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Key Myths of Neoliberalism

News Neoliberalism Neoliberalism Bookshelf Recommended Links Neoliberal rationality The neoliberal myth of human capital Neoclassical Pseudo Theories and Crooked and Bought Economists as Fifth Column of Financial Oligarchy Scapegoating and victimization of poor and unemployed
Ayn Rand and her Objectivism Cult Neoliberal "New Class" as "creative class" Small government smoke screen Invisible Hand Hypothesys: The Theory of Self-regulation of the Markets Shareholder value scam "Starving the beast" bait and switch Universal quantification  Deification of market
Neoliberalism's Myth on Benefits of Free Trade Neoliberal concept of freedom Financization of everything in sight Mathiness Rational expectations scam Numbers racket and "Potemkin numbers" Free Markets Newspeak The Great Transformation
Neoliberal "New Class" as variant of Soviet Nomenklatura Techno-fundamentalism Ayn Rand and her Objectivism Cult Greed Is King - What We Learned Managerialism Deception as an art form Machiavellism Mayberry Machiavellians
Neoliberalism as secular religion, "idolatry of money"  Pope Francis on danger of neoliberalism Over-consumption of Luxury Goods as Market Failure Globalization of Financial Flows Neoliberalism as Trotskyism for the rich Libertarian Philosophy Greenspan humor Etc

A critical look on the role of myths in the neoliberal society was undertaken by Robert Bonomo in his artcile We're All Zombies ( The Unz Review  Feb 23, 2015). He compare behaviour of financial oligarchy in  the neoliberal society with the behaviour of zombies:

The great psychologist and mystic Carl Jung was asked if a myth could be equated to a collective dream and he answered this way, “A myth…is the product of an unconscious process in a particular social group, at a particular time, at a particular place. This unconscious process can naturally be equated with a dream. Hence anyone who ‘mythologizes,’ that is, tells myths, is speaking out of this dream.”

Many of the themes in our popular culture are conscious story telling devices with the definite purpose of social engineering/control, but others seem to just emerge from the collective unconscious like the stuff of dreams.

For example  essential quality of the zombie myth is its unquenchable hunger. No amount of flesh and blood seems able to quench the longing to consume live human flesh. Modern man has a similar problem -- no amount of money, sex, gadgets, job titles, drugs, entertainment, pornography, art, religion or gurus seem able to quench our thirst. We live in constant hunger. If we equate the zombie ‘hunger’ for flesh to the human desire for money, the comparison becomes almost uncanny. Most adult humans spend most of their day either making money or spending it while being constantly bombarded with propaganda/advertising to keep them hungry.

From the most humble street vendor to the billionaires on CNBC, no one seems to ever have enough money. Zombies need to eat live human flesh and money is at its core, human labor. Our craving for money is really the craving for the work of others, for the sweat and blood of millions to furnish us with unlimited amounts of food and consumer goods.

The vast majority of Westerners have ceased to create anything tangible. Only one in five Americans actually produce anything. Eating what one produces on a farm or trading manufactured goods for food connects us to life. But when people spend ten hours hours a day in an office looking at a computer screen and two hours in traffic, somehow eating, and living, become abstract. What are we actually doing to create the food , heat, and the shelter we need?

Modern man is almost entirely without out any practical skills. He doesn’t know how to grow food, hunt animals or build a house. He uses all sorts of electronic tools whose core technologies he doesn’t really understand and which he doesn’t have the slightest idea how to fix.

This set of circumstances is a recent development in human history, beginning in the 18th century and growing exponentially in the last 30 years during the information revolution. We are helpless slaves to technologies we don’t understand and to media that programs us to believe all sorts of propaganda designed to keep us from actually thinking critically.

Neoliberals created amazingly elaborate set of myths. Which are enforced via universities and MSM very effectivly. Both in quality of myths and the quility of indoctibation they are successfully competing with Marxism and Trotskyism. Like Bolsheviks they creates its special "Neoliberal-Speak" a language for indoctrinated, much like "Marxism-speak" in the USSR. 

We will list only some of the most popular neoliberal myths. Among them


Our work will be guided by a shared belief that market  principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction. […]

We recognize that these reforms will only be successful if grounded in a commitment to free market  principles, including the rule of law, respect for private  property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems. These  principles are essential to economic growth and  prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living. 

Recognizing the necessity to improve financial sector regulation, we must avoid over-regulation that would hamper economic growth and exacerbate the contraction of capital flows, including to developing countries. We underscore the critical importance of rejecting  protectionism and not turning inward in times of financial uncertainty.

-Declaration from the G-20 Washington Summit 2008

 

Amid the burgeoning financial crisis, the Group of Twenty (G-20) met in 2008 for the Washington Summit, attended by then President Rodríguez Zapatero of the ruling Socialist party (PSOE), where the world’s wealthiest nations called for concerted international cooperation to reform the financial sector, favorable to reviving global flows of capital.

The many points identified in the declaration (the need to strengthen transparency and accountability, enhance regulation, promote integrity in the financial markets, reform international financial institutions, and foster prudential oversight and risk management), may have been a legible indicator that the world’s leading economic  powers were coming to terms with the responsibility of unethical business practices and systemic flaws, among other factors, in the successive tumbling of international markets in a domino effect ( Declaration of the Summit ).

Yet, despite the different nuances of  policy positions in the European Union at large, political and financial powers have upheld structural reform  as the basis from which to pursue deeper austerity measures and labor reforms that favor precarity, thereby dismantling the welfare state and social rights in Spain under the aegis of neoliberal reform. In the neoliberal policies of the EU, reducing the deficit by cutting public expenditures on social measures (on public healthcare, education, pensions, social  programs, and so on) while leaving others untouched (investments in private enterprise, the military, national security programs, and so on) has been expressed, and indeed imposed, as part of the only  solution to the crisis in Spain, as elsewhere. According to this logic, as the G-20 declaration asserts, greater competition, private investments, and the surveillance and tempered regulation of the free market. In sum, free market activity with minimal state intervention, as deemed necessary equate directly to greater opportunity, entrepreneurship, and prosperity that deliver poverty reduction and a higher standard of living on a global scale. And yet, in extensive literature on the effects of neoliberal policies in general and of austerity in particular, nothing could be farther from the social reality experienced by world populations, as these reforms have correlated to greater inequality, unrest, disease, and mortality.

 In the forging of its myth, neoliberal policies are asserted by the G-20 as providing a better quality of life for all. On what bases is the claim made that a higher standard of living follows naturally from austerity and the "flexibilization" of labor, among other neoliberal reforms? Myth, writes Roland Barthes, bears an ideological mechanics that  ‘naturalizes’ its constructed character in order to assert and legitimize itself as truth. Exemplified in

Barthes’ reading of a magazine photograph in which a soldier of African descent salutes the French flag, myth produces a sleight of hand here, forged from an image of colonial subservience to the French Empire that collapses the signified into a signifier

These reforms have proved historically “damaging [to] the welfare of the common people in those countries, causing enormous suffering,” writes Vicenç Navarro. “[T]hese policies had consequences for the welfare and quality of life of ordinary people, creating death, disease, and social unrest” (“The IMF’s Mea Culpa?”).

Also see  Basu and Stuckler; Blyth; Harvey,  A Brief History of Neoliberalism ; and Lustig and her contributors, to name a few.  by reducing its connotative meaning into a self-evident truth: “that France is a great Empire, that all her sons, without any color discrimination, faithfully serve under her flag, and that there is no better answer to the detractors of an alleged colonialism than the zeal shown by this Negro [ sic] in serving his so-called oppressors” ( Mythologies  116). By attributing the constructed character of presumptions to nature, myth may  become an accomplice to legitimize power relations by forging an alibi. Here, to the ‘natural order’  of the cultural (and ethnic) ‘ superiority ’ of the metropolis  and its right to (military) rule over the colonial subject, demonstrated in the subordinate’s allegiance to the empire. In this sense, as in Barthes’ s reading, myth may adopt or invert the arguments of its opposition, despite the lack of veracity in its production of meanings or claims. “Myth is a value, truth is no guarantee for it; nothing prevents it from being a  perpetual alibi: it is enough that its signifier has two sides for it always to have an ‘elsewhere’ at its disposal”—  an elsewhere  which Barthes locates in the empire’s  benevolent intentions as its alibi to implicit racial subordination and colonial oppression (123). Thereby myth becomes indisputable material if its alibi is taken literally, at once  passing itself off as a natural order that has always been and that bears a malleable disposition to be appropriated in further myth-making, say, in Barthes’ s reading, at the service of imperial power and its legitimacy of rule. Let us return then to the assertion that neoliberal governmentality delivers greater good on a global scale.

The myth that neoliberalism produces poverty reduction and social wellbeing for all has become an alibi for the dismantling of the welfare state in Spain and with it, an accomplice to the dismantling of social rights, on the one hand, and to the channeling of state coffers into private interests to the benefit of banks, financial institutions, and private business, on the other. Such a polemic has been flagged by economist Vicenç Navarro, who argues that Spain’s ‘ oft’ multi-billion euro  bailout from the European Central Bank (ECB) does not alleviate the crisis of credit-lending in Spain, as this capital is destined for Spanish banks to pay off interest on loans from European financial institutions abroad, while the Spanish state incurs this burden of debt, on the one hand, and must also adopt austerity policies to dismantle social welfare programs, on the other (“The Euro Is Not in Trouble”). Public funds, in other words, are redirected to private interests in neoliberal practice at the expense of labor

“If I focus on a full signifier, in which I clearly distinguish the meaning and the form, and consequently  the distortion which the one imposes on the other, I undo the signification of the myth, and I receive the latter as an imposture” (128). See Roland Barthes,

 Mythologies

As Navarro notes, the ECB and the International Monetary Fund (IMF) have placed conditions on Spain’s eligibility to receive financial assistance by urging the government to pursue measures that would increase the flexibility of labor, reduce public expenditures on pensions, and  privatize the welfare state — in sum, to deepen neoliberal reforms (“The Euro Is Not in Trouble”).

One form of what David Harvey calls the “accumulation by dispossession” of capital, these measures entail the “reversion to the private domain of common property rights won through past class struggles (the right to a state pension, to welfare, or to national health care),” which often, if not exclusively, benefit the greatest fortunes at the expense of social  programs (“The ‘New’ Imperialism” 75).

That is, where the private accumulation of capital reaches its limits of projected growth, the sustainability of a given enterprise must be secured through dispossession, through takeovers, expropriation, the payment of private debts from public funds, and so on. However, one should not presume that these reforms are adopted coercively alone, as government officials in Spain’s predominant left and right parties (PSOE and PP, respectively) have welcomed likeminded policies, historically, in order to meet the accords for Spain’s adhesion to the European Union after the Maastricht Treaty of 1992.

Amid neoliberal governance, contemporary times have witnessed the rise of new transnational actors and financial players. The state, in other words, experiences a crisis of sovereignty for its accentuated lack of autonomous decision-making on fiscal and labor matters, in which government officials and policy-makers often succumb to corporate, banking, and financial interests beyond the state, and sometimes do so voluntarily. This circumstance is not new, however, nor is it unique to Spain. In the 1970s, foreign credit lending from financial institutions in the United States would wield powerful leverage to reshape strategically the economic policies of indebted countries.

 As David Harvey notes, after Mexico was pushed into default on its debt to New York financial institutions in 1982-84, this circumstance provided the test case for the IMF and United States government to work in concert to demand neoliberal reforms of Mexico towards greater labor flexibility  (the deregulation of labor protections for workers), free market laws, and privatization (, 28-31). Echoing the test case of Mexico, today the European Commission (EC), the IMF, and the ECB, known popularly as the Troika, have urged the European member states of intervened economies to pursue further neoliberal “structural adjustments”


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[Feb 19, 2020] During the stagflation crisis of the 1970s, a "neoliberal revolution from above" was staged in the USA by "managerial elite" which like Soviet nomenklatura (which also staged a neoliberal coup d' tat) changed sides and betrayed the working class

Highly recommended!
This was an outright declaration of "class war" against working-class voters by a "university-credentialed overclass" -- "managerial elite" which changed sides and allied with financial oligrchy. See "The New Class War: Saving Democracy from the Managerial Elite" by Michael Lind
Notable quotes:
"... By canceling the class compromise that governed the capitalist societies after World War II, the neoliberal elite saws the seed of the current populist backlash. The "soft neoliberal" backbone of the Democratic Party (Clinton wing) were incapable of coming to terms with Hillary Clinton's defeat -- the rejection of the establishment candidate by the US population and first of all by the working class. The result has been the neo-McCarthyism campaign and the attempt to derail Trump via color revolution spearheaded by Brennan-Obama factions in CIA and FBI. ..."
Feb 19, 2020 | angrybearblog.com

likbez , February 19, 2020 12:31 pm

Does not matter.

It looks like Bloomberg is finished. He just committed political suicide with his comments about farmers and metal workers.

BTW Bloomberg's plan is highly hypocritical -- like is Bloomberg himself.

During the stagflation crisis of the 1970s, a "neoliberal revolution from above" was staged in the USA by "managerial elite" which like Soviet nomenklatura (which also staged a neoliberal coup d'état) changed sides and betrayed the working class.

So those neoliberal scoundrels reversed the class compromise embodied in the New Deal.

The most powerful weapon in the arsenal of the neoliberal managerial class and financial oligarchy who got to power via the "Quiet Coup" was the global labor arbitrage in which production is outsourced to countries with lower wage levels and laxer regulations.

So all those "improving education" plans are, to a large extent, the smoke screen over the fact that the US workers now need to compete against highly qualified and lower cost immigrants and outsourced workforce.

The fact is that it is very difficult to find for US graduates in STEM disciplines a decent job, and this is by design.

Also, after the "Reagan neoliberal revolution" ( actually a coup d'état ), profits were maximized by putting downward pressure on domestic wages through the introduction of the immigrant workforce (the collapse of the USSR helped greatly ). They push down wages and compete for jobs with their domestic counterparts, including the recent graduates. So the situation since 1991 was never too bright for STEM graduates.

By canceling the class compromise that governed the capitalist societies after World War II, the neoliberal elite saws the seed of the current populist backlash. The "soft neoliberal" backbone of the Democratic Party (Clinton wing) were incapable of coming to terms with Hillary Clinton's defeat -- the rejection of the establishment candidate by the US population and first of all by the working class. The result has been the neo-McCarthyism campaign and the attempt to derail Trump via color revolution spearheaded by Brennan-Obama factions in CIA and FBI.

See also recently published "The New Class War: Saving Democracy from the Managerial Elite" by Michael Lind.

One of his quotes:

The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight.

[Feb 19, 2020] On Michael Lind's "The New Class War" by Gregor Baszak

Highly recommended!
Notable quotes:
"... To writer Michael Lind, Trump's victory, along with Brexit and other populist stirrings in Europe, was an outright declaration of "class war" by alienated working-class voters against what he calls a "university-credentialed overclass" of managerial elites. ..."
"... Lind cautions against a turn to populism, which he believes to be too personality-centered and intellectually incoherent -- not to mention, too demagogic -- to help solve the terminal crisis of "technocratic neoliberalism" with its rule by self-righteous and democratically unaccountable "experts" with hyperactive Twitter handles. Only a return to what Lind calls "democratic pluralism" will help stem the tide of the populist revolt. ..."
"... Many on the left have been incapable of coming to terms with Hillary Clinton's defeat. The result has been the stifling climate of a neo-McCarthyism, in which the only explanation for Trump's success was an unholy alliance of "Putin stooges" and unrepentant "white supremacists." ..."
"... To Lind, the case is much more straightforward: while the vast majority of Americans supports Social Security spending and containing unskilled immigration, the elites of the bipartisan swamp favor libertarian free trade policies combined with the steady influx of unskilled migrants to help suppress wage levels in the United States. Trump had outflanked his opponents in the Republican primaries and Clinton in the general election by tacking left on the economy (he refused to lay hands on Social Security) and right on immigration. ..."
"... Then, in the 1930s, while the world was writhing from the consequences of the Great Depression, a series of fascist parties took the reigns in countries from Germany to Spain. To spare the United States a similar descent into barbarism, President Franklin D. Roosevelt implemented the New Deal, in which the working class would find a seat at the bargaining table under a government-supervised tripartite system where business and organized labor met seemingly as equals and in which collective bargaining would help the working class set sector-wide wages. ..."
"... This class compromise ruled unquestioned for the first decades of the postwar era. It was made possible thanks to the system of democratic pluralism, which allowed working-class and rural constituencies to actively partake in mass-membership organizations like unions as well as civic and religious institutions that would empower these communities to shape society from the ground up. ..."
"... But then, amid the stagflation crisis of the 1970s, a "neoliberal revolution from above" set in that sought to reverse the class compromise. The most powerful weapon in the arsenal of the newly emboldened managerial class was "global labor arbitrage" in which production is outsourced to countries with lower wage levels and laxer regulations; alternatively, profits can be maximized by putting downward pressure on domestic wages through the introduction of an unskilled, non-unionized immigrant workforce that competes for jobs with its unionized domestic counterparts. By one-sidedly canceling the class compromise that governed the capitalist societies after World War II, Lind concludes, the managerial elite had brought the recent populist backlash on itself. ..."
"... American parties are not organized parties built around active members and policy platforms; they are shifting coalitions of entrepreneurial candidate campaign organizations. Hence, the Democratic and Republican Parties are not only capitalist ideologically; they are capitalistically run enterprises. ..."
"... In the epigraph to the book, Lind cites approvingly the 1949 treatise The Vital Center by historian Arthur Schlesinger Jr. who wrote that "class conflict, pursued to excess, may well destroy the underlying fabric of common principle which sustains free society." Schlesinger was just one among many voices who believed that Western societies after World War II were experiencing the "end of ideology." From now on, the reasoning went, the ideological battles of yesteryear were settled in favor of a more disinterested capitalist (albeit New Deal–inflected) governance. This, in turn, gave rise to the managerial forces in government, the military, and business whose unchecked hold on power Lind laments. The midcentury social-democratic thinker Michael Harrington had it right when he wrote that "[t]he end of ideology is a shorthand way of saying the end of socialism." ..."
"... A cursory glance at the recent impeachment hearings bears witness to this, as career bureaucrats complained that President Trump unjustifiably sought to change the course of an American foreign policy that had been nobly steered by them since the onset of the Cold War. In their eyes, Trump, like the Brexiteers or the French yellow vest protesters, are vulgar usurpers who threaten the stability of the vital center from polar extremes. ..."
Jan 08, 2020 | lareviewofbooks.org

A FEW DAYS AFTER Donald Trump's electoral upset in 2016, Club for Growth co-founder Stephen Moore told an audience of Republican House members that the GOP was "now officially a Trump working class party." No longer the party of traditional Reaganite conservatism, the GOP had been converted instead "into a populist America First party." As he uttered these words, Moore says, "the shock was palpable" in the room.

The Club for Growth had long dominated Republican orthodoxy by promoting low tax rates and limited government. Any conservative candidate for political office wanting to reap the benefits of the Club's massive fundraising arm had to pay homage to this doctrine. For one of its formerly leading voices to pronounce the transformation of this orthodoxy toward a more populist nationalism showed just how much the ground had shifted on election night.

To writer Michael Lind, Trump's victory, along with Brexit and other populist stirrings in Europe, was an outright declaration of "class war" by alienated working-class voters against what he calls a "university-credentialed overclass" of managerial elites. The title of Lind's new book, The New Class War: Saving Democracy from the Managerial Elite , leaves no doubt as to where his sympathies lie, though he's adamant that he's not some sort of guru for a " smarter Trumpism ," as some have labeled him.

Lind cautions against a turn to populism, which he believes to be too personality-centered and intellectually incoherent -- not to mention, too demagogic -- to help solve the terminal crisis of "technocratic neoliberalism" with its rule by self-righteous and democratically unaccountable "experts" with hyperactive Twitter handles. Only a return to what Lind calls "democratic pluralism" will help stem the tide of the populist revolt.

The New Class War is a breath of fresh air. Many on the left have been incapable of coming to terms with Hillary Clinton's defeat. The result has been the stifling climate of a neo-McCarthyism, in which the only explanation for Trump's success was an unholy alliance of "Putin stooges" and unrepentant "white supremacists."

To Lind, the case is much more straightforward: while the vast majority of Americans supports Social Security spending and containing unskilled immigration, the elites of the bipartisan swamp favor libertarian free trade policies combined with the steady influx of unskilled migrants to help suppress wage levels in the United States. Trump had outflanked his opponents in the Republican primaries and Clinton in the general election by tacking left on the economy (he refused to lay hands on Social Security) and right on immigration.

The strategy has since been successfully repeated in the United Kingdom by Boris Johnson, and it looks, for now, like a foolproof way for conservative parties in the West to capture or defend their majorities against center-left parties that are too beholden to wealthy, metropolitan interests to seriously attract working-class support. Berating the latter as irredeemably racist certainly doesn't help either.

What happened in the preceding decades to produce this divide in Western democracies? Lind's narrative begins with the New Deal, which had brought to an end what he calls "the first class war" in favor of a class compromise between management and labor. This first class war is the one we are the most familiar with: originating in the Industrial Revolution, which had produced the wretchedly poor proletariat, it soon led to the rise of competing parties of organized workers on the one hand and the liberal bourgeoisie on the other, a clash that came to a head in the Bolshevik Revolution of 1917. Then, in the 1930s, while the world was writhing from the consequences of the Great Depression, a series of fascist parties took the reigns in countries from Germany to Spain. To spare the United States a similar descent into barbarism, President Franklin D. Roosevelt implemented the New Deal, in which the working class would find a seat at the bargaining table under a government-supervised tripartite system where business and organized labor met seemingly as equals and in which collective bargaining would help the working class set sector-wide wages.

This class compromise ruled unquestioned for the first decades of the postwar era. It was made possible thanks to the system of democratic pluralism, which allowed working-class and rural constituencies to actively partake in mass-membership organizations like unions as well as civic and religious institutions that would empower these communities to shape society from the ground up.

But then, amid the stagflation crisis of the 1970s, a "neoliberal revolution from above" set in that sought to reverse the class compromise. The most powerful weapon in the arsenal of the newly emboldened managerial class was "global labor arbitrage" in which production is outsourced to countries with lower wage levels and laxer regulations; alternatively, profits can be maximized by putting downward pressure on domestic wages through the introduction of an unskilled, non-unionized immigrant workforce that competes for jobs with its unionized domestic counterparts. By one-sidedly canceling the class compromise that governed the capitalist societies after World War II, Lind concludes, the managerial elite had brought the recent populist backlash on itself.

Likewise, only it can contain this backlash by returning to the bargaining table and reestablishing the tripartite system it had walked away from. According to Lind, the new class peace can only come about on the level of the individual nation-state because transnational treaty organizations like the EU cannot allow the various national working classes to escape the curse of labor arbitrage. This will mean that unskilled immigration will necessarily have to be curbed to strengthen the bargaining power of domestic workers. The free-market orthodoxy of the Club for Growth will also have to take a backseat, to be replaced by government-promoted industrial strategies that invest in innovation to help modernize their national economies.

Under which circumstances would the managerial elites ever return to the bargaining table? "The answer is fear," Lind suggests -- fear of working-class resentment of hyper-woke, authoritarian elites. Ironically, this leaves all the agency with the ruling class, who first acceded to the class compromise, then canceled it, and is now called on to forge a new one lest its underlings revolt.

Lind rightly complains all throughout the book that the old mass-membership based organizations of the 20th century have collapsed. He's coy, however, about who would reconstitute them and how. At best, Lind argues for a return to the old system where party bosses and ward captains served their local constituencies through patronage, but once more this leaves the agency with entities like the Republicans and Democrats who have a combined zero members. As the third-party activist Howie Hawkins remarked cunningly elsewhere ,

American parties are not organized parties built around active members and policy platforms; they are shifting coalitions of entrepreneurial candidate campaign organizations. Hence, the Democratic and Republican Parties are not only capitalist ideologically; they are capitalistically run enterprises.

Thus, they would hardly be the first options one would think of to reinvigorate the forces of civil society toward self-rule from the bottom up.

The key to Lind's fraught logic lies hidden in plain sight -- in the book's title. Lind does not speak of "class struggle ," the heroic Marxist narrative in which an organized proletariat strove for global power; no, "class war " smacks of a gloomy, Hobbesian war of all against all in which no side truly stands to win.

In the epigraph to the book, Lind cites approvingly the 1949 treatise The Vital Center by historian Arthur Schlesinger Jr. who wrote that "class conflict, pursued to excess, may well destroy the underlying fabric of common principle which sustains free society." Schlesinger was just one among many voices who believed that Western societies after World War II were experiencing the "end of ideology." From now on, the reasoning went, the ideological battles of yesteryear were settled in favor of a more disinterested capitalist (albeit New Deal–inflected) governance. This, in turn, gave rise to the managerial forces in government, the military, and business whose unchecked hold on power Lind laments. The midcentury social-democratic thinker Michael Harrington had it right when he wrote that "[t]he end of ideology is a shorthand way of saying the end of socialism."

Looked at from this perspective, the break between the postwar Fordist regime and technocratic neoliberalism isn't as massive as one would suppose. The overclass antagonists of The New Class War believe that they derive their power from the same "liberal order" of the first-class peace that Lind upholds as a positive utopia. A cursory glance at the recent impeachment hearings bears witness to this, as career bureaucrats complained that President Trump unjustifiably sought to change the course of an American foreign policy that had been nobly steered by them since the onset of the Cold War. In their eyes, Trump, like the Brexiteers or the French yellow vest protesters, are vulgar usurpers who threaten the stability of the vital center from polar extremes.

A more honest account of capitalism would also acknowledge its natural tendencies to persistently contract and to disrupt the social fabric. There is thus no reason to believe why some future class compromise would once and for all quell these tendencies -- and why nationalistically operating capitalist states would not be inclined to confront each other again in war.

Gregor Baszak is a PhD candidate in English at the University of Illinois at Chicago. His Twitter handle is @gregorbas1.

Stourley Kracklite 20 days ago • edited ,

Reagan was a free-trader and a union buster. Lind's people jumped the Democratic ship to vote for Reagan in (lemming-like) droves. As Republicans consolidated power over labor with cheap goods from China and the meth of deficit spending Democrats struggled with being necklaced as the party of civil rights.
The idea that people who are well-informed ought not to govern is a sad and sick cover story that the culpable are forced to chant in their caves until their days are done, the reckoning being too great.

[Feb 01, 2020] You think it's bad now, look where we're going

Feb 01, 2020 | www.zerohedge.com

Batman11 , 4 hours ago link

You think it's bad now, look where we're going.

We stepped onto an old path that still leads to the same place.

1920s/2000s – neoclassical economics, high inequality, high banker pay, low regulation, low taxes for the wealthy, robber barons (CEOs), reckless bankers, globalisation phase

1929/2008 – Wall Street crash

1930s/2010s – Global recession, currency wars, trade wars, austerity, rising nationalism and extremism

1940s – World war.

We forgot we had been down that path before.

[Feb 01, 2020] Freedom in the neo-liberal lexicon means freedom of the strong to predate on the weak. Free Trade is a particular example of this.

Feb 01, 2020 | www.moonofalabama.org

Tim Glover , Jan 31 2020 19:07 utc | 9

Freedom in the neo-liberal lexicon means freedom of the strong to predate on the weak. Free Trade is a particular example of this. A rational person must expect the UK to be brutally savaged in dealing with the EU, US and China.

@1, It is true that at present not having a Mediterranean coast is an advantage. But an optimist might hope that the defeat of the US in Eurasia will bring new peace along the Belt and Road, and Africa and the ME will see the greatest boom.

[Jan 30, 2020] An excellent question, "who benefits", clearly it's not everybody. "Profitable for whom", "rights for whom", "safe for whom", "justice for whom"

Jan 30, 2020 | www.moonofalabama.org

Biloximarxkelly , Jan 30 2020 19:30 utc | 84

Human. Beings. Doing Earth Life. There is no separation in our species, except that, a disconnect occurred. Who, When, What, Where, and How did the disconnect become an all powerful power? Acting as though the species Human isn't. The tap root "dis~ease" (disconnect) must be eradicated/ healed/ rejoining our species into oneness, again. Top~bottom junk yard dogs is barbaric.

Bemildred , Jan 30 2020 20:01 utc | 89

Posted by: charliechan | Jan 30 2020 19:36 utc | 85

An excellent question, "who benefits", clearly it's not everybody. "Profitable for whom", "rights for whom", "safe for whom", "justice for whom". If the answer is not "everybody", it's bullshit. What's good for corporations is not what is good for people. We are infested with economic parasites who blather on about how they are taking "care" of us and giving us "choices".

[Jan 25, 2020] Rabobank What If... The Protectionists Are Right And The Free Traders Are Wrong by Michael Every

Highly recommended!
Notable quotes:
"... Yet it took until 1860 for the UK to fully embrace free trade, and even then the unpalatable historical record is that during this 'golden age', the British: Destroyed the Indian textile industry to benefit their own cloth manufacturers; Started the Opium Wars to balance UK-China trade by selling China addictive drugs; Ignored the Irish Potato Famine and continued to allow Irish wheat exports; Forced Siam (Thailand) to open up its economy to trade with gunboats (as the US did with Japan); and Colonized much of Africa and Asia. ..."
"... Regardless, the first flowering of free trade collapsed back into nationalism and protectionism - bloodily so in 1914. Free trade was tried again from 1919 - but burned-out even more bloodily in the 1930s and 1940s. After WW2, most developed countries had moderately free trade - but most developing countries did not. We only started to re-embrace global free trade from the 1990s onwards when the Cold War ended – and here it is under stress again. In short, only around 100 years in a total of 5,000 years of civilization has seen real global free trade, it has failed twice already, and it is once again coming under pressure. ..."
"... Of course, this doesn't mean liked-minded groups of countries with similar-enough or sympathetic-enough economies and politics should avoid free trade: clearly for some states it can work out nicely - even if within the EU one could argue there are also underlying strains. However, it is a huge stretch to assume a one-size-fits-all free trade policy will always work best for all countries, as some would have it. That is a fairy tale. History shows it wasn't the case; national security concerns show it can never always be the case; and Ricardo argues this logically won't be the case. ..."
Jan 25, 2020 | www.zerohedge.com

"When I used to read fairy tales, I fancied that kind of thing never happened, and now here I am in the middle of one!" (Alice in Wonderland, Chapter 4, The Rabbit Sends in a Little Bill)

Submitted by Michael Every of Rabobank

2020 starts with markets feeling optimistic due to a US-China trade deal and a reworked NAFTA in the form of the USMCA. However, the tide towards protectionism may still be coming in, not going out.

