just
south, that figure is 9 percent.
This economic and educational sorting of neighborhoods is often represented as a matter of
personal preference, as in red people like to hang with red, and blue with blue. In reality,
it's about the consolidation of wealth in all its forms, starting, of course, with money.
Gilded zip codes are located next to giant cash machines: a too-big-to-fail bank, a friendly
tech monopoly, and so on. Local governments, which collected a record $523 billion in property
taxes in 2016, make sure that much of the money stays close to home.
But proximity to economic power isn't just a means of hoarding the pennies; it's a force of
natural selection. Gilded zip codes deliver higher life expectancy, more-useful social
networks, and lower crime rates. Lengthy commutes, by contrast, cause obesity, neck pain,
stress, insomnia, loneliness, and divorce, as Annie Lowrey reported in Slate . One study
found that a commute of 45 minutes or longer by one spouse
increased the chance of divorce by 40 percent .
Nowhere are the mechanics of the growing geographic divide more evident than in the system
of primary and secondary education. Public schools were born amid hopes of opportunity for all;
the best of them have now been effectively reprivatized to better serve the upper classes.
According to a widely used school-ranking service, out of more than 5,000 public elementary
schools in California, the top 11 are located in Palo Alto. They're free and open to the
public. All you have to do is move into a town where the median home value is $3,211,100.
Scarsdale, New York, looks like a steal in comparison: The public high schools in that area
funnel dozens of graduates to Ivy League colleges every year, and yet the median home value is
a mere $1,403,600.
Racial segregation has declined with the rise of economic segregation. We in the 9.9 percent
are proud of that. What better proof that we care only about merit? But we don't really want
too much proof. Beyond a certain threshold -- 5 percent minority or 20 percent, it varies
according to the mood of the region -- neighborhoods suddenly go completely black or brown. It
is disturbing, but perhaps not surprising, to find that social mobility is lower in regions
with high levels of racial segregation. The fascinating revelation in the data, however, is
that the damage isn't limited to the obvious victims. According to Raj Chetty's research
team , "There is evidence that higher racial segregation is associated with lower social
mobility for white people." The relationship doesn't hold in every zone of the country, to be
sure, and is undoubtedly the statistical reflection of a more complex set of social mechanisms.
But it points to a truth that America's 19th-century slaveholders understood very well:
Dividing by color remains an effective way to keep all colors of the 90 percent in their
place.
With localized wealth comes localized political power, and not just of the kind that shows
up in voting booths. Which brings us back to the depopulation paradox. Given the social and
cultural capital that flows through wealthy neighborhoods, is it any wonder that we can defend
our turf in the zoning wars? We have lots of ways to make that sound public-spirited. It's all
about saving the local environment, preserving the historic character of the neighborhood, and
avoiding overcrowding. In reality, it's about hoarding power and opportunity inside the walls
of our own castles. This is what aristocracies do.
Zip code is who we are. It defines our style, announces our values, establishes our status,
preserves our wealth, and allows us to pass it along to our children. It's also slowly
strangling our economy and killing our democracy. It is the brick-and-mortar version of the
Gatsby Curve. The traditional story of economic growth in America has been one of arriving,
building, inviting friends, and building some more. The story we're writing looks more like one
of slamming doors shut behind us and slowly suffocating under a mass of commercial-grade
kitchen appliances.
7. Our Blind Spot
In my family, Aunt Sarah was the true believer. According to her version of reality, the
family name was handed down straight from the ancient kings of Scotland.
Great-great-something-grandfather William Stewart, a soldier in the Continental Army, was
seated at the right hand of George Washington. And Sarah herself was somehow descended from
"Pocahontas's sister." The stories never made much sense. But that didn't stop Sarah from
believing in them. My family had to be special for a reason.
The 9.9 percent are different. We don't delude ourselves about the ancient sources of our
privilege. That's because, unlike Aunt Sarah and her imaginary princesses, we've convinced
ourselves that we don't have any privilege at all.
Consider the reception that at least some members of our tribe have offered to those who
have foolishly dared to draw attention to our advantages. Last year, when the Brookings
Institution researcher Richard V. Reeves, following up on his book Dream Hoarders ,
told
the readers of The New York Times to "Stop Pretending You're Not Rich," many of
those readers accused him of engaging in "class warfare," of writing "a meaningless article,"
and of being "rife with guilt."
In her incisive portrait of my people, Uneasy Street , the sociologist Rachel Sherman
documents the syndrome. A number among us, when reminded of our privilege, respond with a
counternarrative that generally goes like this: I was born in the street. I earned
everything all by myself. I barely get by on my $250,000 salary. You should see the other
parents at our kids' private school.
In part what we have here is a listening problem. Americans have trouble telling the
difference between a social critique and a personal insult. Thus, a writer points to a broad
social problem with complex origins, and the reader responds with, "What, you want to punish me
for my success?"
In part, too, we're seeing some garden-variety self-centeredness, enabled by the usual
cognitive lapses. Human beings are very good at keeping track of their own struggles; they are
less likely to know that individuals on the other side of town are working two minimum-wage
jobs to stay afloat, not watching Simpsons reruns all day. Human beings have a simple
explanation for their victories: I did it . They easily forget the people who handed
them the crayon and set them up for success. Human beings of the 9.9 percent variety also
routinely conflate the stress of status competition with the stress of survival. No, failing to
get your kid into Stanford is not a life-altering calamity.
The recency of it all may likewise play a role in our failure to recognize our growing
privileges. It has taken less than one lifetime for the (never fully formed) meritocracy to
evolve into a (fledgling) aristocracy. Class accretes faster than we think. It's our awareness
that lags, trapping us within the assumptions into which we were born.
And yet, even allowing for these all-too-human failures of cognition, the cries of anguish
that echo across the soccer fields at the mere suggestion of unearned privilege are too
persistent to ignore. Fact-challenged though they may be, they speak to a certain, deeper truth
about life in the 9.9 percent. What they are really telling us is that being an aristocrat is
not quite what it is cracked up to be.
A strange truth about the Gatsby Curve is that even as it locks in our privileges, it
doesn't seem to make things all that much easier. I know it wasn't all that easy growing up in
the Colonel's household, for example. The story that Grandfather repeated more than any other
was the one where, following some teenage misdemeanor of his, his father, the 250-pound,
6-foot-something onetime Rough Rider, smacked him so hard that he sailed clear across the room
and landed flat on the floor. Everything -- anything -- seemed to make the Colonel angry.
Jay Gatsby might have understood. Life in West Egg is never as serene as it seems. The
Princeton man -- that idle prince of leisure who coasts from prep school to a life of ease --
is an invention of our lowborn ancestors. It's what they thought they saw when they were
looking up. West Eggers understand very well that a bad move or an unlucky break (or three or
four) can lead to a steep descent. We know just how expensive it is to live there, yet living
off the island is unthinkable. We have intuited one of the fundamental paradoxes of life on the
Gatsby Curve: The greater the inequality, the less your money buys.
We feel in our bones that class works only for itself; that every individual is dispensable;
that some of us will be discarded and replaced with fresh blood. This insecurity of privilege
only grows as the chasm beneath the privileged class expands. It is the restless engine that
drives us to invest still more time and energy in the walls that will keep us safe by keeping
others out.
Perhaps the best evidence for the power of an aristocracy is the degree of
resentment it provokes. By that measure, the 9.9 percent are doing pretty well indeed.
Here's another fact of life in West Egg: Someone is always above you. In Gatsby's case, it
was the old-money people of East Egg. In the Colonel's case, it was John D. Rockefeller Jr.
You're always trying to please them, and they're always ready to pull the plug.
The source of the trouble, considered more deeply, is that we have traded rights for
privileges. We're willing to strip everyone, including ourselves, of the universal right to a
good education, adequate health care, adequate representation in the workplace, genuinely equal
opportunities, because we think we can win the game. But who, really, in the end, is going to
win this slippery game of escalating privileges?
Under the circumstances, delusions are understandable. But that doesn't make them salutary,
as Aunt Sarah discovered too late. Even as the last few pennies of the Colonel's buck trickled
down to my father's generation, she still had the big visions that corresponded to her version
of the family mythology. Convinced that she had inherited a head for business, she bet her
penny on the dot-com bubble. In her final working years, she donned a red-and-black uniform and
served burgers at a Wendy's in the vicinity of Jacksonville, Florida.
"... At this point, I'm wondering whether life was easier in the old days, when you could buy a spot in the elite university of your choice with cold cash. Then I remind myself that Grandfather lasted only one year at Yale. In those days, the Ivies kicked you out if you weren't ready for action. Today, you have to self-combust in a newsworthy way before they show you the door. ..."
"... Excellent Sheep ..."
"... The Price of Admission ..."
"... In the United States, the premium that college graduates earn over their non-college-educated peers in young adulthood exceeds 70 percent. ..."
"... All of this comes before considering the all-consuming difference between "good" schools and the rest. Ten years after starting college, according to data from the Department of Education, the top decile of earners from all schools had a median salary of $68,000 . But the top decile from the 10 highest-earning colleges raked in $220,000 -- make that $250,000 for No. 1, Harvard -- and the top decile at the next 30 colleges took home $157,000. (Not surprisingly, the top 10 had an average acceptance rate of 9 percent, and the next 30 were at 19 percent.) ..."
"... But the fact is that degree holders earn so much more than the rest not primarily because they are better at their job, but because they mostly take different categories of jobs. Well over half of Ivy League graduates, for instance, typically go straight into one of four career tracks that are generally reserved for the well educated: finance, management consulting, medicine, or law. To keep it simple, let's just say that there are two types of occupations in the world: those whose members have collective influence in setting their own pay, and those whose members must face the music on their own. It's better to be a member of the first group. Not surprisingly, that is where you will find the college crowd. ..."
"... The candy-hurling godfather of today's meritocratic class, of course, is the financial-services industry. Americans now turn over $1 of every $12 in GDP to the financial sector; in the 1950s, the bankers were content to keep only $1 out of $40. ..."
"... It isn't a coincidence that the education premium surged during the same years that membership in trade unions collapsed. In 1954, 28 percent of all workers were members of trade unions, but by 2017 that figure was down to 11 percent. ..."
"... Education -- the thing itself , not the degree -- is always good. A genuine education opens minds and makes good citizens. It ought to be pursued for the sake of society . In our unbalanced system, however, education has been reduced to a private good, justifiable only by the increments in graduates' paychecks. Instead of uniting and enriching us, it divides and impoverishes. ..."
"... If the system can be gamed, well then, our ability to game the system has become the new test of merit. ..."
My 16-year-old daughter is sitting on a couch, talking with a stranger about her dreams for
the future. We're here, ominously enough, because, she says, "all my friends are doing it." For
a moment, I wonder whether we have unintentionally signed up for some kind of therapy. The
professional woman in the smart-casual suit throws me a pointed glance and says, "It's normal
to be anxious at a time like this." She really does see herself as a therapist of sorts. But
she does not yet seem to know that the source of my anxiety is the idea of shelling out for a
$12,000 "base package" of college-counseling services whose chief purpose is apparently to
reduce my anxiety. Determined to get something out of this trial counseling session, I push for
recommendations on summer activities. We leave with a tip on a 10-day "cultural tour" of France
for high schoolers. In the college-application business, that's what's known as an "enrichment
experience." When we get home, I look it up. The price of enrichment: $11,000 for the 10
days.
That's when I hear the legend of the SAT whisperer. If you happen to ride through the
yellow-brown valleys of the California coast, past the designer homes that sprout wherever tech
unicorns sprinkle their golden stock offerings, you might come across him. His high-school
classmates still remember him, almost four decades later, as one of the child wonders of the
age. Back then, he and his equally precocious siblings showed off their preternatural verbal
and musical talents on a local television program. Now his clients fly him around the state for
test-prep sessions with their 16-year-olds. You can hire him for $750, plus transportation, per
two-hour weekend session. (There is a weekday discount.) Some of his clients book him every
week for a year.
Affirmative-action programs are to some degree an extension of the system
of wealth preservation. They indulge rich people in the belief that their college is open to
all.
At this point, I'm wondering whether life was easier in the old days, when you could buy
a spot in the elite university of your choice with cold cash. Then I remind myself that
Grandfather lasted only one year at Yale. In those days, the Ivies kicked you out if you
weren't ready for action. Today, you have to self-combust in a newsworthy way before they show
you the door.
Inevitably, I begin rehearsing the speech for my daughter. It's perfectly possible to lead a
meaningful life without passing through a name-brand college, I'm going to say. We love you for
who you are. We're not like those tacky strivers who want a back-windshield sticker to testify
to our superior parenting skills. And why would you want to be an investment banker or a
corporate lawyer anyway? But I refrain from giving the speech, knowing full well that it will
light up her parental-bullshit detector like a pair of khakis on fire.
The skin colors of the nation's elite student bodies are more varied now, as are their
genders, but their financial bones have calcified over the past 30 years. In 1985, 54 percent
of students at the 250 most selective colleges came from families in the bottom three quartiles
of the income distribution. A similar review of the class of 2010 put that figure at just 33
percent. According to a 2017 study, 38 elite colleges -- among them five of the Ivies --
had more students from the top 1 percent than from the bottom 60 percent . In his 2014
book, Excellent Sheep , William Deresiewicz, a former English professor at Yale,
summed up the situation nicely: "Our new multiracial, gender-neutral meritocracy has figured
out a way to make itself hereditary."
The wealthy can also draw on a variety of affirmative-action programs designed just for
them. As Daniel Golden points out in The Price of Admission , legacy-admissions
policies reward those applicants with the foresight to choose parents who attended the
university in question. Athletic recruiting, on balance and contrary to the popular wisdom,
also favors the wealthy, whose children pursue lacrosse, squash, fencing, and the other
cost-intensive sports at which private schools and elite public schools excel. And, at least
among members of the 0.1 percent, the old-school method of simply handing over some of Daddy's
cash has been making a comeback. (
Witness Jared Kushner, Harvard graduate .)
The mother lode of all affirmative-action programs for the wealthy, of course, remains the
private school. Only 2.2 percent of the nation's students graduate from nonsectarian private
high schools, and yet these graduates account for 26 percent of students at Harvard and 28
percent of students at Princeton. The other affirmative-action programs, the kind aimed
at diversifying the look of the student body, are no doubt well intended. But they are to some
degree merely an extension of this system of wealth preservation. Their function, at least in
part, is to indulge rich people in the belief that their college is open to all on the basis of
merit.
The plummeting admission rates of the very top schools nonetheless leave many of the
children of the 9.9 percent facing long odds. But not to worry, junior 9.9 percenters! We've
created a new range of elite colleges just for you. Thanks to ambitious university
administrators and the ever-expanding rankings machine at U.S. News & World Report ,
50 colleges are now as selective as Princeton was in 1980, when I applied. The colleges seem to
think that piling up rejections makes them special. In fact, it just means that they have
collectively opted to deploy their massive, tax-subsidized endowments to replicate privilege
rather than fulfill their duty to produce an educated public.
The only thing going up as fast as the rejection rates at selective colleges is the
astounding price of tuition. Measured relative to the national median salary, tuition and fees
at top colleges more than tripled from 1963 to 2013. Throw in the counselors, the whisperers,
the violin lessons, the private schools, and the cost of arranging for Junior to save a village
in Micronesia, and it adds up. To be fair, financial aid closes the gap for many families and
keeps the average cost of college from growing as fast as the sticker price. But that still
leaves a question: Why are the wealthy so keen to buy their way in?
The short answer, of course, is that it's worth it.
In the United States, the premium that college graduates earn over their
non-college-educated peers in young adulthood exceeds 70 percent. The return on education is 50
percent higher than what it was in 1950, and is significantly higher than the rate in every
other developed country. In Norway and Denmark, the college premium is less than 20 percent; in
Japan, it is less than 30 percent; in France and Germany, it's about 40 percent.
All of this comes before considering the all-consuming difference between "good" schools and
the rest. Ten years after starting college, according to data from the Department of Education,
the top decile of earners from all schools had a median salary of $68,000 . But the top decile from
the 10 highest-earning colleges raked in $220,000 -- make that $250,000 for No. 1, Harvard --
and the top decile at the next 30 colleges took home $157,000. (Not surprisingly, the top 10
had an average acceptance rate of 9 percent, and the next 30 were at 19 percent.)
It is entirely possible to get a good education at the many schools that don't count as
"good" in our brand-obsessed system. But the "bad" ones really are bad for you. For those who
made the mistake of being born to the wrong parents, our society offers a kind of virtual
education system. It has places that look like colleges -- but aren't really. It has debt --
and that, unfortunately, is real. The people who enter into this class hologram do not collect
a college premium; they wind up in something more like indentured servitude.
So what is the real source of this premium for a "good education" that we all seem to
crave?
One of the stories we tell ourselves is that the premium is the reward for the knowledge and
skills the education provides us. Another, usually unfurled after a round of drinks, is that
the premium is a reward for the superior cranial endowments we possessed before setting foot on
campus. We are, as some sociologists have delicately put it, a "cognitive elite."
Behind both of these stories lies one of the founding myths of our meritocracy. One way or
the other, we tell ourselves, the rising education premium is a direct function of the rising
value of meritorious people in a modern economy. That is, not only do the meritorious get
ahead, but the rewards we receive are in direct proportion to our merit.
But the fact is that degree holders earn so much more than the rest not primarily because
they are better at their job, but because they mostly take different categories of jobs. Well
over half of Ivy League graduates, for instance, typically go straight into one of four career
tracks that are generally reserved for the well educated: finance, management consulting,
medicine, or law. To keep it simple, let's just say that there are two types of occupations in
the world: those whose members have collective influence in setting their own pay, and those
whose members must face the music on their own. It's better to be a member of the first group.
Not surprisingly, that is where you will find the college crowd.
why do America's doctors make twice as much as those of other wealthy countries? Given that
the United States has placed dead last five times running in the Commonwealth Fund's ranking of
health-care systems in high-income countries, it's hard to argue that they are twice as gifted
at saving lives. Dean Baker, a senior economist with the Center for Economic and Policy
Research, has
a more plausible suggestion : "When economists like me look at medicine in America --
whether we lean left or right politically -- we see something that looks an awful lot like a
cartel." Through their influence on the number of slots at medical schools, the availability of
residencies, the licensing of foreign-trained doctors, and the role of nurse practitioners,
physicians' organizations can effectively limit the competition their own members face -- and
that is exactly what they do.
Lawyers (or at least a certain elite subset of them) have apparently learned to play the
same game. Even after the collapse of the so-called law-school bubble, America's lawyers are
No. 1 in international salary rankings and earn more than twice as much, on average, as their
wig-toting British colleagues. The University of Chicago law professor Todd Henderson, writing
for Forbes in 2016,
offered a blunt assessment : "The American Bar Association operates a state-approved
cartel."
Similar occupational licensing schemes provide shelter for the meritorious in a variety of
other sectors. The policy researchers Brink Lindsey and Steven Teles detail the mechanisms in
The Captured
Economy . Dentists' offices, for example, have a glass ceiling that limits what dental
hygienists can do without supervision, keeping their bosses in the 9.9 percent. Copyright and
patent laws prop up profits and salaries in the education-heavy pharmaceutical, software, and
entertainment sectors. These arrangements are trifles, however, compared with what's on offer
in tech and finance, two of the most powerful sectors of the economy.
By now we're thankfully done with the tech-sector fairy tales in which whip-smart cowboys
innovate the heck out of a stodgy status quo. The reality is that five monster companies -- you
know the names -- are worth about $3.5 trillion combined, and represent more than 40 percent of
the market capital on the nasdaq stock exchange. Much of the rest of the technology sector
consists of virtual entities waiting patiently to feed themselves to these beasts.
Let's face it: This is Monopoly money with a smiley emoji. Our society figured out some time
ago how to deal with companies that attempt to corner the market on viscous substances like
oil. We don't yet know what to do with the monopolies that arise out of networks and scale
effects in the information marketplace. Until we do, the excess profits will stick to those who
manage to get closest to the information honeypot. You can be sure that these people will have
a great deal of merit.
The candy-hurling godfather of today's meritocratic class, of course, is the
financial-services industry. Americans now turn over $1 of every $12 in GDP to the financial
sector; in the 1950s, the bankers were content to keep only $1 out of $40. The game is more
sophisticated than a two-fisted money grab, but its essence was made obvious during the 2008
financial crisis. The public underwrites the risks; the financial gurus take a seat at the
casino; and it's heads they win, tails we lose. The financial system we now have is not a
product of nature. It has been engineered, over decades, by powerful bankers, for their own
benefit and for that of their posterity.
Who is not in on the game? Auto workers, for example. Caregivers. Retail workers. Furniture
makers. Food workers. The wages of American manufacturing and service workers consistently
hover in the middle of international rankings. The exceptionalism of American compensation
rates comes to an end in the kinds of work that do not require a college degree.
You see, when educated people with excellent credentials band together to advance their
collective interest, it's all part of serving the public good by ensuring a high quality of
service, establishing fair working conditions, and giving merit its due. That's why we do it
through "associations," and with the assistance of fellow professionals wearing white shoes.
When working-class people do it -- through unions -- it's a violation of the sacred principles
of the free market. It's thuggish and anti-modern. Imagine if workers hired consultants and
"compensation committees," consisting of their peers at other companies, to recommend how much
they should be paid. The result would be -- well, we know what it would be, because that's what
CEOs do.
It isn't a coincidence that the education premium surged during the same years that
membership in trade unions collapsed. In 1954, 28 percent of all workers were members of trade
unions, but by 2017 that figure was down to 11 percent.
Education -- the thing itself , not the degree -- is always good. A genuine education opens
minds and makes good citizens. It ought to be pursued for the sake of society . In our
unbalanced system, however, education has been reduced to a private good, justifiable only by
the increments in graduates' paychecks. Instead of uniting and enriching us, it divides and
impoverishes. Which is really just a way of saying that our worthy ideals of educational
opportunity are ultimately no match for the tidal force of the Gatsby Curve. The metric that
has tracked the rising college premium with the greatest precision is -- that's right --
intergenerational earnings elasticity, or IGE. Across countries, the same correlation obtains:
the higher the college premium, the lower the social mobility.