The intellectual appeal of the basis for free trade, Ricardo's theory of comparative advantage, where Portugal specializes in wine, and the UK in cloth, is still clearly there. Moreover, trade has always been a beneficial and enriching part of human culture. Yet the fact is that for the majority of the last 5,000 years global trade has been highly-politicized and heavily-regulated . Indeed, global free-trade only began following the abolition of the UK Corn Laws in 1846, which reduced British agricultural tariffs, brought in European wheat and corn, and allowed the UK to maximize its comparative advantage in industry.

Yet it took until 1860 for the UK to fully embrace free trade, and even then the unpalatable historical record is that during this 'golden age', the British:

As we showed back in ' Currency and Wars ', after an initial embrace of free trade, the major European powers and Japan saw that their relative comparative advantage meant they remained at the bottom of the development ladder as agricultural producers, an area where prices were also being depressed by huge US output; meanwhile, the UK sold industrial goods, ran a huge trade surplus, and ruled the waves militarily. This was politically unsustainable even though the UK vigorously backed the intellectual concept of free trade given it was such a winner from it.

Regardless, the first flowering of free trade collapsed back into nationalism and protectionism - bloodily so in 1914. Free trade was tried again from 1919 - but burned-out even more bloodily in the 1930s and 1940s. After WW2, most developed countries had moderately free trade - but most developing countries did not. We only started to re-embrace global free trade from the 1990s onwards when the Cold War ended – and here it is under stress again. In short, only around 100 years in a total of 5,000 years of civilization has seen real global free trade, it has failed twice already, and it is once again coming under pressure.

What are we getting wrong? Perhaps that Ricardo's theory has major flaws that don't get included in our textbooks, as summarized in this overlooked quote

"It would undoubtedly be advantageous to the capitalists of England [that] the wine and cloth should both be made in Portugal [and that] the capital and labour of England employed in making cloth should be removed to Portugal for that purpose." Which is pretty much what happens today! However, Ricardo adds that this won't happen because "Most men of property [will be] satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations," which is simply not true at all! In other words, his premise is flawed in that:

As Ricardo's theory requires key conditions that are not met in reality most of the time, why are we surprised that most of reality fails to produce idealised free trade most of the time? Several past US presidents before Donald Trump made exactly that point. Munroe (1817-25) argued: " The conditions necessary for Free Trade's success - reciprocity and international peace - have never occurred and cannot be expected ". Grant (1869-77) noted "Within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade".

Yet arguably we are better, not worse, off regardless of these sentiments – so hooray! How so? Well, did you know that Adam Smith, who we equate with free markets, and who created the term "mercantile system" to describe the national-protectionist policies opposed to it, argued the US should remain an agricultural producer and buy its industrial goods from the UK? It was Founding Father Alexander Hamilton who rejected this approach, and his "infant industry" policy of industrialization and infrastructure spending saw the US emerge as the world's leading economy instead. That was the same development model that, with tweaks, was then adopted by pre-WW1 Japan, France, and Germany to successfully rival the UK; and then post-WW2 by Japan (again) and South Korea; and then more recently by China, that key global growth driver. Would we really be better off if the US was still mainly growing cotton and wheat, China rice and apples, and the UK was making most of the world's consumer goods? Thank the lack of free trade if you think otherwise!

Yet look at the examples above and there is a further argument for more protectionism ahead. Ricardo assumes a benign global political environment for free trade . Yet what if the UK and Portugal are rivals or enemies? What if the choice is between steel and wine? You can't invade neighbours armed with wine as you can with steel! A large part of the trade tension between China and the US, just as between pre-WW1 Germany and the UK, is not about trade per se: for both sides, it is about who produces key inputs with national security implications - and hence is about relative power . This is why we hear US hawks underlining that they don't want to export their highest technology to China, or to specialize only in agricultural exports to it as China moves up the value-chain. It also helps underline why for most of the past 5,000 years trade has not been free. Indeed, this argument also holds true for the other claimed benefit of free trade: the cross-flow of ideas and technology. That is great for friends, but not for those less trusted.

Of course, this doesn't mean liked-minded groups of countries with similar-enough or sympathetic-enough economies and politics should avoid free trade: clearly for some states it can work out nicely - even if within the EU one could argue there are also underlying strains. However, it is a huge stretch to assume a one-size-fits-all free trade policy will always work best for all countries, as some would have it. That is a fairy tale. History shows it wasn't the case; national security concerns show it can never always be the case; and Ricardo argues this logically won't be the case.

Yet we need not despair. The track record also shows that global growth can continue even despite protectionism, and in some cases can benefit from it. That being said, should the US resort to more Hamiltonian policies versus everyone, not just China, then we are in for real financial market turbulence ahead given the role the US Dollar plays today compared to the role gold played for Smith and Ricardo! But that is a whole different fairy tale...

[Jan 19, 2020] Internal Boeing Emails Claim 777X Shares MAX Problem

Jan 19, 2020 | www.zerohedge.com

Tillyoudrop , 49 seconds ago link

Greed is good, greed is right, greed works.

Neochrome , 2 minutes ago link

sacrificing the safety of the planes to drive sales higher

Good thing we sentence people to life in jail for shoplifting couple of t-shirts, safety restored.

VodkaInKrakow , 12 minutes ago link

Financialization killed Boeing. All those MBA's who dreamed up outsourced supply-chains for the Dreamliner. Thought they were going to make a lot of money through savings.

Silly rabbit MBA's... if you don't spend money? You don't make money.

MBA graduates are f*cking useless retards trained in only one system: FAILURE.

What sank McDonald Douglas - bought out by Boeing? Is the same bullsh*t that is ruining Boeing. Boeing kept a lot of board member & management failures around from McDonald Douglas. Poisoned the Boeing culture.

Bounder , 14 minutes ago link

How many of you remember all the McDonald Douglas passenger jet success stories? There wasnt any - the whole mgmt of MD was to to strip out every possible cost and maximize very profit at the expense of the end customer and the government - and these are the guys who bought Boeing - and then made the first step of moving the headquarters to chicago. Guess which party gave lots and lots of government boondoggles to MD?

VodkaInKrakow , 10 minutes ago link

Damn. Wish I would have read your comment.

I had a Polish executive tell me how proud they were as they were about to hire an American executive who graduated with an MBA.

That is, until I asked him... "Have you checked what happened to the previous companies that he worked at?"

So the Polish executive did just that. This led to a ban on hiring any American MBA. Turns out, the American MBA worked at companies, all of which FAILED.

Though, somehow, despite a track record of working at failed companies? The American was still quite well off.

VodkaInKrakow , 1 minute ago link

Boeing is a symbol of American reliability that reflected hugely upon American manufacturing.

Well, WAS a symbol of American reliability. Which casts doubt upon American manufacturing.

Confidence in American manufacturing quality is in GRAVE DOUBT. Which leads to people seeking their products elsewhere.

The US business leadership consists of crapification.

fedslayer , 20 minutes ago link

Ok but what's the alternative?

If the parts meet specifications, get the lowest price.

If you don't, you will have executives drop-shipping parts. That's what i would do.

If you don't go with the lowest-price, executives like me will rob you blind.

east of eden , 16 minutes ago link

The ******* alternative you stupid ******* americunt is already in the air. They are labelled Airbus A220 and A230, otherwise known as Bombardier CS200 and CS300 and they are sold out 15 years in advance.

VodkaInKrakow , 4 minutes ago link

That was part of the problem. The parts from Boeing's foreign suppliers MET SPECIFICATIONS.

That is, until they went to assemble the Dreamliner. Where parts did not fit together.

You see, Boeing found out LONG, LONG AGO... that it was necessary to have manufacturing close to design. That way, when parts that "met specifications" did not fit? The engineers and machinists were there to correct deficiencies. Thus leading to reliable planes that were fit together very well. Only THEN could Boeing could assemble parts in other locations and mate them together.

This never happened with the Dreamliner. Quadrupled costs. The Dreamliner only exists thanks to taxpayer subsidies through the ExIm Bank. The Dreamliner WILL NEVER BE PROFITABLE. Accounting gimmicks make it appear as if Boeing makes money on the Dreamliner.

Bay Area Guy , 28 minutes ago link

Amazing that in less than a generation, we go from "if it's not Boeing, I'm not going" to wondering what the next Boeing screw-up will be and how many will be killed as a result.

The existing 777 is a fantastic plane and, other than pilot error (Asiana at SFO), a missile attack (Malaysia 17) and some unknown (but apparently not mechanical) issue (Malaysia 370), the 777 has been the safest plane around.

Ignorance is bliss , 1 hour ago link

American executives are incentivized to manipulate their company's stock. So they squeeze the workforce and cut everything to the bone. That's why Boeing, GM, and other household names are crashing.

According to economist William Lazonick, Boeing spent $43.1 billion on stock buybacks from 2013 to 2019, raising the company's stock price to a record high just 10 days before the second crash of its 737 MAX. Boeing CEO Muilenburg collects most of his pay through stock or compensation based on financial metrics. Yet the company reportedly avoided spending the estimated $7 billion it would have needed to engineer a safer plane. Less than 10 years after a public sector bailout, GM has spent $10.6 billion on stock buybacks, while engaging in layoffs and plant closures. That amounts to $221,308 for each of the 47,897 active UAW members currently on strike at GM. Walmart spent $9.2 billion on stock buybacks from August 2018 to July 2019, which, by my calculations, could have been used to give a raise of roughly $5/ hour to each of its 1 million hourly workers instead.

Illegal , 56 minutes ago link

Boeing should have been spending all its supposed profits on R&D. The other problem is the military side of the business is grossly corrupt. Remember the blowup over Air Force 1?

flyonmywall , 24 minutes ago link

Yep. Stock buybacks.

This is what happens when the Federal Reserve lets the financial cat out the bag, and pump up the stock market to the tune of 35-60 billion every 3 days, because some hedge funds "could" fail and topple the financial system.

If multiple entities are now too important and could topple the financial system if they failed, the Fed has massively screwed up.

aldol11 , 1 hour ago link

In 1991 a Boeing purchaser told me that he would give us a contract if we transferred 51% of the shares to a minority.

This is God's truth

He added that when he could not find minority businesses that would make components according to specifications, he would buy stuff from minority owned businesses and not use it but store it in warehouses around the country indefinitely. this in order to meet a quota of 20% purchases from minority owned businesses mandated by the Feds for all government suppliers.

I can just imagine how bad the discrimination is now.

Svastic , 1 hour ago link

Good grief. Look at Boeing's board of directors anyway.

https://www.boeing.com/company/general-info/corporate-governance.page

These are politically connected animals who feed from the trough of government pork barrel a.k.a taxpayer money. Exactly what has Nikki Haley achieved in her life, except for being a pathological liar?

These animals were responsible for our reckless fiscal deficits and looming debt bombs which will soon come crashing down. Kinda good metaphor for Boeing.

BidnessMan , 46 minutes ago link

All former CFOs and politicians ( civilian and military - only political types in the military get stars ). No evidence of any engineering expertise. Sad for a once-proud global leader.

moseybear , 1 hour ago link

In the "investor economy", there is no morality. EVERYTHING is "commoditized". Even you .. your DNA. A pricetag hovers over your head like a dialog bubble. Bean counters can incorporate your morbidity and mortality into mathematical equations showing investors why cutting costs and saving 0.01% is worthy of investment. While 911 was the paradigm shift for Rights ... the Lehman "crisis" was its own "911" -- the death of the labor economy ... and rise of the "investor economy". Nobody works, trading time for dollars. They "invest" Why work? Investors can kill without being held personally responsible. They only risk their fiat capital. You die.

[Jan 08, 2020] Deification of questionable metrics is an objective phenomenon that we observe under neoliberalism

Jan 08, 2020 | angrybearblog.com

.

  1. likbez , January 8, 2020 4:00 am

    @run75441 January 7, 2020 5:45 pm

    In my golden days, I did manufacturing throughput analysis, cost modeled parts, and reviewed component and transportation distribution. I am curious. Forget all that neoliberal stuff . . .

    Ohh, those golden days 😉

    Measurement has its place and is the cornerstone of science, but it is not equal to pattern recognition. And when applied to social phenomena with their complexity it is more often a trap, rather then an insight.

    You need to understand that.

    Deification of questionable metrics is an objective phenomenon that we observe under neoliberalism.

    A classic example of deification of a questionable metric under neoliberalism is the "cult of GDP" ("If the GDP Is Up, Why Is America Down?") See , for example

    https://www.theguardian.com/commentisfree/2019/nov/24/metrics-gdp-economic-performance-social-progress

    Also see a rather interesting albeit raw take on the same ("Growth for the sake of growth is the ideology of the cancer cell." ) at:

    http://casinocapitalism.info/Skeptics/Financial_skeptic/Casino_capitalism/Number_racket/gdp_is_a_questionable_measure_of_economic_growth.shtml

    For example, many people discuss stagnation of GDP growth in Japan not understanding here we are talking about the country with shrinking population. And adjusted for this factor I am not sure that it not higher then in the USA (were it is grossly distorted by the cancerous growth of FIRE sector).

    So while comparing different years for a single country might make some limited sense, those who blindly compare GDP of different countries (even with PPP adjustment) IMHO belong to a modern category of economic charlatans. Kind of Lysenkoism, if you wish

    That tells you something about primitivism and pseudo-scientific nature of neoliberal economics.

    We also need to remember the "performance reviews travesty" which is such a clear illustration of "cult of measurement" abuses that it does not it even requires commentary. Google has abolished numerical ratings in April 2014.

    Recently I come across an interesting record of early application of it in AT&T at Brian W Kernighan book UNIX: A History and a Memoir at late 60th, early as 70th.

[Jan 02, 2020] The Purpose Of Life Is Not Happiness: It s Usefulness Happiness as an achievable goal is an illusion, but that doesn t mean happiness itself is not attainable by Darius Foroux

Highly recommended!
Notable quotes:
"... "The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well." ..."
"... Recently I read Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his thoughts about dying from cancer. ..."
Aug 22, 2019 | getpocket.com

For the longest time, I believed that there's only one purpose of life: And that is to be happy. Right? Why else go through all the pain and hardship? It's to achieve happiness in some way. And I'm not the only person who believed that. In fact, if you look around you, most people are pursuing happiness in their lives.

That's why we collectively buy shit we don't need, go to bed with people we don't love, and try to work hard to get approval of people we don't like.

Why do we do these things? To be honest, I don't care what the exact reason is. I'm not a scientist. All I know is that it has something to do with history, culture, media, economy, psychology, politics, the information era, and you name it. The list is endless.

We are who are.

Let's just accept that. Most people love to analyze why people are not happy or don't live fulfilling lives. I don't necessarily care about the why .

I care more about how we can change.

Just a few short years ago, I did everything to chase happiness.

But at the end of the day, you're lying in your bed (alone or next to your spouse), and you think: "What's next in this endless pursuit of happiness?"

Well, I can tell you what's next: You, chasing something random that you believe makes you happy.

It's all a façade. A hoax. A story that's been made up.

Did Aristotle lie to us when he said:

"Happiness is the meaning and the purpose of life, the whole aim and end of human existence."

I think we have to look at that quote from a different angle. Because when you read it, you think that happiness is the main goal. And that's kind of what the quote says as well.

But here's the thing: How do you achieve happiness?

Happiness can't be a goal in itself. Therefore, it's not something that's achievable. I believe that happiness is merely a byproduct of usefulness. When I talk about this concept with friends, family, and colleagues, I always find it difficult to put this into words. But I'll give it a try here. Most things we do in life are just activities and experiences.

Those things should make you happy, right? But they are not useful. You're not creating anything. You're just consuming or doing something. And that's great.

Don't get me wrong. I love to go on holiday, or go shopping sometimes. But to be honest, it's not what gives meaning to life.

What really makes me happy is when I'm useful. When I create something that others can use. Or even when I create something I can use.

For the longest time I foud it difficult to explain the concept of usefulness and happiness. But when I recently ran into a quote by Ralph Waldo Emerson, the dots connected.

Emerson says:

"The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well."

And I didn't get that before I became more conscious of what I'm doing with my life. And that always sounds heavy and all. But it's actually really simple.

It comes down to this: What are you DOING that's making a difference?

Did you do useful things in your lifetime? You don't have to change the world or anything. Just make it a little bit better than you were born.

If you don't know how, here are some ideas.

That's just some stuff I like to do. You can make up your own useful activities.

You see? It's not anything big. But when you do little useful things every day, it adds up to a life that is well lived. A life that mattered.

The last thing I want is to be on my deathbed and realize there's zero evidence that I ever existed.

Recently I read Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his thoughts about dying from cancer.

It's a very powerful book and it will definitely bring tears to your eyes. In the book, he writes about how he lived his life and how he found his calling. He also went to business school, and this is what he thought of his fellow MBA candidates:

"Bottom line: they were extremely bright people who would never really anything, would never add much to society, would leave no legacy behind. I found this terribly sad, in the way that wasted potential is always sad."

You can say that about all of us. And after he realized that in his thirties, he founded a company that turned him into a multi-millionaire.

Another person who always makes himself useful is Casey Neistat . I've been following him for a year and a half now, and every time I watch his YouTube show , he's doing something.

He also talks about how he always wants to do and create something. He even has a tattoo on his forearm that says "Do More."

Most people would say, "why would you work more?" And then they turn on Netflix and watch back to back episodes of Daredevil.

A different mindset.

Being useful is a mindset. And like with any mindset, it starts with a decision. One day I woke up and thought to myself: What am I doing for this world? The answer was nothing.

And that same day I started writing. For you it can be painting, creating a product, helping elderly, or anything you feel like doing.

Don't take it too seriously. Don't overthink it. Just DO something that's useful. Anything.

Darius Foroux writes about productivity, habits, decision making, and personal finance. His ideas and work have been featured in TIME, NBC, Fast Company, Inc., Observer, and many more publications. Join his free weekly newsletter.

More from Darius Foroux

This article was originally published on October 3, 2016, by Darius Foroux, and is republished here with permission. Darius Foroux writes about productivity, habits, decision making, and personal finance.

Join his newsletter.


[Jan 01, 2020] "Maximizing shareholder is the holy grail of all capitalist enterprises" is self-destuctive and anti-social as it is equlent to local optimizatin of a complex social system

Jan 01, 2020 | www.unz.com

anarchyst , says: December 19, 2019 at 3:56 pm GMT

@Dutch Boy rk, employees need to make an adequate wage. Unfortunately, this premise does not exist in today's business climate.

Henry Ford openly criticized those of the "tribe" for manipulating wall street and banksters to their own advantage, and was roundly (and unjustly) criticized for pointing out the TRUTH.

Catholic priest, Father Coughlin did the same thing and was punished by the Catholic church, despite his popularity and exposing the TRUTH of the American economy and the outsider internationalists that ran it . . . and STILL run it.

Our race to the bottom will not be without consequences. A great realignment is necessary (and is coming) . .

[Dec 29, 2019] The Loss of Fair Play

Dec 27, 2019 | www.nakedcapitalism.com
This site regularly discusses the rise of neoliberalism and its consequences, such as rising inequality and lower labor bargaining rights. But it's also important to understand that these changes were not organic but were the result of a well-financed campaign to change the values of judges and society at large to be more business-friendly. But the sacrifice of fair dealing as a bedrock business and social principle has had large costs.

We've pointed out how lower trust has increased contracting costs: things that use to be done on a handshake or a simple letter agreement are now elaborately papered up. The fact that job candidates will now engage in ghosting, simply stopping to communicate with a recruiter rather than giving a ritually minimalistic sign off, is a testament to how impersonal hiring is now perceived to be, as well as often-abused workers engaging in some power tit for tat when they can.

But on a higher level, the idea of fair play was about self-regulation of conduct. Most people want to see themselves as morally upright, even if some have to go through awfully complicated rationalizations to believe that. But when most individuals lived in fairly stable social and business communities, they had reason to be concerned that bad conduct might catch up with them. It even happens to a small degree now.

Greg Lippmann, patient zero of toxic CDOs at Deutsche Bank, was unable to get his kids into fancy Manhattan private schools because his reputation preceded him. But the case examples for decades have gone overwhelmingly the other way. My belief is that a watershed event was the ability of Wall Street renegade, and later convicted felon Mike Milken, to rehabilitate himself spoke volumes as to the new normal of money trumping propriety.

Another aspect of the decline in the importance of fair dealing is the notion of the obligations of power, that individuals in a position of authority have a duty to

The abandonment of lofty-sounding principles like being fair has other costs. We've written about the concept of obliquity, how in complex systems, it's not possible to chart a simple path though them because it's impossible to understand it well enough to begin to do so. John Kay, who has made a study of the issue and eventually wrote a book about it , pointed out as an illustration that studies of similarly-sized companies in the same industry showed that ones that adopted nobler objectives did better in financial terms than ones that focused on maximizing shareholder value.

Our Brexit regulars wound up talking about these issues as part of a UK election post mortem. Hoisted from e-mail. First from David:

Around the time of the cold dawn of Friday 13 December, I began to ask myself why the whole grisly Brexit business had turned out so differently to what I, and many others, had expected. Now it's true that politics is unpredictable, but in 2015, any satirist worthy of their name would surely not have dared to imagine a sequence of events so bizarre as that which actually happened. And of course we can all be wrong, but I was basing my judgements not only on a lifetime of watching politicians at play, but also on the well-understood general principles of how politics, and especially international politics, operates.

The conclusion I came to involves conceding that, yes, politics is unpredictable, yes we all make wrong calls from time to time, but there's something more profound than that. Simply put, the traditional rules and procedures of British politics have stopped applying. It's not now possible to count on the British system for planning, forethought, rationality, strategy, tactical sense, political sense, common sense or any other kind of sense.

Consider. Cameron's referendum promise was an error of judgement, but it could have been handled very differently even so. I'd assumed that there would be some kind of threshold (55% perhaps), and some provision for a later stage of reflection and time-wasting.

I assumed that the government would be wary of the possible result, and try to de-dramatise the referendum campaign.

I assumed that Remain would do a reasonably competent job, underlining the positive benefits of EU membership.

I assumed that the result, if it was "leave" would be the beginning of a long process of reflection and discussion. A Royal Commission, or something, would be set up, with several years to work out what kind of future relationship there should be with the EU. Bits of the UK most affected (agriculture for example) would be consulted in depth. Discreet soundings would be made throughout Europe to see what our partners might accept. Only after all this was done would it be time to press the Art 50 button.

At that point, I assumed, the UK would be well prepared and, in the traditional manner, have working papers and draft treaty language to propose as soon as the negotiations started. All aspects (including NI) would have been at least thought of.

I assumed that the Cabinet would have agreed a fairly detailed set of objectives and negotiating guidelines to give to the UK delegation, fine-tuned in the light of first reactions from partners.

I assumed that the Cabinet would have agreed fallback positions and some idea of what the Tories, and Parliament, would accept.

Literally none of this was true.

Now we're not talking rocket-science here. Yes, the UK system was once pretty Rolls-Royce, but the kind of list I've given above would have seemed obvious to any middle-level functionary of any medium-sized country. Actually achieving all of it is not necessarily easy, but at least you can make a serious attempt: there are important stakes involved.

So what does this imply for the future?

Well, things are getting worse, not better. The Cabinet hasn't even begun to think yet about the future relationship. Some of them probably think Brexit is all over. I don't think there's any agreement even about the vaguest outlines of this future relationship, which means that it could be months before any political objectives emerge, if they ever do.

Which is to say that we are in for another year of Keystone Cops diplomacy, with the stakes if anything even greater.

From Clive:

Your thought-process sounds like my trains of thought. And when I think those sorts of thoughts, I think that I'm a remnant or a bygone era. Which I am.

What disappeared from that world was playing fair. Everyone played fair, or, at least, playing fair was a bedrock than you could drift away from, but, sooner or later, you fell back on it.

There will be a lot of casualties until our societies get to the stage where they can rediscover fairness. I bought a book from a second hand bookstore about the founding of the EEC, from 1978 I think the copyright said it was. When I read it, it's like it was written by some long-since vanished ancient civilisation. There were honourable intentions, strategies to deliver them, honest evaluations of emerging problems and, above all, a shared shouldering of responsibility to resolve them equitably. There was a sense of pride which leaps off the pages not at what had been achieved, but at what the prevailing culture intended to achieve. The book went on about the European ideal -- and didn't think it was in any danger of naivety.

That world has vanished -- and it's not coming back any time soon.

Brexit was a reaction to that. We can't fix it, think a majority of the U.K. population, and we're not even going to try. This is why Leave has progressed the way it has. The last thing the Leave majority (or maybe the smidge over 50% who think Leave is the best option) want to do is try to return to the failed common-cause based solutions. Johnson has no intention whatsoever of anything other than the lightest of lightweight FTAs -- or even no FTA. Anything more would be an anathema to the Thatcher-esque approach the Conservatives have on remaking UK society by severing all EU ties. This isn't really Thatcherism -- a common misconception. It's the sort of response which Thatcher would have devised, had she been placed in the same position, so is easily confused.

So this isn't some unplanned, accidental stumbling along to an unexpected surprise conclusion. It is, rather, a laser like focus on an intended destination.

Anyone expecting some great effort or thought-process to be applied by the U.K. to salvaging a relationship with the EU will be disappointed. In effect, they'd be asking for the U.K. to spend time and resources saving something that isn't, in the U.K.'s prevailing worldview, worth saving. The EU has been nothing but a bother, so the thinking goes, what's the point in trying to flog the dead horse that is the European ideal? What did it ever do for us, anyway..?

Brexit is just a here's-one-we-made-earlier example of a long-term global trend. If humanism -- or fairness as I reduced it to earlier -- makes a comeback, it might all be fixable. In the meantime, prepare for an increasingly atomised, separatist world.

Vlade's response:

I'd like to agree with you. Except I believe you're idealising it. The world was never playing fair – but it did cooperate more, because the US needed the Europe more in the cold war than it does now (when it's more of a rival, definitely in Trumps' eyes). Hell, the Soviet Block cooperated – except it didn't really, it did what the SU told it to. But it definitely didn't play fair. It did follow the rules, because the cost of breaking them was seen as too high (US was terrified I believe of France and Italy doing a deal with the SU). At least to me, following the rules and playing fair are distinct.

It's possible that the western society was more fair before 90s, I can't know. But again, I suspect that a lot of it was almost a self-protection against the SU and "communism", which disappeared in the 80s., but possibly started disappearing even in 70s (when you live with some danger for a while, you get oblivious to it).

I do think that the Brexit was a reaction to the word that was. But I disagree that it was really the EU specific reaction, as in "the EU is the source of all this". It played the part, but the underlying reasons were IMO much more varied than the EU – where I have doubts many of the people there really understood in any way, except as an externality you can rail against.

You get the crawing for the world-that-was in the US, and it doesn't have any EU. You get it in Russia, and it has the EU and the US, or, if you want, "the West" which puts conveniently both of them together.

The world as most people knew it is coming apart, and chances are it will get worse (and who knows it it ever gets better). In times like those, people want the world-that-was. Sometimes it can actually be a force for good, like after WW2 in "the west". Except even there it wasn't the world-that-was, but more of the world-we-want (on both sides of the iron curtain, there was a reason why the communist regimes were, at least initially, strongly supported by the populace). But wanting the world-that-was was also what brought Nazis and Fascist into the power.

And PlutoniumKun's:

A key casualty of neoliberalism was corporatism in its more benign form. It used to be that policy was made in the early hours in those proverbial smoke filled rooms where different groups at least made some type of attempt at compromise. This is still a feature of many countries and sectors, but I think its significant that the rot is most advanced in the neolib early adopters. It's not just the formal art of making compromises, it's the simple force of human contact when people in the same room together. It's unfortunate I think that the UK joined the EU just as it lost interest in being run by civil servants having endless meetings with sectoral interest groups. This is a core reason I think why the UK never really engaged with the EU, even if in the short term its engagement was quite effective (essentially bullying other countries into getting its way on issues like agriculture and competition policy).

But as we've discussed before, the long term destruction of the British civil service has in many ways been just as stupid, and just as damaging, as the long term destruction of Britain's manufacturing base. In both cases, the reasons have been ideological, not pragmatic.

Outsiders I think see it more clearly. I was travelling in Asia for a while and I was really surprised at how casually people would discuss what they see as the once admired anglosphere fall apart. Most Asians in my experience viewed Britain with a mixture of distrust and some awe and admiration. Now the commonest response seems to be a shrug of the shoulder or just plain schadenfreude.

This bodes particularly badly for the UK's trade negotiators when they start face to face meetings. They will be a little like late 19th Century Russia or Turkey -seen as a country who's only right to be at the top table is due to history, not present circumstances. The gradual retreat of the US from the eastern Pacific is pretty much seen as a done deal, everyone is frantically scrambling to ensure they are not caught on the hop. I'm a great believer that the true indicator of what a country sees as its future can be seen in what it spends its military budget on. Every major Asian country is spending serious cash on domestically sourced air superiority, long distance strike capability, in addition to A2AD for its brown water coasts.

There are many parts of the world where the 'old ways' are still pretty much intact – much of Europe still likes the EU and the way it works and vaguely corporatist/social democratic ways of doing things. Its easy to get carried away with stories of austerity and decay, but when I travel in Europe much of it (including countries like Spain and Portugal) look pretty good and no more or less full of discontent than they ever were. Much of northern Europe and individual countries like Portugal are doing very well indeed, and France has been defying the naysayers for as long as I've been reading English language economics papers and magazines. Its not clear to me that the foment in those countries – even in France – is much worse than its been in any given post war decade. There are cycles within cycles for these things. Ireland is, all things considered, booming economically and culturally content, austerity a long forgotten problem for most people.

What we are seeing is the postponed breakdown of the traditional centre left and rights. The wipeout of traditional left wing parties has been much commented upon, but less obvious is the breakdown of the old Christian Democrat/centre right tradition in much of Europe and other parts of the world in favour of a more libertarian/populist/nationalist form. It's just that the change has tended to be more within parties, while the left is always more fissiparous.