As I'm angling all the angles for my daughter's college applications -- the counselor is
out, and the SAT whisperer was never going to happen -- I realize why this delusion of merit is
so hard to shake. If I -- I mean, she -- can pull this off, well, there's the proof that we
deserve it! If the system can be gamed, well then, our ability to game the system has become the new test of merit.
So go ahead and replace the SATs with shuffleboard on the high seas, or whatever you want.
Who can doubt that we'd master that game, too? How quickly would we convince ourselves of our
absolute entitlement to the riches that flow directly and tangibly from our shuffling talent?
How soon before we perfected the art of raising shuffleboard wizards? Would any of us notice or
care which way the ship was heading?
Let's suppose that some of us do look up. We see the iceberg. Will that induce us to
diminish our exertions in supreme child-rearing? The grim truth is that, as long as good
parenting and good citizenship are in conflict, we're just going to pack a few more violins for
the trip.
We currently exist in a land of financial contradictions. US household incomes adjusting for
inflation are back to levels last seen in the late 1980s. However, holiday spending is going
strongly largely by people going
into big debt . Many are going to be paying for the holiday season of 2013 deep into years
to come. More troubling than spending via debt is the record level of wealth inequality in the
United States.
We would need to go back to the Gilded Age to find similar levels of wealth inequality.
The latest data shows that roughly 75 percent of the financial wealth in America is held in
the hands of the top 10 percent of households. Or to invert this, 25 percent of all US wealth
is divided up amongst the bottom 90 percent of the population.
Wealth is the true measure of financial stability. It used to be the case that housing was
the one safe store of wealth for Americans but Wall Street has hijacked this asset class and
has converted it to another commodity to speculate on. Yet by looking at spending habits and
financial behavior many Americans think they are simply
temporarily embarrassed millionaires.
They act against their own interests while wealth inequality rages on.
Images were deleted. Refer to the original link for full text.
Notable quotes:
"... According to Miles Corak, an economics professor at the City University of New York, half a century ago IGE in America was less than 0.3 . Today, it is about 0.5. In America, the game is half over once you've selected your parents. IGE is now higher here than in almost every other developed economy. On this measure of economic mobility, the United States is more like Chile or Argentina than Japan or Germany. ..."
"... Social Register ..."
"... Obesity, diabetes, heart disease, kidney disease, and liver disease are all two to three times more common in individuals who have a family income of less than $35,000 than in those who have a family income greater than $100,000. Among low-educated, middle-aged whites, the death rate in the United States -- alone in the developed world -- increased in the first decade and a half of the 21st century. Driving the trend is the rapid growth in what the Princeton economists Anne Case and Angus Deaton call "deaths of despair" -- suicides and alcohol- and drug-related deaths. ..."
"... Why can't they get their act together? ..."
"... This article appears in the June 2018 print edition with the headline "The Birth of a New American Aristocracy." ..."
At the end of each week, we would return to our place. My reality was the aggressively middle-class world of 1960s and '70s U.S.
military bases and the communities around them. Life was good there, too, but the pizza came from a box, and it was Lucky Charms
for breakfast. Our glory peaked on the day my parents came home with a new Volkswagen camper bus. As I got older, the holiday
pomp of patriotic luncheons and bridge-playing rituals came to seem faintly ridiculous and even offensive, like an endless birthday
party for people whose chief accomplishment in life was just showing up. I belonged to a new generation that believed in getting
ahead through merit, and we defined merit in a straightforward way: test scores, grades, competitive résumé-stuffing, supremacy in
board games and pickup basketball, and, of course, working for our keep. For me that meant taking on chores for the neighbors, punching
the clock at a local fast-food restaurant, and collecting scholarships to get through college and graduate school. I came into many
advantages by birth, but money was not among them.
The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other
people's children.
I've joined a new aristocracy now, even if we still call ourselves meritocratic winners. If you are a typical reader of The
Atlantic , you may well be a member too. (And if you're not a member, my hope is that you will find the story of this new class
even more interesting -- if also more alarming.) To be sure, there is a lot to admire about my new group, which I'll call -- for
reasons you'll soon see -- the 9.9 percent. We've dropped the old dress codes, put our faith in facts, and are (somewhat) more varied
in skin tone and ethnicity. People like me, who have waning memories of life in an earlier ruling caste, are the exception, not the
rule.
By any sociological or financial measure, it's good to be us. It's even better to be our kids. In our health, family life, friendship
networks, and level of education, not to mention money, we are crushing the competition below. But we do have a blind spot, and it
is located right in the center of the mirror: We seem to be the last to notice just how rapidly we've morphed, or what we've morphed
into.
The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other
people's children. We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices
in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy. Our delusions of merit
now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims
of our success are just the people excluded from the club. But history shows quite clearly that, in the kind of game we're playing,
everybody loses badly in the end.
2.
The Discreet Charm of the 9.9 Percent
Let's talk first about money -- even if money is only one part of what makes the new aristocrats special. There is a familiar
story about rising inequality in the United States, and its stock characters are well known. The villains are the fossil-fueled plutocrat,
the Wall Street fat cat, the callow tech bro, and the rest of the so-called top 1 percent. The good guys are the 99 percent, otherwise
known as "the people" or "the middle class." The arc of the narrative is simple: Once we were equal, but now we are divided. The
story has a grain of truth to it. But it gets the characters and the plot wrong in basic ways.
It is in fact the top 0.1 percent who have been the big winners in the growing concentration of wealth over the past half century.
According to the UC Berkeley economists Emmanuel Saez and Gabriel Zucman,
the 160,000 or so households in that group held 22
percent of America's wealth in 2012 , up from 10 percent in 1963. If you're looking for the kind of money that can buy elections,
you'll find it inside the top 0.1 percent alone.
A Tale of Three Classes ( Figure 1 ):
The 9.9 percent hold most of the wealth in the United States.
Saez / Zucman
Every piece of the pie picked up by the 0.1 percent, in relative terms, had to come from the people below. But not everyone in
the 99.9 percent gave up a slice. Only those in the bottom 90 percent did. At their peak, in the mid-1980s, people in this group
held 35 percent of the nation's wealth. Three decades later that had fallen 12 points -- exactly as much as the wealth of the 0.1
percent rose.
In between the top 0.1 percent and the bottom 90 percent is a group that has been doing just fine. It has held on to its share
of a growing pie decade after decade. And as a group, it owns substantially more wealth than do the other two combined. In the tale
of three classes (see Figure 1), it is represented by the gold line floating high and steady while the other two duke it out. You'll
find the new aristocracy there. We are the 9.9 percent.
So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1
percent. We're a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque
job titles, and assorted other professionals -- the kind of people you might invite to dinner. In fact, we're so self-effacing, we
deny our own existence. We keep insisting that we're "middle class."
As of 2016, it took $1.2 million in net worth to make it into the 9.9 percent; $2.4 million to reach the group's median; and $10
million to get into the top 0.9 percent. (And if you're not there yet, relax: Our club is open to people who are on the right track
and have the right attitude.) "We are the 99 percent" sounds righteous, but it's a slogan, not an analysis. The families at our end
of the spectrum wouldn't know what to do with a pitchfork.
We are also mostly, but not entirely, white. According to a Pew Research Center analysis, African Americans represent 1.9 percent
of the top 10th of households in wealth; Hispanics, 2.4 percent; and all other minorities, including Asian and multiracial individuals,
8.8 percent -- even though those groups together account for 35 percent of the total population.
One of the hazards of life in the 9.9 percent is that our necks get stuck in the upward position. We gaze upon the 0.1 percent
with a mixture of awe, envy, and eagerness to obey. As a consequence, we are missing the other big story of our time. We have left
the 90 percent in the dust -- and we've been quietly tossing down roadblocks behind us to make sure that they never catch up.
Let's suppose that you start off right in the middle of the American wealth distribution. How high would you have to jump to make
it into the 9.9 percent? In financial terms, the measurement is easy and the trend is unmistakable. In 1963, you would have needed
to multiply your wealth six times. By 2016, you would have needed to leap twice as high -- increasing your wealth 12-fold -- to scrape
into our group. If you boldly aspired to reach the middle of our group rather than its lower edge,
you'd have needed to multiply your wealth by a
factor of 25 . On this measure, the 2010s look much like the 1920s.
If you are starting at the median for people of color, you'll want to practice your financial pole-vaulting.
The Institute for Policy Studies calculated
that, setting aside money invested in "durable goods" such as furniture and a family car, the median black family had net wealth
of $1,700 in 2013, and the median Latino family had $2,000, compared with $116,800 for the median white family. A 2015 study in Boston
found that the wealth of the median white family there was $247,500, while the wealth of the median African American family was $8.
That is not a typo. That's two grande cappuccinos. That and another 300,000 cups of coffee will get you into the 9.9 percent.
N one of this matters, you will often hear, because in the United States everyone has an opportunity to make the leap: Mobility
justifies inequality. As a matter of principle, this isn't true. In the United States, it also turns out not to be true as a factual
matter. Contrary to popular myth, economic mobility in the land of opportunity is not high, and it's going down.
Imagine yourself on the socioeconomic ladder with one end of a rubber band around your ankle and the other around your parents'
rung. The strength of the rubber determines how hard it is for you to escape the rung on which you were born. If your parents are
high on the ladder, the band will pull you up should you fall; if they are low, it will drag you down when you start to rise. Economists
represent this concept with a number they call "intergenerational earnings elasticity," or IGE, which measures how much of a child's
deviation from average income can be accounted for by the parents' income. An IGE of zero means that there's no relationship at all
between parents' income and that of their offspring. An IGE of one says that the destiny of a child is to end up right where she
came into the world.
According to Miles Corak, an economics professor at the City University of New York,
half a century ago IGE in America was less than 0.3 . Today, it is about 0.5. In America, the game is half over once you've selected
your parents. IGE is now higher here than in almost every other developed economy. On this measure of economic mobility, the United
States is more like Chile or Argentina than Japan or Germany.
The story becomes even more disconcerting when you see just where on the ladder the tightest rubber bands are located. Canada,
for example, has an IGE of about half that of the U.S. Yet from the middle rungs of the two countries' income ladders, offspring
move up or down through the nearby deciles at the same respectable pace. The difference is in what happens at the extremes. In the
United States, it's the children of the bottom decile and, above all, the top decile -- the 9.9 percent -- who settle down nearest
to their starting point. Here in the land of opportunity, the taller the tree, the closer the apple falls.
All of this analysis of wealth percentiles, to be clear, provides only a rough start in understanding America's evolving class
system. People move in and out of wealth categories all the time without necessarily changing social class, and they may belong to
a different class in their own eyes than they do in others'. Yet even if the trends in the monetary statistics are imperfect illustrations
of a deeper process, they are nonetheless registering something of the extraordinary transformation that's taking place in our society.
A few years ago, Alan Krueger, an economist and a former chairman of the Obama administration's Council of Economic Advisers,
was reviewing
the international mobility data when he
caught a glimpse of the fundamental
process underlying our present moment . Rising immobility and rising inequality aren't like two pieces of driftwood that happen
to have shown up on the beach at the same time, he noted. They wash up together on every shore. Across countries, the higher the
inequality, the higher the IGE (see Figure 2). It's as if human societies have a natural tendency to separate, and then, once the
classes are far enough apart, to crystallize.
The Great Gatsby Curve ( Figure 2 ): Inequality and class immobility go together.
Miles Corak
Economists are prudent creatures, and they'll look up from a graph like that and remind you that it shows only correlation, not
causation. That's a convenient hedge for those of us at the top because it keeps alive one of the founding myths of America's meritocracy:
that our success has nothing to do with other people's failure. It's a pleasant idea. But around the world and throughout
history, the wealthy have advanced the crystallization process in a straightforward way. They have taken their money out of productive
activities and put it into walls. Throughout history, moreover, one social group above all others has assumed responsibility for
maintaining and defending these walls. Its members used to be called aristocrats. Now we're the 9.9 percent. The main difference
is that we have figured out how to use the pretense of being part of the middle as one of our strategies for remaining on top.
Krueger liked the graph shown in Figure 2 so much that he decided to give it a name: the Great Gatsby Curve. It's a good choice,
and it resonates strongly with me. F. Scott Fitzgerald's novel about the breakdown of the American dream is set in 1922, or right
around the time that my great-grandfather was secretly siphoning money from Standard Oil and putting it into a shell company in Canada.
It was published in 1925, just as special counsel was turning up evidence that bonds from that company had found their way into the
hands of the secretary of the interior. Its author was drinking his way through the cafés of Paris just as Colonel Robert W. Stewart
was running away from subpoenas to testify before the United States Senate about his role in the Teapot Dome scandal. We are only
now closing in on the peak of inequality that his generation achieved, in 1928. I'm sure they thought it would go on forever, too.
3.
The Origin of a Species
Money can't buy you class, or so my grandmother used to say. But it can buy a private detective. Grandmother was a Kentucky debutante
and sometime fashion model (kind of like Daisy Buchanan in The Great Gatsby , weirdly enough), so she knew what to do when
her eldest son announced his intention to marry a woman from Spain. A gumshoe promptly reported back that the prospective bride's
family made a living selling newspapers on the streets of Barcelona. Grandmother instituted an immediate and total communications
embargo. In fact, my mother's family owned and operated a large paper-goods factory. When children came, Grandmother at last relented.
Determined to do the right thing, she arranged for the new family, then on military assignment in Hawaii, to be inscribed in the
New York Social Register .
Sociologists would say, in their dry language, that my grandmother was a zealous manager of the family's social capital -- and
she wasn't about to let some Spanish street urchin run away with it. She did have a point, even if her facts were wrong. Money may
be the measure of wealth, but it is far from the only form of it. Family, friends, social networks, personal health, culture, education,
and even location are all ways of being rich, too. These nonfinancial forms of wealth, as it turns out, aren't simply perks of membership
in our aristocracy. They define us.
We are the people of good family, good health, good schools, good neighborhoods, and good jobs. We may want to call ourselves
the "5Gs" rather than the 9.9 percent. We are so far from the not-so-good people on all of these dimensions, we are beginning to
resemble a new species. And, just as in Grandmother's day, the process of speciation begins with a love story -- or, if you prefer,
sexual selection.
The polite term for the process is assortative mating . The phrase is sometimes used to suggest that this is another of
the wonders of the internet age, where popcorn at last meets butter and Yankees fan finds Yankees fan. In fact, the frenzy of assortative
mating today results from a truth that would have been generally acknowledged by the heroines of any Jane Austen novel: Rising inequality
decreases the number of suitably wealthy mates even as it increases the reward for finding one and the penalty for failing to do
so. According to one study, the last time marriage partners
sorted themselves by educational status as
much as they do now was in the 1920s .
For most of us, the process is happily invisible. You meet someone under a tree on an exclusive campus or during orientation at
a high-powered professional firm, and before you know it, you're twice as rich. But sometimes -- Grandmother understood this well
-- extra measures are called for. That's where our new technology puts bumbling society detectives to shame.
Ivy Leaguers looking to mate with their equals can apply to join a dating service called the League. It's selective, naturally:
Only 20 to 30 percent of New York applicants get in. It's sometimes called "Tinder for the elites."
From Our June 2018 Issue
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It is misleading to think that assortative mating is symmetrical, as in city mouse marries city mouse and country mouse marries
country mouse. A better summary of the data would be: Rich mouse finds love, and poor mouse gets screwed. It turns out -- who knew?
-- that people who are struggling to keep it all together have a harder time hanging on to their partner. According to the Harvard
political scientist Robert Putnam, 60 years ago just 20 percent of children born to parents with a high-school education or less
lived in a single-parent household; now that figure is nearly 70 percent. Among college-educated households, by contrast, the single-parent
rate remains less than 10 percent. Since the 1970s, the divorce rate has declined significantly among college-educated couples, while
it has risen dramatically among couples with only a high-school education -- even as marriage itself has become less common. The
rate of single parenting is in turn the single most significant predictor of social immobility across counties, according to a study
led by the Stanford economist Raj Chetty.
None of which is to suggest that individuals are wrong to seek a suitable partner and make a beautiful family. People should --
and presumably always will -- pursue happiness in this way. It's one of the delusions of our meritocratic class, however, to assume
that if our actions are individually blameless, then the sum of our actions will be good for society. We may have studied Shakespeare
on the way to law school, but we have little sense for the tragic possibilities of life. The fact of the matter is that we have silently
and collectively opted for inequality, and this is what inequality does. It turns marriage into a luxury good, and a stable family
life into a privilege that the moneyed elite can pass along to their children. How do we think that's going to work out?
This divergence of families by class is just one part of a process that is creating two distinct forms of life in our society.
Stop in at your local yoga studio or SoulCycle class, and you'll notice that the same process is now inscribing itself in our own
bodies. In 19th-century England, the rich really were different. They didn't just have more money; they were taller -- a lot taller.
According to a study colorfully titled "On English Pygmies and Giants," 16-year-old boys from the upper classes towered a remarkable
8.6 inches, on average, over their undernourished, lower-class countrymen. We are reproducing the same kind of division via a different
set of dimensions.
Obesity, diabetes, heart disease, kidney disease, and liver disease are all
two to three times more common in individuals who have a family income of less than $35,000 than in those who have a family income
greater than $100,000. Among low-educated, middle-aged whites, the death rate in the United States -- alone in the developed world
-- increased in the first decade and a half of the 21st century. Driving the trend is the rapid growth in what the
Princeton economists
Anne Case and Angus Deaton call "deaths of despair" -- suicides and alcohol- and drug-related deaths.
The sociological data are not remotely ambiguous on any aspect of this growing divide. We 9.9 percenters live in safer neighborhoods,
go to better schools, have shorter commutes, receive higher-quality health care, and, when circumstances require, serve time in better
prisons. We also have more friends -- the kind of friends who will introduce us to new clients or line up great internships for our
kids.
These special forms of wealth offer the further advantages that they are both harder to emulate and safer to brag about than high
income alone. Our class walks around in the jeans and T‑shirts inherited from our supposedly humble beginnings. We prefer to signal
our status by talking about our organically nourished bodies, the awe-inspiring feats of our offspring, and the ecological correctness
of our neighborhoods. We have figured out how to launder our money through higher virtues.
Most important of all, we have learned how to pass all of these advantages down to our children. In America today, the single
best predictor of whether an individual will get married, stay married, pursue advanced education, live in a good neighborhood, have
an extensive social network, and experience good health is the performance of his or her parents on those same metrics.
We're leaving the 90 percent and their offspring far behind in a cloud of debts and bad life choices that they somehow can't stop
themselves from making. We tend to overlook the fact that parenting is more expensive and motherhood more hazardous in the United
States than in any other developed country, that campaigns against family planning and reproductive rights are an assault on the
families of the bottom 90 percent, and that law-and-order politics serves to keep even more of them down. We prefer to interpret
their relative poverty as vice: Why can't they get their act together?
New forms of life necessarily give rise to new and distinct forms of consciousness. If you doubt this, you clearly haven't been
reading the "personal and household services" ads on Monster.com. At the time of this writing, the section for my town of Brookline,
Massachusetts, featured one placed by a "busy professional couple" seeking a "Part Time Nanny." The nanny (or manny -- the ad scrupulously
avoids committing to gender) is to be "bright, loving, and energetic"; "friendly, intelligent, and professional"; and "a very good
communicator, both written and verbal." She (on balance of probability) will "assist with the care and development" of two children
and will be "responsible for all aspects of the children's needs," including bathing, dressing, feeding, and taking the young things
to and from school and activities. That's why a "college degree in early childhood education" is "a plus."
In short, Nanny is to have every attribute one would want in a terrific, professional, college-educated parent. Except, of course,
the part about being an actual professional, college-educated parent. There is no chance that Nanny will trade places with our busy
5G couple. She "must know the proper etiquette in a professionally run household" and be prepared to "accommodate changing circumstances."
She is required to have "5+ years experience as a Nanny," which makes it unlikely that she'll have had time to get the law degree
that would put her on the other side of the bargain. All of Nanny's skills, education, experience, and professionalism will land
her a job that is "Part Time."
The ad is written in flawless, 21st-century business-speak, but what it is really seeking is a governess -- that exquisitely contradictory
figure in Victorian literature who is both indistinguishable in all outward respects from the upper class and yet emphatically not
a member of it. Nanny's best bet for moving up in the world is probably to follow the example of Jane Eyre and run off with the lord
(or lady) of the manor.
If you look beyond the characters in this unwritten novel about Nanny and her 5G masters, you'll see a familiar shape looming
on the horizon. The Gatsby Curve has managed to reproduce itself in social, physiological, and cultural capital. Put more accurately:
There is only one curve, but it operates through a multiplicity of forms of wealth.
Rising inequality does not follow from a hidden law of economics, as the otherwise insightful Thomas Piketty suggested when he
claimed that the historical rate of return on capital exceeds the historical rate of growth in the economy. Inequality necessarily
entrenches itself through other, nonfinancial, intrinsically invidious forms of wealth and power. We use these other forms of capital
to project our advantages into life itself. We look down from our higher virtues in the same way the English upper class looked down
from its taller bodies, as if the distinction between superior and inferior were an artifact of nature. That's what aristocrats do.
... ... ...
5.
The Invisible Hand of Government
As far as Grandfather was concerned, the assault on the productive classes began long before the New Deal. It all started in 1913,
with the ratification of the Sixteenth Amendment. In case you've forgotten, that amendment granted the federal government the power
to levy a direct personal-income tax. It also happens that ratification took place just a few months after Grandfather was born,
which made sense to me in a strange way. By far the largest part of his lifetime income was attributable to his birth.
Grandfather was a stockbroker for a time. I eventually figured out that he mostly traded his own portfolio and bought a seat at
the stock exchange for the purpose. Politics was a hobby, too. At one point, he announced his intention to seek the Republican nomination
for lieutenant governor of Connecticut. (It wasn't clear whether anybody outside the clubhouse heard him.) What he really liked to
do was fly. The memories that mattered most to him were his years of service as a transport pilot during World War II. Or the time
he and Grandmother took to the Midwestern skies in a barnstorming plane. My grandparents never lost faith in the limitless possibilities
of a life free from government. But in their last years, as the reserves passed down from the Colonel ran low, they became pretty
diligent about collecting their Social Security and Medicare benefits.
There is a page in the book of American political thought -- Grandfather knew it by heart -- that says we must choose between
government and freedom. But if you read it twice, you'll see that what it really offers is a choice between government you can see
and government you can't. Aristocrats always prefer the invisible kind of government. It leaves them free to exercise their privileges.
We in the 9.9 percent have mastered the art of getting the government to work for us even while complaining loudly that it's working
for those other people.
Consider, for starters, the greatly exaggerated reports of our tax burdens. On guest panels this past holiday season, apologists
for the latest round of upwardly aimed tax cuts offered versions of Mitt Romney's claim that the 47 percent of Americans who pay
no federal income tax in a typical year have "no skin in the game." Baloney. Sure, the federal individual-income tax, which raised
$1.6 trillion last year, remains progressive. But the $1.2 trillion raised by the payroll tax hits all workers -- but not investors,
such as Romney -- and it hits those making lower incomes at a higher rate, thanks to a cap on the amount of income subject to the
tax. Then there's the $2.3 trillion raised by state and local governments, much of it collected through regressive sales and property
taxes. The poorest quintile of Americans
pays more than
twice the rate of state taxes as the top 1 percent does , and about half again what the top 10 percent pays.
Our false protests about paying all the taxes, however, sound like songs of innocence compared with our mastery of the art of
having the taxes returned to us. The income-tax system that so offended my grandfather has had the unintended effect of creating
a highly discreet category of government expenditures. They're called "tax breaks," but it's better to think of them as handouts
that spare the government the inconvenience of collecting the money in the first place. In theory, tax expenditures can be used to
support any number of worthy social purposes, and a few of them, such as the earned income-tax credit, do actually go to those with
a lower income. But more commonly, because their value is usually a function of the amount of money individuals have in the first
place, and those individuals' marginal tax rates, the benefits flow uphill.
Let us count our blessings: Every year, the federal government doles out tax expenditures through deductions for retirement savings
(worth $137 billion in 2013); employer-sponsored health plans ($250 billion); mortgage-interest payments ($70 billion); and, sweetest
of all, income from watching the value of your home, stock portfolio, and private-equity partnerships grow ($161 billion). In total,
federal tax expenditures exceeded $900 billion in 2013. That's more than the cost of Medicare, more than the cost of Medicaid, more
than the cost of all other federal safety-net programs put together. And -- such is the beauty of the system -- 51 percent of those
handouts went to the top quintile of earners, and 39 percent to the top decile.
The best thing about this program of reverse taxation, as far as the 9.9 percent are concerned, is that the bottom 90 percent
haven't got a clue. The working classes get riled up when they see someone at the grocery store flipping out their food stamps to
buy a T-bone. They have no idea that a nice family on the other side of town is walking away with $100,000 for flipping their house.
But wait, there's more! Let's not forget about the kids. If the secrets of a nation's soul may be read from its tax code, then
our nation must be in love with the children of rich people. The 2017 tax law raises the amount of money that married couples can
pass along to their heirs tax-free from a very generous $11 million to a magnificent $22 million. Correction: It's not merely tax-free;
it's tax-subsidized. The unrealized tax liability on the appreciation of the house you bought 40 years ago, or on the stock portfolio
that has been gathering moths -- all of that disappears when you pass the gains along to the kids. Those foregone taxes cost the
United States Treasury $43 billion in 2013 alone -- about three times the amount spent on the Children's Health Insurance Program.
Grandfather's father, the Colonel, died in 1947, when the maximum estate-tax rate was a now-unheard-of 77 percent. When the remainder
was divvied up among four siblings, Grandfather had barely enough to pay for the Bentley and keep up with dues at the necessary clubs.
The government made sure that I would grow up in the middle class. And for that I will always be grateful.
... ... ...
8.
The Politics of Resentment
The political theology of the meritocracy has no room for resentment. We are taught to run the competition of life with our eyes
on the clock and not on one another, as if we were each alone. If someone scores a powerboat on the Long Island waterways, so much
the better for her. The losers will just smile and try harder next time.
In the real world, we humans are always looking from side to side. We are intensely conscious of what other people are thinking
and doing, and conscious to the point of preoccupation with what they think about us. Our status is visible only through its reflection
in the eyes of others.
Perhaps the best evidence for the power of an aristocracy is to be found in the degree of resentment it provokes. By that measure,
the 9.9 percent are doing pretty well indeed. The surest sign of an increase in resentment is a rise in political division and instability.
We're positively acing that test. You can read all about it in the headlines of the past two years.
The 2016 presidential election marked a decisive moment in the history of resentment in the United States. In the person of Donald
Trump, resentment entered the White House. It rode in on the back of an alliance between a tiny subset of super-wealthy 0.1 percenters
(not all of them necessarily American) and a large number of 90 percenters who stand for pretty much everything the 9.9 percent are
not.
According to exit polls by CNN and Pew, Trump won white voters by about 20 percent. But these weren't just any old whites (though
they were old, too). The first thing to know about the substantial majority of them is that they weren't the winners in the new economy.
To be sure, for the most part they weren't poor either. But they did have reason to feel judged by the market -- and found wanting.
The counties that supported Hillary Clinton represented an astonishing 64 percent of the GDP, while Trump counties accounted for
a mere 36 percent. Aaron Terrazas, a senior economist at Zillow,
found that the median home value in
Clinton counties was $250,000, while the median in Trump counties was $154,000. When you adjust for inflation, Clinton counties enjoyed
real-estate price appreciation of 27 percent from January 2000 to October 2016; Trump counties got only a 6 percent bump.
The residents of Trump country were also the losers in the war on human health. According to Shannon Monnat, an associate professor
of sociology at Syracuse, the Rust Belt counties that put the anti-government-health-care candidate over the top were those that
lost the most people in recent years to deaths of despair -- those due to alcohol, drugs, and suicide.
To make all of America
as great as Trump country, you would have to torch about a quarter of total GDP, wipe a similar proportion of the nation's housing
stock into the sea, and lose a few years in life expectancy. There's a reason why one of Trump's favorite words is unfair
. That's the only word resentment wants to hear.
Even so, the distinguishing feature of Trump's (white) voters wasn't their income but their education, or lack thereof. Pew's
latest analysis indicates that Trump lost college-educated white voters by a humiliating 17 percent margin. But he got revenge with
non-college-educated whites, whom he captured by a stomping 36 percent margin. According to an analysis by Nate Silver,
the 50 most
educated counties in the nation surged to Clinton : In 2012, Obama had won them by a mere 17 percentage points; Clinton took
them by 26 points. The 50 least educated counties moved in the opposite direction; whereas Obama had lost them by 19 points, Clinton
lost them by 31. Majority-minority counties split the same way: The more educated moved toward Clinton, and the less educated toward
Trump.
The historian Richard Hofstadter drew attention to Anti-intellectualism in American Life in 1963; Susan Jacoby warned in
2008 about The Age of American Unreason ; and Tom Nichols announced The Death of Expertise in 2017. In Trump, the age
of unreason has at last found its hero. The "self-made man" is always the idol of those who aren't quite making it. He is the sacred
embodiment of the American dream, the guy who answers to nobody, the poor man's idea of a rich man. It's the educated phonies this
group can't stand. With his utter lack of policy knowledge and belligerent commitment to maintaining his ignorance, Trump is the
perfect representative for a population whose idea of good governance is just to scramble the eggheads. When reason becomes the enemy
of the common man, the common man becomes the enemy of reason.
Did I mention that the common man is white? That brings us to the other side of American-style resentment. You kick down, and
then you close ranks around an imaginary tribe. The problem, you say, is the moochers, the snakes, the handout queens; the solution
is the flag and the religion of your (white) ancestors. According to a survey by the political scientist Brian Schaffner, Trump crushed
it among voters who "strongly disagree" that "white people have advantages because of the color of their skin," as well as among
those who "strongly agree" that "women seek to gain power over men." It's worth adding that these responses measure not racism or
sexism directly, but rather resentment. They're good for picking out the kind of people who will vehemently insist that they are
the least racist or sexist person you have ever met, even as they vote for a flagrant racist and an accused sexual predator.
No one is born resentful. As mass phenomena, racism, xenophobia, anti-intellectualism, narcissism, irrationalism, and all other
variants of resentment are as expensive to produce as they are deadly to democratic politics. Only long hours of television programming,
intelligently manipulated social-media feeds, and expensively sustained information bubbles can actualize the unhappy dispositions
of humanity to the point where they may be fruitfully manipulated for political gain. Racism in particular is not just a legacy of
the past, as many Americans would like to believe; it also must be constantly reinvented for the present. Mass incarceration, fearmongering,
and segregation are not just the results of prejudice, but also the means of reproducing it.
The raging polarization of American political life is not the consequence of bad manners or a lack of mutual understanding. It
is just the loud aftermath of escalating inequality. It could not have happened without the 0.1 percent (or, rather, an aggressive
subset of its members). Wealth always preserves itself by dividing the opposition. The Gatsby Curve does not merely cause barriers
to be built on the ground; it mandates the construction of walls that run through other people's minds.
But that is not to let the 9.9 percent off the hook. We may not be the ones funding the race-baiting, but we are the ones hoarding
the opportunities of daily life. We are the staff that runs the machine that funnels resources from the 90 percent to the 0.1 percent.
We've been happy to take our cut of the spoils. We've looked on with smug disdain as our labors have brought forth a population prone
to resentment and ripe for manipulation. We should be prepared to embrace the consequences.
The first important thing to know about these consequences is the most obvious: Resentment is a solution to nothing. It isn't
a program of reform. It isn't "populism." It is an affliction of democracy, not an instance of it. The politics of resentment is
a means of increasing inequality, not reducing it. Every policy change that has waded out of the Trump administration's baffling
morass of incompetence makes this clear. The new tax law; the executive actions on the environment and telecommunications, and on
financial-services regulation; the judicial appointments of conservative ideologues -- all will have the effect of keeping the 90
percent toiling in the foothills of merit for many years to come.
The second thing to know is that we are next in line for the chopping block. As the population of the resentful expands, the circle
of joy near the top gets smaller. The people riding popular rage to glory eventually realize that we are less useful to them as servants
of the economic machine than we are as model enemies of the people. The anti-blue-state provisions of the recent tax law have miffed
some members of the 9.9 percent, but they're just a taste of the bad things that happen to people like us as the politics of resentment
unfolds.
The past year provides ample confirmation of the third and most important consequence of the process: instability. Unreasonable
people also tend to be ungovernable. I won't belabor the point. Just try doing a frequency search on the phrase constitutional
crisis over the past five years. That's the thing about the Gatsby Curve. You think it's locking all of your gains in place.
But the crystallization process actually has the effect of making the whole system more brittle. If you look again at history, you
can get a sense of how the process usually ends.
10.
The Choice
I like to think that the ending of The Great Gatsby is too down-beat. Even if we are doomed to row our boats ceaselessly
back into the past, how do we know which part of the past that will be?
History shows us a number of aristocracies that have made good choices. The 9.9 percenters of ancient Athens held off the dead
tide of the Gatsby Curve for a time, even if democracy wasn't quite the right word for their system of government. America's
first generation of revolutionaries was mostly 9.9 percenters, and yet they turned their backs on the man at the very top in order
to create a government of, by, and for the people. The best revolutions do not start at the bottom; they are the work of the upper-middle
class.
These exceptions are rare, to be sure, and yet they are the story of the modern world. In total population, average life expectancy,
material wealth, artistic expression, rates of violence, and almost every other measure that matters for the quality of human life,
the modern world is a dramatically different place than anything that came before. Historians offer many complicated explanations
for this happy turn in human events -- the steam engine, microbes, the weather -- but a simple answer precedes them all: equality.
The history of the modern world is the unfolding of the idea at the vital center of the American Revolution.
The defining challenge of our time is to renew the promise of American democracy by reversing the calcifying effects of accelerating
inequality. As long as inequality rules, reason will be absent from our politics; without reason, none of our other issues can be
solved. It's a world-historical problem. But the solutions that have been put forward so far are, for the most part, shoebox in size.
Well-meaning meritocrats have proposed new and better tests for admitting people into their jewel-encrusted classrooms. Fine --
but we aren't going to beat back the Gatsby Curve by tweaking the formulas for excluding people from fancy universities. Policy wonks
have taken aim at the more-egregious tax-code handouts, such as the mortgage-interest deduction and college-savings plans. Good --
and then what? Conservatives continue to recycle the characterological solutions, like celebrating traditional marriage or bringing
back that old-time religion. Sure -- reforging familial and community bonds is a worthy goal. But talking up those virtues won't
save any families from the withering pressures of a rigged economy. Meanwhile, coffee-shop radicals say they want a revolution. They
don't seem to appreciate that the only simple solutions are the incredibly violent and destructive ones.
The American idea has always been a guide star, not a policy program, much less a reality. The rights of human beings never have
been and never could be permanently established in a handful of phrases or old declarations. They are always rushing to catch up
to the world that we inhabit. In our world, now, we need to understand that access to the means of sustaining good health, the opportunity
to learn from the wisdom accumulated in our culture, and the expectation that one may do so in a decent home and neighborhood are
not privileges to be reserved for the few who have learned to game the system. They are rights that follow from the same source as
those that an earlier generation called life, liberty, and the pursuit of happiness.
Yes, the kind of change that really matters is going to require action from the federal government. That which creates monopoly
power can also destroy it; that which allows money into politics can also take it out; that which has transferred power from labor
to capital can transfer it back. Change also needs to happen at the state and local levels. How else are we going to open up our
neighborhoods and restore the public character of education?
It's going to take something from each of us, too, and perhaps especially from those who happen to be the momentary winners of
this cycle in the game. We need to peel our eyes away from the mirror of our own success and think about what we can do in our everyday
lives for the people who aren't our neighbors. We should be fighting for opportunities for other people's children as if the future
of our own children depended on it. It probably does.
This article appears in the June 2018 print edition with the headline "The Birth of a New American Aristocracy."
There are many societies that tolerate a certain degree of economic inequality, but still
provide decent living conditions, services and infrastructure for most citizens. The notion
that we either have extreme inequality or extreme poverty is empirically and morally empty.
The economist John Maynard Keynes said "When the facts change, I change my mind. What do
you do, sir?" But many students continue to be deceived by their professors who, even
after the great financial crisis, refuse to change their mind and continue to actively peddle
theories that are plain wrong. So on the show we ask if the academics are failing us, how do we
begin to reverse such a heavily entrenched education system? Host Ross Ashcroft is joined by
Professor Steve Keen and the author and economist Steven Payson.
Stumbling and Mumbling has a good riff on this topic:
". Economics, for me, is not about armchair theorizing. It should begin with the facts, and
especially the big ones. The facts are that share buy-backs do usually matter, so thought
experiments that say otherwise are wrong from the off. Similarly, the fact that wage
inflation has been low for years (pdf) is much more significant than any theorizing about
Phillips curves."
The comments are good as well:
"That's a category error: you don't define "Economics", tenure committees define it, and they
award tenure to people who have a long record of publishing "internally consistent"
("armchair theorizing") papers."
"I found myself sitting next to a very likable young middle-aged academic tenured at an elite
British university, whom henceforth I will refer to as Doctor X and whose field is closely
associated with this blog. Every year I publish papers in the top journals and they're pure
shit." Doctor X, who by now had had a glass or two, felt bad about this, not least because
"students these days are so idealistic and eager to learn; they're really wonderful."
Furthermore Doctor X could and would like "to write serious papers but what would be the
point?" "
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/04/facts-vs-hand-waving-in-economics.html#comments
Yeah. I'm inclined to think the author needs to curb his enthusiasms and take up dejected
drinking.
The nub of his presentation was a model in which consumers, due to cognitive
limitations, were unable to fully examine every single product they purchased. The result
was that regulations guaranteeing a certain standard of safety, quality and the like could
improve competition by giving people more time to shop around instead of having to devote
so much time to investigate specific products. Thus, regulation would improve markets and
competition
This is Nobel-level work? It amounts to finding a way to pitch a product to
anti-regulation dogmatists. I'm sure that you could find similar arguments being made during
the Progressive era regulatory push. Only they would have been framed more as "people will
have more time to shop around if they're not killed by previous ingestion of the
product."
What I mean by 'mathemagics' is the misuse of mathematics –even simple
mathematics -- to create the illusion that 'utility' or 'indifference curves' actually
pertain to real concepts. In reality, they 'mathematize' gobbledygook passed off as coherent
concepts. There is nothing so conceptually barren as 'utility' or 'indifference curve'
analytics. The notion that one can derive any coherent 'demand' analysis for any one consumer
that is individual human being (or life form of any kind) for any product, or that one can
aggregate these up is mathematical junk.
The Classical Economists used the broader political economy rather than today's narrow
economics.
The Washington Consensus dreamed of a world run by the laws of economics.
The laws of economics worked in China's favour and the Western economies got hollowed
out.
Disposable income = wages – (taxes + the cost of living)
Maximising profit required minimising wages.
The minimum wage is set when disposable income equals zero.
The minimum wage = taxes + the cost of living
China had it made and the West had tilted the playing field against itself.
The US eventually woke up the geopolitical consequences of a world governed by the laws of
economics that had worked in China's favour.
Trump has just made things worse with his tax cuts.
Theory:
If we reduce taxes on the wealthy they will create more jobs and wages.
Reality:
If we reduce taxes on the wealthy they will create more jobs and wages in Asia where they can
make more profit. They can then ship the stuff back here increasing Western trade
deficits.
"... First, we need to accept that there is no such thing as "value-free" analysis of the economy. As I've explained, neoclassical economics pretends to be ethically neutral while smuggling in an individualistic, anti-social ethos " – Howard Reed ..."
"... Fundamentally, economics is a religion, with priests, high priests, creed, dogma, punishment for heretics, and all the other trappings of a religion. But the pay is good, so Clive's rule for middle class jobs applies. ..."
Economics conducted
a curriculum review of 174 modules at 7 Russell Group universities -- rightly or wrongly
considered the 'top' universities in the UK -- and we found that the uncritical acceptance of
one type of economics begins with education. Under 10% of modules even mentioned anything other
than mainstream or 'neoclassical' economics; in econometrics, over 90% of modules devoted more
than two-thirds of their lectures to linear regression. Only 24% of exam questions required
critical or independent thinking (i.e. were open-ended); this dropped to 8% if you only counted
the compulsory macro and micro modules that form the core of economics education.
We have
previously called this 'indoctrination', and while this may seem dramatic the dictionary
definition of indoctrination is to "teach a person or set of people to accept a set of beliefs
uncritically", which we think adequately characterises the results of the review, as well as
our own experience and many widely used economics textbooks. Given this education, it is no
wonder that economists remain wedded to the fundamental precepts of choice models and linear
regression no matter where they turn their attention. By putting the method first, the implicit
assumption becomes that answering a question using this framework is prima facie
interesting, and critical evaluation of these tools against others is made unthinkable.
For nearly thirty years after the Efficient Market Hypothesis (EMH) became received gospel
in the mid-1960s, the claim that stock prices exhibited momentum (which shouldn't be true in
a perfectly efficient market) was roundly mocked by mainstream economists.
Then in 1993, Jegadeesh and Titman published a paper titled "Returns to Buying Winners and
Selling Losers: Implications for Stock Market Efficiency" in the Journal of Finance .
Its evidence for a momentum effect was impossible to refute.
So economists bolted en masse to the opposite side of the boat. Today there are
thousands of papers on momentum, often presenting some fairly trivial arithmetic that
home-based amateurs have long used. But it's formulated into equations with Greek letters,
and a [totally boring] statistical panel appears in the Appendix to prove some statistical
significance.
A few professors actually exploited their discoveries to get rich. Cliff Asness, a U of
Chicago PhD (but a practitioner, not a professor) offers some light-hearted commentary on his
mentor Eugene Fama:
Of course the book The Fama Portfolio also contains contributions by other
authors (or how the heck did I get in there?) that reflect, directly or indirectly, on
Gene's work.
Being able to read Gene's originals and some of the major papers by others that explore
his work in one volume is both a treat and incredibly useful (these contributors, unlike
John Liew and myself, are themselves serious academic luminaries!).
OK, enough shilling. If you love finance and don't immediately pine for this book, I
can't help you any further☺
Where the police were call off their pursuit, when within a finger nail of – helping
– their subject. Because the economic perimeters their models produced, with the help of
computational machines, gave a ridged defined view of the operation. Seems the subject was
operating outside the econometric perimeters due to mental illness – was a patient whom
escaped at the time.
Alas we never get to see what he saw when he popped out on the surface, save a blinding
orb.
In retrospect did they do the underground thingy to better control, could nature itself be a
threat to the model, hence the need to control every aspect of environment for behavioral
reasons.
Anywho I'll just leave this on my way to work:
"If we accept that we need fundamental reform, what should the new economics --
"de-conomics" as I'm calling it -- look like?
First, we need to accept that there is no such thing as "value-free" analysis of the
economy. As I've explained, neoclassical economics pretends to be ethically neutral while
smuggling in an individualistic, anti-social ethos " – Howard Reed
Linear regression is economists' preferred empirical technique
That's really a powerful tool in a world which is chaotic.
The trouble with embracing chaos and catastrophe theory is the "chaos" part of predicting
the future. But economists, being human and liking their paychecks, are not interested in any
predictions which do not cater, or pander, to the needs of their bosses or paymasters.
Why, that might suggest the boss is wrong! Such heresy leads to a quick execution!
Fundamentally, economics is a religion, with priests, high priests, creed, dogma,
punishment for heretics, and all the other trappings of a religion. But the pay is good, so
Clive's rule for middle class jobs applies.
Disclaimer: My view of Religion is similar: Why?
1. You'll get your reward in the afterlife, after you are dead!
2. We know this is true, because we've never had a complaint.
Linear regression certainly is a powerful tool for examining linear distributions, but it
essential to first confirm that the distribution is linear, and to remember that on occasion,
samples drawn from random (unrelated) distributions can show a spurious correlation.
but it essential to first confirm that the distribution is linear
Very true, but how is this proven? In nature and economics are there any linear
distributions? If so over what range?