I think the left is slowly, very slowly, reformulating along lines closer to the older anarchy tradition, as seen by the rise of Green Parties – but it will take time before a more grassroots, collaborationist form of left wing politics really starts to make a difference. I think the libertarian/neolib wing of the right is being well and truly wiped out by the more ruthless nationalistic (I hate to use the F word) tradition. The transformation of the Tory party into an English nationalist party with a focus on serving its new working class/lower middle class base has been carried out with quite remarkable speed. The Tory business class will come to deeply regret its silence over the internal revolution that took place post the Brexit vote.

All this of course is within the context of slowing growth and a rapid climate deterioration. All bets are off in significant parts of the world as the fires rage. The only certainty about climate change is that there will be completely unforeseen negative impacts.


BillC , December 27, 2019 at 4:40 am

4th 'graph is truncated.

Massinissa , December 27, 2019 at 2:32 pm

The fourth paragraph is still incomplete at the time of this comment.

Ignacio , December 27, 2019 at 5:28 am

"Remove fairness from society and you create the conditions for revolt"

This is a quote from a march article by Ben Felton on fairness and brexit.

Ignacio , December 27, 2019 at 5:37 am

Sorry, I forgot to say that this was one of these think-provoking posts that I like so much.
In a loosing fairness world, what is the proper personal conduct one must follow? Go with the trend, or try to keep the old-style way as much as you can?

I would expect the whole spectrum of answers to this question. Fortunately, there will always be some people that put fairness forefront.

Eustache de Saint Pierre , December 27, 2019 at 7:07 am

" Fortunately, there will always be some people that put fairness forefront "

Yes Ignacio but I do hope youngsters don't become embittered by a world that is certainly a lot harsher for them than it was for me 40 odd years ago.

After a year of fighting to get money from those who have plenty of it, am now working on a transatlantic commission for a wealthy guy from Colorado, who has actually shocked me with his fairness – particularly as I was worried about the possible downsides of getting into such a far flung relationship.

He has actually kept my head above water while am waiting for a large long overdue payment from a public institution that I almost wish privatisation on for their lack of effort in addressing the situation.

I had a great Christmas trying to play Santa without the suit, with the best bit being the giant full facial smile received from one of those likely old beyond her years Roma women selling " The Big Issue " as she sat as if clinging to the wall in the pouring rain.

Winston Smith , December 27, 2019 at 7:41 am

I hope everyone at NC is having a fine Holiday can anyone post the link to some of the videos explaining neoliberalism posted at NC a short while ago? Can't seem to find them. Thanks

flora , December 27, 2019 at 7:49 am

This video is a pretty good intro.

https://larspsyll.wordpress.com/2019/12/19/neoliberalism-2/

Winston Smith , December 27, 2019 at 9:19 am

Yes that's it! Thanks.

Carla , December 27, 2019 at 2:54 pm

I've just tried, for the second time, to watch that video. For me, it is too quickly paced to be effective, or even informative -- and mind you, like other NC regulars, I KNOW this stuff. IMO, Nancy MacLean's "Democracy in Chains" does a much better job. Yes, it takes more than 26 minutes to read -- but I think understanding what has happened to the world over the last 75 to 80 years SHOULD take more than 26 minutes.

flora , December 27, 2019 at 3:27 pm

Yes, it is quick paced. I had to do the pause-rewind-replay this or that bit, pause-rewind-replay steps several times to get what was being said. Too much condensed info for me to take in all at once.

inode_buddha , December 27, 2019 at 8:14 am

Thank you, Yves. This post is about exactly the sort of thing that keeps me up at night. Frankly I spend a lot of time mourning for what our society used to be, and the notion that nobody has the backbone to do the right thing regardless.

I spend my share of time in conversation with many people in the upper/middle class, business leaders and Conservatives in particular. The entire thinking is, "Losers cry about being fair, winners go home and bang the Prom Queen". [paraphrased]

I always ask them if this is the kind of society they want to live in, and raise their kids in. It is lizard brain, writ large.

Anyway, I just want to say "thank you" for all your efforts as a beacon in the darkness. It is comforting to know that someone else also can see.

DHG , December 27, 2019 at 8:47 am

They dont have the backbone as we are deep into the "time of the end" where the love of the greater number will cool off, they will be lovers of money and themselves, and the list goes on. This system of things is all Satans and its on the verge of being extinguished forever.

Synoia , December 27, 2019 at 8:22 am

What disappeared from that world was playing fair. Everyone played fair, or, at least, playing fair was a bedrock than you could drift away from, but, sooner or later, you fell back on it.

Was it "fair" or was it Because the Soviet Block offered an alternative, purportedly Communism but what appears to me as totalitarianism. The alternative to the Communist block had to appear more appealing for the players to gain advantage in the great game.

With the Communist block gone, do we now just see the reality, and whatever accommodation was made to have the Western/US based system more appealing has now changed. How is the US' system viewed in Latin America? As "fair?"

When the British Empire controlled much of the world, was it "fair"? I was a part of that, and I could not describe it as "fair".

In the British Empire's demolition the US played a good part of being "fair," but it was "fair" only if it advanced the US' interests. An example of this is the forgiveness of War Loans. Germany, on the Soviet systems' door step had war debts forgiven. The UK, which paid a huge penalty for fighting the wars received no such favor for its "special relationship" with the US, coupled with a not-so-polite demand to dismantle the British Empire (aka Self Determination).

I perceive the world's governing system not in terms of left and right, but as the surface of a sphere, with the the horizontal axis being changing from "free" to "totalitarian" which can be approached from the political left or the right, and the vertical axis varying from market based (neoliberal) to centrally controlled, and any country is always being affected by words or threats to slide from one point on the sphere along some rhumbh line to another point.

Katniss Everdeen , December 27, 2019 at 8:25 am

The idea of "fairness" is one of those things that used to be a lot more clear in the past than it seems to be today. In general, the rules were the rules, and anyone who decided to play accepted them. A level and "fair" playing field, with the same rules for everyone, was what determined the "winner," and made "winning" legitimate.

But lately society has apparently decided to determine the "winners" first, and change the rules to match the desired outcome. That approach has wreaked havoc with the concept of "fairness."

Everybody gets a trophy for "participation." Eliminate the electoral college because hillary didn't win it. Pretend that biological males are actually women because that's how they "self-identify," and let them "compete" against biological women instead of those with the same chromosomes.

You can't have "fairness" without rules, and playing fast and loose with the rules means you can never tell who the cheaters are.

flora , December 27, 2019 at 8:51 am

Thanks for this post. It seems like many of the economic and democratic govt and even social rules once reliably enforced by laws and custom have become mere suggestions. The idea of rules or fair play that existed from, say, the 1930's – 1980's, in the US now seem entirely overtaken by a sort of modern, re-invigorated, social Darwinism, a once rightly discredited moral theory. imo.

shinola , December 27, 2019 at 11:15 am

Ah, yes – the self-licking ice cream cone of social Darwinism. Something to the effect of:

"I won the roll of the die because I deserve to. The fact that I used a loaded die & you didn't just proves that you are a born loser."

flora , December 27, 2019 at 1:08 pm

Everything old is new again, unfortunately. Neoliberalism is like the old social Darwinism dressed up in newer, erudite, clothes. Substitute today's words 'the market' for yesterday's words 'the strongest and fittest' and you have a pretty close 1:1 match. Misapplying Darwin's studies in biology to sociology.

The following text was written for school kids' history class. It's a quick read.

http://www.american-historama.org/1881-1913-maturation-era/social-darwinism.htm

shinola , December 27, 2019 at 3:16 pm

Thanks! Good overview of the subject.

Davenport , December 27, 2019 at 3:06 pm

And way before Darwinianism, at the dawn of capitalism, we had the Puritans.

According to their doctrine, if you were wealthy it was because you were favoured by God. If you weren't wealthy, God didn't intend you to be. In every era, the selfish and the greedy have a justification.

Nothing to do with the fact that you stitched up your fellow countrymen by enclosing common land and kicking those that had used it for generations off their means of self subsistence.

Frank Little , December 27, 2019 at 9:31 am

Your comment about the courts role in eroding a sense of fairness and, by extension, trust in the system called to mind the courts' role in maintaining the vast US prison system. The Supreme Court was recently considering a case filed from a pro se prisoner and Justice Sotomayor referenced a secret policy within the Fifth Circuit Court of Appeals of denying all petitions filed by pro se prisoners for thirteen years without even so much as glancing at the briefs. The policy only came to light when an employee of the court referenced it in their note before committing suicide, apparently out of guilt.

The Fifth Circuit happens to include Louisiana, which has the highest incarceration rate of any state. Eventually the policy was reversed, but in practice I'm sure most filings from pro se petitioners in prison are met with a similar lack of interest and consideration. Perhaps there are good reasons to dismiss some filings quickly given the large backlogs and legal rumors and nonsense that makes it way through prisons.

However, the courts remain the last best hope for prisoners in trying to overturn wrongful convictions or address abuse at the hands of prison officials, at least for now. If the courts are happy to deny these people fair consideration for efficiency's sake unless they can secure outside counsel you can bet this abuse and neglect will continue. Maybe that sounds like a fine trade-off to those in power now, but the long-term effect is the erosion of trust and confidence in the system beyond just those directly affected.

Steve Ruis , December 27, 2019 at 9:42 am

Another consequence of the loss of fair play is a termination of the phenomenon that many workers, especially white collar workers, wanted to believe that their employer was trustworthy and, as a consequence, they trusted their employer at a higher level that is or was warranted. This trust was mis-placed to some extent but served as a bulwark when relationships between employee and employer became strained.

I wonder now, whether this is still the case. It seems not to be. Granted employers have earned their employees distrust or, at a bare minimum, lack of trust that formerly was granted (due to wishful thinking).

Pelham , December 27, 2019 at 10:44 am

I know exactly what you're talking about. Before I was laid off, I watched as many colleagues were shown the door. Oddly from a trust perspective, most of these people were vastly more talented and experienced than the employees who continued to keep their jobs. (Though, of course, from a strictly shareholder perspective, their high pay levels justified their dismissal.)

So from the canned employees' point of view, after years of awards, high praise and affirmation from management, the fact that they were being hustled out the door (sometimes literally) amounted to a profound betrayal of trust. And you could see it in the look of shock on many of their faces.

When my time came, I had absorbed the lesson and had completely detached my ego from my work, no longer taking any pride in what I did for a living. And I never will again as long as I'm working for someone else, even an employer who in the moment is kind and appreciative. They can turn on you in a heartbeat, and for the flimsiest of reasons.

James , December 27, 2019 at 3:47 pm

Or, we are all temporary employees, whether we know it or not.

Carolinian , December 27, 2019 at 9:46 am

Just to add in impeachment (prexit?), it once was considered a big deal that Nixon lied ("the coverup is worse than the crime"). And lying was at the center of the Clinton impeachment. But that's less true with the current dispute and perhaps that's because the impeachers themselves are shamelessly lying. The truth no longer seems to matter to anyone as long as a fairy tale "narrative" can be found to substitute. Perhaps it's not so much that the world has become more evil or selfish but that modern society has a serious reality problem. People still understand fairness but simply pretend they are being fair as long as nobody is challenging their narrative (see Amazon post today). And that may be because we are saturated with media that are all too willing to tell us what we want to hear.

Thank goodness for NC where some of us come–and for a long time–to find out the truth. Perhaps it's not just a coincidence that many of those who hang out here seem to be older–old enough to remember a time when truth mattered.

Off The Street , December 27, 2019 at 10:57 am

A little more patience, but not too much, is needed in awaiting the inevitable and continuing sunlight disinfectant applied to so many top level employees of the FBI, DOJ, their institutions and other malefactors in other branches. When, not if, that day arrives, when perp walks, trials, sentencing, mea culpas and much feckless deflection and gnashing of teeth occur, then will there be some perception of a symbolic return to the fairness that was once felt by much of the country. The preponderance of evidence, not punditry or spin, points to likely criminal convictions, ruined careers and discredited institutions. Repairing those institutions, and regaining public trust will be difficult given the inertia and FUD residues that have built up, but we do have a country at stake for all of us.

There are many other aspects of the justice system that need review and reform, as noted by other commenters. Without some highly publicized changes to those institutions to restore some initial and fundamental element of trust, then people both in the US and abroad will have doubts about the Rule of Law. Most people do not want to have a country where that statue of a blindfolded justice has to peek to see who is trying to tip the scales.

The Rev Kev , December 27, 2019 at 9:49 am

The main word used here is fairness but what we are really talking about is justice. It does not matter what country or culture that we are talking about, we all know when we are being treated fairly, or justly, and when we are suffering an injustice. An example? Two people have a meal together when one reaches over and helps themselves to the food on the other person's plate. That sort of unfairness can get you killed in some places. But likely that feeling of unfairness or injustice is universal.

And here is the crux of neoliberalism. It picks sinners and losers – deliberately – and abandons those they deem to be losers. But it does not do so on the basis of worth but on what it perceives to be worth which is why a college sports coach or administrator can earn millions while a professor earns peanuts. If anything, there is a strong streak of Social Darwinism to this as a justification to who these "winners" are. But most of us can think of people in business, sports, politics, etc. who in reality aren't worth two bits based on their performance.

The result for the UK? Those designated the losers who were abandoned, policed and watched by the winners saw their chance to strike back at them by picking Leave in the Brexit campaign. Life was not good for them and it was not going to get any better and so they decided to make a choice to deny the winners something that they valued – Remain. There is not a doubt in my mind that if these people had not been abandoned but had been able to share in the success of the country, then they too would have chosen Remain. You saw the same with the Trump vote in 2016 in the US. And this is only the first installment.

Rory , December 27, 2019 at 1:43 pm

I think the insight in your last paragraph, more than any other single factor, explains Donald Trump's electoral success in 2016 and identifies who his "base" really are.

upstater , December 27, 2019 at 10:16 am

The court system is perhaps the best example of how Fair Play has been degraded in the US.

For 20+ years we ran a small mom-and-pop consulting business for large companies, all Fortune-500. We did highly technical work with such efficiency and economies of scale providing industry standings and granular decision support, the companies themselves or McKinsey-types could never come close to doing a similar product. At least until an industry association, facilitated by a customer decided to steal misappropriate our intellectual property and produce a knock-off product. This happened even though we offered to collaborate with the industry association and had a "good" contract prohibiting stealing misappropriation.

Let it suffice to say that a mom-and-pop consulting business is at serious disadvantage as soon as you get a lawyer and file a lawsuit in federal court. The defense attorneys were given a blank check by their members and spent high 7 figure sums trying to pulverize us. By the time the thing was winding down, we were paying our attorneys our of our retirement account. I understand that in the UK and EU things are even more stacked against plaintiffs.

While 98% of federal civil cases and tossed out or settled, we ended up with a 3 week trial. The defendants team had 3 partners, an IT person and paralegal from a national firm in court at all times, plus 3 people working locally at rented office space. We had a mid-size regional firm represent us -- it was not cheap.

What strikes us most is the defendants seemed to be on home turf from the get-go with the court. There were YEARS of delays and all sorts of spurious filings and even a counterclaim based on fiction. This is standard procedure. Further, it was a highly technical case and we performed thousands of hours of work to refine the details for the lawyers and jury to understand. The defendants had unlimited resources to obfuscate and confuse, which they did masterfully. The majority of evidentiary ruling were in favor of the defendants. It was a huge upward struggle.

What is even worse is there is zero incentive for defendants not to lie mis-remember facts. Our lead attorney told us in 25 years of litigation practice he had never seen or heard of a sanction, much less prosecution, for perjury. In fact some of these liars were promoted and rewarded for their courtroom performance.

This whole process took 5 years. We "won"; the jury didn't buy the industry's arguments. But our business was destroyed, we've been blacklisted and any residual value a business with 20+ years of stable income was destroyed. The industry group pays their staff handsomely (its just added to your monthly bill) and while a few people were pushed aside, the main perps remain and are well compensated. They plod along with a garbage imitation, but the associations membership executives don't care -- there is no third party assessment of their performance -- they grade their own performance now.

Needless to say, we are tired, disgusted and cynical. But glad we won and that it is over. I would not do it again

Anonymous 2 , December 27, 2019 at 10:36 am

Very sorry to hear your story. That sucks.

It reminds me a bit of the Phone Hacking trial in the UK. Peter Jukes has a good book on it – Beyond Contempt. The mismatch between the resources available to the News International people and those available to the British Government was risible. As a result News International was effectively in control of the proceedings almost from start to finish, though the Crown was able to get Coulson as there was incriminating evidence against him in writing.

Yes there may well have been perjury as well and the police seemed as I recall to have been very slow to get to a farm where there were reports that major bundles of paper were going on to a bonfire. Hugh Grant, when he taped a journalist, was told that 20% of Metropolitan Police officers had been bribed by the press. Wonder if that had anything to do with it?

And yet many Britons still think that the UK is a pretty straight place ..so much more honest than those foreign countries.

Carolinian , December 27, 2019 at 1:40 pm

Maybe they should just keep out Murdoch.

Have recently watched series The Loudest Voice about Fox News. They make Murdoch look like an avuncular figure in order to heighten the villainy of Ailes but of course you don't let the organ grinder off the hook so as to blame the monkey. No Rupert no Fox News and perhaps no current version of the NYT that acts like Fox News.

Off The Street , December 27, 2019 at 3:59 pm

You can watch the thinly-disguised Succession for more of a look at the Murdochesque world.

Adam Eran , December 27, 2019 at 1:26 pm

Thanks for the summary of the courts' action as a millstone around the neck of honest commerce, and my sympathy for your loss.

It's worth remembering this kind of thing has consequences too. Fred Koch patented the basic refining processes to turn crude oil into useful products, then the Rockefellers' refineries essentially stole those processes (used them without paying patent royalties) in their refineries. Koch sued .and *lost*! A few years later it came out that the Rockefellers bribed the judge and Koch re-sued and won but at what cost? And ever after Koch and his offspring came after the government whose courts were so corrupt.

The lament about declining standards is as old as the Pharaohs–read Howard Zinn's People's History of the U.S. which exposes the New World's history of venality–but recent events seem to be sounding the depths of the most profound dishonesty. It's gotten bad enough that political economist Mark Blythe talks about the positive impact a disaster like the Climate catastrophe would have in breaking up this cabal of evil.

Fíréan , December 27, 2019 at 2:16 pm

Your story reminds me of Florida inventor Steve Morton's case against copyright theft being closed down and covered up by then-FBI Director Mueller and then-Attorney General Eric Holder. Definitely a good example of unfairness at the top of the system.

For further information on Morton's case and story a good search engine for "Steve Morton" , " Fincantieri ", " Mueller", " Holder" , "Comey" , ought bring up an outlet covering said situation.

Otherwise, for starters, i offer you a link : https://truepundit.com/mueller-holder-shut-down-fbi-investigation-of-stolen-u-s-stealth-defense-technology-implicating-lockheed-martin-while-comey-was-lockheeds-top-lawyer/

Pleased to read that You "won" Your case.

Robert Gray , December 27, 2019 at 10:27 am

from PK:

> The gradual retreat of the US from the eastern Pacific is pretty much seen as a done deal,
> everyone is frantically scrambling to ensure they are not caught on the hop.

Not sure I understand this. Eastern Pacific? What retreat?

Off The Street , December 27, 2019 at 4:01 pm

PK likely meant western Pacific .
Dragon territory, East Asia, still at war with Oceania.

Wukchumni , December 27, 2019 at 10:34 am

Wall*Street is often described as a casino, but in reality most every house of chance has a security exchange commission of it's own, making sure that there is no cheating, and fair play on both sides of the green felt jungle, and should a dealer in it's employ be caught in an act of larceny, they'll be arrested toot suite.

When Wall*Street was paid off on losing wagers a dozen years ago, fair play lost it's luster and has only become more meaningless in it's absence.

Summer , December 27, 2019 at 10:36 am

Neoliberalism is insidious.
So now, that austerity from the EZ and the like minded hasn't been all that bad?
Absolutely insidious!

Palinurus , December 27, 2019 at 10:40 am

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . 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."
-- U.S. President Abraham Lincoln, Nov. 21, 1864
(letter to Col. William F. Elkins)

"These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel."
speech to Illinois legislature, Jan. 1837.

Jeremy Grimm , December 27, 2019 at 1:00 pm

I find your Lincoln quotes curious. I thought Lincoln that after splitting wood for rail supports Lincoln made his name and money as a lawyer arguing cases for the large rail road corporations. If so, the quote you provided seems much like Eisenhower's speech on the Military Industrial Complex.

ambrit , December 27, 2019 at 1:18 pm

"Lincoln made his name and money as a lawyer "
How better to learn about the 'real' machinations of the ruling elites? What Lincoln did with that 'education' was what made him famous, not the education itself.

Trent , December 27, 2019 at 3:07 pm

Something tells me the A Lincoln we've been taught about prob wasn't the real A Lincoln

Vegetius , December 27, 2019 at 10:42 am

Societal trust is impossible under conditions of imposed Multiculturalism. The sooner progressives figure this out, the better off we will all be.

flora , December 27, 2019 at 11:12 am

The word 'multiculturalism' has a range of meanings, both sociological and political. You need clearly define your meaning of the word. As it is, your assertion is vague, imo.

ambrit , December 27, 2019 at 11:15 am

I imagine that the operative word in his or her comment is "imposed." That implies an 'authority' that can dictate to everyone else. Such a state of affairs would be the opposite of what I grew up imagining "progressivism" was.

flora , December 27, 2019 at 11:24 am

Yes. "Imposed". I mistook the 'who' for the 'what'. Thanks.

Summer , December 27, 2019 at 12:06 pm

What are the conditions imposed?
Because as much of a problem as people have with the idea of "cancel culture" there still is the flip side that people aren't going to continue to let themselves be treated like garbage.

ambrit , December 27, 2019 at 12:55 pm

The ultimate 'problem' in all this is the perennial one of who controls the resources, or, as Marx and Engels put it, the means of production.
People will be "treated like garbage" for as long as 'garbage' is all that is available to them. In an extremely unequal society, as the modern Wast has evolved into, once some threshold of resource 'ownership' is crossed, the only feasible method of redressing the balance seems to be outright revolt and warfare. Except for the example of Cincinnatus in the Roman Republic period, (See: https://en.wikipedia.org/wiki/Lucius_Quinctius_Cincinnatus ) who knows of a time when concentrated power ever voluntarily gave up any significant portion of their powers?
Inequality is inherently unfair.

JTMcPhee , December 27, 2019 at 1:47 pm

People do interesting and sometimes beautiful things with garbage:

"Landfill Harmonic: Paraguay's Recycled Orchestra," https://www.aljazeera.com/programmes/witness/2019/12/landfill-harmonic-paraguay-recycled-orchestra-191225143800657.html

Summer , December 27, 2019 at 4:02 pm

The previously "imposed upon" know all about it

ambrit , December 27, 2019 at 10:49 am

With the site admin's forbearance.
We encountered the 'ground level' fruits of the loss of the ethos of fairness yesterday.
Phyl was told to see the "Pain Management Practice," an independent section of the local medical apparat in order to 'manage' her use of the pain meds she was prescribed for her amputation. So far, so good. The appointment is for two o'clock. Show up at one thirty o'clock to fill out paperwork. Due to a tight schedule and other impediments, we show up at the office at a quarter to two o'clock. The receptionist nurses, who sit at a desk behind an armoured glass partition, tell us that we are late and must reschedule the appointment for two weeks later. At which time, Phyllis begins to argue. This is normal behaviour with her when confronted with 'unfair' conditions. One of the receptionists relents somewhat and goes back into the back room and consults with someone.
She returns and declares; "No exceptions are allowed. You are late and that is that."
Phyl replies: "You can see my problem. Are you going to be rigid?"
Receptionist; "The best I can do for you is two weeks off."
Phyl; "Is there anything sooner?"
Receptionist; "Do you want the appointment or not? We have work to do here!"
Me, sotto voice to Phyl; "We will get nowhere with this bunch. Take the next appointment and we'll see what we can do later."
Phyl; "All right."
As we left the waiting room, one of the two patients sitting there was visibly trying not to laugh. The other patient got up and helped open the large glass door so I could maneuver the wheelchair out into the hallway.
The point of all this, (besides an apologetically admitted venting on my part,) is that this medical establishment has opted for a rigid and formalized rules based imposition of authority in place of any sort of fairness or flexibility in dealing with their clients. (I use the word client in it's original [?] Roman sense.) Speaking with several of our neighbors yesterday I have discovered that this sort of rigidity in scheduling is becoming more common around here.
One of the main features of fairness, at the least in medical situations is the belief that the patients deserve some leeway in their treatment at the hands of 'officials.' This new experience of ours highlights the emerging ethos that the system is paramount now. The patients are now there for the convenience of the providers, and their stockholders. Fairness has now officially been banned.
I was going to make a remark about this system change being an example of late stage capitalism, but just realized that formalism and inflexibility are hallmarks of late stage anything.
'Fairness,' however one defines it is a function of flexibility. 'Fairness' shows the desire and ability to think out complex situations and move to balanced outcomes. All 'actors' in the social situation are considered and dealt with in some semblance of a socially supportive ethos. Communitarian at root, this has been, as is mentioned several times above, replaced by an atomistic and minimalist pseudo philosophy. The foregoing because a strategy of adherence to a rigid and simplistic set of rules in social situations is a rejection of thought and reflection. "I was just following orders." Does that sound familiar?
Alas, I fear that "things" are going to get much worse in the times ahead, for everyone.
Thanks for your indulgence.

Elizabeth , December 27, 2019 at 5:09 pm

Ambrit, I am so sorry you and Phyl have to deal with humans utterly lacking in compassion and human decency. If think if this happened to me, I would argued forcefully – screamed- which would have probably had me removed from the office or banished from the practice. This kind of treatment from people who are dealing with patients who need help just makes my blood boil. Unfortunately, I think this kind of treatment towards others is a side effect of living in an unfair/unjust society. Many people's hearts become bitter and hardened ( like I'm suffering and I don't care if you suffer too). The dark world we live in now is cold hearted and full of tears. My heart goes out to you and Phyl and all others who are suffering because of this.

ambrit , December 27, 2019 at 5:36 pm

Thanks Elizabeth. The Home Health nurse this morning didn't want to believe our tale. She finally suggested that we complain directly to the top level of the Medical Organization that this practice is a part of. I'm going to try that Monday. As a side note, the Physical Therapist this afternoon mentioned that the nurses are stymied because absolutely no pain med scrips are written on Fridays. (I found it hard to credit, but reflection seemed to prove her correct.) This is evidently not just a function of the doctors wanting Fridays off, but a conscious policy on the part of the local medical establishment. [Your only recourse would be to admit yourself in to the Emergency Room I was told. Hmmm . what's the most expensive part of a Hospital practice? You guessed it!]
My favourite aspect of the "visit" to the Pain Management Office was the presence of the armoured glass partition between the Lobby and the receptionist's desk. This assumes that someone in the physical office planning stage anticipated a high potential for violence in that office. {I wonder why?}
I was tempted to let Phyl scream her head off, but remembered the presence of a uniformed 'Security Person' in the building lobby. The two behind the glass partition looked like, and acted like the sort who would love to smack an unruly 'client' down. /Bored and smug would be how I summed up how the two women appeared.\
Luckily, Phyl is already tapering off her drugs usage, so, there is a small cushion with which to maneuver around this unholy edifice of Mammon.

katiebird , December 27, 2019 at 6:02 pm

I wonder if Phyllis's doctor could refer her to another clinic, one a little more compassionate to people in pain? (Couldn't they let you finish the paperwork while you wait in that little room for the always late doctor?)

This story has me enraged for Phyllis and also you. I am so sorry. Two weeks. The audacity. Making her wait even a day! (I am almost crying in frustration. So very sorry)

Anarcissie , December 27, 2019 at 11:57 am

While I definitely agree that ruling classes have deteriorated remarkably over the last few decades, I don't think the old days were very fair either. Fairness is of interest -- in fact, it's crucially important -- in a society composed of people who are more or less equal and autonomous. It's a way to get along without a lot of conflict and risk. In an highly unequal society, like those of the US and the UK, it's much less valuable than access to the levers of power. You don't have to get along with those you can crush or brush aside. As the scene here in the US continues to deteriorate, I expect concepts like fairness and justice to seem more and more quaint to the movers and shakers and fixers, until finally the general system breaks down completely. It's anybody's guess what will succeed that.

JimTan , December 27, 2019 at 12:59 pm

I think this loss of fair play is partly because many have realized that fortunes can be made simply by gaining exceptions to established rules and laws. There have always been exceptions, here and there, but our situation now is there are exceptions to established rules everywhere. Companies can now simply lobby for some exclusive benefit or to ignore some law that everyone else must follow, and then collect a risk free guaranteed profit for essentially doing nothing.

Many large firms use these exceptions in the form of legal protections not available to their competitors to both attain and maintain their competitive advantage. These protections include ignoring existing laws, profiting from illegal businesses where profits exceed fines, and profiting from exclusive U.S. government subsidies not available to competitors. The banking and drug industry are notorious for routinely engaging in illegal practices that generate profits which far exceed the fines that regulators impose when these firms are caught. Preferential government subsidies that benefit a single company in an industry are now also acceptable business strategy as companies like Amazon can obtain confidential agreements with the U.S. Post office to ship packages for at least half of what UPS and FedEx would charge for the same deliveries. A subsidy like this contributes to the many reasons that its competitors are driven into bankruptcy, and probably explains why Amazon's retail business loses money everywhere except in the U.S.

Many small firms, especially tech unicorns in their early days, use these exceptions in the same way. Amazon started as a small company that would sell mail-order books in a way that allowed it to avoid sales tax. Early Uber investors were probably attracted by a belief that government will look the other way while it made cab rides cheaper by ignoring local taxi regulation, then transferring all its business costs to its drivers, and then collecting a substantial fee for each of taxi fare. AirBnB started as a small company whose rent would also ignore local hotel regulations, zoning laws, health laws to prevent public health hazards, and fire safety codes. Small drug companies like Turing Pharmaceuticals can simply acquire patents for drugs with no substitute and then raise prices by 5,456%.

The problem is that too many of these risk free 'rent seeking' opportunities can overwhelm an economy filled with corporations who are all chasing the highest risk adjusted rate of return. When there are too many of these rent seeking opportunities in an economy then its companies will select only these risk-less rent seeking strategies, while abandoning all riskier but socially productive profit strategies like the pursuit of new breakthroughs, product innovations, design quality, superior service, and product reliability. A related negative outcome which you hint at with 'fair play' is most of these rents offer particular exclusions from laws designed to protect society like those prohibiting consumer or investor fraud, prohibiting worker exploitation, ensuring consumer safety, and maintaining financial market stability.