I notice a preponderance of using straight lines instead of growth curves. I also notice
chaos, or noise, in behaviors, coupled with a complete non-understanding of entropy.
In nature linear behavior is unlikely. If it were linear we'd see straight branches on
trees, rainfall evenly distributed and the wind would always blow at constant speed, with
predictable eddies.
I suppose a rock dropped would exhibit linear behaviors until it hits the ground, and at
that point in time the "dropping rock" system become decidedly chaotic, from stuck in the mud,
to bouncing in a random direction, to bursting into pieces, pieces who's destiny is completely
uncertain.
― Nassim Nicholas Taleb, Antifragile: Things That Gain from Disorder
I've debated many economists who claim to specialize in risk and probability: when one
takes them slightly outside their narrow focus, but within the discipline of probability,
they fall apart, with the disconsolate face of a gym rat in front of a gangster hit man."
Nassim, I think covers all this better than anyone else. Would love to hear of
similarly comprehensive works.
Neoliberalism as a social system is self-destructive -- similar to Trotskyism from which it was derived.
World leaders urged to act as anger over inequality reaches a 'tipping point'
Typical neoliberal mantra "need to rise productivity" is a typical neoliberal fake: look at Amazon for shining example here.
Notable quotes:
"... The real focus of our taxation system should be to tax wealth and recipients of silly amounts of annual income. ..."
"... Ur talking about something called "Reagan-nomics" or what was commonly and lovingly referred to as "trickle down economics". After the destruction of unionized labor, years of globalization, record profits for corporations & wall street and a high octane doze of Reagan / Thatcher Neoliberalism, "trickle down" has obviously been a complete failure. ..."
An alarming projection produced by the House of Commons library suggests that if trends seen since the 2008 financial crash were
to continue, then the top 1% will hold 64% of the world's wealth by 2030. Even taking the financial crash into account, and measuring
their assets over a longer period, they would still hold more than half of all wealth.
Since 2008, the wealth of the richest 1% has been growing at an average of 6% a year – much faster than the 3% growth in wealth
of the remaining 99% of the world's population. Should that continue, the top 1% would hold wealth equating to $305tn (£216.5tn)
– up from $140tn today.
The population of third world countries is skyrocketing. The population of developed countries, outside the importation of poor
immigrants, is static. The top 1% of world population will continuously become comparatively richer as long as this is the case.
That means 6.75m households are in the top 1% of the world, At 1.94 adults per household, that's 13,000,000 people.
However, assuming households are not 'legal people' but the adults within them are, then you'd have to divide household income
by the number of adults (1.94) to get the wealth per person. So to reach £550,000 per person, a household would have to
have net wealth of £1.067m, and only 10% of households have that wealth.
10% of 27m is 2.7m and that equates to only 5,240,000 people.
So in terms of households we easily reach 10m mark, but in terms of individual people, you are correct, it is 'only' 5.24m.
Still and awful lot of people though.
A single mother get £20k on benefits per years. Over 18 years that is £360,000. She has two kids, so that iwill cost £3,000 in
education per years. 2 kids x 14 years x £3,500 per years = £98,000. We pay for child birth costs, free vaccinations, anti-natal
care, free prescriptions, free eye care, free dental care, free school meals, we pay her countal tax bil. Plus if she is lucky,
she get a free £450,000 council home.
Even if she works for a few years, it will never be enough to pay what she has received from the state. PLus we have to make
provisions for her pension and her elderly care, meals on wheels, elderly health care etc...
That is easily £1m to £2million per single mother....
The plebs are well on the way to figuring it out alright and so have the 1%. That's we now live under a militarized surveillance
state which serves the elites.. Think again if voting will ever change this.. Bernie was doomed from the getgo.
I think the principle here is that the longer this goes on and the greater inequality becomes then the more extreme will be the
countervailing force.
It is in everybody's interest that the world becomes fairer. That governments govern in the interests of as many people as
possible. That public services like health and education are available to all regardless. That taxes are progressive and that
governments have international treaties to deal with tax avoidance and evasion. That our democratic processes are as robust as
possible and that all our organs of state are as transparent as possible and open to scrutiny to the public.
If the accumulation of wealth on this scale continues unabated it will end in tears... inevitably.
Furthermore I believe that there is a relationship between inequality - and all the things that go with it and follow from
it - and environmental degradation.
Greater fairness between individuals and between countries is, in my opinion, one of the essential requirements for us to surmount
the epic problems that we face in the world today.
I think most of us have are aware of what really happens at Davos. The wealthy and powerful are cooking up more schemes to screw
the 99% over. Your Bono's and your Bill Gates are no friends to the working class or the working poor. Take Jeff Bezos for example.
He has a mass of wealth totaling $112 Billion.
To end global hunger - $30 Billion
To end homelessness in the USA - $20 Billion
Jeff Bezos, or even Bill Gates could do that in an instant and still have Billions to spare. The super rich don't care about
"regular" people, and never have.
Peter Rabbit ComfortablyPlumb 7 Apr 2018 14:25
This is the Osborne analogy regurgitated.
If you live in a £2.5 million house, you are wealthy, not average or poor. To be wealthy is not some form of human rights entitlement,
especially if it is at the cost of the overwhelming majority. This concept is known as "greed" and "selfishness". Obviously your
mantra is that of Gordon Gekko "greed is good".
The real focus of our taxation system should be to tax wealth and recipients of silly amounts of annual income.
All these arguments are dated and are applicable to the Thatcher era of the early 1980s which has long gone and is not going
to return. The problem facing our society currently is run away social and economic inequality and the entrenchment of substantial
wealth for a very small number of people which is fuelling generational social and inequality.
TakoradiMan BrotherLead 7 Apr 2018 14:24
I presume that most those living in the U.K. will fall within top 1% which the Guardianista loath so much.
I'm sorry but this post is utterly clueless.
To be in the top 1% you need to have a household income of well over £50k per annum (closer to £100k I suspect - no one here
has yet given very authoritative figures); only a fraction of the UK population are that well off.
AnneK1 Landlord52 7 Apr 2018 14:24
Except that they don't and the charities have to come along and ask us for more money because the public sector haven't used
tax revenue efficiently. I would say Britain's ineffective public sector are the greatest threat to Corbyn's chances of forming
the government we need to rid us of these dangerous Tories.
PeterlooSunset 7 Apr 2018 14:24
The richest 1% own the corporate media (including the private equity firms keeping the Guardian afloat) that keep telling us
we have to focus our attention on identity politics while they loot all the wealth.
prematureoptimsim -> Inthesticks 7 Apr 2018 14:23
Ur talking about something called "Reagan-nomics" or what was commonly and lovingly referred to as "trickle down economics". After the destruction of unionized labor, years of globalization, record profits for corporations & wall street and a high octane doze of Reagan / Thatcher Neoliberalism, "trickle down" has obviously been a complete failure.
U need proof ? Just examine recent history of presidential elections. . . .
Barack Obama - ( Mr. Hope and Change )
Donald Trump - ( Mr. Make America Great Again ).
And in the end it's the same as it ever was. The rich get richer and. . . . Well u know the rest. Good luck to u. Enjoy ur crumbs.
"... Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace". ..."
Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate.
As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic
control of knowledge" by delegating control over academic research to "the marketplace".
This market rationality extends even to the way research is evaluated – which the Saudi government has been gaming. To give one
example, it paid highly cited mathematicians at universities around the world to list
King Abdulaziz University as an affiliation,
thereby making it the seventh "best" mathematics department worldwide in the
2014 US
News and World Report university rankings .
Here, the Saudi government is only playing by the rules of a game designed by western elites. This is the same logic that has
been used to allow corporations, nonprofits and the military to steadily buy out chunks of academia to the point where it makes little
sense to presume clear boundaries exist between these entities. As a result, numerous partnerships entangle MIT researchers with
Bin Salman. On his Boston tour, he also visited IBM's Cambridge research facility, which recently partnered with MIT to form an artificial
intelligence research laboratory in exchange for a $240m commitment to the university.
Boston Dynamics , an MIT partner that builds robots for the US military, also offered a demonstration. Such alliances ought to
cast doubt on MIT's promise to understand the "societal and ethical" implications of AI and build socially beneficial technologies.
The terms of all of these partnerships are essentially opaque, while the secrecy that surrounds them denies the community the
chance to deliberate and take action. The growth of unaccountable university partnerships, like other crises facing educational institutions,
stems from the absence of democratic engagement. When universities decide to sell themselves to the highest bidder, they become deaf
to the interests of their students and the wider societies in which they operate. Subservience to war criminals and corporate overlords
tends to follow.
Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal
logic by which universities increasingly operate. As the journalist David Dickson noted in
1984, American universities and corporations have "teamed up to challenge the democratic
control of knowledge" by delegating control over academic research to "the marketplace".
This
market rationality extends even to the way research is evaluated – which the Saudi
government has been gaming. To give one example, it paid highly cited mathematicians at
universities around the world to list King Abdulaziz University as an
affiliation, thereby making it the seventh "best" mathematics department worldwide in the
2014 US News and World Report university rankings .
Here, the Saudi government is only playing by the rules of a game designed by western
elites. This is the same logic that has been used to allow corporations, nonprofits and the
military to steadily buy out chunks of academia to the point where it makes little sense to
presume clear boundaries exist between these entities. As a result, numerous partnerships
entangle MIT researchers with Bin Salman. On his Boston tour, he also visited IBM's Cambridge
research facility, which recently partnered with MIT to form an artificial intelligence
research laboratory in exchange for a $240m commitment to the university.
Boston Dynamics , an MIT partner that builds robots for the US military, also offered a
demonstration. Such alliances ought to cast doubt on MIT's promise to understand the "societal
and ethical" implications of AI and build socially beneficial technologies.
The terms of all of these partnerships are essentially opaque, while the secrecy that
surrounds them denies the community the chance to deliberate and take action. The growth of
unaccountable university partnerships, like other crises facing educational institutions, stems
from the absence of democratic engagement. When universities decide to sell themselves to the
highest bidder, they become deaf to the interests of their students and the wider societies in
which they operate. Subservience to war criminals and corporate overlords tends to follow.
"... In over half of states, the share was higher. In Vermont, New Hampshire, Delaware and Pennsylvania, over 70 percent of higher education funding came from tuition dollars last year. ..."
State colleges and universities are relying more on tuition dollars to fund their operations even as state funding rises
and colleges come under pressure to keep tuition low.
Last fiscal year, for the first time, tuition revenue outpaced government appropriations for higher
education in the majority of states, according to the annual higher education finance report from the State
Higher Education Executive Officers Association. The association represents chief executives of statewide
governing, policy and coordinating boards of postsecondary education.
Tuition dollars are becoming a more important revenue source as more students head to college, tuition
prices rise, and state lawmakers struggle to return higher education funding to the per-student levels seen
before the Great Recession.
The report looked at net tuition revenue, which it defined as tuition and fees minus medical student
tuition, state and institutional financial aid and other waivers and discounts. It found that tuition dollars
paid by families -- a figure that includes federal grants and loans -- made up 46 percent of funding for U.S.
public colleges and universities in fiscal 2017, almost double tuition's share of higher education funding in
1990.
In over half of states, the share was higher. In Vermont, New Hampshire, Delaware and Pennsylvania, over
70 percent of higher education funding came from tuition dollars last year.
Nationwide, net tuition revenue peaked as a funding source for public higher education in 2013, after the
collapsing economy sent a wave of students back to school at the same time as state lawmakers were cutting
funding for colleges. Since then, enrollments have fallen and state investments in higher education and
financial aid have increased.
It takes a lot of courage for an addict to recover and stay clean. And it is sadly not news that drug addiction and high levels
of prescription drug use are signs that something is deeply broken in our society. There are always some people afflicted with deep
personal pain but our system is doing a very good job of generating unnecessary pain and desperation.
Mady Ohlman was 22 on the evening some years ago when she stood in a friend's bathroom looking down at the sink.
"I had set up a bunch of needles filled with heroin because I wanted to just do them back-to-back-to-back," Ohlman recalled. She
doesn't remember how many she injected before collapsing, or how long she lay drugged-out on the floor.
"But I remember being pissed because I could still get up, you know?"
She wanted to be dead, she said, glancing down, a wisp of straight brown hair slipping from behind an ear across her thin face.
At that point, said Ohlman, she'd been addicted to opioids -- controlled by the drugs -- for more than three years.
"And doing all these things you don't want to do that are horrible -- you know, selling my body, stealing from my mom, sleeping
in my car," Ohlman said. "How could I not be suicidal?"
For this young woman, whose weight had dropped to about 90 pounds, who was shooting heroin just to avoid feeling violently ill,
suicide seemed a painless way out.
"You realize getting clean would be a lot of work," Ohlman said, her voice rising. "And you realize dying would be a lot less
painful. You also feel like you'll be doing everyone else a favor if you die."
Ohlman, who has now been sober for more than four years, said many drug users hit the same point, when the disease and the pursuit
of illegal drugs crushes their will to live. Ohlman is among at least
40 percent of active
drug users who wrestle with depression, anxiety or another mental health issue that increases the risk of suicide.
Measuring Suicide Among Patients Addicted To Opioids
Massachusetts, where Ohlman lives, began formally
recognizing
in May 2017 that some opioid overdose deaths are suicides. The state confirmed only about 2 percent of all overdose deaths as suicides,
but Dr. Monica Bhare l, head of the
Massachusetts Department of Public Health, said it's difficult to determine a person's true intent.
"For one thing, medical examiners use different criteria for whether suicide was involved or not," Bharel said, and the "tremendous
amount of stigma surrounding both overdose deaths and suicide sometimes makes it extremely challenging to piece everything together
and figure out unintentional and intentional."
Research on drug addiction and suicide suggests much higher numbers.
"[Based on the literature that's available], it looks like it's anywhere between 25 and 45 percent of deaths by overdose that
may be actual suicides," said
Dr. Maria Oquendo
, immediate past president of the American Psychiatric Association.
Oquendo pointed to one study of overdoses
from prescription opioids that found nearly 54 percent were unintentional. The rest were either suicide attempts or undetermined.
Several large studies show an increased risk of suicide among drug users addicted to opioids, especially women. In
a study of about 5 million veterans, women were eight
times as likely as others to be at risk for suicide, while men faced a twofold risk.
The opioid epidemic is occurring at the same time suicides have
hit a 30-year high , but Oquendo said few doctors
look for a connection.
"They are not monitoring it," said Oquendo, who chairs the department of psychiatry at the University of Pennsylvania. "They are
probably not assessing it in the kinds of depths they would need to prevent some of the deaths."
That's starting to change. A few hospitals in Boston, for example, aim to ask every patient admitted about substance use, as well
as about whether they've considered hurting themselves.
"No one has answered the chicken and egg [problem]," said
Dr. Kiame Mahaniah , a family physician who runs the
Lynn Community Health Center in Lynn, Mass. Is it that patients "have mental health issues that lead to addiction, or did a life
of addiction then trigger mental health problems?"
With so little data to go on, "it's so important to provide treatment that covers all those bases," Mahaniah said.
'Deaths Of Despair'
When doctors do look deeper into the reasons patients addicted to opioids become suicidal, some economists predict they'll find
deep reservoirs of depression and pain.
In a seminal paper published in 2015, Princeton economists
Angus Deaton and
Anne Case tracked falling marriage rates,
the loss of stable middle-class jobs and rising rates of self-reported pain. The authors say opioid overdoses, suicides and diseases
related to alcoholism are all often "deaths of despair."
"We think of opioids as something that's thrown petrol on the flames and made things infinitely worse," Deaton said, "but the
underlying deep malaise would be there even without the opioids."
Many economists agree on remedies for that deep malaise. Harvard economics professor
David Cutle r said solutions include a good education, a steady
job that pays a decent wage, secure housing, food and health care.
"And also thinking about a sense of purpose in life," Cutler said. "That is, even if one is doing well financially, is there a
sense that one is contributing in a meaningful way?"
Tackling Despair In The Addiction Community
"I know firsthand the sense of hopelessness that people can feel in the throes of addiction," said
Michael Botticelli , executive director of the Grayken Center
for Addiction at Boston Medical Center; he is in recovery for an addiction to alcohol.
Botticelli said recovery programs must help patients come out of isolation and create or recreate bonds with family and friends.
"The vast majority of people I know who are in recovery often talk about this profound sense of re-establishing -- and sometimes
establishing for the first time -- a connection to a much larger community," Botticelli said.
Ohlman said she isn't sure why her attempted suicide, with multiple injections of heroin, didn't work.
"I just got really lucky," Ohlman said. "I don't know how."
A big part of her recovery strategy involves building a supportive community, she said.
"Meetings; 12-step; sponsorship and networking; being involved with people doing what I'm doing," said Ohlman, ticking through
a list of her priorities.
There's a fatal overdose at least once a week within her Cape Cod community, she said. Some are accidental, others not. Ohlman
said she's convinced that telling her story, of losing and then finding hope, will help bring those numbers down.
res ipsa loquitur although as one wag said, this news tidbit does seem to disprove
the claim that young people aren't risk takers. But it may establish that they are innumerate
or more specifically, bad at statistics. One of Nassim Nicholas Taleb's recommendations about
investing boils down to "Be paranoid" and "Don't be greedy" and leveraged cryptocurrency
speculation is the opposite of that.
This sort of thing does not help the image of student borrowers, although it does strengthen
the case for regulating cryptocurrencies far more strictly. Given the decline in the status of
cab drivers, who historically have been indicators of market peaks (when cab drivers talk about
their stocks, it's usually sign of a bubble), this finding may also be a proof of Peak
Cryptocurrency.
According to a study by The Student Loan Report, over one-fifth of current university
students with student loan debt indicated that they used their student loan money to invest
in digital currency such as bitcoin.
The student loan news and information website found that 21.2% of the 1,000 students they
surveyed indicated that they used their borrowed cash to gamble on the highly volatile
digital currency market. While school administrators may look down upon the practice of using
borrowed funds for non-school expenses, Student Loan Report indicates that there are
currently no rules against it. College students are able to use loans for "living expenses,"
a flexible category that covers a wide range of potential necessities.
Given that 70% of retail investors in futures lose money, there's not a strong reason for
thinking that latecomers to the cryptocurrency party would be stellar traders. I wonder how
many students who lose so much money on bad cryptocurrency wagers that it undermines their
ability to finish their course of study (presumably they really did need at least some of that
"living expense" money for bona fide living expenses) will be willing to 'fess up to that
fact.
I guess that means that almost 4/5ths of students did NOT use "loan" proceeds (which are
part of the whole Casino enterprise, after all) to gamble invest "expose
themselves to market risk" by moving those bits representing "money" into the block chain
spurt
And I also guess that means that the Puritans among us, and the mopes who want to make
sure everyone else gets as screwed by "the system" as they have been by so diligently paying
off those student loans/debt millstones, will now have a new line of argument about why the
Banksters and the scum among the legislators and "loan servicers" and kickback-collecting
higher-education administrators should be fully armed to go after mope students and
graduates-without-portfolios-but-with-lots-of-"credentials" and their parents and other
"guarantors" to extract that last full measure of blood from the turnipheads who signed on
the dotted line without much of a clue that the "contract" was drafted by some Shylock named
"Mephistopheles "
Say it loud, say it clear -- "#juststoppaying. No other way to end the game, is there? And
yes, there will be blood, economically speaking, in the Street
But think how it helped stimulate the economy. Except that unlike other Fed Gov spending,
the Fed Gov wants this money back. D'oh! And as we know, it's very difficult to discharge
student loans through bankruptcy (which at least gives the economy more slack for other debt
to be paid off).
So ultimately it doesn't stimulate the economy. It just feeds various maws: the education
industry and its bubble, the corporations and their inflated requirements for hiring for
jobs. Edit: And the cryptocurrency bubble who knew? While subtracting from other maws:
housing starts, family starts, etc.
I doubt you could find 20% of college students who even know where to buy crypto.
Maybe, maybe you could find 20% who are more aware than "heard about it on the
news".
(propublica.org)As the world's dominant technology firm, payrolls at International Business Machines swelled
to nearly a quarter-million U.S. white-collar workers in the 1980s. Its profits helped
underwrite a broad agenda of racial equality, equal pay for women and an unbeatable offer of
great wages and something close to lifetime employment, all in return for unswerving loyalty.
But when high tech suddenly started shifting and companies went global, IBM faced the changing
landscape with a distinction most of its fiercest competitors didn't have: a large
number of experienced and aging U.S. employees .
The company reacted with a strategy that, in the words of one confidential planning
document, would "correct seniority mix." It slashed IBM's U.S. workforce by as much as
three-quarters from its 1980s peak, replacing a substantial share with younger,
less-experienced and lower-paid workers and sending many positions overseas. ProPublica
estimates that in the past five years alone, IBM has eliminated more than 20,000 American
employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those
years. In making these cuts, IBM has flouted or outflanked U.S. laws and regulations intended
to protect later-career workers from age discrimination, according to a ProPublica review of
internal company documents, legal filings and public records, as well as information provided
via interviews and questionnaires filled out by more than 1,000 former IBM employees.
"Before accounting for taxes and transfers, the U.S. ranked 10th in income inequality; among
the countries with more unequal income distributions were France, the U.K. and Ireland. But
after taking taxes and transfers into account, the U.S. had the second-highest level of
inequality, behind only Chile. "
" The five countries with the worst income inequality -- Chile, Mexico, Turkey, the United
States, and Israel -- also had the five highest poverty rates in the OECD. The relationship is
not perfect, however. The United Kingdom fell just outside the five worst countries for income
equality, but its poverty rate was 13th lowest among developed nations."
I've been thinking about this as well. I went looking for a graph of median income in China
and the US over the last 20 years ... and could not find one. What I would really like to see
is a graph of median income increases over the last 20 years - I would argue this is more
relevant than the easy to find graphs of GDP increases.
Median income in Russia increased something like 270% in inflation adjusted terms during the
first 10 years that Putin was in power. The Economist claims this was solely due to the
increase in oil prices. I went looking at countries that had comparable
oil-production-per-person and found that Canada (whose oil production per person is essentially
identical to Russia) saw its median income increase only 9% in the same period.