So an economy with systemic rent seeking often incentivizes its corporations to abandon their socially productive profit strategies, and then replace them with risk-less 'rent' strategies where profit comes from ignoring laws that protect our society from fraud, exploitation, and economic disruption.

smoker , December 27, 2019 at 1:05 pm

Thanks for this.

Jeff Bezos was the first thing that popped into my mind. The Technocracy –with no room for humanity, where the masses serve as hosts for 24/7 parasites – the second.

In this neck of the woods,Silicon Valley, the infestation of unfairness reflects itself everywhere, particularly in the homelessness. Cars, the way they're driven, and how they are judged, are also a perfect example. You can see it in very pricey new model cars with dangerously blinding LED lights as the norm (which an insane National Highway Traffic Safety Administration has yet to address after over a decade of complaints); so called demon light headlight adaptations which make the car appear like a predatory night stalker in one's rearview mirror; and disturbing personalized license plates, saw one the other day that said MALWARE. And then there's the judgment by vehicle. After having lived where I am for over a decade, was asked by a new neighbor, in a brand new vehicle, if I needed directions, as if I was lost, when I stopped to speak with another neighbor in my not clunker looking, almost 20 year old car. It cut me to the bone, as words can.

Small businesses are increasingly losing their shirts and being shut down due to amoral commercial property owners; Amazon; Google, Facebook and Apple Campuses ™; and corrupt mayors and city council members' neighborhood planning ™.

The Silicon Valley CalTrain commuter line just had its 16th pedestrian fatality of the year in early December (a thirty two year old female youth therapist), and a hospitalized, attempted 17th fatality, 9 days later; despite ever increasing rail vigilance. Meanwhile the Local News™ keeps alluding to track improvements versus addressing the now tangible despair. It's all gut rending and no surprise that Santa Clara County led California in negative migration between 2018 – 2019. Unfortunately many were left with no means to even leave, and/or couldn't leave their loved ones who needed them..

The age old term walking in another person's shoes – implying looking beyond oneself, treating others fairly, and not taking ones luck in life as an indicator that they're worthier people – seems utterly lost on many who are doing well and wish the millions of 'losers' would disappear from their sight.

Off The Street , December 27, 2019 at 1:48 pm

Who will be the new Wright Patman?
Who will be the new Sal Pecora?
Prior generations provided guidance on how to identify and call out unfairness, and get meaningful results, for the benefit of the citizenry.

Summer , December 27, 2019 at 1:54 pm

Fair play won't be arriving much less "coming back."
Talk to the "algorithm."

Louis Fyne , December 27, 2019 at 1:55 pm

With absolutely 100% respect to the original posters and their points, I'd side w/Vlade and argue that there are some serious rose-tinted glasses being worn.

Yes, (in my opinion) there was an era of "fair play" .but this was a flash-in-the-pan consequence of WWII. As rightfully the bottom 95% earned their just desserts after years of sacrifice for their country and rescuing the elites from the literal existential threat of authoritarianism.

Now we're merely reverting to the time immemorial-style of 'every person for themselves' social ruthlessness. sadly.

JTMcPhee , December 27, 2019 at 5:03 pm

As I recall, the elites were in no danger from authoritarianism in the 1900s. Au contraire, they profited at every turn from the acts of authoritarianism. Prescott Bush and other business leaders (sic) did business with the Nazis and Fascists, and even with the Japanese imperium. These days, platforms and algorithms setvup by the Elites of this time loot and pollute and accelerate the many races to the bottom.

Good thing for that "life force" that when the last Elite human (possibly the last human of any sort) dies, there will be other species already carving out niches of precedence and preference It hurts, a little, to know we won't be missed

Susan the Other , December 27, 2019 at 2:38 pm

This post is a tad deceptive. It sounds like a review of neoliberalism and all that has happened since c. 1980 when in fact it is now The Question. What is fair play/ What is/was fair play and how do we create it going forward. Now that there can be no growth, very little manufacturing and no labor unions as we once knew them. Automation and an elite class of oligarchs and their functionaries are taking over. States/Nations still have their constitutions but they are creating internal conflict as the old ways disappear back into what Varoufakis calls a new feudalism. Like upstart above, however, I have only experienced fair play in the courts, never in economic situations. But then I'm old, b. 1946, and female. So I'm keeping an open mind as best I can, like the above clips from David, Clive, Vlade and PK. One thing to add from the FR24 Debate on good regulation – it was pointed out by one panelist that regulations are stricter in the EU for going into business, but on a "horizontal" basis. Whereas it is easy to go into Bz in the US, all you need are vertical connections. I took this to describe the fact that many corporations are monopolies. But connections are few and far between. And lurking in the wings, as we all know, is climate change. The new discussion about societal collapse has started. Now would be an excellent time to interject the concept of fair play. I am optimistic because there is a basic, rock solid strength in fair play that might serve to make it a survivor.

Oregoncharles , December 27, 2019 at 2:40 pm

I've mentioned before that my father, an investment manager who retired around the time Yves started, made a similar point prospectively. Background: he ran a smallish private firm in Indiana, but it gave him rather wide exposure, including in a large industrial firm, plus direct investments, besides the stock market.. Plus, my mother inherited a (then) good-sized farm that was operated by a tenant.

His comment was that a culture of honesty saved a lot of money, otherwise spent on guarding your interests, watching the watchers, hiring lawyers, etc. His firm shied away from investing in anything with a hint of shadiness.

This is merely confirmatory of Yves' point, but from a different point of view and from before the cultural changes (aka crapification) her post goes over.

And come to think, a younger relative who is a corporate lawyer told us, from her contemporary experience, that handshake agreements are NOT a good idea. They tend to lead to her getting involved, and she ain't cheap, nor are the consequences predictable.

I would add that I think human institutions, like human beings, have a life cycle, so to a great extent the vagaries of, say, Brexit are a result of predictable senescence. Not that you want to experience the down side, as we seem to be doing.

Off The Street , December 27, 2019 at 4:05 pm

Your word is your bond.
Another old-fashioned saying that might yet make a comeback, starting with some undergrad research paper on forgotten sayings of, say, the mid-20th century.

Chris , December 27, 2019 at 2:45 pm

On the opening mention of recruiters and employees ghosting I'd like to add a few thoughts of how different things are in that regard.

We're now all supposed to be part of some social network or another because we need to get our names out there and grow our networks. Those services then turn around and pelt you with emails and phone calls non-stop if you're whatever flavor of the moment they deem desirable. They also don't give you the time of day if they decide you're not. And those services have tried to evolve new tools to prevent you turning them away or ignoring them. Emails with "decision required" and polls and notices that seem to imply if you don't respond they'll kick you off. That's problem since any boss can fire you for any reason at any time. And they definitely mention that you're not being polite or fair by not responding to an email conversation you didn't initiate for a job position you didn't inquire about on a service you didn't ask them to use.

I have a job I like so I was really annoyed that one recruiter on Indeed couldn't take no for an answer and demanded I tell them why I wasn't going to permit them to sell my resume to a potential job opening. I don't understand why we're supposed to be at everyone else's beck and call and they don't have to respond to even polite overtures from us.

So it's more than just fair play seems to be missing in our society right now. It's that whatever echoes of fairness exist are used to abuse the people who believe in them. They steal your time, your attention, your professional connections, anything they can. Then they complain about you not responding. That's another facet of this that I really don't like.

Mikerw0 , December 27, 2019 at 3:52 pm

There is so much one can say on this topic. Unfortunately, I am increasingly pessimistic and of the view that nothing will really change until we suffer a true calamity as was the case in the past.

An oversimplifying example. My father was a combat veteran from the Korean War, having been just a little young to serve in WWII. There was a clear sense of inter-relationship in this generation. They experienced the depths of the depression and the massive loss of life and destruction of WWII. My dad eventually became the COO of one of the most powerful financial services firms in the US. His generation of leaders would never have considered the (1) levels of compensation relative employees as appropriate, (2) becoming predators on their customers, they prized their customer relationships, (3) using the firms balance sheet to gamble at the casino in a heads they win, tails you lose game. It simply wasn't in their DNA. They had suffered too much to jeopardize shared prosperity and general welfare.

When my father took early retirement he had a unique resume and was offered very serious positions of prestige and power, with high levels of compensation. He turned them all down, as did his piers, as they violated an inherent code of ethics and fairness that they didn't need to articulate it was just their from their shared sacrifices earlier in life.

In my experiences on Wall Street, both as a banker and as a CFO of firms, this would be anathema.

My only source of hope is that our daughter's generation, she is 27, sees this for what it is. They fully understand that our society is failing and eschew the loss of fairness on multiple levels. They consciously avoid politics and participation, not out of laziness, but because they see our leaders (both political and business) as fundamentally corrupt. She and her friends have no interest in voting for a neo-liberal (e.g., Biden, Buttagieg, etc.) who is just better behaved than Trump. They are well educated, have gone to excellent schools, and want something more from life than a high paying Wall Street job.

We see so much goodness in them, yet worry that it will take a global war or financial collapse leading to depression to reset our society.

Off The Street , December 27, 2019 at 4:13 pm

Reagan pocketed a huge, at the time, $2,000,000 speaking fee. That provided the imprimatur that cashing in was okey-dokey. Later grifters looked on with amusement pondering the blood, sweat, toil and tears of others that led to their own book and speaking shakedown deals with multiples of that fee in laundered money.

Jeremy Grimm , December 27, 2019 at 5:21 pm

Two assertions in this post caught my eye:
Firms "that adopted nobler objectives did better in financial terms than ones that focused on maximizing shareholder value."

I believe firms that adopted nobler objectives -- may -- have done better over the long-term than firms that focused on maximizing shareholder value but next I wonder about how well the managers did in the short-term [perhaps even the long-term after correcting for the differences in the qualities and abilities of the management] in each type of firm. I suppose mediocre managers did very much better when "focused on maximizing shareholder value". Before engaging the relatively long read of the linked post discussing details of the study which the main post refers to -- I also wonder how the referenced study deals with immoral acts which are not quite clearly immoral -- like outsourcing. Over the long-run outsourcing is bad for a country, bad for the resilience of a firm, and bad for the firm over the long-run before we are dead. However, I believe many of the firms that "adopted nobler objectives" -- and remained steadfast to them -- were driven out of business by price competition.

The second assertion:
"Another aspect of the decline in the importance of fair dealing is the notion of the obligations of power, [w]hat individuals in a position of authority have a duty to."

In regard to this assertion, I immediately recalled Machiavelli's "the Prince". Many of the ideas of noblesse oblige were anchored in the power and authority of the Catholic [Universal] Church. Though in conflict with a God Chosen Monarch -- noblesse oblige operated to attach similar moral authority to the Aristocratic Classes. In my Youth I thought of Machiavelli as completely unmoral. Later when I learned more about his life and actions I realized his "Prince" unveiled the unmoral reality behind the operations of monarchical and aristocratic actions. Neoliberalism has succeeded in stripping all moral coverings from power and through the efforts of an extremely well-funded Thought-Collective and propaganda machine it has divorced thinking about morality from power -- except as a thin fig-leaf. Most significantly it has exalted Power and its co-worker Wealth to positions of 'moral goodness'. Fair dealing in the Neoliberal moral universe is a slogan without content to fool those unaware and/or unwilling to 'see'.

I also feel much of the nostalgia for noblesse oblige and critique of the Neoliberal Age may originate from the residual conflicts and cross-envies between 'Old'-money and 'New'-money. Old-money has already forgotten the immoral origins of its wealth.

Much of this post is related to Brexit -- something I avoided study of or comment upon and still little understand. I excuse myself as someone squeamish about traffic accidents and train wrecks though powerful feelings of sadness overwhelm me.

The heart of this post resides in the ancient question of the tie between morality and its enforcement -- the question for how you would act given a "cloak of invisibility" which is a prop for posing concrete questions about how you might act without the constraints of dealing with any of the moral consequences or implications of your acts. I may be a fool -- but I believe most all of Humankind believes in Justice [and acts Justly] -- the Justice which I believe The Rev Kev equates to 'fairness' -- which is a much weaker word. But I also believe there are a certain number of individuals who do not care about Justice and the Neoliberal Thought Collective has somehow transformed this indifference ['disregard' -- 'disdain for'] Justice into a moral imperative and belittled Justice as a throw-back to benighted times past.

We live in DarkTimes when the very worst among us claim the most and worse still brand themselves as praise-worthy while using their colossally disproportionate Power and Wealth to squelch criticism and amplify their accolades often self-accolades through their wholly owned Media.

[Dec 24, 2019] Christmas in Flyover Land - Kunstler

Notable quotes:
"... It's a Wonderful Life ..."
"... we have sent the factories to distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and cheap stuff from Asia is your consolation prize. Enjoy ..."
"... Homelessness in America runs way deeper than just the winos and drug addicts living on the big city sidewalks. ..."
Dec 24, 2019 | kunstler.com

All the people of America, including the flyovers, are responsible for the sad situation we're in: this failure to reestablish a common culture of values most people can subscribe to and use it to rebuild our towns into places worth caring about. Main Street, as it has come to be, is the physical manifestation of that failure. The businesses that used to occupy the storefronts are gone, except for second-hand stores. Nobody in 1952 would have believed this could happen. And yet, there it is: the desolation is stark and heartbreaking.

Even George Bailey's "nightmare" scene in It's a Wonderful Life depicts the supposedly evil Pottersville as a very lively place, only programmed for old-fashioned wickedness: gin mills and streetwalkers. Watch the movie and see for yourself.

Pottersville is way more appealing than 99 percent of America's small towns today, dead as they are.

The dynamics that led to this are not hard to understand. The concentration of retail commerce in a very few gigantic corporations was a swindle that the public fell for.

Enthralled like little children by the dazzle and gigantism of the big boxes, and the free parking, we allowed ourselves to be played.

The excuse was "bargain shopping," which actually meant we have sent the factories to distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and cheap stuff from Asia is your consolation prize. Enjoy

The "bones" of the village are still standing but the programming for the organism of a community is all gone: gainful employment, social roles in the life of the place, confidence in the future. For a century starting in 1850, there were at least five factories in town. They made textiles and later on, paper products and, in the end, toilet paper, ironically enough. Yes, really.

They also made a lot of the sod-busting steel ploughs that opened up the Midwest, and cotton shirts, and other stuff. The people worked hard for their money, but it was pretty good money by world standards for most of those years.

It allowed them to eat well, sleep in a warm house, and raise children, which is a good start for any society. The village was rich with economic and social niches, and yes, it was hierarchical, but people tended to find the niche appropriate to their abilities and aspirations -- and, believe it or not, it is better to have a place in society than to have no place at all, which is the sad situation for so many today.

Homelessness in America runs way deeper than just the winos and drug addicts living on the big city sidewalks.


BackRowHeckler December 22, 2019 at 10:50 pm #

It seems there's a major political party exactly working against a common American culture. They jeer at the thought of it. It seems to be the main platform, above all else.

Brh

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Walter B December 23, 2019 at 3:23 pm #

It is a major party alright BRH, but it is no so much political as it is economic and socially stratified. They are opulent, self consumed and greedy as hell (literally). There can only be so many parasites sucking the lifeblood out of any herd of servant beasts, and they can only suck so long on their hosts before the poor beasts fall over and die. And that is the tipping point, where we lose enough life blood that we can no longer stand upright, but drop to the deck and are consumed. It is the classic Goose that laid the Golden Egg fairy tale being acted out in real life and coming to a neighborhood near you soon. Log in to Reply

sunburstsoldier December 22, 2019 at 11:22 pm #

Beautiful, thoughtful post Jim, yet to be honest it fills me with a sense of anxiety, and this is simply because the catastrophic events you forecast, although for the better in the long run (as they will compel a return to a world made by hand, or the recovery of human scale) will nonetheless bring much suffering to a lot of people ( including my own family). I would personally like to believe there is another way a more sustainable civilization could be attained than on the heels of societal collapse. I do believe the world is full of mystery, and that life itself is a series of unfolding miracles we lack the capacity to comprehend due to our limited perspective. Yet perhaps you are right and some type of collapse is inevitable before a new beginning can be made. If such be the case, as individuals we will be compelled to tap into inner potentials that will needed to meet the approaching apocalypse, potentials which currently lie dormant and undeveloped. Maybe in the process of doing so we will recover our wholeness as well.

[Dec 21, 2019] Trump administration sanction companies involved in laying the remaining pipe, and also companies involved in the infrastructure around the arrival point.

Highly recommended!
Dec 21, 2019 | peakoilbarrel.com

Watcher x Ignored says: 12/13/2019 at 6:27 am

The new US defense bill, agreed on by both parties, includes sanctions on executives of companies involved in the completion of Nordstream 2. This is companies involved in laying the remaining pipe, and also companies involved in the infrastructure around the arrival point.

This could include arrest of the executives of those companies, who might travel to the United States. One of the companies is Royal Dutch Shell, who have 80,000 employees in the United States.

Hightrekker x Ignored says: 12/13/2019 at 12:28 pm
So much for the "Free Market".
Hickory x Ignored says: 12/12/2019 at 11:28 pm
Some people believe 'the market' for crude oil is a fair and effective arbiter of the industry supply and demand. But if we step back an inch or two, we all can see it has been a severely broken mechanism during this up phase in oil. For example, there has been long lags between market signals of shortage or surplus.

Disruptive policies and mechanisms such as tariffs, embargo's, and sanctions, trade bloc quotas, military coups and popular revolutions, socialist agendas, industry lobbying, multinational corporate McCarthyism, and massively obese debt financing, are all examples of forces that have trumped an efficient and transparent oil market.

And yet, the problems with the oil market during this time of upslope will look placid in retrospect, as we enter the time beyond peak.
I see no reason why it won't turn into a mad chaotic scramble.
We had a small hint of what this can look like in the last mid-century. The USA responded to military expansionism of Japan by enacting an oil embargo against them. The response was Pearl Harbor. This is just one example of many.
How long before Iran lashes out in response to their restricted access to the market?
People generally don't respond very calmly to involuntary restriction on food, or energy, or access to the markets for these things.

[Dec 08, 2019] 'Free World'? What exactly does that mean? What does 'Freedom' mean? I 'freely' admit I simply have no idea what people mean when they urgently bleat words like that at me.

Dec 08, 2019 | www.moonofalabama.org

Ant. , Dec 5 2019 18:32 utc | 39

In Uncle Sam Land, "freedom" has two meanings. Rich people are free to do as they like. The rest of us are free to live under a bridge and starve.

We do have one right: The Right To Obey.

The whole society is organized around obedience, and the purpose of public education is to make sure every one obeys. Modern schools are more accurately called "day prisons", with all the cameras, metal detectors, armed police, isolation rooms, etc. I wonder how many people realize that "lockdown" is straight out of the criminal prison system, and is now a regular occurrence for little kids.

Ant. , Dec 5 2019 18:32 utc | 39

@33 vk

'Free World'? What exactly does that mean? What does 'Freedom' mean? I 'freely' admit I simply have no idea what people mean when they urgently bleat words like that at me.

To me, freedom applies to an action. You are free to do this, or you are free to do that. Which is, of course, actions that are constrained or allowed by various laws passed by local, state, federal and/or international entities. I would suppose that the amount of freedom you have depends on haw many laws have been passed in your own country to criminalize various activities.

Has anyone done such an analysis, to define which countries have limited their citizens behaviour? Simplistically, which countries have written the most laws?

I'll be willing to bet they are the 'democracies' that are most bellicose about protecting 'freedoms'. Let's face facts, politicians just love to keep passing laws, otherwise they have no reason to exist. I unreasonably think there should be another superior law, that any government should only be able to have so many laws. If they want to have yet another one, take some other law away. Otherwise 'freedoms' are just being chipped away at, constantly.

'Freedom', as a thing unto and onto itself, seems a completely meaningless concept. I keep wondering why politicians aren't asked what they are talking about when they roar about 'freedom' as a general term.

Trailer Trash , Dec 5 2019 19:51 utc | 53
>What does 'Freedom' mean? >

[Dec 07, 2019] While neoliberal talk much about the redistribution of wealth we need to talk more about its creation. And that involves the state.

Notable quotes:
"... "There's a whole neoliberal agenda," she said, referencing the received free-market wisdom that cutting public budgets spurs economic growth. "And then the way that traditional theory has fomented it or not contested it -- there's been kind of a strange symbiosis between mainstream economic thinking and stupid policies." ..."
"... Dr. Mazzucato takes issue with many of the tenets of the neoclassical economic theory taught in most academic departments: its assumption that the forces of supply and demand lead to market equilibrium, its equation of price with value and -- perhaps most of all -- its relegation of the state to the investor of last resort, tasked with fixing market failure. She has originated and popularized the description of the state as an "investor of first resort," envisioning new markets and providing long-term, or "patient," capital at early stages of development. ..."
"... Emphasizing to policymakers not only the importance of investment, but also the direction of that investment -- "What are we investing in?" she often asks -- Dr. Mazzucato has influenced the way American politicians speak about the state's potential as an economic engine. In her vision, governments would do what so many traditional economists have long told them to avoid: create and shape new markets, embrace uncertainty and take big risks. ..."
Dec 07, 2019 | economistsview.typepad.com

anne , November 28, 2019 at 12:05 PM

https://www.nytimes.com/2019/11/26/business/mariana-mazzucato.html

November 26, 2019

Meet the Leftish Economist With a New Story About Capitalism
Mariana Mazzucato wants liberals to talk less about the redistribution of wealth and more about its creation. Politicians around the world are listening.
By Katy Lederer

Mariana Mazzucato was freezing. Outside, it was a humid late-September day in Manhattan, but inside -- in a Columbia University conference space full of scientists, academics and businesspeople advising the United Nations on sustainability -- the air conditioning was on full blast.

For a room full of experts discussing the world's most urgent social and environmental problems, this was not just uncomfortable but off-message. Whatever their dress -- suit, sari, head scarf -- people looked huddled and hunkered down. At a break, Dr. Mazzucato dispatched an assistant to get the A.C. turned off. How will we change anything, she wondered aloud, "if we don't rebel in the everyday?"

Dr. Mazzucato, an economist based at University College London, is trying to change something fundamental: the way society thinks about economic value. While many of her colleagues have been scolding capitalism lately, she has been reimagining its basic premises. Where does growth come from? What is the source of innovation? How can the state and private sector work together to create the dynamic economies we want? She asks questions about capitalism we long ago stopped asking. Her answers might rise to the most difficult challenges of our time.

In two books of modern political economic theory -- "The Entrepreneurial State" (2013) and "The Value of Everything" (2018) -- Dr. Mazzucato argues against the long-accepted binary of an agile private sector and a lumbering, inefficient state. Citing markets and technologies like the internet, the iPhone and clean energy -- all of which were funded at crucial stages by public dollars -- she says the state has been an underappreciated driver of growth and innovation. "Personally, I think the left is losing around the world," she said in an interview, "because they focus too much on redistribution and not enough on the creation of wealth."

Her message has appealed to an array of American politicians. Senator Elizabeth Warren, Democrat of Massachusetts and a presidential contender, has incorporated Dr. Mazzucato's thinking into several policy rollouts, including one that would use "federal R & D to create domestic jobs and sustainable investments in the future" and another that would authorize the government to receive a return on its investments in the pharmaceutical industry. Dr. Mazzucato has also consulted with Representative Alexandria Ocasio-Cortez, Democrat of New York, and her team on the ways a more active industrial policy might catalyze a Green New Deal.

Even Republicans have found something to like. In May, Senator Marco Rubio of Florida credited Dr. Mazzucato's work several times in "American Investment in the 21st Century," his proposal to jump-start economic growth. "We need to build an economy that can see past the pressure to understand value-creation in narrow and short-run financial terms," he wrote in the introduction, "and instead envision a future worth investing in for the long-term."

Formally, the United Nations event in September was a meeting of the leadership council of the Sustainable Development Solutions Network, or S.D.S.N. It's a body of about 90 experts who advise on topics like gender equality, poverty and global warming. Most of the attendees had specific technical expertise -- Dr. Mazzucato greeted a contact at one point with, "You're the ocean guy!" -- but she offers something both broad and scarce: a compelling new story about how to create a desirable future.

'Investor of first resort'

Originally from Italy -- her family left when she was 5 -- Dr. Mazzucato is the daughter of a Princeton nuclear physicist and a stay-at-home mother who couldn't speak English when she moved to the United States. She got her Ph.D. in 1999 from the New School for Social Research and began working on "The Entrepreneurial State" after the 2008 financial crisis. Governments across Europe began to institute austerity policies in the name of fostering innovation -- a rationale she found not only dubious but economically destructive.

"There's a whole neoliberal agenda," she said, referencing the received free-market wisdom that cutting public budgets spurs economic growth. "And then the way that traditional theory has fomented it or not contested it -- there's been kind of a strange symbiosis between mainstream economic thinking and stupid policies."

Dr. Mazzucato takes issue with many of the tenets of the neoclassical economic theory taught in most academic departments: its assumption that the forces of supply and demand lead to market equilibrium, its equation of price with value and -- perhaps most of all -- its relegation of the state to the investor of last resort, tasked with fixing market failure. She has originated and popularized the description of the state as an "investor of first resort," envisioning new markets and providing long-term, or "patient," capital at early stages of development.

In important ways, Dr. Mazzucato's work resembles that of a literary critic or rhetorician as much as an economist. She has written of waging what the historian Tony Judt called a "discursive battle," and scrutinizes descriptive terms -- words like "fix" or "spend" as opposed to "create" and "invest" -- that have been used to undermine the state's appeal as a dynamic economic actor. "If we continue to depict the state as only a facilitator and administrator, and tell it to stop dreaming," she writes, "in the end that is what we get."

As a charismatic figure in a contentious field that does not generate many stars -- she was recently profiled in Wired magazine's United Kingdom edition -- Dr. Mazzucato has her critics. She is a regular guest on nightly news shows in Britain, where she is pitted against proponents of Brexit or skeptics of a market-savvy state.

Alberto Mingardi, an adjunct scholar at the libertarian Cato Institute and director general of Istituto Bruno Leoni, a free-market think tank, has repeatedly criticized Dr. Mazzucato for, in his view, cherry-picking her case studies, underestimating economic trade-offs and defining industrial policy too broadly. In January, in an academic piece written with one of his Cato colleagues, Terence Kealey, he called her "the world's greatest exponent today of public prodigality."

Her ideas, though, are finding a receptive audience around the world. In the United Kingdom, Dr. Mazzucato's work has influenced Jeremy Corbyn, leader of the Labour Party, and Theresa May, a former Prime Minister, and she has counseled the Scottish leader Nicola Sturgeon on designing and putting in place a national investment bank. She also advises government entities in Germany, South Africa and elsewhere. "In getting my hands dirty," she said, "I learn and I bring it back to the theory."

The 'Mission Muse'

During a break at the United Nations gathering, Dr. Mazzucato escaped the air conditioning to confer with two colleagues in Italian on a patio. Tall, with a muscular physique, she wore a brightly colored glass necklace that has become something of a trademark on the economics circuit. Having traveled to five countries in eight days, she was fighting off a cough.

"In theory, I'm the 'Mission Muse,'" she joked, lapsing into English. Her signature reference is to the original mission to the moon -- a state-spurred technological revolution consisting of hundreds of individual feeder projects, many of them collaborations between the public and private sectors. Some were successes, some failures, but the sum of them contributed to economic growth and explosive innovation.

Dr. Mazzucato's platform is more complex -- and for some, controversial -- than simply encouraging government investment, however. She has written that governments and state-backed investment entities should "socialize both the risks and rewards." She has suggested the state obtain a return on public investments through royalties or equity stakes, or by including conditions on reinvestment -- for example, a mandate to limit share buybacks.

Emphasizing to policymakers not only the importance of investment, but also the direction of that investment -- "What are we investing in?" she often asks -- Dr. Mazzucato has influenced the way American politicians speak about the state's potential as an economic engine. In her vision, governments would do what so many traditional economists have long told them to avoid: create and shape new markets, embrace uncertainty and take big risks.

... ... ...

Earlier in the day, she pointed at an announcement on her laptop. She had been nominated for the first Not the Nobel Prize, a commendation intended to promote "fresh economic thinking." "Governments have woken up to the fact the mainstream way of thinking isn't helping them," she said, explaining her appeal to politicians and policymakers. A few days later, she won.

Paine -> Paine ... , December 02, 2019 at 08:47 AM
Socialize corporate net cash flow
joe -> anne... , December 05, 2019 at 08:12 AM
Then she would advocate free banking, like Selgin. Better more efficient banking is a huge and profitable investment for government.

So before the leftwards jump on her idea of investment, start here and explain why suddenly, making finance more efficient for everyone is a bad idea.

Or ask our knee jerkers, before they jump on her ideas with all their delusions, why not invest in dumping the primary dealer system? That is obviously inefficient and generates the ATM costs we pay. Why not remove that with a sound investment f some sort?

Everything is through the eye of the beholder, for lelftwards it is the wonder of central planning, for the libertariaturds it is about efficiency via decentralization.

Then comes meetup, and waddya know, each side brings a 200 page insurance contract they want guaranteed before any efficiency changes are made. The meeting selects business as normal. We will select business as normal, our economists will approve.

Mr. Bill -> anne... , December 05, 2019 at 06:21 PM
" the way society thinks about economic value"

I am thrilled / s at the feeling of fulfillment I, well, feel, that an academic deems the obvious. It definitely, indicates that we are approaching, wokeness !

Economists are beginning to evolve, again, almost, but not quite capturing the curl of the real time world.

Mr. Bill -> Mr. Bill... , December 05, 2019 at 06:31 PM
" There's a whole neoliberal agenda," she said, referencing the received free-market wisdom that cutting public budgets spurs economic growth. "And then the way that traditional theory has fomented it or not contested it -- there's been kind of a strange symbiosis between mainstream economic thinking and stupid policies."

That is a deep vision that needs to be unpacked. My impression of traditional theory is that it discourages the neoliberal, market deism.

[Dec 07, 2019] The death of free markets under neoliberalism. Monopolization unhinged

Dec 07, 2019 | economistsview.typepad.com

Fred C. Dobbs , December 04, 2019 at 06:12 AM

The death of free markets
https://www.bostonglobe.com/2019/11/29/opinion/death-free-markets/?event=event25 via @BostonGlobe

Shaul Amsterdamski - November 29, 2019

In 2012, when economist Thomas Philippon was looking into some data, something odd caught his attention.

His homeland, France, was undergoing another revolution, although a much different one: a revolution in the country's telecommunication market. A new mobile operator, Free, had entered the market and disrupted it almost overnight. The new operator slashed prices, offering plans that hadn't been seen before in France.

France's three legacy mobile operators were forced to react and drop their own prices. It didn't help. In only three months, Free's market share reached 4 percent. At the end of the following year, its market share tripled. Today, Free controls 15 to 16 percent of the market, making it France's third largest mobile operator. (If you add the six virtual operators to the mix -- meaning companies who lease broadband space -- you'll get a total of 10 different mobile operators in a country with a population one-fifth the size of the United States.)

"Digging deeper into that crystallized everything for me," says Philippon. "It was an oligopoly based on three legacy carriers that lobbied very hard to prevent anybody from getting a fourth (mobile) license. For 10 years they were successful. But then, in 2011, the regulator changed and gave a license [to] Free. It wasn't a technological change or a change in consumers' taste. It was purely a regulatory decision."

For French consumers, this one decision changed everything. Instead of paying $55 for a 1-gigabyte plan, the new prices for much better plans cost half that. And prices continued to drop. Today, a Free 60-gigabyte plan costs only $12.

But Philippon wasn't just interested in what the new competition in the French telecom industry said about French markets. Having lived in the United States since 1999, he compared the French telecom revolution to the American market. The numbers blew his mind. While in France the number of mobile operators was rising, in the US the number was getting smaller (and that number might even decline further, if the planned Sprint-T-Mobile merger goes through).

The result was a huge price gap between the two countries.

"France went from being much more expensive to much cheaper in two years," he says. "The change in price was drastic -- a relative price move of 50 percent. In such a big market with gigantic firms, that's a big change. And it was not driven by technology, it was driven by pro-competition regulation." He immediately adds, just to emphasize the irony: "It happened in France of all places, a country that historically had a political system that made sure there wasn't too much competition. This is not the place where we expected this kind of outcome."

The opposite was very surprising too: The level of competition in the United States, the role model of free-market democracy, was declining.

Philippon, an acclaimed professor of finance at the New York University Stern School of Business, kept pulling that thread. He gathered an overwhelming amount of data on various markets, took a few steps back to look at the big picture, and then identified a pattern. The result is "The Great Reversal," his recent book, in which he explores and explains when, why, and how, as his subtitle puts it, "America Gave Up on Free Markets."

The telecom story is just one of many examples Philippon provides throughout the book of non-competitive US markets, in which most or all of the power is concentrated in the hands of a few big companies. It's a situation that makes it almost impossible for new competitors to enter and lower prices for consumers. The airline market is another example, as is the pharmaceutical industry, the banking system, and the big tech companies such as Google and Facebook, who have no real competition in the markets they operate in.

The book's main argument has a refreshing mix of both right- and left-leaning economic thinking. It goes like this: During the last 20 years, while the European Union has become much more competitive, the United States has become a paradise for monopolies and oligopolies -- with a few players holding most of the market share. As US companies grew bigger, they became politically powerful. They then used their influence over politicians and regulators, and their vast resources, to skew regulation in their favor.

The fight over net neutrality, to name one example, demonstrates it well.

"Guess who lobbied for that? It's a simple guess -- the people who benefited from it, the ISP's [internet service providers]. And they are already charging outrageous prices, twice as high [as] any other developed country," Philippon says.

This growing concentration of power in the hands of a few has affected everything and everyone. It has inflated prices because consumers have fewer options. Wages are stagnant because less competition means firms don't have to fight over workers. Financial investment in new machinery and technology has plummeted because when companies have fewer competitors they lose the incentive to invest and improve. It has driven CEO compensation up, and workers' compensation down. It has caused a spike in inequality, which in turn has ignited social unrest.

If all of this is too much to wrap your head around, Philippon puts a price tag on it: $5,000 per year. That's the price the median American household pays every year for the lost competition. That's the cost of the United States becoming a Monopoly Land.

How did this happen? According to Philippon, it's a story with two threads. The European side of this story happened almost by mistake. The American side, on the contrary, was no coincidence.

When the European Union was formed in the early 1990s, there was a lot of suspicion between the member states, namely France and Germany. (Two World Wars tend to have that effect.) This mistrust birthed pan-European regulators who enjoyed an unprecedented amount of freedom, more powerful than any of the member countries' governments.

"We did that mostly because we didn't really trust each other very much," he says. Now, 20 years later, "it turns out that this system we created is just a lot more resilient towards lobbying and bad influences than we thought."

At the same time in the United States, the exact opposite was happening. Adopting a free-market approach, regulators and legislators chose not to intervene. They didn't block mergers and acquisitions, and let big companies get bigger.

This created a positive feedback loop: As companies grew stronger, the regulators got weaker, and more dependent on the companies they are supposed to regulate. Tens of millions of dollars were channeled into lobbying. The Supreme Court's Citizens United decision gave corporate money even more political influence.

At some point, big companies started using regulation itself to prevent new competitors from entering the market.

The result wasn't free markets, but "the opposite -- market capture," says Philippon, referring to a situation in which the regulator is so weak it depends completely on the companies it regulates to design regulation.

Philippon is not the only one who's making these claims. A group of economists from the University of Chicago Booth School of Business holds a similar view. They are called Neo-Brandeisian, after the late Justice Louis Brandeis, who, a century ago, fought to broaden antitrust laws. They believe the big tech companies, for example, managed to rig the system, and fly under current antitrust regulation. They think it is time to break them apart.

But not everyone agrees with Philippon's narrative or his conclusions. Economists like Edward Conard, author of "The Upside of Inequality," thinks Philippon's claim that big companies are evidence of less competition is upside down. According to his criticism, it's exactly the opposite: These companies became big and powerful because they innovate and give a lot of value to consumers. He also argues that the conclusion that Europe is more competitive and innovative than the United States is preposterous, given that the biggest tech companies are American, not European.

Philippon addresses this counterclaim in his book. The United States is one giant market of English speakers. Theoretically, if you have a good idea for a new product and you can finance it, you have more than 300 million potential users on day one. In the EU, on the other hand, there are 28 countries, with residents who speak 24 different languages. It's not as simple.

Philippon, who by the age of 40 was named one of the top 25 promising economists by the International Monetary Fund, also differentiates himself from the Chicago school of thought in one important way: He's not dogmatic, he's pragmatic. Instead of a one-size-fits-all solution to the problem, he suggests a more nuanced approach. This is exactly what makes his case both unique and somewhat tricky to grasp. His approach is neither right nor left.

"The idea that free markets and government intervention are opposites, that's bogus. So half of me agrees with the Chicago School and half disagrees," he says.

"But if you think that you can get to a free market without any scrutiny by the government, that's crazy. That's simply untrue empirically. We need to make entry easier to increase competition, that's the objective," he says. "And the way to do so sometimes means more government intervention."

OK, but how do you do that? According to Philippon, each case is different.

"In some cases it will be by more intervention. Like maybe force Facebook to break from WhatsApp. And sometimes it will be by less intervention. Kill a bunch of regulations and requirements for small companies," he says.

The first idea, at least, has caught a lot of public attention during the last year, and has been a talking point of the presidential campaigns of Senators Bernie Sanders and Elizabeth Warren. Facebook's CEO Mark Zuckerberg was recorded saying that if Warren wins, it will "suck for us." Warren's plan for the big tech companies, for example, includes "reversing mergers," which means uncoupling WhatsApp and Instagram from Facebook. Her plan would also forbid Amazon being both a marketplace and a vendor at the same time.

But can any of these interventions actually happen? And if so, what would they mean for American consumers? Those are more complicated questions.

If big tech companies were broken up, Philippon estimates that the average American consumer won't be affected financially.

"Since people don't pay these companies directly, it won't change the bottom line for the middle class, it won't have a big impact on people's disposable income," he says.

What would have a tremendous impact on Americans' lives and income is to keep on going beyond the big tech companies. "We should go after the big ticket items -- telecom, transport, energy, and healthcare. That's where you want action, but there is much less bipartisan support for that," he says.

Something similar to the French telecom revolution is still far from happening in the United States, but the fact that the 2020 campaign is already pushing competition-promoting ideas back into the public discourse is a reason for cautious optimism, according to Philippon. Nevertheless, he warns, we should not let this mild optimism mislead us.

"Free markets are like a public good: It is in nobody's interest to protect them. Consumers are too dispersed and businesses love monopolies," he says. "So to take free markets for granted, that's just stupid."

(Shaul Amsterdamski is senior economics editor
for Kan, Israel's public broadcasting corporation.)

(Hmmm. Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service.
There's no competitive offering in our town.)

RC (Ron) Weakley said in reply to Fred C. Dobbs... , December 04, 2019 at 10:16 AM
"...Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service..."

[I got the same information from the service tech doing the annual clean and test on my propane fireplace insert yesterday, in reference to his parents though. They were on Verizon Fios for cable. He thought they should dump cable for a web-TV solution and just use cell phones. Their bill was over $400/month. Mine is a little over $200/month for the same service, which in both cases includes land line. In my zip code Verizon does not bundle Fios with mobile. The only difference that I know is that we have neither any premium channels nor DVR boxes and I assume that his parents must have both to run up a bill that high. When we pony up for Fios Gb, then at least for three years our bill will fall below $100/month, then return to a higher monthly yet if we do not take another new contract after that upgrade contract ends. Verizon only makes new contracts when new services are added or upgraded. Customers get next to no benefit for loyalty/retention. We have both Verizon and Comcast available in our area. I have had both in my present home at different times, but hate Comcast for failures on their part to provide tall vehicle clearance to pass down my driveway until forced to do so by the power company whose poles they must use and for a duplicate billing error where they billed me for two separate addresses and put me into collections for the one that I never resided at since I never saw that bill or knew of it prior to the first collections call.]

Fred C. Dobbs said in reply to RC (Ron) Weakley... , December 06, 2019 at 11:32 AM
(Bernie to the rescue!)

Bernie Sanders unveils plan to boost broadband
access, break up internet and cable titans
https://cnb.cx/34TzaQw
CNBC - Jacob Pramuk - Dec 6

Bernie Sanders unveiled a plan Friday to expand broadband internet access as part of a push to boost the economy and reduce corporate power over Americans.

In his sprawling "High-Speed Internet for All" proposal, the Vermont senator and Democratic presidential candidate calls to treat internet like a public utility. His campaign argues that the internet should not be a "price gouging profit machine" for companies such as Comcast, AT&T and Verizon.

Sanders' plan would create $150 billion in grants and aid for local and state governments to build publicly owned broadband networks as part of the Green New Deal infrastructure initiative. The total would mark a massive increase over current funding for broadband development initiatives. The proposal would also break up what the campaign calls "internet service provider and cable monopolies," stop service providers from offering content and end what it calls "anticompetitive mergers."

Sanders and his rivals for the 2020 Democratic presidential nomination have pushed to boost high-speed internet access for rural and low-income Americans, saying it has become a necessity to succeed in school and business. The self-proclaimed democratic socialist has unveiled numerous plans to root out corporate influence as he runs near the top of a jammed primary field. ...

im1dc -> Fred C. Dobbs... , December 04, 2019 at 05:07 PM
Aa excellent article that brings no new ideas to the debate but updates the debate to today.

One thing economist Thomas Philippon did not mention is that voters must turn out the elected and get new ones who will vote to create more and vigorous competition instead of oligopoly.

That is in my Equality, frequently shared here:

Economics = Politics
and
Politics = Economics

[Dec 07, 2019] https://www.nytimes.com/2019/11/26/business/mariana-mazzucato.html

Notable quotes:
"... "There's a whole neoliberal agenda," she said, referencing the received free-market wisdom that cutting public budgets spurs economic growth. "And then the way that traditional theory has fomented it or not contested it -- there's been kind of a strange symbiosis between mainstream economic thinking and stupid policies." ..."
"... Dr. Mazzucato takes issue with many of the tenets of the neoclassical economic theory taught in most academic departments: its assumption that the forces of supply and demand lead to market equilibrium, its equation of price with value and -- perhaps most of all -- its relegation of the state to the investor of last resort, tasked with fixing market failure. She has originated and popularized the description of the state as an "investor of first resort," envisioning new markets and providing long-term, or "patient," capital at early stages of development. ..."
Dec 07, 2019 | www.nytimes.com

November 26, 2019

Meet the Leftish Economist With a New Story About Capitalism
Mariana Mazzucato wants liberals to talk less about the redistribution of wealth and more about its creation. Politicians around the world are listening.
By Katy Lederer

Mariana Mazzucato was freezing. Outside, it was a humid late-September day in Manhattan, but inside -- in a Columbia University conference space full of scientists, academics and businesspeople advising the United Nations on sustainability -- the air conditioning was on full blast.

For a room full of experts discussing the world's most urgent social and environmental problems, this was not just uncomfortable but off-message. Whatever their dress -- suit, sari, head scarf -- people looked huddled and hunkered down. At a break, Dr. Mazzucato dispatched an assistant to get the A.C. turned off. How will we change anything, she wondered aloud, "if we don't rebel in the everyday?"

Dr. Mazzucato, an economist based at University College London, is trying to change something fundamental: the way society thinks about economic value. While many of her colleagues have been scolding capitalism lately, she has been reimagining its basic premises. Where does growth come from? What is the source of innovation? How can the state and private sector work together to create the dynamic economies we want? She asks questions about capitalism we long ago stopped asking. Her answers might rise to the most difficult challenges of our time.

In two books of modern political economic theory -- "The Entrepreneurial State" (2013) and "The Value of Everything" (2018) -- Dr. Mazzucato argues against the long-accepted binary of an agile private sector and a lumbering, inefficient state. Citing markets and technologies like the internet, the iPhone and clean energy -- all of which were funded at crucial stages by public dollars -- she says the state has been an underappreciated driver of growth and innovation. "Personally, I think the left is losing around the world," she said in an interview, "because they focus too much on redistribution and not enough on the creation of wealth."

Her message has appealed to an array of American politicians. Senator Elizabeth Warren, Democrat of Massachusetts and a presidential contender, has incorporated Dr. Mazzucato's thinking into several policy rollouts, including one that would use "federal R & D to create domestic jobs and sustainable investments in the future" and another that would authorize the government to receive a return on its investments in the pharmaceutical industry. Dr. Mazzucato has also consulted with Representative Alexandria Ocasio-Cortez, Democrat of New York, and her team on the ways a more active industrial policy might catalyze a Green New Deal.

Even Republicans have found something to like. In May, Senator Marco Rubio of Florida credited Dr. Mazzucato's work several times in "American Investment in the 21st Century," his proposal to jump-start economic growth. "We need to build an economy that can see past the pressure to understand value-creation in narrow and short-run financial terms," he wrote in the introduction, "and instead envision a future worth investing in for the long-term."

Formally, the United Nations event in September was a meeting of the leadership council of the Sustainable Development Solutions Network, or S.D.S.N. It's a body of about 90 experts who advise on topics like gender equality, poverty and global warming. Most of the attendees had specific technical expertise -- Dr. Mazzucato greeted a contact at one point with, "You're the ocean guy!" -- but she offers something both broad and scarce: a compelling new story about how to create a desirable future.

'Investor of first resort'

Originally from Italy -- her family left when she was 5 -- Dr. Mazzucato is the daughter of a Princeton nuclear physicist and a stay-at-home mother who couldn't speak English when she moved to the United States. She got her Ph.D. in 1999 from the New School for Social Research and began working on "The Entrepreneurial State" after the 2008 financial crisis. Governments across Europe began to institute austerity policies in the name of fostering innovation -- a rationale she found not only dubious but economically destructive.

"There's a whole neoliberal agenda," she said, referencing the received free-market wisdom that cutting public budgets spurs economic growth. "And then the way that traditional theory has fomented it or not contested it -- there's been kind of a strange symbiosis between mainstream economic thinking and stupid policies."

Dr. Mazzucato takes issue with many of the tenets of the neoclassical economic theory taught in most academic departments: its assumption that the forces of supply and demand lead to market equilibrium, its equation of price with value and -- perhaps most of all -- its relegation of the state to the investor of last resort, tasked with fixing market failure. She has originated and popularized the description of the state as an "investor of first resort," envisioning new markets and providing long-term, or "patient," capital at early stages of development.

In important ways, Dr. Mazzucato's work resembles that of a literary critic or rhetorician as much as an economist. She has written of waging what the historian Tony Judt called a "discursive battle," and scrutinizes descriptive terms -- words like "fix" or "spend" as opposed to "create" and "invest" -- that have been used to undermine the state's appeal as a dynamic economic actor. "If we continue to depict the state as only a facilitator and administrator, and tell it to stop dreaming," she writes, "in the end that is what we get."

As a charismatic figure in a contentious field that does not generate many stars -- she was recently profiled in Wired magazine's United Kingdom edition -- Dr. Mazzucato has her critics. She is a regular guest on nightly news shows in Britain, where she is pitted against proponents of Brexit or skeptics of a market-savvy state.

Alberto Mingardi, an adjunct scholar at the libertarian Cato Institute and director general of Istituto Bruno Leoni, a free-market think tank, has repeatedly criticized Dr. Mazzucato for, in his view, cherry-picking her case studies, underestimating economic trade-offs and defining industrial policy too broadly. In January, in an academic piece written with one of his Cato colleagues, Terence Kealey, he called her "the world's greatest exponent today of public prodigality."

Her ideas, though, are finding a receptive audience around the world. In the United Kingdom, Dr. Mazzucato's work has influenced Jeremy Corbyn, leader of the Labour Party, and Theresa May, a former Prime Minister, and she has counseled the Scottish leader Nicola Sturgeon on designing and putting in place a national investment bank. She also advises government entities in Germany, South Africa and elsewhere. "In getting my hands dirty," she said, "I learn and I bring it back to the theory."

The 'Mission Muse'

During a break at the United Nations gathering, Dr. Mazzucato escaped the air conditioning to confer with two colleagues in Italian on a patio. Tall, with a muscular physique, she wore a brightly colored glass necklace that has become something of a trademark on the economics circuit. Having traveled to five countries in eight days, she was fighting off a cough.

"In theory, I'm the 'Mission Muse,'" she joked, lapsing into English. Her signature reference is to the original mission to the moon -- a state-spurred technological revolution consisting of hundreds of individual feeder projects, many of them collaborations between the public and private sectors. Some were successes, some failures, but the sum of them contributed to economic growth and explosive innovation.

Dr. Mazzucato's platform is more complex -- and for some, controversial -- than simply encouraging government investment, however. She has written that governments and state-backed investment entities should "socialize both the risks and rewards." She has suggested the state obtain a return on public investments through royalties or equity stakes, or by including conditions on reinvestment -- for example, a mandate to limit share buybacks.

Emphasizing to policymakers not only the importance of investment, but also the direction of that investment -- "What are we investing in?" she often asks -- Dr. Mazzucato has influenced the way American politicians speak about the state's potential as an economic engine. In her vision, governments would do what so many traditional economists have long told them to avoid: create and shape new markets, embrace uncertainty and take big risks.

Inside the conference, the news was uniformly bleak. Pavel Kabat, the chief scientist of the World Meteorological Organization, lamented the breaking of global temperature records and said that countries would have to triple their current Paris-accord commitments by 2030 to have any hope of staying below a critical warming threshold. A panel on land use and food waste noted that nine species account for two-thirds of the world's crop production, a dangerous lack of agricultural diversity. All the experts appeared dismayed by what Jeffrey Sachs, the S.D.S.N.'s director, described as the "crude nationalism" and "aggressive anti-globalization" ascendant around the world.

"We absolutely need to change both the narrative, but also the theory and the practice on the ground," Dr. Mazzucato told the crowd when she spoke on the final expert panel of the day. "What does it mean, actually, to create markets where you create the demand, and really start directing the investment and the innovation in ways that can help us achieve these goals?"

Earlier in the day, she pointed at an announcement on her laptop. She had been nominated for the first Not the Nobel Prize, a commendation intended to promote "fresh economic thinking." "Governments have woken up to the fact the mainstream way of thinking isn't helping them," she said, explaining her appeal to politicians and policymakers. A few days later, she won. Reply Thursday, November 28, 2019 at 12:05 PM

[Dec 06, 2019] The Myth of Shareholder Primacy by Sahil Jai Dutta

Notable quotes:
"... "Fifty years of shareholder primacy," wrote the Financial Times, "has fostered short-termism and created an environment of popular distrust of big business." ..."
"... The rise of stock options to compensate corporate managers entrenched shareholder value by aligning the interests of managers and shareholders. Companies began sacrificing productive investments, environmental protections, and worker security to ensure shareholder returns were maximised. The fear of stock market verdicts on quarterly reports left them no choice. ..."
"... This account fits a widespread belief that financiers and rentiers mangled the postwar golden era of capitalism. More importantly, it suggests a simple solution: liberate companies from the demands of shareholders. Freed from the short-term pursuit of delivering shareholder returns, companies could then return to long-term plans, productive investments, and higher wages. ..."
"... In the 1960s, a group of firms called the conglomerates were pioneering many of the practices that later became associated with the shareholder revolution: aggressive mergers, divestitures, Leverage buy-outs (LBOs), and stock repurchasing. ..."
"... These firms, such as Litton Industries, Teledyne and LTV revolutionised corporate strategy by developing new techniques to systematically raise money from financial markets. They wheeled and dealed their divisions and used them to tap financial markets to finance further predatory acquisitions. Instead of relying on profits from productive operations, they chased speculative transactions on financial markets to grow. ..."
"... With fortunes to be made and lost, no manager could ignore the stock market. They became increasingly concerned with their position on financial markets. It was in this context that corporate capitalism first spoke of the desire to 'maximise shareholder value'. While sections of the corporate establishment were put on the defensive, the main reason for this was not that shareholders imposed their preferences on management. Instead, it was competitor managers using the shareholder discourse as a resource to expand and gain control over other firms. Capital markets became the foundation of a new form of financialised managerial power. ..."
"... Third, the notion of shareholder primacy helped to offload managerial responsibility. An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice. Managers lamented the fact they had no choice but to disregard workers and other stakeholders because of shareholder power. Rhetorically, shareholders were deemed responsible for corporate problems. Yet in practice, managers, more often than not, enrolled shareholders into their own projects, using the newly-formed alliance with shareholders to pocket huge returns for themselves. ..."
"... Amorphous? Anonymous? Anybody who faced one of Milken's raiders, or paid Icahn's Greenmail, would disagree. Nelson Putz, er, Peltz just forced P&G to start eating into the foundation of the business to feed his greed. There's nothing amorphous or anonymous about activist shareholders, especially when they take over a company and start carving it up like a Thanksgiving turkey. ..."
"... Corporations are artificial creations of the state. They exist in their current form under a complex series of laws and regulations, but with certain privileges, such as Limited Liability Corporations. It is assumed that these creatures will enhance economic activity if they are given these privileges, but there is no natural law, such as gravity, that says these laws and regulations need to exist in their current form. They can be changed at will be legislatures. ..."
"... The semantics of "shareholder primacy" are problematic. The word "shareholder" in this formula echoes the kind problems that whirl around a label like "farmer". ..."
"... I believe "shareholder primacy" is just one of many rhetorical tools used to argue for the mechanisms our Elites constructed so they could loot Corporate wealth. There is no misunderstanding involved. ..."
"... This fits within a Marxist analysis as the material conditions spurred the ideological justifications of the conditions, not the ideology spurring the conditions. ..."
"... I think about stock markets as separate from companies and I'm wrong. Each of the stock exchanges I have heard of started off when 4-5 local companies invested a few thousand each in renting a building and a manager to run an exchange hoping it would attract investment, promote their shares and pay for itself. ..."
Nov 06, 2019 | www.nakedcapitalism.com

By Sahil Jai Dutta, a lecturer in political economy at the University of Goldsmiths, London and Samuel Knafo, a Senior Lecturer in the Department of International Relations at the University of Sussex. Originally published at the PERC blog

In the late 1960s, a young banker named Joel Stern was working on a project to transform corporate management. Stern's hunch was that the stock market could help managers work out how their strategies were performing. Simply, if management was effective, demand for the firm's stock would be high. A low price would imply bad management.

What sounds obvious now was revolutionary at the time. Until then profits were the key barometer of success. But profits were a crude measure and easy to manipulate. Financial markets, Stern felt, could provide a more precise measure of the value of management because they were based on more 'objective' processes, beyond the firm's direct control. The value of shares, he believed, represented the market's exact validation of management. Because of this, financial markets could help managers determine what was working and what was not.

In doing this, Stern laid the foundation for a 'shareholder value' management that put financial markets at the core of managerial strategy.

Stern would probably never have imagined that these ideas would 50 years later be castigated as a fundamental threat to the future of liberal capitalism. In recent times everyone from the Business Roundtable group of global corporations, to the Financial Times , to the British Labour Party has lined up to condemn the shareholder ideology.

"Fifty years of shareholder primacy," wrote the Financial Times, "has fostered short-termism and created an environment of popular distrust of big business."

It is not the first time Stern's creation has come under fire. A decade ago Jack Welsh, former CEO of General Electric declared shareholder value " probably the dumbest idea in the world ". And 15 years before then, British political commentator Will Hutton, among others, found paperback fame with his book The State We're In preaching much the same message.

To critics, the rise of shareholder value is a straightforward story , that has been told over and over again. Following a general crisis of postwar profitability in the late 1970s, corporate managers came under fire from disappointed shareholders complaining about declining returns. Shareholder revolts forced managers to put market capitalisation first. The rise of stock options to compensate corporate managers entrenched shareholder value by aligning the interests of managers and shareholders. Companies began sacrificing productive investments, environmental protections, and worker security to ensure shareholder returns were maximised. The fear of stock market verdicts on quarterly reports left them no choice.

This account fits a widespread belief that financiers and rentiers mangled the postwar golden era of capitalism. More importantly, it suggests a simple solution: liberate companies from the demands of shareholders. Freed from the short-term pursuit of delivering shareholder returns, companies could then return to long-term plans, productive investments, and higher wages.

In two recent articles , we have argued that this critique of shareholder value has always been based on a misunderstanding. Stern and the shareholder value consultants did not aim to put shareholders first. They worked to empower management. Seen in this light, the history of the shareholder value ideology appears differently. And it calls for alternative political responses.

To better understand Stern's ideas, it is important to grasp the broader context in which he was writing. In the 1960s, a group of firms called the conglomerates were pioneering many of the practices that later became associated with the shareholder revolution: aggressive mergers, divestitures, Leverage buy-outs (LBOs), and stock repurchasing.

These firms, such as Litton Industries, Teledyne and LTV revolutionised corporate strategy by developing new techniques to systematically raise money from financial markets. They wheeled and dealed their divisions and used them to tap financial markets to finance further predatory acquisitions. Instead of relying on profits from productive operations, they chased speculative transactions on financial markets to grow.

These same tactics were later borrowed by the 1980s corporate raiders, many of which were in fact old conglomerators from the 1960s. The growing efficiency with which these raiders captured undervalued firms on the stock market and ruthlessly sold off their assets to finance further acquisitions put corporate America on alert.

With fortunes to be made and lost, no manager could ignore the stock market. They became increasingly concerned with their position on financial markets. It was in this context that corporate capitalism first spoke of the desire to 'maximise shareholder value'. While sections of the corporate establishment were put on the defensive, the main reason for this was not that shareholders imposed their preferences on management. Instead, it was competitor managers using the shareholder discourse as a resource to expand and gain control over other firms. Capital markets became the foundation of a new form of financialised managerial power.

These changes made the approach of management consultants championing shareholder value attractive. The firm founded by Stern and his business partner Bennett Stewart III took advantage of the situation. They sold widely their ideas about financial markets as a guideline for corporate strategy to firms looking to thrive in this new environment.

As the discourse and tools of shareholder value took hold, they served three distinct purposes. First, they provided accounting templates for managerial strategies and a means to manage a firm's standings on financial markets. The first and most famous metric for assessing just how much value was being created for shareholders was one Stern himself helped develop, Economic Value Added (EVA).

Second, they became a powerful justification for the idea that managers should be offered share options. This was in fact an old idea floated in the 1950s by management consultants such as Arch Patton of McKinsey as a means to top-up relatively stagnant managerial pay. Yet it was relaunched in this new context as part of the promise to 'align the interests of managers with shareholders.' Stock options helped managerial pay skyrocket in the 1990s, a curious fact for those who believe that managers were 'disciplined' by shareholders.

Third, the notion of shareholder primacy helped to offload managerial responsibility. An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice. Managers lamented the fact they had no choice but to disregard workers and other stakeholders because of shareholder power. Rhetorically, shareholders were deemed responsible for corporate problems. Yet in practice, managers, more often than not, enrolled shareholders into their own projects, using the newly-formed alliance with shareholders to pocket huge returns for themselves.

Though shareholder demands are now depicted as the problem to be solved, the same reformist voices have in the past championed shareholders as the solution to corporate excesses. This was the basis for the hope around the ' shareholder spring ' in 2012, or the recent championing of activist shareholders as ' labour's last weapon' .

By challenging the conventional narrative, we have emphasised how it is instead the financialisation of managerialism , or the way in which corporations have leveraged their operations on financial markets, that has characterised the shareholder value shift. Politically this matters.

If shareholder demands are understood to be the major problem in corporate life, then the solution is to grant executives more space. Yet the history of shareholder value tells us that managers have been leading the way in corporate governance. They do not need shielding from shareholders or anyone else and instead need to be made accountable for their decisions. Critiques of shareholder primacy risk muddying the responsibility of managers who have long put their own interests first. Perhaps the reason why executives are now so ready to abandon shareholder primacy, is because it never really existed.


vlade , November 6, 2019 at 5:11 am

Uber. WeWork. Theranos. I rest my case.

notabanktoadie , November 6, 2019 at 5:51 am

Imagine if all corporations were equally owned by the entire population? Then shareholder primacy would just be representative democracy, no?

But, of course, corporations are not even close to being equally owned by the entire population and part of the blame must lie with government privileges for private credit creation whereby the need to share wealth and power with the entire population is bypassed – in the name of "efficiency", one might suppose.

But what good is the "efficient" creation of wealth if it engenders unjust and therefore dangerous inequality and levies noxious externalities?