This isn't to say that Putin's leadership is necessarily good in the long term, but the
western press are clearly ignoring important economic statistics regarding both China and
Russia. Reply
21 March 2018 at 03:10 PM Fred said in reply to Terry... Terry,
"by some measures" If you torture the data long inenough it confesses. So the US is one of
the five worst in income inequality? Maybe those Chineese imigrants should all stay in China to
enjoy their "percentages". Of course they might first ask just what the 400% increase in
Chineese income means. Oh, that's right, the 400% increase from almost nothing to 4 times
almost nothing. The negative 1% reduction in bottom 50% of income distribuiton in the US over
that 4 decades resulted in:
"Median individual income for all earners in the workforce was $37,610.00, and the
breakpoint to be a one-percenter (99th percentile) was $300,800.00."
So the 50% percentile in the US has a 37K icome. What is it for China, it certainly isn't
37K. That's right, acording to the link you provided it's 14,600 USD. In China, with the
official exchange rate.
James T,
"but the western press are clearly ignoring important economic statistics regarding both
China and Russia."
Yes indeed, they ignore the actual data and repeat out percentages with no idea of the
underlying facts of how those percentages were created and not bothering to ask how they were
calculated. Reply
21 March 2018 at 09:11 PM
Like many high demand cults neoliberalism is a trap, from which it is very difficult to escape...
Notable quotes:
"... A large, open-border global free market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism. ..."
"... Globalists, as neoliberal capitalists are often called, also understood that democracy, defined by a smattering of individual rights and a voting booth, was the ideal vehicle to usher neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes no demands in the economic sphere. Socialism does. Communism does. These models directly address ownership of the means of production. Not so democratic capitalism. This permits the globalists to continue to own the means of production while proclaiming human rights triumphant in nations where interventions are staged. ..."
"... The enduring lie is that there is no democracy without economic democracy. ..."
This 'Washington Consensus' is the false promise promoted by the West. The reality is quite
different. The crux of neoliberalism is to eliminate democratic government by downsizing,
privatizing, and deregulating it. Proponents of neoliberalism recognize that the state is the
last bulwark of protection for the common people against the predations of capital. Remove the
state and they'll be left defenseless .
Think about it. Deregulation eliminates the laws. Downsizing eliminates departments and their
funding. Privatizing eliminates the very purpose of the state by having the private sector take
over its traditional responsibilities.
Ultimately, nation-states would dissolve except perhaps for armies and tax systems. A large, open-border global free
market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the
whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism.
Globalists, as neoliberal capitalists are often called, also understood that democracy, defined
by a smattering of individual rights and a voting booth, was the ideal vehicle to usher
neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes
no demands in the economic sphere. Socialism does. Communism does. These models directly
address ownership of the means of production. Not so democratic capitalism. This permits the
globalists to continue to own the means of production while proclaiming human rights triumphant
in nations where interventions are staged.
The enduring lie is that there is no democracy
without economic democracy.
What matters to the one percent and the media conglomerates that disseminate their worldview is
that the official definitions are accepted by the masses. The real effects need never be known.
The neoliberal ideology (theory) thus conceals the neoliberal reality (practice). And for the
masses to accept it, it must be mass produced. Then it becomes more or less invisible by virtue
of its universality.
Neoliberal economists are a new type of clergy. As simple as this. Neoliberal God is great that's what they are preaching to students.
Notable quotes:
"... Bronze Age: Greatest Age EVAH! ..."
"... It's surprising economists feel the need to engage in happy talk, considering that markets are supposed to be natural, just, and efficient. Like clergy preaching to a perpetually backsliding laity about the one true God, Whom only a fool would doubt. If God were so great, there'd be no need to harp on it. In any case, this goes some way toward accounting for Bennet's statement. ..."
"... It takes a half-educated person to say something like that. First you get the ideas by way of a certain education, and then you don't think about them, in part because the educators discourage that kind of thing. ..."
"[Capitalism] has been the greatest engine of, it's been the greatest anti-poverty program
and engine of progress that we've seen."
I can almost smell the economics section of my local bookstore. Strange science,
economics. Judging from the titles, much of it consists of cheerleading. Very different from
history, anthropology, or sociology.
I never see history titles like Bronze Age: Greatest Age EVAH!It's
surprising economists feel the need to engage in happy talk, considering that markets are
supposed to be natural, just, and efficient. Like clergy preaching to a perpetually
backsliding laity about the one true God, Whom only a fool would doubt. If God were so great,
there'd be no need to harp on it. In any case, this goes some way toward accounting for
Bennet's statement.
It takes a half-educated person to say something like that. First you get the ideas by
way of a certain education, and then you don't think about them, in part because the
educators discourage that kind of thing.
"... "Liberals" stopped caring about those things after Clinton showed them the "third way," which was really just a way to be kinder, gentler conservatives. ..."
"... the best and most well-founded causations history I've come across directly relating to "Divide & Rule". ..."
" liberals are concerned about minorities and the poor."
What a joke. "Liberals" stopped caring about those things after Clinton showed them the "third way," which was really just
a way to be kinder, gentler conservatives.
LEFTISTS still care about minorities and the poor, which is why liberals do everything in their power to keep them from ever
getting elected and would rather throw an election to someone like Trump than let Bernie Sanders be president.
Longtooth , February 22, 2018 8:04 pm
Here's paper that economistsview just linked to today. It traces the events leading to Trump -- or shall I say leading to the
recognition by those that have been economically disenfranchised which led to Trump. http://www.cesifo-group.de/DocDL/cesifo1_wp6868.pdf
In it's composite as well as most (though not all) causes the paper describes, it is the best and most well-founded causations
history I've come across directly relating to "Divide & Rule".
Pay growth for middle class workers in the US has been abysmal over recent decades – in real terms, median hourly compensation
rose only 11% between 1973 and 2016. 1 At the same time, hourly labour productivity has grown steadily, rising by 75%.
This divergence between productivity and the typical worker's pay is a relatively recent phenomenon. Using production/nonsupervisory
compensation as a proxy for median compensation (since there are no data on the median before 1973), Bivens and Mishel (2015) show
that typical compensation and productivity grew at the same rate over 1948-1973, and only began to diverge in 1973 (see Figure 1).
Figure 1 Labour productivity, average compensation, and production/nonsupervisory compensation 1948-2016
Notes : Labour productivity: total economy real output per hour (constructed from BLS and BEA data). Average compensation:
total economy compensation per hour (constructed from BLS data). Production/nonsupervisory compensation: real compensation per hour,
production and nonsupervisory workers (Economic Policy Institute).
What does this stark divergence imply about the relationship between productivity and typical compensation? Since productivity growth
has been so much faster than median pay growth, the question is how much does productivity growth benefit the typical worker?
2
A number of authors have raised these questions in recent years. Harold Meyerson, for example, wrote in American Prospect
in 2014 that "for the vast majority of American workers, the link between their productivity and their compensation no longer exists",
and the Economist wrote in 2013 that "unless you are rich, GDP growth isn't doing much to raise your income anymore". Bernstein
(2015) raises the concern that "[f]aster productivity growth would be great. I'm just not at all sure we can count on it to lift
middle-class incomes." Bivens and Mishel (2015) write "although boosting productivity growth is an important long-run goal, this
will not lead to broad-based wage gains unless we pursue policies that reconnect productivity growth and the pay of the vast majority".
Has typical compensation delinked from productivity?
Figure 1 appears to suggest that a one-to-one relationship between productivity and typical compensation existed before 1973, and
that this relationship broke down after 1973. On the other hand, just as two time series apparently growing in tandem does not mean
that one causes the other, two series diverging may not mean that the causal link between the two has broken down. Rather, other
factors may have come into play which appear to have severed the connection between productivity and typical compensation.
As such there is a spectrum of possibilities for the true underlying relationship between productivity and typical compensation.
On one end of the spectrum – which we call 'strong delinkage' – it's possible that factors are blocking the transmission mechanism
from productivity to typical compensation, such that increases in productivity don't feed through to pay. At the opposite end of
the spectrum – which we call 'strong linkage' – it's possible that productivity growth translates fully into increases in typical
workers' pay, but even as productivity growth has been acting to raise pay, other factors (orthogonal to productivity) have been
acting to reduce it. Between these two ends of the spectrum is a range of possibilities where some degree of linkage or delinkage
exists between productivity and typical compensation.
In a recent paper, we estimate which point on this linkage-delinkage spectrum best describes the productivity-typical compensation
relationship (Stansbury and Summers 2017). Using medium-term fluctuations in productivity growth, we test the relationship between
productivity growth and two key measures of typical compensation growth: median compensation, and average compensation for production
and nonsupervisory workers.
Simply plotting the annual growth rates of productivity and our two measures of typical compensation (Figure 2) suggests support
for quite substantial linkage – the series seem to move together, although typical compensation growth is almost always lower.
Figure 2 Change in log productivity and typical compensation, three-year moving average
Notes : Data from BLS, BEA and Economic Policy Institute. Series are three-year backward-looking moving averages
of change in log variable.
Making use of the high frequency changes in productivity growth over one- to five-year periods, we run a series of regressions to
test this link more rigorously. We find that periods of higher productivity growth are associated with substantially higher growth
in median and production/nonsupervisory worker compensation – even during the period since 1973, where productivity and typical compensation
have diverged so much in levels. A one percentage point increase in the growth rate of productivity has been associated with between
two-thirds and one percentage point higher growth in median worker compensation in the period since 1973, and with between 0.4 and
0.7 percentage points higher growth in production/nonsupervisory worker compensation. These results suggest that there is substantial
linkage between productivity and median compensation (even the strong linkage view cannot be rejected), and that there is a significant
degree of linkage between productivity and production/nonsupervisory worker compensation.
How is it possible to find this relationship when productivity has clearly grown so much faster than median workers' pay? Our findings
imply that even as productivity growth has been acting to push workers' pay up , other factors not associated with productivity
growth have acted to push workers' pay down . So while it may appear on first glance that productivity growth has not benefited
typical workers much, our findings imply that if productivity growth had been lower, typical workers would have likely done substantially
worse.
If the link between productivity and pay hasn't broken, what has happened?
The productivity-median compensation divergence can be broken down into two aspects of rising inequality: the rise in top-half income
inequality (divergence between mean and median compensation) which began around 1973, and the fall in the labour share (divergence
between productivity and mean compensation) which began around 2000.
For both of these phenomena, technological change is often invoked as the primary cause. Computerisation and automation have been
put forward as causes of rising mean-median income inequality (e.g. Autor et al. 1998, Acemoglu and Restrepo 2017); and automation,
falling prices of investment goods, and rapid labour-augmenting technological change have been put forward as causes of the fall
in the labour share (e.g. Karabarbounis and Neiman 2014, Acemoglu and Restrepo 2016, Brynjolffson and McAfee 2014, Lawrence 2015).
At the same time, non-purely technological hypotheses for rising mean-median inequality include the race between education and technology
(Goldin and Katz 2007), declining unionisation (Freeman et al. 2016), globalisation (Autor et al. 2013), immigration (Borjas 2003),
and the 'superstar effect' (Rosen 1981, Gabaix et al. 2016). Non-technological hypotheses for the falling labour share include labour
market institutions (Levy and Temin 2007, Mishel and Bivens 2015), market structure and monopoly power (Autor et al. 2017, Barkai
2017), capital accumulation (Piketty 2014, Piketty and Zucman 2014), and the productivity slowdown itself (Grossman et al. 2017).
While we do not analyse these theories in detail, a simple empirical test can help distinguish the relative importance of these two
categories of explanation – purely technology-based or not – for rising mean-median inequality and the falling labour share. More
rapid technological progress should cause faster productivity growth – so, if some aspect of faster technological progress has caused
inequality, we should see periods of faster productivity growth come alongside more rapid growth in inequality.
We find very little evidence for this. Our regressions find no significant relationship between productivity growth and changes in
mean-median inequality, and very little relationship between productivity growth and changes in the labour share. In addition, as
Table 1 shows, the two periods of slower productivity growth (1973-1996 and 2003-2014) were associated with faster
growth in inequality (an increasing mean/median ratio and a falling labour share).
Taken together, this evidence casts doubt on the idea that more rapid technological progress alone has been the primary driver of
rising inequality over recent decades, and tends to lend support to more institutional and structural explanations.
Table 1 Average annual growth rates of productivity, the labour share and the mean/median ratio during the US' productivity booms
and productivity slowdowns
The 70s was when the ideology of free lunch economics was born and then rose to take over virtually the entirety of economics.
Even Krugman adopts a lot of free lunch economics.
In free lunch economics, costs are dependent on price, not price dependent on costs. And profits rising on maximum efficiency,
maximum factor utilization, not profits going to zero when factor utilization and efficiency are maximized.
Free lunch economics is the opposite of Keynesian principles. Free lunch economists prescribe the opposite of what Keynes prescribed
in similar circumstances.
Keynes called for maximizing aggregate labor costs. Free lunch economists call for minimizing aggregate labor costs.
As all real economic costs are labor costs, everything else being profits and rents, when Bernie bros call for lower costs,
or oppose higher costs, they are arguing for lower labor costs, lower wages. Economics is zero sum.
Food costs are low because of government subsidies and government policies promoting low labor costs, low wages.
Progressives should be opposed to SNAP and food banks which are directly or indirectly government funded/subsidized. The solution
is to ensure jobs are available than pay wages high enough to buy food that farmers sell at high prices which allow them to pay
all their bills.
FDR and Congress set price floors for many goods, and paid workers living wages to do productive work. Conservatives fought
these measures to increase costs. Note Hoover was very interested in building capital assets, but he wanted workers to be paid
as little as possible, and as few as possible. He promoted working workers to death to cut costs, even when the assets built would
certainly generate high returns over their useful lives.
Friedman created the intellectual free lunch theory to justify Hoover's business theory applied to government policy.
Friedman invented the free lunch welfare handout to make the free lunch economy work, because he knew economies are zero sum.
Instead of SNAP which is restricted cash, he called for unrestricted cash so labor costs could be cut to increase profits, with
government free lunch handouts given to workers to pay the high profits on the goods they were paid to produce.
Again, this is contrary to Keynes and FDR.
Yet Bernie progressives call for Friedman's free lunch economics subsidy of profits in consumer spending subsidies to enable
low wages and high profits.
This research and paper merely provide evidence that Friedman's free lunch economics have driven public policy and private
sector investment.
Milton Friedman's free lunch economics principles have successfully driven lower productivity growth as he intended, based
on his Newsweek articles circa 1970, and based on other 70s era statements and lectures.
OMG- how many understatements can be written, without acknowledging basic facts and truth.
A good place to start would be a similar, I mean really similar, and use CEO pay. Come on lets see a CEO pay VS productivity
- the CEO's sure aren't doing the work, and neither are the midline managers. Come on lets see some real good charts on "divergence"
factors starting in 1973. Quit the BS. The economy is presently increasing based on human predation. Ignore it, til it stares
you in the face, upfront and personal.
From cited link- for those who want the reason why, I even posted a link on banking, when this article is on labor divergence
etc. etc.
5.4.1. Implications for economic theory
The empirical evidence shows that of the three theories of banking, it is the one that today has the least influence and that
is being belittled in the literature that is supported by the empirical evidence. Furthermore, it is the theory which was widely
held at the end of the 19th century and in the first three decades of the twentieth. It is sobering to realise that since the
1930s, economists have moved further and further away from the truth, instead of coming closer to it. This happened first via
the half-truth of the fractional reserve theory and then reached the completely false and misleading financial intermediation
theory that today is so dominant. Thus this paper has found evidence that there has been no progress in scientific knowledge in
economics, finance and banking in the 20th century concerning one of the most important and fundamental facts for these disciplines.
Instead, there has been a regressive development. The known facts were unlearned and have become unknown. This phenomenon deserves
further research. For now it can be mentioned that this process of unlearning the facts of banking could not possibly have taken
place without the leading economists of the day having played a significant role in it. The most influential and famous of all
20th century economists, as we saw, was a sequential adherent of all three theories, which is a surprising phenomenon. Moreover,
Keynes used his considerable clout to slow scientific analysis of the question whether banks could create money, as he instead
engaged in ad hominem attacks on followers of the credit creation theory. Despite his enthusiastic early support for the credit
creation theory (Keynes, 1924), only six years later he was condescending, if not dismissive, of this theory, referring to credit
creation only in inverted commas. He was perhaps even more dismissive of supporters of the credit creation theory, who he referred
to as being part of the "Army of Heretics and Cranks, whose numbers and enthusiasm are extraordinary", and who seem to believe
in "magic" and some kind of "Utopia" (Keynes, 1930, vol. 2, p. 215).33
Needless to mention, such rhetoric is not conducive to scientific argument. But this technique was followed by other economists
engaged in advancing the fractional reserve and later financial intermediation theories. US Federal Reserve staffer Alhadeff (1954)
argued similarly during the era when economists worked on getting the fractional reserve theory established:
"One complication worth discussing concerns the alleged "creation" of money by bankers. It used to be claimed that bankers could
create money by the simple device of opening deposit accounts for their business borrowers. It has since been amply demonstrated
that under a fractional reserve system, only the totality of banks can expand deposits to the full reciprocal of the reserve ratio.
[Original footnote: 'Chester A. Phillips, Bank Credit (New York: Macmillan, 1921), chapter 3, for the classical refutation of
this claim.'] The individual bank can normally expand to an amount about equal to its primary deposits" (p. 7).
The creation of credit by banks had become, in the style of Keynes (1930), an "alleged 'creation'", whereby rhetorically it was
suggested that such thinking was simplistic and hence could not possibly be true. Tobin used the rhetorical device of abductio
ad absurdum to denigrate the credit creation theory by incorrectly suggesting it postulated a 'widow's cruse', a miraculous vessel
producing unlimited amounts of valuable physical goods, and thus its followers were believers in miracles or utopias.
This same type of rhetorical denigration of and disengagement with the credit creation theory is also visible in the most recent
era. For instance, the New Palgrave Money (Eatwell et al., 1989), is an influential 340-page reference work that claims to present
a 'balanced perspective on each topic' (Eatwell et al., 1989, p. viii). Yet the financial intermediation theory is dominant, with
a minor representation of the fractional reserve theory. The credit creation theory is not presented at all, even as a possibility.
But the book does include a chapter entitled "Monetary cranks". In this brief chapter, Keynes' (1930) derogatory treatment of
supporters of the credit creation theory is updated for use in the 1990s, with sharpened claws: Ridicule and insult is heaped
on several fateful authors that have produced thoughtful analyses of the economy, the monetary system and the role of banks, such
as Nobel laureate Sir Frederick Soddy (1934) and C.H. Douglas (1924). Even the seminal and influential work by Georg Friedrich
Knapp (1905), still favourably cited by Keynes (1936), is identified as being created by a 'crank'. What these apparently wretched
authors have in common, and what seems to be their main fault, punishable by being listed in this inauspicious chapter, is that
they are adherents of the credit creation theory. But, revealingly, their contributions are belittled without it anywhere being
stated what their key tenets are and that their analyses centre on the credit creation theory, which itself remains unnamed and
is never spelled out. This is not a small feat, and leaves one pondering the possibility that the Eatwell et al. (1989) tome was
purposely designed to ignore and distract from the rich literature supporting the credit creation theory. Nothing lost, according
to the authors, who applaud the development that due to
"the increased emphasis given to monetary theory by academic economists in recent decades, the monetary cranks have largely disappeared
from public debate " (p. 214).
And so has the credit creation theory. Since the tenets of this theory are never stated in Eatwell et al. (1989), the chapter
on 'Cranks' ends up being a litany of ad hominem denigration, defamation and character assassination, liberally distributing labels
such as 'cranks', 'phrase-mongers', 'agitators', 'populists', and even 'conspiracy theorists' that believe in 'miracles' and engage
in wishful thinking, ultimately deceiving their readers by trying to "impress their peers with their apparent understanding of
economics, even though they had no formal training in the discipline" (p. 214). All that we learn about their actual theories
is that, somehow, these ill-fated authors are "opposed to private banks and the 'Money Power' without their opposition leading
to more sophisticated political analysis" (p. 215). Any reading of the highly sophisticated Soddy (1934) quickly reveals such
labels as unfounded defamation.
To the contrary, the empirical evidence presented in this paper has revealed that the many supporters of the financial intermediation
theory and also the adherents of the fractional reserve theory are flat-earthers that believe in what is empirically proven to
be wrong and which should have been recognisable as being impossible upon deeper consideration of the accounting requirements.
Whether the authors in Eatwell et al. (1989) did in fact know better is an open question that deserves attention in future research.
Certainly the unscientific treatment of the credit creation theory and its supporters by such authors as Keynes, who strongly
endorsed the theory only a few years before authoring tirades against its supporters, or by the authors in Eatwell et al. (1989),
raises this possibility.
5.4.2. Implications for government policy
There are other, far-reaching ramifications of the finding that banks individually create credit and money when they do what
is called 'lending money'. It is readily seen that this fact is important not only for monetary policy, but also for fiscal policy,
and needs to be reflected in economic theories. Policies concerning the avoidance of banking crises, or dealing with the aftermath
of crises require a different shape once the reality of the credit creation theory is recognised. They call for a whole new paradigm
in monetary economics, macroeconomics, finance and banking (for details, see for instance Werner, 1997, 2005, 2012, 2013a,b) that
is based on the reality of banks as creators of the money supply. It has potentially important implications for other disciplines,
such as accounting, economic and business history, economic geography, politics, sociology and law.
5.4.3. Implications for bank regulation
The implications are far-reaching for bank regulation and the design of official policies. As mentioned in the Introduction,
modern national and international banking regulation is predicated on the assumption that the financial intermediation theory
is correct. Since in fact banks are able to create money out of nothing, imposing higher capital requirements on banks will not
necessarily enable the prevention of boom–bust cycles and banking crises, since even with higher capital requirements, banks could
still continue to expand the money supply, thereby fuelling asset prices, whereby some of this newly created money can be used
to increase bank capital. Based on the recognition of this, some economists have argued for more direct intervention by the central
bank in the credit market, for instance via quantitative credit guidance (Werner, 2002, 2003a, 2005).
5.4.4. Monetary reform
The Bank of England's (2014b) recent intervention has triggered a public debate about whether the privilege of banks to create
money should in fact be revoked (Wolf, 2014). The reality of banks as creators of the money supply does raise the question of
the ideal type of monetary system. Much research is needed on this account. Among the many different monetary system designs tried
over the past 5000 years, very few have met the requirement for a fair, effective, accountable, stable, sustainable and democratic
creation and allocation of money. The view of the author, based on more than twenty-three years of research on this topic, is
that it is the safest bet to ensure that the awesome power to create money is returned directly to those to whom it belongs: ordinary
people, not technocrats. This can be ensured by the introduction of a network of small, not-for-profit local banks across the
nation. Most countries do not currently possess such a system. However, it is at the heart of the successful German economic performance
in the past 200 years. It is the very Raiffeisen, Volksbank or Sparkasse banks – the smaller the better – that were helpful in
the implementation of this empirical study that should serve as the role model for future policies concerning our monetary system.
In addition, one can complement such local public bank money with money issued by local authorities that is accepted to pay local
taxes, namely a local public money that has not come about by creating debt, but that is created for services rendered to local
authorities or the community. Both forms of local money creation together would create a decentralised and more accountable monetary
system that should perform better (based on the empirical evidence from Germany) than the unholy alliance of central banks and
big banks, which have done much to create unsustainable asset bubbles and banking crises (Werner, 2013a,b).
AND, be sure to read why a lot of present economist's are so OFF "talking points" that they don't know they are even off the fundamental
talking points, and way off track! You have to start reading the Werner article from the beginning to understand that preceding
exclamatory sentence.
Why I have my doubts about whether Trump colluded with Moscow.
By BLAKE HOUNSHELL February 18, 2018
f, like me, you've been following every twist and turn of the Russia investigations, you've probably wrestled with the same
question that has been gnawing at me for more than a year now: What if there's nothing there?
No, I'm not denying the voluminous evidence that Russia, at Kremlin strongman Vladimir Putin's personal direction, sought to
meddle in the 2016 election, and that Donald Trump was clearly his man. The indictment on Friday of 13 Russians -- and the incredible
forensic detail in the 37-page complaint filed by Special Counsel Robert Mueller's team -- ought to have convinced any reasonable
person that the Russia investigation is definitely a somethingburger. But what kind of somethingburger is it?
President Trump has seized on Deputy Attorney General Rod Rosenstein's statement that "there is no allegation in the indictment
that any American was a knowing participant in this illegal activity" to say that the special counsel has vindication his oft-repeated
refrain that there was "NO COLLUSION" between Russia and the Trump campaign. This is obviously nonsense -- the key words in Rosenstein's
remarks being "in the indictment," which in any case dealt only with a sliver of Russian efforts to tilt the election in Trump's
favor.
Of course, Mueller has put some serious points on the board. In addition to the 13 Russians and three Russian organizations
from Friday's indictments, we've also seen two indictments of Trump associates thus far -- former Trump campaign chairman/manager
Paul Manafort and his wingman Rick Gates -- and two plea bargains, from sometime national security adviser Michael Flynn and volunteer
campaign adviser George Papadapoulos. There is also other stuff hanging out there -- most of all Donald Trump Jr.'s infamous meeting
in Trump Tower, the one he enthusiastically scheduled after being told the Russians on offer had dirt on Hillary Clinton. Mueller's
team has had nothing to say -- yet? -- about the hacked emails of the Democratic National Committee or Clinton campaign chairman
John Podesta. And there is no indication, despite the professed optimism of White House lawyer Ty Cobb, that they are wrapping
up anytime soon.
There are, of course, odd aspects of Trump's behavior that arouse suspicions. His obsequious praise of Putin. The aborted effort
to roll back the old Russia sanctions, and the failure to enforce the new ones. His refusal to accept that Moscow meddled in the
election, despite the conclusions of his own staff, the intelligence community and pretty much everyone looking at the evidence
in good faith. Firing his FBI director and reportedly ordering the firing of the special counsel. His constant fulminations against
the "Russia hoax." The fact that he hasn't directed any effort to safeguard the 2018 midterms. If Trump is guilty, he sure is
acting like it.
And there is the fact Trump aides have repeatedly lied about the fact, and extent, of contact between campaign officials and
Russia. If the Trump Tower meeting was as innocuous as Donald Jr. says it was, for instance, why the misleading claim that it
was about "adoptions"?
I keep coming back the slapdash nature of Trump's 2016 operation, and the chaos and dysfunction that everyone who covered that
campaign saw play out each day. Like the Trump White House, the Trump campaign was a viper's nest of incompetence and intrigue,
with aides leaking viciously against one another almost daily. So much damaging information poured out of Trump Tower that it's
hard to believe a conspiracy to collude with Moscow to win the election never went public. If there was such a conspiracy, it
must have been a very closely guarded secret.
Then there's the Trump factor to consider. Here's a man who seems to share every thought that enters his head, almost as soon
as he enters it. He loves nothing more than to brag about himself, and he's proven remarkably indiscreet in the phone calls he
makes with "friends" during his Executive Time -- friends who promptly share the contents of those conversations with D.C. reporters.
If Trump had cooked up a scheme to provide some favor to Putin in exchange for his election, wouldn't he be tempted to boast about
it to someone?
And there are aspects of the Russia scandal, too, that don't quite add up for me. Take Flynn's plea bargain. As Preet Bharara,
the former U.S. attorney for the Southern District of New York, noted after the deal became public, prosecutors usually prefer
to charge participants in a conspiracy with charges related to the underlying crime. But Flynn pleaded guilty only to lying to
the FBI, which Bharara surmised suggests might mean Mueller didn't have much on him. It certainly seems unlikely that any prosecutor
would charge Flynn for violating the 219-year-old Logan Act, a constitutionally questionable law that has never been tested in
court, for his chats with the Russian ambassador. It's not even clear if the (stupid) idea of using secure Russian communications
gear, as Flynn and Trump's son-in-law Jared Kushner reportedly considered doing, would have been a crime.
Then there is Papadopoulos, the hapless campaign volunteer who drunkenly blabbed to the Australian ambassador to London that
the Russians were sitting on loads of hacked emails. He, likewise, confessed only to lying to the FBI. Papadopoulos desperately
tried to arrange meetings between Trump or top Trump officials and Russians, which apparently never happened. Papadopoulos has
been cooperating with Mueller for months, but how much does he really have to offer? He seems like an attention-seeking wannabe
-- the kind who puts "Model U.N. participant" on his resume.
Speaking of attention-seeking wannabes, Carter Page was another volunteer campaign adviser who was enthusiastic about collaborating
with Russia. His writings and comments suggest he has been a Putin apologist for years. But anyone who has seen Page's TV interviews
or read through his congressional testimony can tell that there's something not quite right about him. He's apparently broke,
doesn't have a lawyer, and has issued lengthy, bizarre statements comparing himself to Martin Luther King, Jr. Back in 2013, when
a Russian agent tried to recruit Page, he described him as too much of an "idiot" to bother with. This is the mastermind of the
Russia scandal?
As for Manafort and Gates, the charges against them are serious and detailed. They stand accused of failing to register as
foreign agents for their overseas work, as well as various offenses related to money laundering. But Mueller has yet to charge
them with any crimes related to their work on the Trump campaign. Gates is reportedly working out a cooperation deal with Mueller's
team -- perhaps he has stories to tell. And we can't rule out the idea that Mueller is prepared to file superseding charges against
either or both of the two men. But so far, their alleged crimes seem unrelated to 2016.
There is, of course, plenty of public evidence that Trump was all too happy to collude with Putin. "Russia, if you're listening,
I hope you're able to find the 30,000 emails that are missing," springs to mind, not to mention Trump's endless invocation of
WikiLeaks in the closing weeks of the 2016 campaign. What's particularly eerie, too, is how Trump's divisive racial rhetoric and
claims about how the election was going to be "rigged" in favor of Hillary Clinton echoes the messages described in Mueller's
latest indictment. Not to mention the voluminous fodder Trump has given Mueller for a (very) hypothetical obstruction of justice
case.
Mueller's team doesn't leak, and he's repeatedly surprised us, as he did again on Friday. But I'm still waiting for a smoking
gun -- and the special counsel hasn't shown us one yet, assuming he ever will.
We'll see when Mueller finally wraps up his investigation, but we know that garbage people like you and Yggies are taking this
opportunity to attack the Left even though there is on evidence for it.
Bernie and Jill Stein supporters aren't implicated at all and only scum like you would suggest so. No doubt you are paid by
DNC Super PACs.
Russiagate Targets the Left
BY
BRANKO MARCETIC
Liberal conspiracy theorists are using Russiagate to smear Bernie Sanders and Jill Stein. How long until they come for you?
id Russia conspire to put its thumb on the scales for Bernie Sanders and Jill Stein in 2016?
If you've paid any attention to mainstream coverage of Robert Mueller's indictment of the Russians involved in running an online
troll farm that opposed Hillary Clinton's campaign, then you're probably certain the answer is "yes." There's been no shortage
of headlines declaring that the accused -- typically referred to simply as "Russians" -- "tried to help" or "aimed to help" the
two left-wing candidates, or that they "appear to have been helped by Russian election interference." Even the New York Times,
the paper of record, declared that the company, Internet Research Agency, aimed to "bolster" Sanders and Stein's candidacies.
You'll find this same narrative on the nominally liberal MSNBC. Stein was grilled on MSNBC about the Russian attempt to "boost"
her campaign. Meanwhile, Ari Melber, one of the network's pundits, seemed to suggest there was something fishy going on between
Sanders and the Russian trolls with an innuendo-laden question to Democratic Sen. Richard Blumenthal.
"It says in here that Donald Trump was the main intended beneficiary, and Bernie Sanders was the other major party candidate
who was a beneficiary," said Melber. "Neither of them have clearly stood up today and said: 'I don't want that help from the Russians,
please don't do that kind of thing for me, and anything that happened, I disclaim.'"
It all sounds pretty damning. Until you read the actual indictment.
Fast and Loose
The sole reference to Stein in the nearly 10,000-word document is a sentence that mentions one single Instagram post from Blacktivist,
an account controlled by the company, saying: "Choose peace and vote for Jill Stein. Trust me, it's not a wasted vote."
Sanders, meanwhile, appears twice. The first mention is when the document states the company's work was "primarily intended
to communicate derogatory information about Hillary Clinton and to support Bernie Sanders and then-candidate Donald Trump." The
second is a few lines down, when it provides an example of this support: an outline of themes for future content that was circulated
around the company, urging employees to "use any opportunity to criticize Hillary and the rest (except Sanders and Trump -- we
support them)." The indictment doesn't specify anything else, including any examples of material support for Sanders's campaign.
These scant references comprise the sole basis for headline after headline about the Kremlin-backed trolls working for Sanders
and Stein's campaigns. Some Clinton backers such as Joy-Ann Reid uncritically spread the narrative that "Russia was helping Jill
Stein and Sanders," while others used it as a launching pad to suggest Sanders was knowingly in cahoots with the Russian efforts.
MSNBC's Melber has been particularly dogged in pushing this narrative. Despite the lack of evidence in the indictment, Melber
claimed on his show that "Mueller has shown that [the Russians] spent 2016 pushing another campaign to elect Bernie Sanders."
When Sanders, appearing on Meet the Press, said that the trolls only began flooding pro-Sanders Facebook pages with anti-Clinton
content after she had already won the nomination -- a claim backed up by previous reporting -- Melber pushed back.
"That may be how Sanders remembers it," said Melber. "But now we know it began much earlier with those February marching orders,
and the very next month a Sanders volunteer, John Mattes, says a 'huge wave of fake news stories' slamming Clinton from abroad
targeted Sanders supporters."
The quote that Melber is referring to -- "huge wave of fake news stories" -- comes from this Guardian piece from July 2017.
It also happens to have been wildly misrepresented by Melber.
For one, the words were never uttered by Mattes, a Sanders campaign volunteer in California and investigative journalist who
played a role in bringing the Iran-Contra scandal to light in the 1980s. Rather, the phrase was used by the Guardian article's
author, Julian Borger. Secondly, at no point is it stated that this "wave" was targeting Sanders supporters. In fact, reading
the whole passage it's clear that neither Borger nor Mattes was saying that the "wave" had anything to do with Sanders at all.
Here is the passage in full:
A huge wave of fake news stories originating from eastern Europe began washing over the presidential election months earlier,
at the height of the primary campaign. John Mattes, who was helping run the outline campaign for the Democratic candidate Bernie
Sanders from San Diego, said it really took off in March 2016.
"In a 30-day period, dozens of full-blown sites appeared overnight, running full level productions posts. It screamed out to
me that something strange was going on," Mattes said. Much of the material was untraceable, but he tracked 40 percent of the new
postings back to eastern Europe.
In fact, publicly available interviews with Mattes make this clear, such as this NBC 7 interview in which Mattes explains what
led him to look into the troll activity in the first place.
"Hundreds and hundreds of people were joining Bernie Sanders pages on Facebook for a campaign that was over. It made no sense,"
he told the network.
I spoke to Mattes, who confirmed as much.
"I did not do that, at all," he said about the claim that he looked into troll activity on pro-Sanders pages during the primaries.
"Anybody who says that I knew what was happening in March 2016 is misconstruing what I've said publicly."
Mattes, who says he was never consulted by MSNBC about Melber's use of his quote, adds that he has "not seen any reporting
that there was material assistance that would have helped" Sanders during the primaries. While he does say that he found Sanders
page administrators around the country complaining about fake news sites being posted on their pages, that was in May, and was
largely haphazard. The trolls didn't appear to target California, for instance, even though it was clear by at least mid-May that
the state was the Sanders's campaign's last hope.
"Had there been an outrageous blasting of Hillary Clinton on our Facebook pages in the outrageous manner that occurred after
the convention, I would've noticed it," says Mattes. "If the Russians had really wanted to help Bernie, our last stand was in
California, and I didn't see it."
As of the time of writing, Melber's segment is still available for viewing online on the MSNBC website, even though Mattes
says he contacted MSNBC to register his objections regarding the misquote. I reached out to Melber and MSNBC and asked them if
they plan on issuing a public retraction. This story will be updated with their response.
It appears, then, that the widespread claim that "the Russians" were helping Sanders's campaign, and did so during the primaries,
is fake news -- much like the kind that those advancing this narrative accuse the Kremlin of spreading to subvert American democracy.
What appears to have happened here is a marked collapse of basic journalistic standards. Various news outlets and pundits have
created a narrative about Russian material support for left-wing presidential candidates based on precisely three references in
a thirty-seven-page document that don't actually provide evidence of such a thing. Ari Melber, meanwhile, misattributed and misrepresented
a quote from a year-old article and never bothered to speak to the individual he was supposedly quoting -- all for the purposes
of quickly and falsely debunking Sanders's defense of his campaign.
A less charitable interpretation is that the media -- unfriendly towards Sanders, uncritical of the national security establishment,
and predisposed to run sensational stories about Russian interference -- ran headfirst into a story that seemed to be an ideal
blend of these two trends, facts be damned.
Who's Next?
The widespread adoption of this narrative as a cudgel wielded against prominent left-wing political figures, often by liberals,
shows the danger of the current political climate, in which liberal anchors openly speculate whether their political opponents
are foreign agents. The moment such accusations are turned leftward is never far away.
Look at what's happening in the Mexican presidential race. The current front-runner is a left-wing, anti-Trump populist running
on a platform promising to renegotiate NAFTA, establish a universal pension, pump billions into infrastructure spending, and undo
the current president's privatization of gas and oil fields. One Bloomberg op-ed charged he would be an ideal beneficiary of a
Putin-backed disinformation campaign. Another, this time at the Washington Post, asserted that Putin "may" be working to help
him, an unsupported charge repeated by one of his opponent's aides in January.
Those hostile to left-wing causes have also made use of the accusation of Russia meddling. Texas Republican Lamar Smith, a
man saturated with the fumes of fossil fuel industry money, has accused anti-fracking environmental groups and Facebook ads of
being funded by the Kremlin. Others have also hyped up the work of Russian troll farms in promoting black activism and the Dakota
Access Pipeline protests. It brings to mind the intelligence assessment released by the Directorate of National Intelligence last
January, which, in lieu of detailing evidence for the Russian hacking of the DNC, instead cited Russia Today's coverage of US
wealth inequality, police brutality, mass surveillance, corruption, fracking, and more as examples of Russian propaganda.
And in the future, such attacks can easily be turned on the liberals now weaponizing Russiagate. What would happen if and when
a Kremlin-backed disinformation campaign appeared to come to the aid of the Democrats in a future election? It's not so far-fetched:
the legal analysis website Law & Crime recently reported that the pundit most retweeted by the trolls indicted by Robert Mueller
was MSNBC's very own Joy-Ann Reid, who received around ten times more retweets than Sanders from the same trolls. It remains to
be seen if news outlets will claim that Reid was being "helped" by the Russian disinformation campaign, or if Ari Melber will
ask for her to renounce their aid.
Liberals should be wary of continuing to use Russiagate for partisan purposes, and of abandoning reporting standards to punish
their ideological challengers, whether consciously or not. Weapons, after all, have a way of getting into other people's hands.
Employers have spent a lot of effort understanding their processes in greater and greater detail over the past 25 years. "Labor
productivity" is very, very gross measure and does not have much meaning to the employer. What exactly in the process is generating
improvements and can an employee effectively withhold their contribution to the improvement are key questions that are pursued
very aggressively. If the new layout of the fabrication cells drives a lot of extra productivity or if a redesign of the product
itself increases producibility, the human labor in the process is not going to be compensated very much regardless of the aggregate
shift in labor productivity. If you can hire someone out of a fast food restaurant and hit the 95% productivity target by the
close of his/her first shift, well the incumbent worker in the position is not going to be getting a big slice of general productivity
measures. On the whole, firms are assessing situations accurately and taking actions that are in their profit interests. If they
were getting this wrong a lot they would make changes. Employers are usually very pragmatic and if higher compensation makes them
more money, they do not hesitate. But it usually does not make them more money.
I don't know whether other commenters have already made this observation, but in case they haven't:
The paper can be summarized by the relationship of median wage growth to productivity growth as the sum of two variables A
& B:
c(3)W = c(1)A + c(2)B
where c(i) are the coefficients of the relations of each term to productivity growth.
What the authors implied is that c(1) is positive and c(2) is negative by a much greater absolute value than c(1), resulting
in a very low but positive c(3).
For this to be the case, then variable B must be the composite weighted sum of all factors besides those with positive coefficients
included in A.
The authors did not identify those factors the sum of which are B.
But, that identification only matters to identify what if any of those factors can be adjusted, eliminated, or substantially
modified. And since they are each related to Productivity growth but still sum to a composite weighted negative coefficient c(2)
they must adjustable, or eliminatable, or modifiable such that in composite the coefficient c(2) sums to near zero.
The simple fact that the coefficient of B has increasingly become more negative over time strongly suggests that many or most
or even all of these factors that sum to B may not in fact be adjustable, eliminatable, or modifiable to any appreciable degree,
since otherwise they would have already been identified and adjustments, etc. made (1973 to 2018 is nearly two generations of
time).
In other words the coefficients of factors B that sum to c(2) must clearly also have strong positive weighted coefficients
that relate to other than productivity growth but which are each still related to productivity growth.
It is obvious then that the other relationships (non-productivity growth) of factors B weigh positively (since 1973 and increasingly
so since then) far more than those that sum to coefficients c(2) which only relate to productivity growth.
Simply stated the other relationships of B to non-productivity growth terms have had increasingly greater priority than those
related to productivity growth .. enough so to fully counteract them at an increasingly greater rate with time.
I submit that Summers et.al. know this already and even what the major drivers are, but intentionally left them in their Posted
"economics" as unknowns to keep from upsetting the apple cart.
"This divergence between productivity and the typical worker's pay is a relatively recent phenomenon.."
Only if you consider 46 years (1973 to 2018) "recent". Most economists would reject that assertion. Most non-economists would
reject that assertion. Most laypersons would reject that assertion.
So on what basis can Summers et.al. possibly assert it as true?
The period since the end of WWII completely changed global and domestic economies and that period is 73 years of time, so that
the most recent 45 years comprises 61% of it or well over half the period since WWII's end has been in effect.
Basically the most recent 45 years begins a few short years after LBJ's administration and the Nixon's failed admin -- but
which was followed by Ford, Carter, and Reagan's.
I'm not indicting the presidential administrations only using them to show that "recent" begins in the post LBJ / Nixon time-frame.
I don't know anybody that would refer to Nixon's presidency as a "recent" administration, including me (and I was born in 1945).
My 40 something offspring and their cousins and all their friends refer to that as "ancient history". Summers was born nearly
a decade after I was, and so must be using a hugely different concept of "recent" than I do or than my children and their generation
do.
Historians have a different concept of "recent" since their operating time frames cover at least from the Industrial revolution
and more often than not several centuries more.
"On the link between US pay and productivity" is more a matter of the link between Anna Stansbury and Larry Summers than a matter
of analytical elegance. OTOH, Anna is quite elegant.
Fed Staff Pondered Inflation Puzzle and Came Away None the Wiser
By Matthew Boesler
February 22, 2018, 12:00 AM EST
Former Federal Reserve Chair Janet Yellen has called low inflation a bit of a "mystery." So it was appropriate that at her
final Fed meeting, she and her colleagues received a special briefing on what had gone wrong with the computer models they use
to forecast price pressures.
The conclusion of the briefing: The models aren't great for forecasting, but alternative options aren't obvious either. Perhaps
even more troubling for policy makers is that inflation appears to be anchored below the Fed's 2 percent target.
The presentations by Fed staff economists were described in the minutes of the policy-setting Federal Open Market Committee's
Jan. 30-31 meeting published Wednesday. The failure to anticipate last year's decline in inflation, despite a tightening labor
market, was chalked up to transitory factors like a one-time drop in the price of cell-phone services.
No alternative frameworks for understanding inflation beyond the Fed's reliance on the decades-old Phillips Curve relationship
-- which relies on the level of the unemployment rate and household inflation expectations -- were uncovered.