Michael , November 6, 2019 at 7:59 am

"An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice."

Amorphous? Anonymous? Anybody who faced one of Milken's raiders, or paid Icahn's Greenmail, would disagree. Nelson Putz, er, Peltz just forced P&G to start eating into the foundation of the business to feed his greed. There's nothing amorphous or anonymous about activist shareholders, especially when they take over a company and start carving it up like a Thanksgiving turkey.

Synoia , November 6, 2019 at 8:00 am

Shareholder primacy or Creditor Primacy? Creditors, or bond holders, appear to be the more powerful. Shareholders have no legal recourse to protect their "ownership." Bondholders do have legal recourse. Either way, many corporations more serve up their than serve their customers and the general public. There is this belief that if a corporation is profitable, that's good but does not include a public interest (for example Monsanto and Roundup.)

vlade , November 6, 2019 at 9:48 am

Managers used to fear the creditors more than shareholders, that's very much true.

But that has gone out of the window recently, as debt investors just chase return, so it's seller's world, and few of them (debt investors) want to take losses as they are much harder to recoup than before. So extend and pretend is well and alive.

In other words, one of the byproducts of QE is that the company management fears no-one, and is more than happy to do whatever they want.

The problem is the agency. If we assume that we want publicly traded companies (which IMO is not a given), the current incentives are skewed towards management paying themselves.

The problem with things like supervisory boards, even if they have high worker representation, is that those are few individuals, and often can be (directly or indirectly) corrupted by the management.

The "shares" incentive is just dumb, at least in the way it's currently structured. It literally gives only upside, and often even realisable in short/medium term.

d , November 6, 2019 at 4:23 pm

And thats how we got Boeing and PG&E. Just don't think thats the entire list, don't think there is enough room for that

rd , November 6, 2019 at 5:57 pm

Corporations are artificial creations of the state. They exist in their current form under a complex series of laws and regulations, but with certain privileges, such as Limited Liability Corporations. It is assumed that these creatures will enhance economic activity if they are given these privileges, but there is no natural law, such as gravity, that says these laws and regulations need to exist in their current form. They can be changed at will be legislatures.

This is why I despise the Citizens United decision which effectively gives these artificial creations the same rights as people. I don't believe that Thomas Jefferson would have found that to be "a self-evident truth." I think that Citizens United will be regarded as something akin to the Dred Scott decision a century from now.

Shareholder primacy is an assumption that hasn't been challenged over the past couple of decades, but can be controlled by society if it so desires.

Jeremy Grimm , November 6, 2019 at 11:12 am

The semantics of "shareholder primacy" are problematic. The word "shareholder" in this formula echoes the kind problems that whirl around a label like "farmer".

A shareholder is often characterized in economics texts as an individual who invests money hoping to receive back dividends and capital gains in the value and valuation of a company as it earns income and grows over time. Among other changes -- changes to the US tax laws undermined these quaint notions of investment, and shareholder.

The coincident moves for adding stock options to management's pay packet [threats of firing are supposed to encourage the efforts of other employees -- why do managers needs some kind of special encouragement?], legalizing share buybacks, and other 'financial innovations' -- worked in tandem to make investment synonymous with speculation and shareholders synonymous with speculators, Corporate raiders, and the self-serving Corporate looters replacing Corporate management.

This post follows a twisting road to argue previous "critique of shareholder value has always been based on a misunderstanding" and arrives at a new critique of shareholder value "challenging the conventional narrative." This post begins by sketching Stern's foundation for 'shareholder value' with the assertion imputed to him: "if management was effective, demand for the firm's stock would be high. A low price would imply bad management." The post then claims "What sounds obvious now was revolutionary at the time." But that assertion does not sound at all obvious to me. In terms of the usual framing of the all-knowing Market the assertion sounds like a tautology, built on a shaky ground of Neolilberal economic religious beliefs.

I believe "shareholder primacy" is just one of many rhetorical tools used to argue for the mechanisms our Elites constructed so they could loot Corporate wealth. There is no misunderstanding involved.

xkeyscored , November 6, 2019 at 12:07 pm

"But that assertion does not sound at all obvious to me."

I think you're severely understating this. I'd call it total [family blogging family blog]. As you go on to imply, it takes an act of pure faith, akin to religious faith in Dawkins' sense of belief in the face of evidence to the contrary, to assume or assert this nonsense, except insofar as it's tautological – if the purpose of management is to have a high share price, then obviously the latter reflects the effectiveness of the former.

Susan the Other , November 6, 2019 at 1:06 pm

Well, we're all stakeholders now. There probably isn't much value to merely being a shareholder at this point. First let's ask for a viable definition of "value" because it's pretty hard to financialize an undefined "value" and nobody can financialize an empty isolated thing like the word "management". Things go haywire.

What we can do with this seed of an idea is finance the preservation and protection of some defined value. And we can, in fact, leverage a healthy planet until hell freezes over. No problem.

PKMKII , November 6, 2019 at 2:07 pm

This fits within a Marxist analysis as the material conditions spurred the ideological justifications of the conditions, not the ideology spurring the conditions.

mael colium , November 6, 2019 at 5:15 pm

Easy to bust this open by legislating against limited liability. Corporates were not always limited liability, but it was promoted as a means to encourage formation of risky businesses that would otherwise never develop due to risk averse owners or managers. This was promoted as a social compact, delivering employment and growth that would otherwise be unattainable. Like everything in life, human greed overcomes social benefits.

Governments world wide would and should step up and regulate to regain control, rather than fiddling at the margins with corporate governance regulation. They won't, because powerful vested interests will put in place those politicians who will do their bidding. Another nail in the democracy coffin. The only solution will be a cataclysmic event that unites humanity.

RBHoughton , November 7, 2019 at 12:30 am

I think about stock markets as separate from companies and I'm wrong. Each of the stock exchanges I have heard of started off when 4-5 local companies invested a few thousand each in renting a building and a manager to run an exchange hoping it would attract investment, promote their shares and pay for itself.

I remember when one of the major components of the Hong Kong Exchange, Hutchison, had a bad year and really needed some black magic to satisfy the shareholders, the Deputy Chairman abandoned his daytime job and spent trading hours buying and selling for a fortnight to contribute something respectable for the annual accounts. Somebody paid and never knew it.

This was at the start of creative accounting and the 'anything goes' version of capitalism that the article connects with Litton Industries, Teledyne and LTV but was infecting the entire inner circle of the money.

[Dec 02, 2019] The Fake Myth of American Meritocracy by Barbara Boland

Highly recommended!
Notable quotes:
"... As part of the scam, parents would "donate" money to a fake charity run by Singer. The funds would then be laundered to either pay off an SAT or ACT administrator to take the exams or bribe an employee in college athletics to name the rich, non-athlete children as recruits. Virtually every scenario relied on multiple layers of corruption, all of which eventually allowed wealthy students to masquerade as "deserving" of the merit-based college slots they paid up to half a million dollars to "qualify" for. ..."
"... When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it. ..."
"... The conclusion of the study? We live in an oligarchy: ..."
Mar 15, 2019 | www.theamericanconservative.com

The college bribery scandal reveals an ugly truth: our society is unjust, dominated by a small elite. Actress Lori Loughlin, who has been implicated in the Operation Varsity Blues scandal. Credit: Featureflash Photo Agency/Shutterstock The most destructive and pervasive myth in America today is that we live in a meritocracy. Our elites, so the myth goes, earned their places at Yale and Harvard, on Wall Street and in Washington -- not because of the accident of their birth, but because they are better, stronger, and smarter than the rest of us. Therefore, they think, they've "earned" their places in the halls of power and "deserve" to lead.

The fervor with which so many believe this enables elites to lord over those worse off than they are. On we slumber, believing that we live in a country that values justice, instead of working towards a more equitable and authentically meritocratic society.

Take the Operation Varsity Blues scandal. On Tuesday, the FBI and federal prosecutors announced that 50 people had been charged in, as Sports Illustrated put it , "a nationwide college admissions scheme that used bribes to help potential students cheat on college entrance exams or to pose as potential athletic recruits to get admitted to high-profile universities." Thirty-three parents, nine collegiate coaches, two SAT/ACT exam administrators, an exam proctor, and a college athletics administrator were among those charged. The man who allegedly ran the scheme, William Rick Singer, pled guilty to four charges of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the U.S., and obstruction of justice.

As part of the scam, parents would "donate" money to a fake charity run by Singer. The funds would then be laundered to either pay off an SAT or ACT administrator to take the exams or bribe an employee in college athletics to name the rich, non-athlete children as recruits. Virtually every scenario relied on multiple layers of corruption, all of which eventually allowed wealthy students to masquerade as "deserving" of the merit-based college slots they paid up to half a million dollars to "qualify" for.

Cheating. Bribery. Lying. The wealthy and privileged buying what was reserved for the deserving. It's all there on vivid display. Modern American society has become increasingly and banally corrupt , both in the ways in which "justice" is meted out and in who is allowed to access elite education and the power that comes with it.

The U.S. is now a country where corruption is rampant and money buys both access and outcomes. We pretend to be better than Russia and other oligarchies, but we too are dominated by a rich and powerful elite.

The average American citizen has very little power, as a 2014 study by Princeton University found. The research reviewed 1,779 public policy questions asked between 1981 and 2002 and the responses by different income levels and interest groups; then calculated the likelihood that certain policies would be adopted.

What they found came as no surprise: How to Fix College Admissions

A proposed policy change with low support among economically elite Americans (one-out-of-five in favor) is adopted only about 18 percent of the time, while a proposed change with high support (four-out-of-five in favor) is adopted about 45% of the time.

That's in stark contrast with policies favored by average Americans:

When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.

The conclusion of the study? We live in an oligarchy:

our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. [T]he preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.

The belief in the myth of merit hurts the smart kid with great grades who aced his SATs but was still rejected from Yale and Harvard. It hurts talented athletes who have worked their tails off for so many years. It hurts parents who have committed hundreds of school nights and weekends to their children. It hurts HR departments that believe degrees from Ivy League schools mean that graduates are qualified. It hurts all of us who buy into the great myth that America is a democratic meritocracy and that we can achieve whatever we want if only we're willing to expend blood, toil, sweat, and tears.

At least in an outright class system like the British Houses of Lords and Commons, there is not this farcical playacting of equal opportunity. The elites, with their privilege and titles, know the reason they are there and feel some sense of obligation to those less well off than they are. At the very least, they do not engage in the ritual pretense of "deserving" what they "earned" -- quite unlike those who descend on Washington, D.C. believing that they really are better than their compatriots in flyover country.

All societies engage in myth-making about themselves. But the myth of meritocracy may be our most pervasive and destructive belief -- and it mirrors the myth that anything like "justice" is served up in our courts.

Remember the Dupont heir who received no prison time after being convicted for raping his three-year-old daughter because the judge ruled that six-foot-four Robert Richards "wouldn't fare well in prison"? Or the more recent case of billionaire Jeffrey Epstein, who had connections to both Hillary Clinton and Donald Trump and faced a 53-page federal indictment for sex-trafficking over two dozens underage girls ? He received instead a sweetheart deal that concealed the extent of his crimes. Rather than the federal life imprisonment term he was facing, Epstein is currently on house arrest after receiving only 13 months in county jail. The lead prosecutor in that case had previously been reprimanded by a federal judge in another underage sex crimes case for concealing victim information, the Miami Herald reports .

While the rich are able to escape consequences for even the most horrific of crimes , the U.S. has the highest incarceration rate in the world. Approximately 7 million people were under some form of correctional control by the end of 2011, including 2.2 million who were detained in federal, state, and local prisons and jails. One in every 10 black men in his thirties is in prison or jail, and one out of three black men born in 2001 can expect to go to prison in their lifetimes.

While black people make up only 13 percent of the population, they make up 42 percent of death row and 35 percent of those who are executed . There are big racial disparities in charging, sentencing, plea bargaining, and executions, Department of Justice reviews have concluded, and black and brown people are disproportionately found to be innocent after landing on death row. The poor and disadvantaged thereby become grist for a system that cares nothing for them.

Despite all this evidence, most Americans embrace a version of the Calvinist beliefs promulgated by their forebears, believing that the elect deserve their status. We remain confident that when our children apply to college or are questioned by police , they will receive just and fair outcomes. If our neighbors' and friends' kids do not, then we assure ourselves that it is they who are at fault, not the system.

The result has been a gaping chasm through our society. Lives are destroyed because, rather than working for real merit-based systems and justice, we worship at the altar of false promises offered by our institutions. Instead we should be rolling up our sleeves and seeing Operation Varsity Blues for what it is: a call to action.

Barbara Boland is the former weekend editor of the Washington Examiner . Her work has been featured on Fox News, the Drudge Report, HotAir.com, RealClearDefense, RealClearPolitics, and elsewhere. She's the author of Patton Uncovered , a book about General Patton in World War II. Follow her on Twitter @BBatDC .

MORE FROM THIS AUTHOR

The GOP's Laughable Call for a Balanced Budget Amendment Congress's "One Spending Bill to Rule Them All" is a Debt-Fueled Disgrace Hide 11 comments 11 Responses to The Myth of American Meritocracy

Collin March 15, 2019 at 1:46 pm

If conservatives are going to dance the graves of Aunt Beckie, the backlash is going to be big. Sure this is a 'scandal' but it seems these parents weren't rich enough to bribe their kids in college the right way, like Trumps and Kushner, and probably slightly duped into going along with this scheme. (It appears the government got the ring leader to call all defendants to get evidence they participated in a crime.)

Just wait until the mug shot of Aunt Beckie is on the internet and Olivia Jade does 60 minutes doing teary eyed interview of how much she loves her mother. And how many parents are stress that their kids will struggle in the global competitive economy.

Fran Macadam , , March 15, 2019 at 1:52 pm
I fully recall the days of getting government computing contracts. Once a certain threshold was reached, you discovered you had to hire a "lobbyist," and give him a significant amount of money to dole out to various gatekeepers in the bureaucracy for your contracts to be approved. That was the end of our government contracts, and the end was hastened by the reaction to trying to complain about it.
prodigalson , , March 15, 2019 at 1:56 pm
Great article, well done. More of this please TAC.
Kurt Gayle , , March 15, 2019 at 2:17 pm
Thank you, Barbara Boland, for "The Myth of American Meritocracy" and for linking ("Related Articles" box) to the 2012 "The Myth of American Meritocracy" by Ron Unz, then publisher of the American Conservative.

The 26,000-word Ron Unz research masterpiece was the opening salvo in the nation-wide discussion that ultimately led to the federal court case nearing resolution in Boston.

"The Myth of American Meritocracy -- How corrupt are Ivy League admissions?" by Ron Unz, The American Conservative, Nov 28, 2012:

https://www.theamericanconservative.com/articles/the-myth-of-american-meritocracy/

Kurt Gayle , , March 15, 2019 at 2:18 pm
Barbara Boland "While black people make up only 13 percent of the population, they make up 42 percent of death row and 35 percent of those who are executed."

Ms. Boland: According to the US Department of Justice, African Americans [13 per cent of the population] accounted for 52.5% of all homicide offenders from 1980 to 2008.

JeffK , , March 15, 2019 at 2:46 pm
I agree with prodigalson. This is the type of article that TAC should uphold as a 'gold standard'. One reason I read, and comment on, TAC is that it offers thought provoking, and sometimes contrarian, articles (although the constant harping on transgender BS gets annoying).

America has always been somewhat corrupt. But, to borrow a phrase, wealth corrupts, and uber wealth corrupts absolutely.

As Warren Buffet says "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning".

I have said it before, and I will say it again. During the next severe financial recession, if the rich are protected and coddled and everybody else is left to fend for themselves the ARs will come out of the closets when the sheriff comes to take the house or the pickup truck. My sense is that average Americans have had enough.

Imagine if the digital transfer of money was abolished. Imagine if everybody had to have their money in a local bank instead of on an account in one of the major banks. Imagine if Americans saw, day after day, armored vehicles showing up at local banks to offload sacks of currency that went to only a few individual accounts.

Instead, the elites get their financial statements showing an ever increasing pile of cash at their disposal. They see it, but nobody else does. But, if everybody physically saw the river of wealth flowing to the elites, I believe things would change. Fast. Right now this transfer of wealth is all digital, hidden from the view of 99.99% of Americans. And the elites, the banking industry, and the wealth management cabal prefer it that way.

Mike N in MA , , March 15, 2019 at 2:49 pm
You said it sister. Great article.

I am amazed by the media coverage of this scandal. Was anyone actually under the impression that college admissions were on the level before these Hollywood bozos were caught red handed?

BDavi52 , , March 15, 2019 at 2:49 pm
What total silliness!

No, the meritocracy is not dead; it's not even dying. It is, in fact, alive and well and the absolute best alternative to any other method used to separate wheat from chaff, cream from milk, diamonds from rust.

What else is there that is even half as good?

Are merit-based systems perfect? Heck, no. They've never been perfect; they will never be perfect. They are administered by people and people are flawed. Not just flawed in the way Singer, and Huffman are flawed (and those individuals are not simply flawed, they're corrupt) but flawed in the everyday kind of sense. Yes, we all have tendencies, biases, preferences that will -- inevitably -- leak into our selection process, no matter how objectively strict the process may be structured, no matter how rigorously fair we try to be.

So the fact that -- as with most things -- we can find a trace of corruption here that fact is meaningless. We can find evidence of human corruption, venality, greed, sloth, lust, envy (all of the 7 Deadly Sins) pretty much everywhere. But if we look at the 20M students enrolled in college, the vast majority are successfully & fairly admitted through merit-based filtering systems (which are more or less rigorous) which have been in place forever.

Ms. Boland tells us (with a straight face, no less) that "The U.S. is now a country where corruption is rampant and money buys both access and outcomes." But what does that even mean?

Certainly money can buy access and certainly money can buy outcomes. But that's what money does. She might as well assert that money can buy goods and services, and lions and tigers and bears -- oh my! Of course it can. Equally networks can 'buy' access and outcomes (if my best friend is working as the manager for Adele, I'm betting he could probably arrange my meeting Adele). Equally success & fame can buy access and outcomes. I'm betting Adele can probably arrange a meeting with Gwen Stefani .and both can arrange a meeting with Tom Brady. So what? Does the fact that money can be used to purchase goods & services mean money or the use of money is corrupt or morally degenerate? No, of course not. In truth, we all leverage what we have (whatever that may be) to get what we want. That's how life works. But the fact that we all do that does not mean we are all corrupt.

But yes, corruption does exist and can usually be found, in trace amounts -- as I said -- pretty much everywhere.

So is it rampant? Can I buy my way into the NBA or the NFL? If I go to Clark Hunt and give him $20M and tell him I want to play QB for the Chiefs, will he let me? Can I buy my way into the CEO's position at General Electric, Apple, Microsoft, Google, Sprint, Verizon, General Motors, Toyota or any of the Fortune 500? Heck, can I even buy my way into the Governor's mansion? To become the Mayor of Chicago? Or the Police Commissioner? No -- these things are not possible. But what I can buy is my presence on the media stage.

What happens after cannot be purchased.

So no, by any measure, corruption is not rampant. And though many things are, in fact, for sale -- not everything is. And no matter how much money I give anyone, I'm never gonna QB the Chiefs or play for the Lakers.

She tells us, "we are dominated by a rich and powerful elite." No, we're not. Most of us live our lives making the choices we want to make, given the means that each of us has, without any interference from any so-called "elite". The "elite" didn't tell me where to go to school, or where to get a job, or how to do my job, or when to have kids, or what loaf of bread to buy, or what brand of beer tastes best, or where to go on the family vacation. No one did. The elite obviously did not tell us who to vote for in the last presidential election.

Of course one of the problems with the "it's the fault of the elite" is the weight given institutions by people like Ms.Boland. "Oh, lordy, the Elite used their dominating power to get a brainless twit of a daughter into USC". Now if my kid were cheated out of a position at USC because the Twit got in, I'd be upset but beyond that who really cares if a Twit gets an undergraduate degree from USC or Yale .or Harvard .or wherever. Some of the brightest people I've known earned their degrees at Easter PolyTechnic U (some don't even have college degrees -- oh, the horror!); some of the stupidest have Ivy League credentials. So what?

Only if you care about the exclusivity of such a relatively meaningless thing as a degree from USC, does gaming the exclusivity matter.

She ends with the exhortation: "The result has been a gaping chasm through our society. Lives are destroyed because, rather than working for real merit-based systems and justice, we worship at the altar of false promises offered by our institutions. Instead we should be rolling up our sleeves and seeing Operation Varsity Blues for what it is: a call to action."

To do what, exactly?

Toss the baby and the bathwater? Substitute lottery selection for merit? Flip a coin? What?
Again the very best method is and always will be merit-based. That is the incentive which drives all of us: the hope that if we work hard enough and do well enough, that we will succeed. Anything else is just a lie.

Yes, we can root out this piece of corruption. Yes, we can build better and more rigorously fair systems. But in the end, merit is the only game in town. Far better to roll-up our sleeves and simply buckle down, Winsocki. There isn't anything better.

Sid Finster , , March 15, 2019 at 2:52 pm
Gee, and people wonder why the rubes think that the system is gamed, why the dogs no longer want to eat the dog food.
Jim Jatras , , March 15, 2019 at 3:22 pm
"While black people make up only 13 percent of the population, they make up 42 percent of death row and 35 percent of those who are executed. There are big racial disparities in charging, sentencing, plea bargaining, and executions, Department of Justice reviews have concluded, and black and brown people are disproportionately found to be innocent after landing on death row. The poor and disadvantaged thereby become grist for a system that cares nothing for them."

So to what degree are these "disparities" "disproportionate" in light of actual criminal behavior? To be "proportionate," would we expect criminal behavior to correlate exactly to racial, ethnic, sex, and age demographics of society as a whole?

Put another way, if you are a victim of a violent crime in America, what are the odds your assailant is, say, an elderly, Asian female? Approximately zero.

Conversely, what are the odds your assailant is a young, black male? Rather high, and if you yourself are a young, black male, approaching 100 percent.

Pam , , March 15, 2019 at 3:42 pm

Mostly thumbs up to this article. But why you gotta pick on Calvinism at the end? Anyway, your understanding of Calvinism is entirely upside down. Calvinists believe they are elect by divine grace, and salvation is something given by God through Jesus, which means you can't earn it and you most assuredly don't deserve it. Calvinism also teaches that all people are made in the image of God and worthy of respect, regardless of class or status. There's no "version" of Calvinism that teaches what you claim.

[Dec 02, 2019] The Myth of American Meritocracy by Ron Unz

Notable quotes:
"... Battle Hymn of the Tiger Mother ..."
"... Wall Street Journal ..."
"... The Price of Admission ..."
"... And while I am not as focused on the poverty ve wealth dynamic. this century has revealed something very disappointing that you address. That the elites have done a very poor job of leading the ship of state, while still remaining in leadership belies such a bold hypocrisy in accountability, it's jarring. The article could actually be titled: "The Myth of the Best and the Brightest." ..."
"... They are teaching the elite how to drain all value from American companies, as the rich plan their move to China, the new land of opportunity. When 1% of the population controls such a huge portion of the wealth, patriotism becomes a loadstone to them. The elite are global. Places like Harvard cater to them, help train them to rule the world .but first they must remake it. ..."
"... In my high school, there were roughly 15 of us who had been advanced two years ahead in math. Of those, 10 were Jewish; only two of them had a 'Jewish' last name. In my graduate school class, half (7) are Jewish. None has a 'Jewish' last name. So I'm pretty dubious of the counting method that you use. ..."
"... Regarding the declining Jewish achievement, it looks like it can be primarily explained through demographics: "Intermarriage rates have risen from roughly 6% in 1950 to approximately 40–50% in the year 2000.[56][57] This, in combination with the comparatively low birthrate in the Jewish community, has led to a 5% decline in the Jewish population of the United States in the 1990s." ..."
"... Jewish surnames don't mean what they used to. And intermarriage rates are lowest among the low-performing and highly prolific Orthodox. ..."
"... A potentially bigger issue completely ignored by your article is how do colleges differentiate between 'foreign' students (overwhelmingly Asian) and American students. Many students being counted as "Asian American" are in reality wealthy and elite foreign "parachute kids" (an Asian term), dropped onto the generous American education system or into boarding schools to study for US entrance exams, qualify for resident tuition rates and scholarships, and to compete for "American" admissions slots, not for the usually limited 'foreign' admission slots. ..."
"... As some who is Jewish from the former Soviet Union, and who was denied even to take an entrance exam to a Moscow college, I am saddened to see that American educational admission process looks more and more "Soviet" nowadays. Kids are denied opportunities because of their ethnic or social background, in a supposedly free and fair country! ..."
"... Actually, Richard Feynman famously rejected genetic explanations of Jewish achievement (whether he was right or wrong to do so is another story), and aggressively resisted any attempts to list him as a "Jewish scientist" or "Jewish Nobel Prize winner." I am sure he would not cared in the slightest bit how many Jews were participating in the Physics Olympiad, as long as the quality of the students' work continued to be excellent. Here is a letter he wrote to a woman seeking to include him in a book about Jewish achievement in the sciences. ..."
"... It would be interesting to know how well "true WASPS" do in admissions. This could perhaps be estimated by counting Slavic and Italian names, or Puritan New England last names. I would expect this group to do almost as well as Jews (not quite as well, because their ability would be in the lower end of the Legacy group). ..."
"... The missing variable in this analysis is income/class. While Unz states that many elite colleges have the resources to fund every student's education, and in fact practice need-blind admissions, the student bodies are skewed towards the very highest percentile of the income and wealth distribution. SAT scores may also scale with parents' income as well. ..."
"... Having worked with folks from all manner of "elite" and not so elite schools in a technical field, the main conclusion I was able to draw was folks who went to "elite" colleges had a greater degree of entitlement. And that's it. ..."
"... My own position has always been strongly in the former camp, supporting meritocracy over diversity in elite admissions. ..."
"... The Reality of American Mediocrity ..."
"... The central test of fairness in any admissions system is to ask this simple question. Was there anyone admitted under that system admitted over someone else who was denied admission and with better grades and SAT scores and poorer ? If the answer is in the affirmative, then that system is unfair , if it is in the negative then the system is fair. ..."
"... Harvard ranks only 8th after Penn State in the production of undergrads who eventually get Doctorates in Science and Engineering. Of course Berkeley has the bragging rights for that kind of attribute. ..."
"... There is an excellent analysis of this article at The Occidental Observer by Kevin MacDonald, "Ron Unz on the Illusory American Meritocracy". The MSM is ignoring Unz's article for obvious reasons. ..."
"... Could it be that the goal of financial, rather than academic, achievement, makes many young people uninterested in competing in the science and math competitions sought out by the Asian students? I ..."
"... America never promised success through merit or equality. That is the American "dream." ..."
"... Anyone famliar with sociology and the research on social stratification knows that meritocracy is a myth; for example, if one's parents are in the bottom decile of the the income scale, the child has only a 3% chance to reach the top decile in his or her lifetime. In fact, in contrast to the Horatio Alger ideology, the U.S. has lower rates of upward mobility than almost any other developed country. Social classses exist and they tend to reproduce themselves. ..."
"... The rigid class structure of the the U.S. is one of the reasons I support progressive taxation; wealth may not always be inherited, but life outcomes are largely determined by the class position of one's parents. In this manner, it is also a myth to believe that wealth is an individual creation;most financially successful individuals have enjoyed the benefits of class privilege: good and safe schools, two-parent families, tutors, and perhaps most important of all, high expecatations and positive peer socialization (Unz never mentions the importants of peeer groups, which data show exert a strong causal unfluence on academic performance). ..."
"... And I would challenge Unz's assertion that many high-performing Asians come from impovershed backgrounds: many of them may undereport their income as small business owners. I believe that Asian success derives not only from their class background but their culture in which the parents have authority and the success of the child is crucual to the honor of the family. As they assimilate to the more individualist American ethos, I predict that their academic success will level off just as it has with Jews. ..."
"... All I can say is see a book: "Ivy League Fools and Felons"' by Mack Roth. Lots of them are kids of corrupt people in all fields. ..."
Dec 28, 2016 | www.unz.com
November 28, 2012 | The American Conservative •
Just before the Labor Day weekend, a front page New York Times story broke the news of the largest cheating scandal in Harvard University history, in which nearly half the students taking a Government course on the role of Congress had plagiarized or otherwise illegally collaborated on their final exam. [1] Each year, Harvard admits just 1600 freshmen while almost 125 Harvard students now face possible suspension over this single incident. A Harvard dean described the situation as "unprecedented."

But should we really be so surprised at this behavior among the students at America's most prestigious academic institution? In the last generation or two, the funnel of opportunity in American society has drastically narrowed, with a greater and greater proportion of our financial, media, business, and political elites being drawn from a relatively small number of our leading universities, together with their professional schools. The rise of a Henry Ford, from farm boy mechanic to world business tycoon, seems virtually impossible today, as even America's most successful college dropouts such as Bill Gates and Mark Zuckerberg often turn out to be extremely well-connected former Harvard students. Indeed, the early success of Facebook was largely due to the powerful imprimatur it enjoyed from its exclusive availability first only at Harvard and later restricted to just the Ivy League.

NetWealth During this period, we have witnessed a huge national decline in well-paid middle class jobs in the manufacturing sector and other sources of employment for those lacking college degrees, with median American wages having been stagnant or declining for the last forty years. Meanwhile, there has been an astonishing concentration of wealth at the top, with America's richest 1 percent now possessing nearly as much net wealth as the bottom 95 percent. [2]

This situation, sometimes described as a "winner take all society," leaves families desperate to maximize the chances that their children will reach the winners' circle, rather than risk failure and poverty or even merely a spot in the rapidly deteriorating middle class. And the best single means of becoming such an economic winner is to gain admission to a top university, which provides an easy ticket to the wealth of Wall Street or similar venues, whose leading firms increasingly restrict their hiring to graduates of the Ivy League or a tiny handful of other top colleges. [3] On the other side, finance remains the favored employment choice for Harvard, Yale or Princeton students after the diplomas are handed out. [4]

The Battle for Elite College Admissions

As a direct consequence, the war over college admissions has become astonishingly fierce, with many middle- or upper-middle class families investing quantities of time and money that would have seemed unimaginable a generation or more ago, leading to an all-against-all arms race that immiserates the student and exhausts the parents. The absurd parental efforts of an Amy Chua, as recounted in her 2010 bestseller Battle Hymn of the Tiger Mother , were simply a much more extreme version of widespread behavior among her peer-group, which is why her story resonated so deeply among our educated elites. Over the last thirty years, America's test-prep companies have grown from almost nothing into a $5 billion annual industry, allowing the affluent to provide an admissions edge to their less able children. Similarly, the enormous annual tuition of $35,000 charged by elite private schools such as Dalton or Exeter is less for a superior high school education than for the hope of a greatly increased chance to enter the Ivy League. [5]

Many New York City parents even go to enormous efforts to enroll their children in the best possible pre-Kindergarten program, seeking early placement on the educational conveyer belt which eventually leads to Harvard. [6] Others cut corners in a more direct fashion, as revealed in the huge SAT cheating rings recently uncovered in affluent New York suburbs, in which students were paid thousands of dollars to take SAT exams for their wealthier but dimmer classmates. [7]

But given such massive social and economic value now concentrated in a Harvard or Yale degree, the tiny handful of elite admissions gatekeepers enjoy enormous, almost unprecedented power to shape the leadership of our society by allocating their supply of thick envelopes. Even billionaires, media barons, and U.S. Senators may weigh their words and actions more carefully as their children approach college age. And if such power is used to select our future elites in a corrupt manner, perhaps the inevitable result is the selection of corrupt elites, with terrible consequences for America. Thus, the huge Harvard cheating scandal, and perhaps also the endless series of financial, business, and political scandals which have rocked our country over the last decade or more, even while our national economy has stagnated.

Just a few years ago Pulitzer Prize-winning former Wall Street Journal reporter Daniel Golden published The Price of Admission , a devastating account of the corrupt admissions practices at so many of our leading universities, in which every sort of non-academic or financial factor plays a role in privileging the privileged and thereby squeezing out those high-ability, hard-working students who lack any special hook.

In one particularly egregious case, a wealthy New Jersey real estate developer, later sent to Federal prison on political corruption charges, paid Harvard $2.5 million to help ensure admission of his completely under-qualified son. [8] When we consider that Harvard's existing endowment was then at $15 billion and earning almost $7 million each day in investment earnings, we see that a culture of financial corruption has developed an absurd illogic of its own, in which senior Harvard administrators sell their university's honor for just a few hours worth of its regular annual income, the equivalent of a Harvard instructor raising a grade for a hundred dollars in cash.

An admissions system based on non-academic factors often amounting to institutionalized venality would seem strange or even unthinkable among the top universities of most other advanced nations in Europe or Asia, though such practices are widespread in much of the corrupt Third World. The notion of a wealthy family buying their son his entrance into the Grandes Ecoles of France or the top Japanese universities would be an absurdity, and the academic rectitude of Europe's Nordic or Germanic nations is even more severe, with those far more egalitarian societies anyway tending to deemphasize university rankings.

EliteCommInc., November 28, 2012 at 11:09 am GMT

Well, legacy programs are alive and well. According to the read, here's the problem:

"The research certainly supports the widespread perception that non-academic factors play a major role in the process, including athletic ability and "legacy" status. But as we saw earlier, even more significant are racial factors, with black ancestry being worth the equivalent of 310 points, Hispanics gaining 130 points, and Asian students being penalized by 140 points, all relative to white applicants on the 1600 point Math and Reading SAT scale."

These arbitrary point systems while well intended are not a reflection of AA design. School lawyers in a race not be penalized for past practices, implemented their own versions of AA programs. The numbers are easy to challenge because they aren't based on tangible or narrow principles. It's weakneses are almost laughable. Because there redal goal was to thwart any real challenge that institutions were idle in addressing past acts of discrimination. To boost their diversity issues, asians were heavily recruited. Since AA has been in place a lot of faulty measures were egaged in: Quotas for quotas sake. Good for PR, lousy for AA and issues it was designed to address.

I think the statistical data hides a very important factor and practice. Most jews in this country are white as such , and as such only needed to change their names and hide behaviors as a strategy of surviving the entrance gauntlet. That segregation created a black collegiate system with it's own set of elite qualifiers demonstrates that this model isn't limited to the Ivy league.

That an elite system is devised and practiced in members of a certain club networks so as to maintain their elite status, networks and control, this is a human practice. And it once served as something to achieve. It was thought that the avenues of becoming an elite were there if one wanted to strive for it. Hard work, honesty, persistence, results . . . should yield X.

And while I am not as focused on the poverty ve wealth dynamic. this century has revealed something very disappointing that you address. That the elites have done a very poor job of leading the ship of state, while still remaining in leadership belies such a bold hypocrisy in accountability, it's jarring. The article could actually be titled: "The Myth of the Best and the Brightest."

I don't think it's just some vindictive intent. and while Americans have always known and to an extent accepted that for upper income citizens, normal was not the same as normal on the street. Fairness, was not the same jn practice nor sentiment. What may becoming increasing intolerant has been the obvious lack of accountability among elites. TARP looked like the elites looking out for each other as opposed the ship of state. I have read three books on the financials and they do not paint a pretty portrait of Ivy League leadership as to ethics, cheating, lying, covering up, and shamelessly passing the buck. I will be reading this again I am sure.

It's sad to think that we may be seeing te passing of an era. in which one aspired to be an elite not soley for their wealth, but the model they provided od leadership real or imagined. Perhaps, it passed long ago, and we are all not just noticing.
I appreciated you conclusions, not sure that I am comfortable with some of the solutions.

EliteCommInc. November 28, 2012 at 11:21 am GMT

Since I still hanker to be an elite in some manner, It is interesting to note my rather subdued response to the cheating. Sadly, this too may be an open secret of standard fair - and that is very very sad. And disappointing. Angering even.

Russell Seitz November 28, 2012 at 1:51 pm GMT

The shifting social demography of deans, house masters and admissions committees may be a more important metric than the composition of the student body, as it determines the shape of the curriculum, and the underlying culture of the university as a legacy in itself.

If Ron harrows the literary journals of the Jackson era with equal diligence. he may well turn up an essay or two expressing deep shock at Unitarians admitting too many of the Lord's preterite sheep to Harvard, or lamenting the rise of Methodism at Yale and the College of New Jersey.

Sean Gillhoolley November 28, 2012 at 3:06 pm GMT

Harvard is a university, much like Princeton and Yale, that continues based on its reputation, something that was earned in the past. When the present catches up to them people will regard them as nepotistic cauldrons of corruption.

Look at the financial disaster that befell the USA and much of the globe back in 2008. Its genesis can be found in the clever minds of those coming out of their business schools (and, oddly enough, their Physics programs as well).

They are teaching the elite how to drain all value from American companies, as the rich plan their move to China, the new land of opportunity. When 1% of the population controls such a huge portion of the wealth, patriotism becomes a loadstone to them. The elite are global. Places like Harvard cater to them, help train them to rule the world .but first they must remake it.

• Replies: @Part White, Part Native I agree, common people would never think of derivatives , nor make loans based on speculation
Rob in CT November 28, 2012 at 4:05 pm GMT

First, I appreciated the length and depth of your article.

Having said that, to boil it down to its essence:

Subconcious bias/groupthink + affirmative action/diversity focus + corruption + innumeracy = student bodies at elite institutions that are wildly skewed vis-a-vis both: 1) the ethnic makeup of the general population; and 2) the makeup of our top-performing students.

Since these institutions are pipelines to power, this matters.

I rather doubt that wage stagnation (which appears to have begun in ~1970) can be pinned on this – that part stuck out, because there are far more plausible causes. To the extent you're merely arguing that our elite failed to counter the trend, ok, but I'm not sure a "better" elite would have either. The trend, after all, favored the elite.

Anyway, I find your case is plausible.

Your inner/outer circle hybrid option is interesting. One (perhaps minor) thing jumps out at me: kids talk. The innies are going to figure out who they are and who the outies are. The outies might have their arrogance tempered, but the innies? I suspect they'd be even *more* arrogant than such folks are now (all the more so because they'd have better justification for their arrogance), but I could be wrong.

Perhaps more significantly, this:

But if it were explicitly known that the vast majority of Harvard students had merely been winners in the application lottery, top businesses would begin to cast a much wider net in their employment outreach, and while the average Harvard student would probably be academically stronger than the average graduate of a state college, the gap would no longer be seen as so enormous, with individuals being judged more on their own merits and actual achievements

Is a very good reason for Harvard, et al. to resist the idea. I think you're right that this would be a good thing for the country, but it would be bad for Harvard. I think the odds of convincing Harvard to do it out of the goodness of their administrators hearts is unlikely. You are basically asking them to purposefully damage their brand.

All in all, I think you're on to something here. I have my quibbles (the wage stagnation thing, and the graph with Chinese vs USA per capita growth come on, apples and oranges there!), but overall I think I agree that your proposal is likely superior to the status quo.

Bryan November 28, 2012 at 5:12 pm GMT

Don't forget the mess one finds after they ARE admitted to these schools. I dropped out of Columbia University in 2010.

You can "make it" on an Ivy-league campus if you are a conservative-Republican-type with all the rich country-club connections that liberals use to stereotype.

Or you can succeed if you are a poor or working-class type who is willing to toe the Affirmative Action party line and be a good "progressive" Democrat (Obama stickers, "Gay Pride" celebrations, etc.)

If you come from a poor or working-class background and are religious, or culturally conservative or libertarian in any way, you might as well save your time and money. You're not welcome, period. And if you're a military veteran you WILL be actively persecuted, no matter what the news reports claim.

It sucks. Getting accepted to Columbia was a dream come true for me. The reality broke my heart.

Anonymous November 28, 2012 at 5:33 pm GMT

Regarding the overrepresentation of Jewish students compared to their actual academic merit, I think the author overstates the role bias (subjective, or otherwise) plays in this:

1) , a likely explanation is that Jewish applicants are a step ahead in knowing how to "play the admissions game." They therefore constitute a good percentage of applicants that admission committees view as "the total package." (at least a higher percentage than scores alone would yield). Obviously money and connections plays a role in them knowing to say precisely what adcoms want to hear, but in any case, at the end of the day, if adcoms are looking for applicants with >1400 SATs, "meaningful" life experiences/accomplishments, and a personal statement that can weave it all together into a compelling narrative, the middle-upper-class east coast Jewish applicant probably constitutes a good percentage of such "total package" applicants. I will concede however that this explanation only works in explaining the prevalence of jews vs. whites in general. With respect to Asians, however, since they are likely being actively and purposefully discriminated against by adcoms, having the "complete package" would be less helpful to them.

2) Another factor is that, regardless of ethnicity, alumni children get a boost and since in the previous generation Jewish applicants were the highest achieving academic group, many of these lesser qualified jews admitted are children of alumni.

3) That ivy colleges care more about strong verbal scores than mathematics (i.e., they prefer 800V 700M over 700V 800M), and Jewish applicants make up a higher proportion of the high verbal score breakdowns.

4) Last, and perhaps more importantly we do not really know the extent of Jewish representation compared to their academic merit. Unlike admitted Asian applicants, who we know, on average, score higher than white applicants, we have no similar numbers of Jewish applicants. The PSAT numbers are helpful, but hardly dispositive considering those aren't the scores colleges use in making their decision information.

Scott McConnell November 28, 2012 at 5:39 pm GMT

@Bryan– Getting accepted to Columbia was a dream come true for me. The reality broke my heart.

I'm touched by this. I've spent tons of time at Columbia, a generation ago -- and my background fit fine -- the kind of WASP background Jews found exotic and interesting. But I can see your point, sad to say. There are other great schools -- Fordham, where my wife went to law school at night, has incredible esprit de corps - and probably, person for person, has as many lawyers doing good and interesting work as Columbia.

HAR November 28, 2012 at 6:10 pm GMT

"There are other great schools–Fordham, where my wife went to law school at night, has incredible esprit de corps - and probably, person for person, has as many lawyers doing good and interesting work as Columbia."

Someone doesn't know much about the legal market.

KXB November 28, 2012 at 6:18 pm GMT

"Tiffany was also rejected by all her other prestigious college choices, including Yale, Penn, Duke, and Wellsley, an outcome which greatly surprised and disappointed her immigrant father.88″

In the fall of 1990, my parents had me apply to 10 colleges. I had the profile of many Indian kids at the time – ranked in the top 10 of the class, editor of school paper, Boy Scouts. SAT scores could have been better, but still strong. Over 700 in all achievement tests save Bio, which was 670.

Rejected by 5 schools, waitlisted by 3, accepted into 2 – one of them the state univ.

One of my classmates, whose family was from Thailand, wound up in the same predicament as me. His response, "Basketball was designed to keep the Asian man down."

The one black kid in our group – got into MIT, dropped out after one year because he could not hack it. The kid from our school who should have gone, from an Italian-American family, and among the few who did not embrace the guido culture, went to Rennsealer instead, and had professional success after.

Anonymous November 28, 2012 at 6:39 pm GMT

As a University of Chicago alum, I infer that by avoiding the label "elite" on such a nifty chart we can be accurately categorized as "meritocratic" by The American Conservative.

Then again, this article doesn't even purport to ask why elite universities might be in the business of EDUCATING a wider population of students, or how that education takes place.

Perhaps, by ensuring that "the best" students are not concentrated in only 8 universities is why the depth and quality of America's education system remains the envy of the world.

a November 28, 2012 at 6:43 pm GMT

Two comments:

In my high school, there were roughly 15 of us who had been advanced two years ahead in math. Of those, 10 were Jewish; only two of them had a 'Jewish' last name. In my graduate school class, half (7) are Jewish. None has a 'Jewish' last name. So I'm pretty dubious of the counting method that you use.

Also, it's clear that there are Asian quotas at these schools, but it's not clear that Intel Science Fairs, etc, are the best way to estimate what level of talent Asians have relative to other groups.

I was curious so I google High School Poetry Competition, High School Constitution Competition, High School Debating Competition. None of the winners here seem to have an especially high Asian quotient. So maybe a non-technical (liberal arts) university would settle on ~25-30% instead of ~40% asian? And perhaps a (small) part of the problem is a preponderance of Asian applicants excelling in technical fields, leading to competition against each other rather than the general population? Just wonderin'

Weighty Commentary November 28, 2012 at 6:43 pm GMT

Regarding the declining Jewish achievement, it looks like it can be primarily explained through demographics: "Intermarriage rates have risen from roughly 6% in 1950 to approximately 40–50% in the year 2000.[56][57] This, in combination with the comparatively low birthrate in the Jewish community, has led to a 5% decline in the Jewish population of the United States in the 1990s."

Jewish surnames don't mean what they used to. And intermarriage rates are lowest among the low-performing and highly prolific Orthodox.

http://en.wikipedia.org/wiki/American_Jews#Demographics

Jewish birth rates have been falling faster than the white population, especially for the non-Orthodox:

"In contrast to the ongoing trends of assimilation, some communities within American Jewry, such as Orthodox Jews, have significantly higher birth rates and lower intermarriage rates, and are growing rapidly. The proportion of Jewish synagogue members who were Orthodox rose from 11% in 1971 to 21% in 2000, while the overall Jewish community declined in number. [60] In 2000, there were 360,000 so-called "ultra-orthodox" (Haredi) Jews in USA (7.2%).[61] The figure for 2006 is estimated at 468,000 (9.4%).[61]"

http://www.jewishdatabank.org/Reports/RecentTrends_Sheskin_2011.pdf

"a very low fertility rate of 1.9, of which 1.4 will be raised as Jews (2.15 is replacement rate)"

http://www.aish.com/jw/s/48899452.html

"As against the overall average of 1.86 children per Jewish woman, an informed estimate gives figures ranging upward from 3.3 children in "modern Orthodox" families to 6.6 in Haredi or "ultra-Orthodox" families to a whopping 7.9 in families of Hasidim."

These statistics would suggest that half or more of Jewish children are being born into these lower-performing groups. Given their very low intermarriage rates, a huge portion of the secular, Reform, and Conservative Jews must be intermarrying (more than half if the aggregate 43% intermarriage figure is right). And the high-performing groups may now be around 1 child per woman or lower, and worse for the youngest generation.

So a collapse in Jewish representation in youth science prizes can be mostly explained by the collapse of the distinct non-Orthodox Jewish youth.

Incidentally, intermarriage also produces people with Jewish ancestry who get classified as gentiles using last names or self-identification, reducing Jewish-gentile gaps by bringing up nominal gentile scores at the same time as nominal-Jewish scores are lowered.

Adam November 28, 2012 at 6:49 pm GMT

The center of power in this country being located in the Northeast is nothing new. Whether it be in it's Ivy League schools or the ownership of natural resources located in other regions, particularly the South, the Northeast has always had a disproportionate share of influence in the power structures, particularly political and financial, of this nation. This is one of the reasons the definition of "white" when reviewing ethnicity is so laughably inaccurate. There is a huge difference in opportunity between WASP or Jewish in the Northeast, for instance, and those of Scots Irish ancestory in the mountain south. Hopefully statistical analysis such as this can break open that stranglehold, especially as it is directly impacting a minority group in a negative fashion. Doing this exercise using say, white Baptists compared to other white subgroups, while maybe equally valid in the results, would be seen as racist by the very Ivy League system that is essentially practicing a form of racism.

Bryan November 28, 2012 at 6:50 pm GMT

Scott, thanks for your words of commiseration.

Yeah, my ultimate goal was to attend law school, and a big part of the heartbreak for me–or heartburn, the more cynical would call it–was seeing how skewed and absurd the admissions process to law school is.

I have no doubt that I could have eventually entered into a "top tier" law school, and that was a dream of mine also. I met with admissions officers from Duke, Harvard, Stanford, Fordham, etc. I was encouraged. I had the grades and background for it.

But–and I'm really not trying to sound corny 0r self-important here–what does it profit a man to gain the world and lose his soul? I really don't feel that I'm exaggerating when I say that that's exactly how it felt to me.

The best experience I had while In New York was working as an after-school programs administrator for P.S. 136, but that was only because of the kids. They'll be old and bitter and cynical soon enough.

At one point it occurred to me that I should have just started claiming "Black" as my ethnicity when I first started attending college as an adult. I never attended high-school so it couldn't have been disproved. I'm part Sicilian so I could pass for 1/4 African-American. Then I would have received the preference toward admission that, say, Michael Jordan's kids or Barack Obama's kids will receive when they claim their Ivy-league diplomas. I should have hid the "white privilege" I've enjoyed as the son of a fisherman and a waitress from one of the most economically-depressed states in America.

The bottom line is that those colleges are political brainwashing centers for a country I no longer believe in. I arrived on campus in 2009 and I'm not joking at all when I say I was actively persecuted for being a veteran and a conservative who was not drinking the Obama Kool-aid. Some big fat African-American lady, a back-room "administrator" for Columbia, straight-up threw my VA benefits certification in the garbage, so my money got delayed by almost two months. I had no idea what was going on. I had a wife and children to support.

The fact that technology has enabled us to sit here in real-time and correspond back-and-forth about the state of things doesn't really change the state of things. They are irredeemable. This country is broke and broken.

If Abraham Lincoln were born today in America he would wind up like "Uncle Teardrop" from Winter's Bone. Back then, in order to be an attorney, you simply studied law and starting trying cases. If you were good at it then you were accepted and became a lawyer. Today, something has been lost. There is no fixing it. I don't want to waste my time trying to help by being "productive" to the new tower of Babel or pretending to contribute.

Anonymous November 28, 2012 at 8:44 pm GMT

Perhaps only one thing you left out, which is especially important with regard to Jewish enrollment and applications at Ivy leagues, and other schools as well.
Jewish high school graduates actively look out for campuses with large Jewish populations, where they feel more comfortable.
I don't know the figures, but I believe Dartmouth, for example, has a much smaller Jewish population than Columbia, and it will stay that way because of a positive feedback loop. (i.e. Jews would rather be at Columbia than Dartmouth, or sometimes even rather be at NYU than Dartmouth). This explains some of the difference among different schools (and not solely better admission standards).

This is also especially relevant to your random lottery idea, which will inevitably lead to certain schools being overwhelmingly Asian, others being overwhelmingly Jewish, etc., because the percentage of applicants from every ethnicity is different in every school. This will necessarily eliminate any diversity which may or may not have existed until now.

TM says: • Website November 28, 2012 at 9:51 pm GMT

I like the lottery admissions idea a lot but the real remedy for the US education system would be to abandon the absurd elite cult altogether. There is not a shred of evidence that graduates of so-called elite institutions make good leaders. Many of them are responsible for the economic crash and some of them have brought us the disaster of the Bush presidency.

Many better functioning countries – Germany, the Scandinavians – do not have elite higher education systems. When I enrolled to University in Germany, I showed up at the enrollment office the summer before the academic year started, filled out a form (1), and provided a certified copy of my Abitur certificate proving that I was academically competent to attend University. I never wasted a minute on any of the admissions games that American middle class teenagers and their parents are subjected to. It would surely have hurt my sense of dignity to be forced to jump through all these absurd and arbitrary hoops.

Americans, due to their ignorance of everything happening outside their borders, have no clue that a system in which a person is judged by what "school" they attended is everything but normal. It is part of the reason for American dysfunction.

Luke Lea November 28, 2012 at 10:04 pm GMT

Since they are the pool from which tomorrow's governing elites will be chosen, I'd much rather see Ivy League student bodies which reflected the full ethnic and geographic diversity of the US. Right now rural and small town Americans and those of Catholic and Protestant descent who live in the South and Mid-West - roughly half the population - are woefully under-represented, which explains why their economic interests have been neglected over the last forty years. We live in a multi-cultural, multi-ethnic representative democracy and our policy-making elites must reflect that diversity. Else the country will come apart.

Thus I recommend 'affirmative action for all' in our elite liberal arts colleges and universities (though not our technical schools). Student bodies should be represent 'the best and the brightest' of every ethnic group and geographical area of the country. Then the old school ties will truly knit our society together in a way that is simply not happening today.

A side benefit - and I mean this seriously - is that our second and third tier colleges and universities would be improved by an influx of Asian and Ashkenazi students (even though the very best would still go to Harvard).

Jack November 28, 2012 at 10:07 pm GMT

I believe that this article raises – and then inappropriately immediately dismisses – the simplest and most likely reason for the over-representation of Jewish students at Ivy League Schools in the face of their declining bulk academic performance:

They apply to those schools in vastly disproportionate numbers.

Without actual data on the ethnicity of the applicants to these and other schools, we simply cannot rule out this simple and likely explanation.

It is quite clear that a large current of Jewish American culture places a great emphasis on elite college attendance, and among elite colleges, specifically values the Ivy League and its particular cache as opposed to other elite institutions such as MIT. Also, elite Jewish American culture, moreso than elite Asian American culture, encourages children to go far away from home for college, considering such a thing almost a right of passage, while other ethnic groups tend to encourage children to remain closer. A high performing Asian student from, say, California, is much more likely to face familial pressure to stay close to home for undergrad (Berkeley, UCLA, etc) than a high performing Jewish student from the same high school, who will likely be encouraged by his or her family to apply to many universities "back east".

Without being able to systematically compare – with real data – the ethnicities of the applicants to those offered admission, these conclusions simply cannot be accepted.

Pat Boyle November 28, 2012 at 10:30 pm GMT

Different expectations for different races should worry traditional Americans.

If we become comfortable with different academic standards for Asians will we soon be expected to apply different laws to them also? Will we apply different laws or at least different interpretations of the same laws to blacks?

The association of East Asians with CalTech is now as strong as the association of blacks with violent crime. Can not race conscious jurisprudence be far behind?

Around a millenium ago in England it mattered to the court if you were a commoner or a noble. Nobles could exercise 'high justice' with impunity. They were held to different standards. Their testimony counted for more in court. The law was class concious.

Then we had centuries of reform. We had 'Common Law'. By the time of our revolution the idea that all were equal before the law was a very American kind of idea. We were proud that unlike England we did not have a class system.

Today we seem to be on the threshold of a similar sytem of privileges and rights based on race. Let me give an example. If there were a domestic riot of somekind and a breakdown of public order, the authorities might very well impose a cufew. That makes good sense for black male teens but makes little or no sense for elderly Chinese women. I can envision a time when we have race specific policies for curfews and similar measures.

It seems to be starting in schools. It could be that the idea of equality before the law was an idea that only flourished between the fifteenth century and the twenty first.

Anonymous November 28, 2012 at 11:06 pm GMT

"But filling out a few very simple forms and having their test scores and grades scores automatically forwarded to a list of possible universities would give them at least the same chance in the lottery as any other applicant whose academic skills were adequate."

They get a lot of applications. I am guessing they chuck about 1/2 or more due to the application being incomplete, the applicant did not follow instructions, the application was sloppy, or just obviously poor grades/test scores. The interview and perhaps the essay and recommendations are necessary to chuck weirdos and psychopaths you do not want sitting next to King Fahd Jr. So the "byzantine" application process is actually necessary to reduce the number of applicants to be evaluated.

Kelly November 28, 2012 at 11:15 pm GMT

I have a friend who went to Stanford with me in the early 80s. She has two sons who recently applied to Stanford. The older son had slightly better grades and test scores. The younger son is gay. Guess which one got in?

Anonymous November 28, 2012 at 11:31 pm GMT

Bryan,

If you were in Columbia's GS school, (or even if you were CC/SEAS/Barnard) you ought to reach out to some of on-campus and alumni veteran's groups. They can help you maneuver through the school. (I know there's one that meets at a cafe on 122 and Broadway) CU can be a lonely and forbidding place for anyone and that goes double for GSers and quadruple for veterans.

You ought to give it another go. Especially if you aren't going somewhere else that's better. Reach out to your deans and make a fuss. No one in the bureaucracy wants to help but you can force them to their job.

FN November 28, 2012 at 11:44 pm GMT

Mr. Unz, the issues of jewish/gentile intermarriage and the significance of jewish-looking names do indeed merit more consideration than they were given in this otherwise very enlightening article.

What would the percentage of jews in Ivy-League universities look like if the methodology used to determine the percentage of jewish NMS semifinalists were applied to the list of Ivy League students (or some available approximation of it)?

Ben K November 29, 2012 at 12:24 am GMT

For background: I'm an Asian-American who worked briefly in legacy admissions at an Ivy and another non-Ivy top-tier, both while in school (work-study) and as an alum on related committees.

Mendy Finkel's observations are spot on. Re: her 1st point, personal "presentation" or "branding" is often overlooked by Asian applicants. An admission officer at another Ivy joked they drew straws to assign "Night of a 1000 Lee's", so accomplished-but-indistinguishable was that group.

A few points on the Asian analysis:

1. I think this analysis would benefit from expanding beyond HYP/Ivies when considering the broader meritocracy issue. Many Asians esteem technical-leaning schools over academically-comparable liberal arts ones, even if the student isn't a science major. When I was in college in the 90′s, most Asian parents would favor a Carnegie Mellon or Hopkins over Brown, Columbia or Dartmouth (though HYP, of course, had its magnetic appeal). The enrollment percentages reflect this, and while some of this is changing, this is a fairly persistent pattern.

2. Fundraising is crucial. The Harvard Class of '77 example isn't the most telling kind of number. In my experience, Jewish alumni provide a critical mass in both the day-to-day fundraising and the resultant dollars. And they play a key role, both as givers and getters, in the signature capital campaign commitments (univ hospitals, research centers, etc.). This isn't unique to Jewish Ivy alumni; Catholic alumni of ND or Georgetown provide similar support. But it isn't clear what the future overall Asian commitment to the Ivy "culture of fundraising" will be, which will continue to be a net negative in admissions.

Sidenote: While Asians greatly value the particular civic good, they are uneasy with it being so hinged to an opaque private sector, in this case, philanthropy. That distinction, blown out a bit, speaks to some of the Republican "Asian gap".

3. I would not place too much weight on NMS comparisons between Asians and Jews. In my experience, most Asians treat the PSAT seriously, but many established Jews do not – the potential scholarship money isn't a factor, "NMS semifinalist" isn't an admissions distinction, and as Mendy highlighted, colleges don't see the scores.

On a different note, while the "weight" of an Ivy degree is significant, it's prestige is largely concentrated in the Northeast and among some overseas. In terms of facilitating access and mobility, a USC degree might serve you better in SoCal, as would an SMU one in TX.

And like J Harlan, I also hope the recent monopoly of Harvard and Yale grads in the presidency will end. No doubt, places like Whittier College, Southwest Texas State Teachers' College, and Eureka College gave earlier presidents valuable perspectives and experience that informed their governing.

But thank you, Ron, for a great provocative piece. Very well worth the read.

Anonymous November 29, 2012 at 12:28 am GMT

Hey Ron, your next article should be on the military academies, and all those legacies that go back to the Revolutionary War. How do you get into the French military academy, and do the cadets trace their family history back to the soldiers of Napoleon or Charles Martel or whatever?

M_Young November 29, 2012 at 1:46 am GMT

"Thus, there appears to be no evidence for racial bias against Asians, even excluding the race-neutral impact of athletic recruitment, legacy admissions, and geographical diversity."

Yes, at UCLA, at least up to 2004, Asian and white admits had nearly identical SATs and GPAs.

Further, it just isn't the case that Asians are so spectacular as people seem to think. Their average on the SAT Verbal is slightly less than whites, their average on SAT Writing is slightly more. Only in math do they have a significant advantage, 59 points or .59 standard deviation. Total advantage is about .2 over the three tests. Assuming that Harvard or Yale admit students at +3 standard deviations overall, and plugging the relative group quantiles +(3, 2.8) into a normal distribution, we get that .14% of white kids would get admitted, versus .26% of Asian kids. Or, 1.85 Asian kids for every one white kid.

But, last year 4.25 times as many whites as Asians took the SAT, so there still should be about 2.28 times as many white kids being admitted as Asians (4.25/1.85).

On GPA, whites and Asians are also pretty similar on average, 3.52 for Asians who took the SAT, 3.45 for whites who took the SAT. So that shouldn't be much of a factor.

Anonymous November 29, 2012 at 4:04 am GMT

I am a Cadet at the US Military Academy at West Point and generally pretty familiar with trans-national Academy admissions processes. There's an excellent comparative study of worldwide military academy admissions that was done in the late '90′s you might find interesting (IIRC it was done by a group in the NATO Defence College) and I think you will find that although soldiers are often proud of their family histories to a fault, it is not what controls entrance to the officer corps in most countries.