"The staff found little compelling evidence for the possible influence of other factors such as a more competitive pricing
environment or a change in the markup of prices over unit labor costs," according to the minutes of the gathering, which took
place just before Jerome Powell succeeded Yellen as chairman. "The prediction errors in recent years were larger than those observed
during the 2001-07 period but were consistent with historical norms."
On one hand, the findings arm Fed officials with ammunition in the debate about whether inflation will pick up again this year
as unemployment remains low. "Almost all" FOMC participants continued to see the Phillips Curve relationship between unemployment
and inflation as a useful guide, according to the minutes, which reinforces the case for gradually raising interest rates even
with relatively slow price increases.
But the news was not all good.
"Two of the briefings presented findings that the longer-run trend in inflation, absent cyclical disturbances or transitory
fluctuations, had been stable in recent years at a little below 2 percent," according to the minutes.
Evans Dissent
The findings echoed a concern that led Chicago Fed President Charles Evans to dissent against the FOMC's most recent rate hike
in December. After that meeting, he explained his decision on the grounds that U.S. households' expectations for inflation may
have fallen below 2 percent, which may make it harder for actual inflation to rise.
Fed officials' preferred inflation gauge has been below 2 percent throughout most of the last six years. Prices rose 1.7 percent
in the 12 months through December, according to the Commerce Department index.
But in the discussion among FOMC participants that followed the briefings, there was no indication that Evans's concerns were
becoming more widespread, despite the staff's findings. Only "a few" said inflation expectations appeared to have fallen below
2 percent, though "a number" noted the importance of stressing the symmetric nature of the Fed's inflation goal.
Dorian Bon reviews a collection of essays by socialist authors and journalists, many of them SW contributors, that asks tough
questions about Trumpism--and answers them.
...............................................
Trump and the crisis that caused him
...................................
"In 2008, Obama rode a wave of popular enthusiasm into the White House. "Two years later," Selfa writes, "the formerly discredited
and out-of-touch Republican Party scored a historic landslide in the 2010 midterm election. In the largest congressional midterm
victory since 1938, the Republicans captured sixty-three seats, ending the four-year Democratic majority in the House of Representatives."
"How did this happen? When Obama took office two years before, with the Democrats controlling both houses of Congress, his
administration quickly proceeded to appoint Bush-era officials to top positions in the Treasury and Pentagon.
The fiscal stimulus law passed weeks after Obama's inauguration, while significant, excluded jobs programs to ease rising unemployment.
The administration imposed sweeping concessions on unionized workers through the auto industry bailout, even while corporate executives
continued to be rewarded with lavish payoffs.
As the business elite found a willing partner in the new White House, poll after poll showed that Americans had begun to associate
Obama and the Democratic Party with big finance."
In an uninformed America, fake news organization like NYT, Wapo and Economist can peddle
fake news about fake news with nary a question of its accuracy. A dangerous time for the world.
MORONS R/U$
"I care not what puppet is placed on the throne of England to rule the Empire, ... The man
that controls Britain's money supply controls the British Empire. And I control the money
supply."
Baron Nathan Mayer Rothschild
Bearing mind that the US Federal Reserve is a private consortium of Rothschild-linked
banks and it was another Rothschild that basically wrote the Balfour Declaration...
"Power tends to corrupt and absolute power corrupts absolutely. Great men are almost
always bad men, even when they exercise influence and not authority; still more when you
superadd the tendency of the certainty of corruption by authority." Lord Acton
Add in Zimbardo (Stanford Prison Experiment) and Milgram (Shock Experiments) revealing how
the influence machine operatesand you have the schema behind what passes for crony capitalism
that infests the world. The icing on the oligarchic system is Bernays-inspired
propaganda.
well octopi are very intelligent as i understand it.. so they got that right!
i agree with @2 ger and @3 A P.. this constant mantra to get russia is a real interesting
set up if you ask me... someone hopes to make a ton of money off war.... these same people
don't care about the death of others either... not pretty..
Sigh, nothing but racism against Russians, MSM really wants ww3 with Russia and unfortunately
they will probably get it if their hatred, hysteria soar coming months, years.
As b said earlier this week, all for the click-bait.
Russiagate is the means the USA are using to manufacture consent for war.
A war that is not based on any real cause - just the Neo cons agenda. That is what the
Meuller enquiry is designed to with the cooperation of the media - to make Americans hate
Russia enough for war to be on the agenda
Putin is demonised - like with Saddam Hussein and Bin Laden and Ghaddafi
It started with obama and the demonisation of Putin.
Hillary was meant to continue this - Trump (Macmasters, Haley, Tillerson and the gang) are
following the plan set out by the Neo-cons.
The question is will Europe follow - the UK and France and Poland may the Baltic's are
dumb enough but I am not so sure about the rest of Europe.
Octopus ist a Symbol like any other, depicting for example methods of surveilance states. If
Sueddeutsche got attacked for using nazi symbolism, this is mosty due to the strong influence
of zionist groups in germany, showing off on their power. Bruce schneier likely confirms
this, even he though he uses a slightly different symbol: the squid.
"The question is will Europe follow - the UK and France and Poland may the Baltic's are dumb
enough but I am not so sure about the rest of Europe".
Unfortunately you are misinformed, the anti-russian hatred is probably worse in europe
than in america. Remember economist is a brittish/european news magazine.
Who most likely resembles an octopus, and acts more likely as one, is George Soros. Have
never seen his likeness mocked in any publication. It is far overdue.
This is amazing Big Lie projection by the elite. It shows their current weakness when they
project their ability onto others as b clearly shows.....has private banking been reeled in
since 1894 or has it grown to project more power and control?
Please remember folks that it is our social contract that needs to change rather than
punish some individuals and leave finance in private hands. Have we "evolved" enough to be
able to manage finance as a public utility? Like with gun (aggression) control, if we can get
some adults to lead the discussion and evolution instead of the psychopaths leadership we
have currently, there shouldn't be a problem.
the anti-russian hatred is probably worse in europe than in america. Remember economist is
a brittish/european news magazine.
Not in whole Europe. In Southern/Mediterranean Europe for example you do not find hatred
towards Russia. And how much Britain is European anyways, they call us 'continentals' after
all.
james @ 4 said:"i agree with @2 ger and @3 A P.. this constant mantra to get russia is a real
interesting set up if you ask me... someone hopes to make a ton of money off war.... these
same people don't care about the death of others either... not pretty.."
The picture of Putin as meddling octopus attacking democracies is of course dumb nonsense.
There is no evidence that the Russian government was in any way involved in the U.S.
election..."
No evidence either that the US, where electors choose between Trump and Clinton, Democrat
neo-cons and republican neo-cons, is a democracy.
Perhaps The Economist is re-cycling Karl Marx's old, 1848, charge against 'that power, whose
head is in Moscow and whose hand is in every cabinet in Europe' a charge that today fits the
arbiter of all wannabe, whose head is in Washington. to a tee.
I cant see any difference between southern states like Spain, France vs northern like
Holland and Norway.
The media is even more hawkish than the folks also.
The famous british weather forecast in never a past thing:
", ladies & gentelment a heavy thick mist this morning covers the Channel, thus isolating
the European continent...''
@ mauisurfer with the english translation of the Soros and INET piece....Thanks!
Most of my undergraduate study was in macro economics which showed the myth behind the
religion of private finance/property and ongoing inheritance. I was one of the folks in class
that asked too many questions and would never get invited to an INET gathering but was a
computer nerd by then anyway.
The point that struck me about the situation is that to overturn private finance also
means dealing with the excesses of patriarchy ....sigh We are a species that has advanced
amazingly so in so many ways and yet here we are with a multi-century pattern of private
finance controlling the lifeblood of human commerce like a vampire. This may have made some
sense in the feudal era but we are past that aren't we?
I hope we don't destroy ourselves trying to evolve.
Putin works for the Rothschilds. Putin is the bankers' faithful employee. Putin was just a
low-level KGB member and suddenly he becomes Russia's president? Just like Obama the unknown
became the US president?
In one sense it's certainly projection. I imagine the text is full of falsifications and
allegations offered with no facts to back them, which is what we've seen from all other media
and linked governments. Clearly, Russia is seen as an easier target than China thanks to the
years of Cold War brainwashing. But when we're confronted with such excrement, what's the
message we see being sent? I see an elaborate Ponzi Scheme built on a slowly disintegrating
foundation of lies in the process of imploding. The so-called Masters of the Universe no
longer hold any Truths and must thus rely on their seemingly infinite lies broadcast via the
Propaganda System. Meanwhile, The Resistance holds all the Truths and refutes the lies
easily. The Resistance rapidly gains the credibility the Masters once wielded.
The Hydra in Greek Mythology is killed in several differing ways. But the most important
aspect of its being is the reason for its existence: Hera raised it specifically to kill
Heracles--it's a tool of the Elite made to kill one of the Elite's main challengers. Yet, it
was a member of the Elite--Athena--who provides Heracles with the ultimate weapon to slay the
Hydra. Yes, Truth is stranger than Fiction; and it must be recalled that Mythology always is
constructed around a core of Truth.
What? No cognitive dissonance? Look closely again! Rothschild is exactly what your
"Private Finance" looks like. I would have thought you would highly approve. Are you sure you
took Economics 101? or just had a bad reaction to a pizza?
It is interesting that the host "b", who is scrupulous about anti-semitic biases, has now to
acknowledge at least tangentially that the anti-semites got some things right. The
anti-semites may have gone overboard with their accusations, but as always there is a kernel
of truth. The Jewish opinion-makers have no sense of moderation, or fairplay and that has
always turned off anyone who thinks about these things. I myself have turned away from being
a raging 110% Zionist to total indifference now.
Whose tentacles control the world?
From the Iran Deputy FM on the nuclear deal :
The world will be plunged into a new nuclear crisis if Donald Trump continues to sabotage
the Iran nuclear deal, the country's deputy foreign minister has warned. Abbas Araghchi, a
deputy foreign minister, accused Mr Trump's administration of violating the agreement by
threatening to reimpose sanctions and said Tehran could walk away from the deal if it did
not begin to see economic benefits from the deal.
" I don't think the deal can survive in this way, if the atmosphere of confusion
continues, if companies or banks will not cooperate with Iran . We cannot stay in a
deal in which there is no benefit for us," he said. "That's a fact." . . .
here
countries that are parties to the JCPOA--
China
European Union
France
Germany
Iran
Russian Federation
United Kingdom United States .. .The meddler
So Trump, not Putin, menaces Western democracies. Change the head on that octopus.
U.S. Mainstream news television and print has become boring predicable relentless propaganda
nonsense, pure hype. Half is pure hype propaganda and the other is mostly advertisement
selling products like pharmaceuticals any news item is product placement, LOL. It is
Frightening at the same time hard to believe that the American Public is still falling for
the same shell game, evil dictator, etc. This Defraud of the American Public, relentless and
diabolical misinformation mind control, and Mr. Obama and his ilk insist they will decide
what is true or not, fake news or not. And they will marginalize criminalize or physically
damage the outliers.
i live on rothschild street it is very nice and safe already no arab spring here as we
removed them and sent them to munchen,garmischpartenkirken,scotland,wales london and norway
sweden barbera lerner spector sorted the shipping out for us super better thsn dhl logistics
already.
"The great Ideal of Judaism is ...that the whole world shall be imbued with Jewish teachings,
and that in a Universal Brotherhood of Nations - a greater Judaism, in fact -- all the
separate races and religions [and nations] shall disappear."
Mythology contains its core of truth because, I submit, events and symbols both arise from
the same source, and share the same pattern.
In plain terms: we are too self-important to think we put the connections together. The
connections come already made, we just ascertain them.
In useful terms: the mythologies contain patterns of existence that remain alive even if
we only see the patterns from mythologies that owe their fame to past events. Whatever a
story evokes, it also invokes. It can happen again because it never went away. The pattern is
universal, enduring, primordial. Plus ca change...
Karlofi @ 24: In a way, the Hydra did kill Heracles (the mortal part of him). Heracles shot a
centaur who was menacing his second wife Deianira with one of his arrows (which he had
previously dipped in the Hydra's blood). The centaur told Deianira to dip a shirt into his
blood (the centaur's blood, that is), falsely claiming that his blood could be used as a love
potion. Some time in the future, Heracles' eye starts to wander and Deianira remembers the
centaur's last words. She gives Heracles the bloodstained shirt to wear. The Hydra poison in
the shirt starts killing Heracles and he cannot take it off.
It is vital to acknowledge that animus towards zionists is culturally driven rather than
racially motivated. Saturday morning Hebrew classes - frequently instructed by fresh outta
the IDF young israelis, has been an essential part of the indoctrination of jews into
zionism. Without that it would have been impossible to develop the cohort of fervently
pro-Israeli jews. Wind the clock back 5 or 6 decades and you will find that among the wider
jewish population zionists were outnumbered by a mixture of secular jews who wanted
integration and those orthodox jews who believed zionism to be contrary to established
teaching. Not now.
However there is another major downside to the accepted indoctrinations. Spend time with a
third generation arab american, italian- american or Greek-american and you will find that
aside from the surname they appear just as any amerikan would. Not so for Amerikan jews,
whose brainwashing has served to seperate them from the wider population.
This is particularly apparent in attitudes towards women. Over the early years of emigration
to the "New World" there have been numerous instances of recent migrants from Italy Greece
and the ME being involved in some dreadful activities against local women. Now, these have
frequent been used by a racist media to persuade fools that the particular nationality in
question is deviant, violent and will 'steal our womenfolk'. After a couple decades of local
Italian-amerikans, Greek-amerikans and Arab-amerikans it all settles down into a crime rate
within the usual boundaries of citizens.
That hasn't prevented race-baiting by third generation feminists, the worst example being
englander
Labour Party MP Sarah Champion claiming that all muslims were misogynist after a gang of
1st & 2nd generation Pakistani-englanders were convicted of grooming 'young white girls'.
The link which certainly doesn't represent my view on this gives a flavour of how the
englander media published racist tropes while pretending to be opposed to racism.
I mention the Champion case because one group of englanders and amerikans are always given
a free pass on sexism, even though they, unlike descendants of xtian and islamic immigrants,
continue with their belief in gender based oppression into all subsequent generations of
amerikans.
Take a look at the primary perpetrators in the #ME TOO tweeting? Harvey Weinstein, Woody
Allen, Roman Polanski to name a tiny percentage of the Hollywood "heavy Hitters" who have
been accused of sexual harassment and/or rape and who happen to be Jews.
I have always held that the combination of "we are the chosen people" rhetoric combined with
the "all goy women are easy" [I mean to say married goyim don't even wear a
sheitel ) nonsense has
encouraged jews to hang on to gender based prejusices long after the societies which other
migrants came from ditched such tosh.
Yet there have been no articles on the rate of Judaism amongst sex pests and rapists. Why
not?
I'm not highlighting this because I reckon the world needs more racist propaganda, but
because a well-researched article which considered all the issues properly could put these
'hebrew classes' that let's face it, are the judaic equivalent of wahabi Madrasa
brainwashing, under pressure to reform the curriculum away the anti-=women, anti-islam - hell
anti anyone/anything which isn't judaic- and into less socially divisive anti-hate speech
stuff.
Looking at any of the problems across this rock in 2018 with a race-based mindset is
wasteful and untrue. amerikans of all colours and creeds cheer on the destruction of the
'undeveloped' world not because of their hair or skin colour, but because they have had their
minds filled with garbage ever since someone first turned on a vid tube to 'distract'
them.
"Really, if the lower orders don't set us a good example, what
on earth is the use of them? They seem, as a class, to have absolutely no sense of moral
responsibility." –Oscar Wilde, The Importance of Being Earnest
Credit Slips informs us of an important new study, "Life in the Sweatbox," by Pamela
Foohey, Robert M. Lawless, Katherine M. Porter, and Deborah Thorne, forthcoming from the
Notre Dame Law Review , and available for download now at
SSRN . Foohey summarizes the article:
"Sweatbox" refers to the financial sweatbox -- the time before people file bankruptcy,
which is when they often are on the brink of defaulting on their debts and lenders can charge
high interest and fees. In the article, we focus on debtors' descriptions of their time in
the sweatbox.
Based on CBP data, we find that people are living longer in the sweatbox before filing
bankruptcy than they have in the past. Two-thirds of people who file bankruptcy reported
struggling with their debts for two or more years before filing. One-third of people reported
struggling for more than five years, double the frequency from the CBP's survey of people who
filed bankruptcy in 2007. For those people who struggle for more than two years before filing
-- the "long strugglers" -- we find that their time in the sweatbox is marked by persistent
debt collection calls, the loss of homes and other property, and going without healthcare,
food, and utilities. And although long strugglers do not file bankruptcy until long after the
benefits outweigh the costs, they still report being ashamed of needing to file.
Foohey concludes:
Our results suggest that the bankruptcy system, at present, cannot deliver its promised
"fresh start" to many of the families that seek its protection.
In this brief post, I'll look at one aspect of how the bankruptcy system came to be as it
is: The narrative that debtors perform a "utilitarian calculus" in deciding whether or not to
seek bankruptcy. This narrative is false, based the results of "Life in the Sweatbox." Since it
will crop up again if bankruptcy reform efforts gain traction -- as they should -- it's
important to debunk it now. This subject matter is new to me, so I will primarily quote from
and contextualize Foohey, Lawless, Porter, and Thorne.
First, let's define the "sweatbox.' Foohey et al., page 1:
The time before a person files bankruptcy is sometimes called the financial "sweatbox."
People in the financial sweatbox are on the brink of defaulting on their debts, which is when
their lenders can charge high interest rates and fees and otherwise profit from their
customers' financial misery.
Ka-ching.
Although the term "sweatbox" often is connected with bankruptcy, how long people spend in
the sweatbox before filing and what it means to live in the sweatbox has yet to be carefully
examined. Understanding what people endure while in the sweatbox is crucial to evaluating the
longstanding belief that people decide to file bankruptcy based on a strategic, financial
calculation.
Second, current personal bankruptcy law is premised on the narrative that people seek
personal bankruptcy out of self-interest (the "utilitarian calculus"). Foohey et al., page
2:
The term "financial sweatbox" came out of the debates leading to the 2005 passage of the
Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a major amendment to the
Bankruptcy Code designed to decrease consumer bankruptcy filings by making filing more
difficult, expensive, and timeconsuming. The consumer credit industry insisted that changes
to bankruptcy were needed because bankruptcy courts were full of deadbeat, "can-pay" debtors
who filed "bankruptcies of convenience" to try to escape their rightful obligations and who
felt no shame in "abusing" the system. This story contradicted the overwhelming expert
consensus that the bankruptcy system functioned well, abuse was rare, and there was no need
for drastic overhaul.
And from page 12:
To make its case for restricting access to bankruptcy and thus extend the time consumers
spend in the sweatbox, the consumer credit industry painted a picture of profligate spending
and uninhibited use of bankruptcy. This picture was not new. Rather, it was updated and
embellished for more than a decade. Proponents of this picture argued that reforms were
necessary because the "rising tide of bankruptcy filings" cost every moral, bill-paying
family $400 a year, a figure that made for "the best sound-bite in the debate."
Proponents further linked people's supposed propensity to file at the first sign of financial
trouble to a purported drastic decline in bankruptcy's stigma.
None of proponents' claims were supported by evidence . Proponents never
substantiated the often-cited "fact" that bankruptcy was costing every American family $400 a
year. The claim that bankruptcy courts were filled with "can-pay" debtors was contradicted by
decades of robust empirical evidence that people file bankruptcy after experiencing exogenous
shocks, such as decline in income, increased expenses, job loss, divorce, and medical
problems. Based on this evidence, the related claim that bankruptcy's stigma had disappeared
became suspect. If anything, comparing levels of consumer debt and the number of bankruptcy
filings, the stigma of filing may have increased over past decades.
Nonetheless, lured by tales of a $400 bankruptcy "tax," Congress embraced the consumer
credit industry's assertion that restricting eligibility to and otherwise making it harder to
file bankruptcy was the best policy.
(The politics of bankruptcy legislation, it seems, make the
politics of
health care law look like deliberations at Aristotle's Lyceum .) So now you have
been inocculated against the talking points from the credit "industry" (so-called), especially
that virulent "$400 a year" one. I'm about to give the article's internal logic on why these
talking points are false, but the article is lavishly footnoted and you can run down plenty of
additional material for yourself.
Third, the struggle to avoid bankruptcy involves immense suffering. Page 39:
To squeeze a few more dollars out of their lives, people work overtime, forego basic
necessities, face serious health consequences, deal with persistent debt collection calls,
end up in court, lose homes, and sell what little they own .
Financial misery hurts families. For couples, financial distress is "complicated by the
internal dynamic of the household." Struggling with unmanageable debts can strain marriages
and relationships. Fights over how to make ends meet, shifting of responsibilities for
dealing with ever-worsening finances, and watching loved ones deal with the emotional
distress that comes with money troubles may lead to separation and divorce. Splitting one
household into two only worsens the financial problems .
For parents, financial troubles are compounded with worries over how the kids cope with
the hardships. If homes are foreclosed, children are displaced along with their parents, and
may switch schools, possibly more than once as their parents find a workable living
situation. Home loss is linked with educational regression. Even if children are not
displaced, they notice their parents' financial distress. Schedules change, diets change, and
activities are scaled back as parents cut spending. Such changes can confuse children,
resulting in behavioral and emotional problems. The effects of prolonged financial problems
extend beyond families to workplaces and communities. Existing in a state of money scarcity
damages people's ability to lead productive lives. Merely determining how one will survive
day to day depletes people's mental resources. This leaves little energy for attending to
anything else, including one's job, threatening people's livelihoods and leading to further
economic drain. People withdraw from society, adding to their isolation. And the costs of
life in the sweatbox are magnified by people's reported underutilization of health-related
services and insurance, which can permanently harm people's health.
Fourth, many prolong the struggle to avoid bankrupcty long after it's in their interest to
do so. Page 3:
[T]wo-thirds of people who file bankruptcy report that they seriously struggled with their
debts for more than two years prior to bankruptcy. Almost one-third report that they
seriously struggled for more than five years, double the frequency from the CBP's survey of
people who filed bankruptcy in 2007. For those people who struggle for more than two years
before filing bankruptcy -- the "long strugglers" -- their time in the sweatbox is
particularly damaging, distinguishing them from other debtors. They lose their homes to
foreclosure, sell other property, report going without food and other necessities, all while
employing multiple tactics to try to make ends meet and dealing with persistent debt
collection calls and lawsuits. When long strugglers finally file, they enter bankruptcy with
fewer assets than other debtors and overwhelming unsecured debts. Long strugglers would
have benefitted financially from filing months or years before they did . Yet seven out
of ten long strugglers say they felt shame upon filing bankruptcy. These debtors' reports
about their prebankruptcy lives suggest a model of deciding to file based on something
beyond just dollars and cents .
Finally and finally, QED. Debtors, especially long strugglers, cannnot be presumed to perfom
a "utilitarian calculus." Page 42:
Debtors' presumed utilitarian calculation that underlies debates about access to
bankruptcy supposes more knowledge about law and shrewdness about timing than our data
suggest people have. People's willingness to file is diminished further by feelings of shame
about using bankruptcy even when filing is clearly financially beneficial. Combined, the
bankruptcy system is severely hampered in delivering the fresh start it is assumed to bestow
on struggling families.
And from page 38:
Far from being a first resort, bankruptcy is the last refuge for struggling families, and
their decisions to file do not reflect the utilitarianism bankruptcy law .
At this point, I'm thinking that the situation in bankruptcy is so hellish that that
loveable goof, Joe Biden, actually did student debtors a favor by not allowing them to file for
it [hollow laughter].
It also occurs to me that since it's not obvious that our elites are likely to feel shame,
and it's quite obvious that they're adept at utilitarian calculus (ka-ching), perhaps they're
projecting their own values and behavior onto the rest of us?
This is an excellent article, far richer in data, ideas, and policy concepts than I've
sought to convey here. Recommended reading . Grab a
cup of coffee!
New figures published this week on obscene inequality show how the capitalist economic
system has become more than ever deeply dysfunctional. Surely, the depraved workings of the
system pose the greatest threat to societies and international security. Yet, Western leaders
are preoccupied instead with other non-existent threats – like Russia.
Take British prime minister Theresa May who this week was
speaking at a posh banquet in London. She told the assembled hobnobs, as they were sipping
expensive wines, that "Russia is threatening the international order upon which we depend".
Without providing one scrap of evidence, the British leader went to assert that Russia was
interfering in Western democracies to "sow discord".
May's grandstanding is a classic case study of what behavioral scientists call "displacement
activity" – that is, when animals find themselves in a state of danger they often react
by displaying unusual behavior or making strange noises.
For indeed May and other Western political leaders are facing danger to their world order,
even if they don't openly admit it as such. That danger is from the exploding levels of social
inequality and poverty within Western societies, leading to anger, resentment, discontent and
disillusionment among increasing masses of citizens. In the face of the inherent, imminent
collapse of their systems of governance, Western leaders like May seek some relief by prattling
on about Russia as a threat.
This week European bank Credit Suisse published figures showing that the wealth gap between
rich and poor has reached even more grotesque and absurdist levels. According to the bank, the
world's richest 1% now own as much wealth as half the population of the entire planet. The
United States and Britain are among the top countries for residing multi-millionaires, while
these two nations have also emerged as among the most unequal in the world.
The data calling out how dysfunctional the capitalist system has become keeps on coming. It
is impossible to ignore the reality of a system in deep disrepair, yet British and American
politicians in particular – apart from notable exceptions like Jeremy Corbyn and Bernie
Sanders – have the audacity to block out this reality and to chase after risible
phantoms. (The exercise makes perfect sense in a way.)
Last week, a
report from the US-based Institute of Policy Studies found that just three of America's
wealthiest men – Bill Gates, Jeff Bezos and Warren Buffett – own the same level of
wealth as the poorest half of the entire US population. That is, the combined monetary worth of
these three individuals – reckoned to be $250 billion – is equivalent to that
possessed by 160 million citizens.
What's more, the study also estimates that if the Trump administration pushes through its
proposed tax plans, the gap between rich elite and the vast majority will widen even further.
This and other studies have found that over 80% of the tax benefits from Trump's budget will go
to enrich the top 1% in society.
All Western governments, not just May's or Trump's, have over the past decades overseen an
historic trend of siphoning wealth from the majority of society to a tiny elite few. The tax
burden has relentlessly shifted from the wealthy to the ordinary workers, who in addition have
had to contend with decreasing wages, as well as deteriorating public serves and social
welfare.
To refer to the United States or Britain as "democracies" is a preposterous misnomer. They
are for all practical purposes plutocracies; societies run by and for a top strata of obscenely
wealthy.
Intelligent economists, like the authors at the IPS cited above, realize that the state of
affairs is unsustainable. Morally, and even from an empirical economics point of view, the
distortion of wealth within Western societies and internationally is leading to social and
political disaster.
On this observation, we must acknowledge the pioneering work of Karl Marx and Friedrich
Engels who more than 150 years ago identified the chief failing of capitalism as being the
polarization of wealth between a tiny few and the vast majority. The lack of consumption power
among the masses owing to chronic poverty induced by capitalism would result in the system's
eventual collapse. Surely, we have reached that point in history now, when a handful of
individuals own as much wealth as half the planet.
Inequality, poverty and the denial of decent existence to the majority of people stands out
as the clarion condemnation of capitalism and its organization of society under private profit.
The human suffering, hardships, austerity and crippled potential that flow from this condition
represent the crisis of our time. Yet instead of an earnest public debate and struggle to
overcome this crisis, we are forced by our elites to focus on false, even surreal problems.
American politics has become paralyzed by an endless elite squabble over whether Russia
meddled in the presidential elections and claims that Russian news media continue to interfere
in American democracy. Of course, the US corporate-controlled news media, who are an integral
part of the plutocracy, lend credibility to this circus. Ditto European corporate-controlled
media.
Then we have President Donald Trump on a world tour berating and bullying other nations to
spend more money on buying American goods and to stop cheating supposed American generosity
over trade. Trump also is prepared to start a nuclear war with North Korea because the latter
is accused of being a threat to global peace – on the basis that the country is building
military defenses. The same for Iran. Trump castigates Iran as a threat to Middle East peace
and warns of a confrontation.
This is the same quality of ludicrous distraction as Britain's premier Theresa May this week
lambasting Russia for "threatening the world order upon which we all depend". By "we" she is
really referring to the elites, not the mass of suffering workers and their families.
May and Trump are indulging in "perception management" taken to absurdity. Or more crudely,
brainwashing.
How can North Korea or Iran be credibly presented as global threats when the American and
British are supporting a genocidal blockade and aerial slaughter in Yemen? The complete
disconnect in reality is testimony to the pernicious system of thought-control that the vast
majority of citizens are enforced to live under.
The biggest disconnect is the obscene inequality of wealth and resources that capitalism has
engendered in the 21 st century. That monstrous dysfunction is also causally related
to why the US and its Western allies like Britain are pushing belligerence and wars around the
planet. It is all part of their elitist denial of reality. The reality that capitalism is the
biggest threat to humanity's future.
Do we let these mentally deficient, deceptive political elites and their media dictate the
nonsense? Or will the mass of people do the right thing and sweep them aside?
"... As it is, the "middle" 59% can replenish their pockets at the expense of top 1% income whose share has ballooned from 10% to 22.5% over recent (de-unionizing) decades. Just reintroduce confiscatory taxation of the kind existing in the Eisenhower era. Say, 90% over $2 million income -- and this time we really mean it -- very top incomes (CEOs, news anchors, er, quarterbacks) now 20X what they were since per capita income only doubled. I predict any social inertia (it's only human nature) on the part of the 59% to jack upper taxes up will be overcome by the friendly persuasion on the part of the 40% -- who want to jack up the price of that burger just a bit more. ..."
"... NY Times' Nate Cohn found that Trump won by trading places with Obama. Obama ran as the black guy (presumably working folks oriented -- were we wrong) against Wall Street Romney; Trump ran as blue collar-acting guy against Wall Street Hillary. True progressive Bernie would have stomped Trump. (Bernie hasn't caught on to re-stocking union density as the only real way to help working people yet -- but at least he won't get in the way while waiting to catch on.) ..."
"... I remember reading an interview of an older person. The interviewer asked what life was like during the Great Depression. And they replied that it wasn't bad if you had a job. ..."
"... This is similar to our situation today. It is not bad if you have a good paying full time job. In that case you have almost no understanding of what some others are complaining about. Income inequality is a sterile term for what happens to other people ..."
"... Candidate Trump addressed the major concern of those 'others', which was their declining spending power. He did that by addressing the economic threats posed by illegal immigration and free trade treaties which allowed companies to move production overseas. ..."
"... The businessman Mohamed El-Erian rejects the populist label for the current multi national voter rebellions, he prefers anti-establishment. And so do I. ..."
"We all know that that the widely touted unemployment rate overstates the strength of
the labor market given so many having dropped out of the labor force, and upward pressure on
wages has remained weak, despite some improvement on that front recently."
Barkley, this understates (too typically I'm afraid) the depth of the "Great Wage
Depression." Everybody (everybody progressive anyway) eternally points to economic growth
benefiting only the upper few percent for decades -- then -- whenever they assess the effect
of the economy upon voters (not you here) they skip right over sink hole wage rates and
keyhole focus right on the unemployment rate (or if we're lucky the real employment rate)
when what voters want is $20/hr jobs plain and simple: high (or at least really livable)
wages.
[cut-and-paste]
Simply put, if fast food can pay $15/hr at 33% (!) labor costs, then, other retail should be
able pay $20/hr at 10-15% labor costs, and, Walmart (God bless it) may be able to pay $25/hr
at 7% labor costs. If this means shifting 10% of overall income to the bottom 40%, that means
scratching 14% of their income from the "middle" 59% (who get roughly 70% of overall income)
-- in higher prices. Which may mean we have been paying the 40% too little for too along. But
if the 40% get labor union organized (where this little speech is going) we may find
ourselves willing to up if we want them to show up at work.
I have always been willing to tell any gang banger (not that I ever run into any) that
side-ways guns and gang signs and all that would look pretty funny in, say, Germany where
they pay people to work. And, that if Walmart were paying $25/hr we wouldn't be hearing about
any of this here.
As it is, the "middle" 59% can replenish their pockets at the expense of top 1% income
whose share has ballooned from 10% to 22.5% over recent (de-unionizing) decades. Just
reintroduce confiscatory taxation of the kind existing in the Eisenhower era. Say, 90% over
$2 million income -- and this time we really mean it -- very top incomes (CEOs, news anchors,
er, quarterbacks) now 20X what they were since per capita income only doubled. I predict any
social inertia (it's only human nature) on the part of the 59% to jack upper taxes up will be
overcome by the friendly persuasion on the part of the 40% -- who want to jack up the price
of that burger just a bit more.
* * * * * *
Super easy way back [ONLY WAY BACK] is restoring healthy labor union density (6%
unions outside gov equates to 20/10 bp). When Democrats take over Congress, we must institute
mandatory union certification and re-certification elections at every work place (stealing a
page from the Republican's anti-union playbook -- see Wisconsin gov workers). I would add the
wrinkle of making the cycle one, three or five years -- plurality rules -- take a lot of
potential rancor out of first time votes in some workplaces.
PS. NY Times' Nate Cohn found that Trump won by trading places with Obama. Obama ran as
the black guy (presumably working folks oriented -- were we wrong) against Wall Street
Romney; Trump ran as blue collar-acting guy against Wall Street Hillary. True progressive
Bernie would have stomped Trump. (Bernie hasn't caught on to re-stocking union density as the
only real way to help working people yet -- but at least he won't get in the way while
waiting to catch on.)
JimH , January 11, 2018 10:39 am
First, I agree with your assessment that President Trump is claiming credit for things
which he has not caused. But this economy is awful for those at the low end of the income
scale. Low pay, high rent, and rising food costs. (Sometimes by subterfuge.)
I remember reading an interview of an older person. The interviewer asked what life was
like during the Great Depression. And they replied that it wasn't bad if you had a job.
This is similar to our situation today. It is not bad if you have a good paying full time
job. In that case you have almost no understanding of what some others are complaining about.
Income inequality is a sterile term for what happens to other people.
Others like those who have not dropped out of the labor force but who are no longer
counted as looking for work because they exhausted their unemployment benefits. (No one
contacts them to see if they are still looking for work.)
Others like those who have full time employment but their wages are low and static.
Others like those who need a full time job but a part time job is all they can get.
Others like those who work but only get by because they applied for food stamps. (SNAP)
Others like those living on Social Security and seeing pitifully tiny COLAs.
Others like older Americans with savings which pay almost no interest.
And others, like all of the above, who see the prices of the things that they consume going
up while the CPI is showing little inflation.
Some of those others live in the rust belt states where they have seen an extended
economic decline.
Neither of the two major political parties addresses those 'others' issues. And because
they are almost completely disconnected from their voters' issues, they did not perceive the
building anger.
Candidate Trump addressed the major concern of those 'others', which was their declining
spending power. He did that by addressing the economic threats posed by illegal immigration
and free trade treaties which allowed companies to move production overseas.
President Trump lost in the polls and won the election. It doesn't really surprise me that
he is continuing to score low in the polls.
Of course, the two major parties can continue on their current paths. And they can blame
their losses on flawed voters. And eventually they will do their complaining from their
homes.
The businessman Mohamed El-Erian rejects the populist label for the current multi national
voter rebellions, he prefers anti-establishment. And so do I.
Varsovian , January 11, 2018 12:14 pm
Oh no, not another extrapolation based on the false economic stats Poland pumped out
pre-2015!!
No-one takes the drastic choice of emigration lightly – especially if you know you're
going to be bottom of the heap in the new country. Can't you find an American to talk about
his forbears escaping poverty in Europe only to face hard times in the New World?
Two million Poles fled Poland's much touted "Economic Miracle". Funnily, they stopped
emigrating when REAL economic growth, wage growth and the setting up of a welfare state
started!
Hard Right crony capitalism with illegal fuel import deals with Putin and falsified public
accounting didn't cause happiness. Despite the figures, Poland wasn't a world leader in the
export of cellphones, for example.
Rosser continues to bark up the wrong tree! Worse – he's making some sort of social
philosophy out of it.
You and I have already been around on this, but I shall point out that the credibility of
sources in Poland that you like to cite have collapsed since the Law and Justice Party you
shill for took over.
The most believable data is that there has been no major economic change in the state of
the Polish economy from before and after the political change, although some minor changes
(which you have hyped while ignoring others not fitting your party line). The big bottom line
is no noticeable change in overall GDP growth in Poland, basically chugging along
unspectacularly in the 1-2% annual range with mild quarterly fluctuations.
So, sorry, I am going to stick with calling this the Poland problem." You folks are the
poster boys for this. Tough, and good luck getting any world leader not also an authoritarian
liar supporting your embarrassing government.
"... managers, janitors, lawyers, nurses, librarians, bartenders, and everyone else who had a job in 2016 ..."
"... Total US Income = $18,750,000,000,000 Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200 Income from Federal Social Benefits = $2,039,300,000,000 ..."
"... Total Income - (Wages & Salaries + Benefits) = $9,763,546,014,800 ..."
"... every commodity ..."
"... every last grain ..."
"... every waste bin ..."
"... every single cappuccino ..."
"... Property income ..."
"... unearned income ..."
"... interest ..."
"... interest, rent, and corporate profits ..."
"... with ..."
"... just as valuable ..."
"... honest work ..."
"... In solidarity, John Laurits ..."
"... If you enjoy these posts, consider buying the writer a cup of coffee ..."
"... or making a monthly donation ..."
"... -- it's like a voluntary subscription directly to an artist & journalist ..."
Working Class w/ No Living Wage: The
Absurd Math of US Income
As the stock market gleefully claws its way to
more record-breaking highs,
Forbes reports
a full 56% of US Americans now have
less than $1,000 to their names -- and 25% have
less than $100
. But the
economy, as they say, is
booming.
Even with 165 million on the
breadline and an hourly minimum wage of only $7.25 nationally, surging Amazon share prices have
added $13 billion to Jeff Bezos' net-worth
since
mid-September. For perspective, $13 billion is enough to pay the student-loan debts of 432,000 millennials.
It's also plenty to end world hunger for a year, according to
the International Institute
for Sustainable Development
. And Bezos -- now the world's richest man -- smashes a bottle of
organic champagne to celebrate his new wind-farm. The question is -- how do markets grow as the wealth of the
people shrinks and wages fall? What do the commentariat mean by "economic growth" when the nation's income can
hardly keep half of its people's heads above water?
The National Income:
How Much Value is Created by the US Economy?
There are a lot of ways to measure economies -- for
example,
gross domestic product
or
GDP
is the value of everything a country produces ( minus the cost to produce it ) and the
employment-rate
measures the number of paying jobs. The
gross national income
or GNI is what you get after adding up all of
the income earned by everyone. GNI includes every citizen ( even in other countries ) and every kind of income
from wages or salaries to social security and unemployment benefits, investment returns, or the sale of assets
like houses and cars.
GNI is basically the total value of all money
paid to everyone, minus the expenses of doing the business everyone is getting paid for. According to the
macroeconomic accounts on the Federal Reserve's website, the GNI was about
$18.7 trillion dollars
in 2016 for the US.
Gross National Wages:
Every Paycheck Combined
Now, how much of America's multi-trillion-dollar
paycheck ends up in the pockets of people who work in the US? Since the "gross national wage" is apparently not
as important to US media-outlets as Jeff Bezos' latest earnings or the many triumphs of the Dow Jones, this
number is a bit more camouflaged. Luckily, the
total number who are employed by all industries and their
average wages or salaries
can be found in the bowels of the Bureau of Labor Statistics' website.
Multiplying these two numbers -- the total employed by all industries and their mean-average yearly
wages -- gives the combined wages and salaries of everyone with a job in the US, from the clerks and mechanics
to the brain-surgeons and corporate executives.
$7 trillion dollars to split between all employed people in the United States.
Everyone who built
everything and provided every service --
managers, janitors, lawyers,
nurses, librarians, bartenders, and everyone else who had a job in 2016
-- collectively earned about $7
trillion of the $18.7 trillion national paycheck.
But who gets the remaining $11,781,946,014,800?
Federal Benefits & Social Welfare
The national income also includes money received
from government benefits, such as disability, retirement, and social security. The Bureau of Labor Statistics
lists the 2016 total federal benefits
received at
$2.0393 trillion.
Total US Income = $18,750,000,000,000
Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200
Income from Federal Social Benefits = $2,039,300,000,000
Total Income - (Wages & Salaries + Benefits) =
$9,763,546,014,800
And about $9.8 trillion is still missing.
Literally All Working People Combined
Earn Less Than Half of American Income
According to the BLS data,
there are an estimated
146 million people who hold some sort of job in the US.
These
146 million workers create
every commodity
, serve
every meal
, harvest
every last
grain
, empty
every waste bin
, teach
every student
, build
every house
,
and pour milk into
every single cappuccino
in the nation. And together
they take
about 37.2%
of the American pie.
All of the so-called
"handouts" from the federal government -- social security, retirement, disability, and other benefits -- only
amount to another 10.8% of the GNI.
The combined income from all employment and federal
benefits still only adds up to 48% of America's paycheck. And that means that the other 52% must be paid to
someone -- or some
thing
-- without a job.
Unearned Income: Landlords, Industrial
Capitalists, & Wall Street Investors
Property
income
-- or, as the classical economists knew it,
unearned income
-- is
earned through ownership ( rather than
wages
, which are earned by time
spent working ). There are three basic types of unearned income.
Rent
is paid to owners of land or other natural resources,
profit
is paid
to owners of capital ( like factories, equipment, machines, etc. ), and
interest
is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion
Jeff Bezos made when Amazon share prices increased, for example, was "earned" by owning something rather than
creating something or providing some service.
This type of income is a bit harder to keep
track of -- especially considering that the wealthy seem to be in the habit of using offshore tax-havens and
shell companies ( like those revealed in the
Panama
and
Paradise Papers
) to stash their fortunes. With
that being said, the
US Department of Commerce's accounts
show
nearly $7 trillion
-- or about the same as 146 million
working people made combined -- paid out for
interest, rent, and corporate
profits
. Another trillion and a half or so was paid to "proprietors" or, more colloquially, the
owners.
And now we have a rough sketch of the great
American paycheck:
Are Workers Worthy of Their Wages?
Not in the United States of America!
There are two basic components to the whole
economic activity and wealth of human civilization --
capital
and
labor
.
On one hand there is capital -- all of the natural resources, materials, lands, machines, and everything that
everything is made
of
and made
with
-- and, on the other hand, there are the countless workers whose labor-power transforms that stuff
into the societies we live in.
Without the time, energy, creativity, and
sacrifices made by the 146 million human beings who make everything and offer every service, the wealth of
people like Jeff Bezos would not exist. Business magnates like Jeff Bezos, Warren Buffet, and Bill Gates
need
working classes -- working classes do not need
them
. And yet
Bezos, Buffet, and Gates now possess more wealth than the
bottom 50%
of the nation combined.
Through the prism of the American economy, people like Bezos, Buffet, and Gates are
just as valuable
as the poorest 160 million of the working classes who
collectively labor billions of hours each week.
And
that
is unfair --
that
doesn't add up. The "American Dream" -- the whole idea
about how anyone willing to work hard should be able to prosper or, at the very least, make ends meet -- is
objectively
untrue
. The truth is -- if you want to earn wealth in the
US or even if you only want to earn enough to pay the bills on time --
honest
work
is not a very good strategy.
In solidarity,
John Laurits
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Economist Linda Bilmes has argued that there's another new factor involved in Washington's budgeting of today's wars. In every other major American conflict, after an initial period, war expenditures were incorporated into the regular defense budget. Since 2001, however, the war on terror has been funded mainly by supplemental appropriations (those Overseas Contingency Operations funds), subject to very little oversight. Think of the OCO as a slush fund that insures one thing: the true impact of this era's war funding won't hit until far later since such appropriations are exempt from spending caps and don't have to be offset elsewhere in the budget.
JamesT said in reply to Terry... Terry
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Regina Bash-Taqi