"Legacy" is definitely meaningless in US Military Academy admissions, although can be very helpful in the separate process of securing a political appointment to attend the Academy once accepted for admission and in an Army career. West Point is not comparable to the Ivy League schools in the country, because (ironically) the admissions department that makes those comparisons lets in an inordinate number of unqualified candidates and ensures our student body includes a wide range of candidates, from people who are unquestionably "Ivy League material" to those who don't have the intellect to hack it at any "elite" institution.

Prior the changes in admissions policies and JFK ordering an doubling of the size of the Corps of Cadets in the '60′s, we didn't have this problem. But, I digress. My point is, the Academy admissions system is very meritocratic.

Todd November 29, 2012 at 5:49 am GMT

Thank you for the great article.

I am a Jewish alum of UPenn, and graduated in the late 90s. That puts me almost a generation ago, which may be before the supposed Jewish decline you write about. I was in an 80%+ Jewish fraternity, and at least 2/3 of my overall network of friends at Penn was also Jewish. As was mentioned earlier, I have serious qualms with your methods for counting Jews based upon last name.

Based upon my admittedly non-scientific sample, the percentage of us who had traditionally Jewish last names was well under half and closer to 25%. My own last name is German, and you would never know I am Jewish based solely upon my name (nor would you based upon the surname of 3/4 of my grandparents, despite my family being 100% Jewish with no intermarriages until my sister).

By contrast, Asians are much easier to identify based upon name. You may overcount certain names like Lee that are also Caucasian, but it is highly unlikely that you will miss any Asian students when your criterion is last name.

Admittedly I skimmed parts of the article, but were other criterion used to more accurately identify the groups?

Interesting November 29, 2012 at 7:02 am GMT

Great article.

The Jewish presence is definitely understated by just looking at surnames. As is the American Indian.

My maternal grandfather was Ashkenazi and his wife was 1/2 Ashkenazi and 1/4 Apache. He changed his name to a Scots surname that matched his red hair so as to get ahead as a business man in 20s due to KKK and anti-German feelings at the time. Their kids had two PHDs and a Masters between them despite their parents running a very blue collar firm.

My surname comes from my dad and its a Scottish surname although he was 1/4 Cherokee. On that side we are members of the FF of Virignia. Altogether I am more Jewish and American Indian than anything else yet would be classified as white. I could easily claim to be
Jewish or Indian on admissions forms. I always selected white. I was NMSF.

Both my sister and I have kids. Her husband is a full blood Indian with a common English surname. One of my nieces made NMSF and another might. My sisters kids do not think of themselves as any race and check other.

My wife is 1/4 Indian and 3/4 English. My kids are young yet one has tested to an IQ in the 150s.

Once you get West of the Appalachians, there are a lot of mutts in the non-gentile whites. A lot of Jews and American Indians Anglicized themselves a generation or two ago and they are lumped into that group – as well as occupy the top percentile academically.

A Jew November 29, 2012 at 7:44 am GMT

Interesting article with parts I would agree with but also tinged with bias and conclusions that I would argue are not fully supported by the data.

I think more analysis is needed to confirm your conclusions. As others have mentioned there may be problems with your analysis of NMS scores. I think graduate admissions and achievements especially in the math and sciences would be a better measure of intellectual performance.

Now, I didn't attend an Ivy League school, instead a public university, mainly because I couldn't afford it or so I thought. I was also a NMS finalist.

But I always was of the opinion that except for the most exceptional students admission to the Ivies was based on the wealth of your family and as you mentioned there are quite a few affluent Jews so I imagine they do have a leg up. Harvard's endowment isn't as large as it is by accident.

It is interesting that you didn't discuss the stats for Stanford.

Lastly, I think your solution is wrong. The pure meritocracy is the only fair solution. Admissions should be based upon the entrance exams like in Asia and Europe.

There are plenty of options for those who don't want to compete and if the Asians dominate admissions at the top schools so be it.

Hopefully, all of this will be mute point n a few years as online education options become more popular with Universities specializing in graduate education and research.

Leon November 29, 2012 at 10:24 am GMT

Ron Unz on Asians (ie Asian Americans): "many of them impoverished immigrant families"

Why do you twice repeat this assertion. Asians are the wealthiest race and most of the wealthiest ethnic groups tracked by the Census Bureau, which includes immigrants.

A potentially bigger issue completely ignored by your article is how do colleges differentiate between 'foreign' students (overwhelmingly Asian) and American students. Many students being counted as "Asian American" are in reality wealthy and elite foreign "parachute kids" (an Asian term), dropped onto the generous American education system or into boarding schools to study for US entrance exams, qualify for resident tuition rates and scholarships, and to compete for "American" admissions slots, not for the usually limited 'foreign' admission slots.

Probably people from non-Asian countries are pulling the same stunt, but it seems likely dominated by Asians. And expect many more with the passage of the various "Dream Acts"

So American kids must compete with the offspring of all the worlds corrupt elite for what should be opportunities for US Americans.

Weighty Commentary November 29, 2012 at 12:03 pm GMT

New York PSAT data:

http://media.collegeboard.com/digitalServices/pdf/research/NY_12_05_02_01.pdf

In New York Asian-Americans make up 9.5%, whites 50.4%, Latinos 18.3% and African-Americans 15.7%.

California PSAT data:

http://media.collegeboard.com/digitalServices/pdf/research/CA_12_05_02_01.pdf

In California Asian-Americans make up 19.7% of PSAT takers, and whites make up 31.9%, with 37% Latino and 5.7% African-American.

Anonymous November 29, 2012 at 2:01 pm GMT

Am I the only one that finds the comparison of Asians (a race) to Jews (a religion) as basis for a case of discrimination completely flawed? I got in at Harvard and don't remember them even asking me what my religion was.

The value of diversity is absolutely key. I have a bunch of very good Asian friends and I love them dearly, but I don't believe a place like CalTech with its 40% demographics cannot truly claim to be a diverse place any more.

nooffensebut says: • Website Show Comment Next New Comment November 29, 2012 at 2:20 pm GMT

Regarding the SAT, we do know more than just differences of averages between whites and Asians. We have some years of score distributions . As recently as 1992, 1.2% of whites and 5.1% of Asians scored between 750 and 800 on the math subtest. As recently as 1985, 0.20% of whites and 0.26% of Asians scored in that range on the verbal/critical reading subtest.

On a different form of the writing subtest than is currently used, 5.0% of whites and 3.0% of Asians scored greater than 60 in 1985. We also know that, as the white-Asian average verbal/critical reading gap shrank to almost nothing and the average math gap grew in Asians' favor, the standard deviations on both for Asians have been much higher than every other group but have stayed relatively unchanged and have become, in fact, slightly lower than in 1985.

Therefore, Asians probably greatly increased their share of top performers.

Anonymous November 29, 2012 at 2:44 pm GMT

@Milton F.: "Perhaps, by ensuring that "the best" students are not concentrated in only 8 universities is why the depth and quality of America's education system remains the envy of the world."

Hardly. America's education system is "the envy" because of the ability for minorities to get placement into better schools, not solely for the education they receive. Only a very select few institutions are envied for their education primarily, 90% of the colleges and universities across the country are sub-standard education providers, same with high schools.

I would imagine you're an educator at some level, more than likely, at one of the sub-standard colleges or even perhaps a high school teacher. You're attempting to be defensive of the American education system, when in reality, you're looking at the world through rose colored glasses. Working from within the system, rather than from the private sector looking back, gives you extreme tunnel vision. That, coupled with the average "closed mindedness" of educators in America is a dangerous approach to advancing the structure of the American education system. You and those like you ARE the problem and should be taken out of the equation as quickly as possible. Please retire ASAP or find another career.

Rob Schacter November 29, 2012 at 3:37 pm GMT

Aside from the complete lack of actual ivy league admission data on jewish applicants, a big problem with unz's "jewish affirmative action" claim is how difficult such a policy would be to carry out in complete secrecy.

Now, it would be one thing if Unz was claiming that jews are being admitted with similar numbers to non-jewish whites, but in close cases, admissions staff tend to favor jewish applicants. But he goes much further than that. Unz is claiming that jews, as a group, are being admitted with lower SAT scores than non-jewish whites. Not only that, but this policy is being carried out by virtually every single ivy league college and it has been going on for years. Moreover, this preference is so pervasive, that it allows jews to gain admissions at many times the rate that merit alone would yield, ultimately resulting in entering classes that are over 20% Jewish.

If a preference this deep, consistent and widespread indeed exists, there is no way it could be the result of subjective bias or intentional tribal favoritism on the part of individual decision makers. It would have to be an official, yet unstated, admissions policy in every ivy league school. Over the years, dozens (if not hundreds) of admission staff across the various ivy league colleges would be engaging in this policy, without a single peep ever leaking through about Jewish applicants getting in with subpar SAT scores. We hear insider reports all the time about one group is favored or discriminated against (we even have such an insider account in this comment thread), but we hear nothing about the largest admission preference of them all.

Remember, admissions staffs usually include other ethnic minorities. I couldn't imagine them not wondering why jews need to be given such a big boost so that they make up almost a quarter of the entering class. Even if every member of every admissions committee were Jewish liberals, it would still be almost impossible to keep this under wraps.

Obviously, I have never seen actual admission numbers for Jewish applicants, so I could be wrong, and there could in fact be an unbreakable wall of secrecy regarding the largest and most pervasive affirmative action practice in the country. Or, perhaps, the ivy league application pool contains a disproportionate amount of high scoring jewish applicants.

Anonymous says: • Website Show Comment Next New Comment November 29, 2012 at 5:41 pm GMT

As some who is Jewish from the former Soviet Union, and who was denied even to take an entrance exam to a Moscow college, I am saddened to see that American educational admission process looks more and more "Soviet" nowadays. Kids are denied opportunities because of their ethnic or social background, in a supposedly free and fair country!

But this is just a tip of the iceberg. The American groupthink of political correctness, lowest common denominator, and political posturing toward various political/ethnic/religious/sexual orientation groups is rotting this country inside out.

Worse things are yet to come.

Julia November 29, 2012 at 6:13 pm GMT

"Similarly, Jews were over one-quarter of the top students in the Physics Olympiad from 1986 to 1997, but have fallen to just 5 percent over the last decade, a result which must surely send Richard Feynman spinning in his grave."

Actually, Richard Feynman famously rejected genetic explanations of Jewish achievement (whether he was right or wrong to do so is another story), and aggressively resisted any attempts to list him as a "Jewish scientist" or "Jewish Nobel Prize winner." I am sure he would not cared in the slightest bit how many Jews were participating in the Physics Olympiad, as long as the quality of the students' work continued to be excellent. Here is a letter he wrote to a woman seeking to include him in a book about Jewish achievement in the sciences.

Dear Miss Levitan:

In your letter you express the theory that people of Jewish origin have inherited their valuable hereditary elements from their people. It is quite certain that many things are inherited but it is evil and dangerous to maintain, in these days of little knowledge of these matters, that there is a true Jewish race or specific Jewish hereditary character. Many races as well as cultural influences of men of all kinds have mixed into any man. To select, for approbation the peculiar elements that come from some supposedly Jewish heredity is to open the door to all kinds of nonsense on racial theory.

Such theoretical views were used by Hitler. Surely you cannot maintain on the one hand that certain valuable elements can be inherited from the "Jewish people," and deny that other elements which other people may find annoying or worse are not inherited by these same "people." Nor could you then deny that elements that others would consider valuable could be the main virtue of an "Aryan" inheritance.

It is the lesson of the last war not to think of people as having special inherited attributes simply because they are born from particular parents, but to try to teach these "valuable" elements to all men because all men can learn, no matter what their race.

It is the combination of characteristics of the culture of any father and his father plus the learning and ideas and influences of people of all races and backgrounds which make me what I am, good or bad. I appreciate the valuable (and the negative) elements of my background but I feel it to be bad taste and an insult to other peoples to call attention in any direct way to that one element in my composition.

At almost thirteen I dropped out of Sunday school just before confirmation because of differences in religious views but mainly because I suddenly saw that the picture of Jewish history that we were learning, of a marvelous and talented people surrounded by dull and evil strangers was far from the truth. The error of anti-Semitism is not that the Jews are not really bad after all, but that evil, stupidity and grossness is not a monopoly of the Jewish people but a universal characteristic of mankind in general. Most non-Jewish people in America today have understood that. The error of pro-Semitism is not that the Jewish people or Jewish heritage is not really good, but rather the error is that intelligence, good will, and kindness is not, thank God, a monopoly of the Jewish people but a universal characteristic of mankind in general.

Therefore you see at thirteen I was not only converted to other religious views but I also stopped believing that the Jewish people are in any way "the chosen people." This is my other reason for requesting not to be included in your work.

I am expecting that you will respect my wishes.

Sincerely yours,

Richard Feynman

Ben K November 29, 2012 at 6:43 pm GMT

@Rob Schacter – your last point is basically spot-on. The Ivies are fairly unique in the high proportion of Jewish applicants. History, geographical bias, and self-selection all play a role. I think the overall preference distortion is probably not as wide as Unz claims, but you will see similar tilts at Stanford, Northwestern, etc. that reflect different preference distortions.

@Leon, two quick points.

1st – the census tracks by household, which generally overestimates Asian wealth. Many families have three generations and extended members living in one household (this reflects that many of them work together in a small family business).

2nd – most of the time, it's clear in the application (the HS, personal info, other residency info, etc.) which Asian applicants are Asian-American and which are "Parachute Kids". But the numbers are much smaller than one might think, and the implication depends on the school.

At Ivies, parachute kids (both Asian and not) tend to compete with each other in the application pool, and aren't substantially informing the broader admissions thesis in this article. I'm not saying that's right, just saying it's less material than we might think.

They more likely skew the admissions equation in great-but-not-rich liberal arts colleges (like Grinnell) and top public universities (like UCLA), which are both having budget crises and need full fare students, parachute or not. And for the publics, this includes adding more higher-tuition, out-of-state students, which further complicates assertions of just whose opportunities are being lost.

I will bring this back to fundraising and finances again, because the broader point is about who is stewarding and creating access: so long as top universities are essentially run as self-invested feedback loops, and position and resource themselves accordingly (and other universities have to compete with them), we will continue to see large, persistent discrepancies in who can participate.

Eric Rasmusen November 29, 2012 at 7:58 pm GMT

When I applied to Harvard College back in 1976, I was proud of my application essay. In it, I proposed that the US used the Israeli army as a proxy, just as the Russians were using the Cuban army at the time.
Alas, I wasn't admitted (I did get into Yale, which didn't require free-form essay like that).

This, of course, illustrates the point that coming from an Application Hell instead of from central Illinois helps a student know how to write applications. It also illustrates what might help explain the mystery of high Jewish admissions: political bias. Jews are savvier about knowing what admissions officers like to hear (including the black and Latino ones, who as a previous commentor said aren't likely to be pro-semite). They are also politically more liberal, and so don't have to fake it. And their families are more likely to read the New York Times and thus have the right "social graces" as we might call them, of this age.

It would be interesting to know how well "true WASPS" do in admissions. This could perhaps be estimated by counting Slavic and Italian names, or Puritan New England last names. I would expect this group to do almost as well as Jews (not quite as well, because their ability would be in the lower end of the Legacy group).


David in Cali November 29, 2012 at 8:16 pm GMT

The missing variable in this analysis is income/class. While Unz states that many elite colleges have the resources to fund every student's education, and in fact practice need-blind admissions, the student bodies are skewed towards the very highest percentile of the income and wealth distribution. SAT scores may also scale with parents' income as well.

Tuition and fees at these schools have nearly doubled relative to inflation in the last 25-30 years, and with home prices in desirable neighborhoods showing their own hyper-inflationary behavior over the past couple of decades (~15 yrs, especially), the income necessary to pay for these schools without burdening either the student or parents with a lot of debt has been pushed towards the top decile of earners. A big chunk of the upper middle class has been priced out. This could hit Asian professionals who may be self made harder than other groups like Jews who may be the second or third generation of relative affluence, and would thus have advantages in having less debt when starting their families and careers and be less burdened in financing their homes. Would be curious to see the same analysis if $$ could be controlled.


David in Cali November 29, 2012 at 8:19 pm GMT

I would also like to add that I am a late '80′s graduate of Wesleyan who ceased his modest but annual financial contribution to the school after reading The Gatekeepers.


Rebecca November 29, 2012 at 9:33 pm GMT

If I had a penny for every Jewish American I met (including myself) whose first and last name gave no indication of his religion or ethnicity, I'd be rich. Oh–and my brother and I have four Ivy League degrees between us.


Anonymous November 29, 2012 at 10:16 pm GMT

I almost clicked on a different link the instance I came across the word "elite" , but curiosity forced my hand.

Just yesterday my mom was remarking how my cousin had gotten into MIT with an SAT score far below what I scored, and she finished by adding that I should have applied to an ivy-league college after high school. I as always, reminded her, I'm too "black for ivy games".

I always worked hard in school, participated in olympiads and symposiums, and was a star athlete. When it came to applying for college I found myself startled when forced to "quantify" my achievements in an "application package". I did not do or engage in these activities solely to boost my chances of gaining admission into some elite college over similarly-hardworking Henry Wang or Jess Steinberg. I did these things because I loved doing them.

Sports after class was almost a relaxation activity for me. Participating in math olympiads was a way for me to get a scoop on advanced mathematics. Participating in science symposiums was a chance for me to start applying my theoretical education to solve practical problems.

The moment I realized I would have to kneel down before some admissions officer and "present my case", outlining my "blackness", athleticism, hard work, curiosity, and academic ability, in that specific order I should point, in order to have a fighting chance at getting admitted; is the moment all my "black rage" came out in an internal explosion of rebellion and disapproval of "elite colleges".

I instead applied to a college that was blind to all of the above factors. I am a firm believer that hard work and demonstrated ability always win out in the end. I've come across, come up against is a better way to put it, Ivy-league competition in college competitions and applications for co-ops and internships, and despite my lack of "eliteness" I am confident that my sheer ability and track record will put me in the "interview candidate" pool.

Finally, my opinion is: let elite schools keep doing what they are doing. It isn't a problem at all, the "elite" tag has long lost its meaning.


Anonymous November 29, 2012 at 10:52 pm GMT

The difficulty with using Jewish sounding last names to identify Jewish students works poorly in two ways today. Not only, as others have pointed out, do many Jews not have Jewish sounding last names, but there are those, my grandson for example, who have identifiably Jewish last names and not much in the way of Jewish background.


Anonymous November 29, 2012 at 11:34 pm GMT

Interesting reading. The article opens a deceptively simple statistical window into a poorly understood process - a window which I would guess even the key participants have never looked through. I especially appreciated the insights provided by the author's examination of Asian surname-frequencies and their over-representation in NMS databases.

Though this is a long and meticulously argued piece, it would have benefited from a more thorough discussion of the statistical share of legacies and athletic scholarships in elite admissions.

Perhaps, though, it would be better to focus on increasing meritocracy in the broader society, which would inevitably lead to some discounting of the value of educational credentials issued by these less than meritocratic private institutions.

It is precisely because the broader society is also in many key respects non-meritocratic that the non-meritocratic admissions practices of elite institutions are sustainable.


Anon November 29, 2012 at 11:50 pm GMT

Despite the very long and detailed argument, the writer's interpretation of a pro-Jewish admissions bias at Ivy-league schools is worryingly flawed.

First, he uses two very different methods of counting Jews: name recognition for counting various "objective" measures such as NMS semifinalists and Hillel stats for those admitted to Harvard. The first is most likely an underestimate while the latter very possibly inflated (in both cases especially due to the very large numbers of partially-Jewish students, in the many interpretations that has). I wonder how much of his argument would just go away if he simply counted the number of Jews in Harvard using the same method he used to count their numbers in the other cases. Would that really be hard to do?

Second, he overlooks the obvious two sources that can lead to such Asian/Jewish relative gaps in admissions. The first is the different groups' different focus on Science/Math vs. on Writing/Culture. It is very possible that in recent years most Asians emphasize the former while Jews the latter, which would be the natural explanation to the Caltech vs Harvard racial composition (as well as to the other stats). The second is related but different and it is the different group's bias in applications: the same cultural anecdotes would explain why Asians would favor applying to Caltech and Jews to Harvard. A natural interpretation of the data would be that Jews have learned to optimize for whatever criteria the Ivy leagues are using and the Asians are doing so for the Caltech criteria.

Most strange is the author's interpretation of how a pro-Jewish bias in admissions is actually put into effect: the application packets do not have the data of whether the applicant is Jewish or not, and I doubt that most admission officers figure it out in most cases. While it could be possible for admissions officers to have a bias for or against various types of characteristics that they see in the data in front of them (say Asian/Black/White or political activity), a systematic bias on unobserved data is a much more difficult proposition to make. Indeed the author becomes rather confused here combining the low education level of admissions officers, that they are "liberal arts or ethnic-studies majors" (really?), that they are "progressive", and that there sometimes is corruption, all together presumably leading to a bias in favor of Jews?

Finally, the author's suggestion for changing admittance criteria is down-right bizarre for a conservative: The proposal is a centralized solution that he aims to force upon the various private universities, each who can only loose from implementing it.

Despite the long detailed (but extremely flawed) article, I am afraid that it is more a reflection of the author's biases than of admissions biases.


Allan November 30, 2012 at 3:00 am GMT

Both the article and the comments are illuminating. My takeaways:

1) Affirmative action in favor of blacks and Hispanics is acknowledged.

2) Admissions officers in the Ivy League appear to limit Asian admissions somewhat relative to the numbers of qualified applicants.

3) They may also admit somewhat more Jewish applicants than would be warranted relative to their comparative academic qualifications. The degree to which this is true is muddled by the difficulty of identifying Jews by surnames, by extensive intermarriage, by changing demographics within the Jewish population, by geographic factors, and by the propensity to apply in the first place.

4) (My major takeaway.) White Protestants and Catholics are almost certainly the sole groups that are greatly under-represented relative to their qualifications as well as to raw population percentages.

5) This is due partly to subtle or open discrimination.

6) I would hypothesize that a great many of the white Protestants and Catholics who are admitted are legacies, star athletes, and the progeny of celebrities in entertainment, media, politics, and high finance. White Protestant or Catholic applicants, especially from the hinterlands, who don't fit one of these special categories–though they must be a very large component of Mr Unz's pool of top talent–are out of luck.

7) And everyone seems to think this is just fine.

The inner and outer ring idea seems to me an excellent one, though the likelihood of it happening is next to nil, both because some groups would lose disproportionate access and because the schools' imprimatur would be diminished in
value.

The larger point, made by several respondents, is that far too many institutions place far too much weight on the credentials conferred by a small group of screening institutions. The great advantage of the American system is not that it is meritocratic, either objectively or subjectively. It is that it is–or was–Protean in its flexibility. One could rise through luck or effort or brains, with credentials or without them, early in life or after false starts and setbacks. And there were regional elites or local elites rather than, as we increasingly see, a single, homogenized national elite. Success or its equivalent wasn't something institutionally conferred.

The result of the meritocratic process is that we are making a race of arrogant, entitled overlords, extremely skilled at the aggressive and assertive arts required to gain admission to, and to succeed in, a few similar and ideologically skewed universities and colleges; and who spend the remainder of their lives congratulating each other, bestowing themselves on the populace, and destroying the country.

No wonder we are where we are.


WG November 30, 2012 at 11:53 am GMT

This article is the product of careful and thoughtful research, and it identifies a problem hiding in plain sight. As a society, we have invested great trust in higher education as a transformative institution. It is clear that we have been too trusting.

That the admissions policies of elite universities are meritocratic is hardly the only wrong idea that Americans have about higher education. Blind faith in higher education has left too many people with largely worthless degrees and crushing student-loan debt.

Of course, the problems don't end with undergraduate education. The "100 reasons NOT to go to grad school" blog offers some depressing reading:

http://100rsns.blogspot.com/

The higher education establishment has failed to address so many longstanding internal structural problems that it's hard to imagine that much will change anytime soon.


candid_observer November 30, 2012 at 1:25 pm GMT

Jack above makes the following point:

"I believe that this article raises – and then inappropriately immediately dismisses – the simplest and most likely reason for the over-representation of Jewish students at Ivy League Schools in the face of their declining bulk academic performance:

They apply to those schools in vastly disproportionate numbers."

Here's the problem with that point. What Ron Unz demonstrates, quite effectively, is that today's Jews simply don't measure up to either their Asian or their White Gentile counterparts in terms of actual performance when they get into, say, Harvard. The quite massive difference in the proportions of those groups who get into Phi Beta Kappa renders this quite undeniable. What is almost certain is that policies that favored Asians and White Gentiles over the current crop of Jewish students would create a class of higher caliber in terms of academic performance.

If indeed it's true that Jews apply to Harvard in greater numbers, then, if the desire is to produce a class with the greatest academic potential, some appropriate way of correcting for the consequent distortion should be introduced. Certainly when it comes to Asians, college admissions committees have found their ways of reducing the numbers of Asians admitted, despite their intense interest in the Ivies.


candid_observer November 30, 2012 at 1:40 pm GMT

One way of understanding Unz's results here might be not so much that today's Jewish student is far less inclined to hard academic work than those of yesteryear, but rather that others - White Gentiles and Asians - have simply caught up in terms of motivation to get into elite schools and perform to the best of their abilities.

Certainly among members of the upper middle class, there has been great, and likely increasing, emphasis in recent years on the importance of an elite education and strong academic performance for ultimate success. This might well produce a much stronger class of students at the upper end applying to the Ivies.

It may be that not only the Asians, but upper middle class White Gentiles, are "The New Jews".


Howard November 30, 2012 at 5:11 pm GMT

I don't always agree with, Mr. Unz, but his expositions are always provocative and informative. As far as the criticisms of his data set go, he openly admits that they are less than ideal. However, the variances are so large that the margin of error can be excused. Jews are 40 TIMES more likely to be admitted to Harvard than Gentile whites. Asians are 10 times more likely. Of course, it could be possible that Jews, because of higher average IQs, actually produce 40 times as many members in the upper reaches of the cognitive elite.

Given Richard Lynn's various IQ studies of Jews and the relative preponderance of non-Jewish and Jewish whites in the population, however, whites ought to have a 7 to 1 representation vis-a-vis Jews in Ivy League institutions, assuming the IQ cutoff is 130. Their numbers are roughly equivalent instead.

Because Ivy League admissions have been a hotbed of ethnic nepotism in the past, it seems that special care should be taken to avoid these improprieties (or the appearance thereof) in the future. But no such safeguards have been put in place. David Brooks has also struck the alarm about the tendency of elites to shut down meritocratic institutions once they have gained a foothold: http://www.nytimes.com/2012/07/13/opinion/brooks-why-our-elites-stink.html?_r=1&ref=global-home

Clannish as the WASPs may have been, they were dedicated enough to ideals of fairness and equality that they opened the doors for their own dispossession. I predict that a new Asian elite will eventually eclipse our Jewish elite. Discrimination and repression can restrain a vigorously ascendant people but for so long. When they do, it will be interesting to see if this Asian cohort clings to its longstanding Confucian meritocratic traditions, embodied in the Chinese gaokao or if it too will succumb to the temptation, ever present in a multiethnic polity, of preferring ethnic kinsmen over others.

Does anyone know how a minority such as the Uighurs fares in terms of elite Chinese university admissions?


Daniel November 30, 2012 at 7:39 pm GMT

This may sound like special-pleading, but it's not clear that full-scale IQ measures are meaningful when assessing and predicting Jewish performance. Jewish deficits on g-loaded spatial reasoning task may reflect specific visuo-spatial deficits and not deficits in g. As far as I know, no one doubts that the average Jewish VIQ is at least 112 (and possibly over 120). This score may explain jewish representation which seems to exceed what would be projected by their full-scale iq scores. Despite PIQ's correllation to mathematical ability in most populations, we ought also remember that, at least on the WAIS, it is the VIQ scale that includes the only directly mathematical subtest. We should also note that Jewish mathematicians seem to use little visualization in their reasoning (cf. Seligman

That said, I basically agree that Jews are, by and large, coasting. American Jews want their children to play hockey and join 'greek life' and stuff, not sit in libraries . It's sad for those of us who value the ivory tower, but understandable given their stigmatiziation as a nerdish people.


Nick November 30, 2012 at 9:06 pm GMT

I wonder if it would be at all possible to assess the political biases of admissions counselors at these schools by assessing the rates at which applicants from red states are admitted to the elite universities. I suppose you would have to know how many applied, and those data aren't likely to exist in the public domain.


Alex November 30, 2012 at 9:47 pm GMT

One major flaw with this article's method of determining Jewish representation: distinctive Jewish surnames in no way make up all Jewish surnames. Distinctive Jewish surnames happen to be held by only 10-12% of all American Jews. In fact, the third most common American Jewish surname after Cohen and Levy is Miller. Mr. Unz' methodology does not speak well for itself, given that he's comparing a limited set of last names against a far more carefully scrutinized estimate.

I'm not suggesting his estimate of national merit scholars and the like is off by a full 90%, but he's still ending up with a significant undercount, possibly close to half. That would still mean Jews may be "wrongfully" over-represented are many top colleges and universities, but the disproportion is nowhere near as nefarious as he would suggest.


Ben K November 30, 2012 at 11:18 pm GMT

@Nick – the "red state" application and admission rates isn't useful data.

Short answer: There are many reasons for this, but basically, historical momentum and comfort play a much bigger role in where kids apply than we think. I assure you, far more top Nebraska HS seniors want to be a Cornhusker than a Crimson, even though many would find a very receptive consideration and financial aid package.

Long answer: 1st, although this article and discussion have been framed in broad racial/cultural terms, the mechanics of college admissions are mostly local and a bit like athletic recruiting – coverage (and cultivation) of specific regions and districts, "X" high school historically deliver "X" kinds of candidates, etc. So to the degree we may see broader trends noted in the article and discussion, some of that is rooted at the HS level and lower.

2nd, in "red states", most Ivy applicants come from the few blue or neutral districts. E.g.: the only 2 Utah HS's that consistently have applicants to my Ivy alma mater are in areas that largely mirror other high-income, Dem-leaning areas nationwide rather than the rest of Utah.

3rd, but, with some variation among the schools, the Ivy student body is more politically balanced than usually assumed. Remember, most students are upper-income, Northeastern suburban and those counties' Dem/Rep ratio is often closer to 55/45 than 80/20.

But to wrap up, ideology plays a negligible role in admissions generally (there's always an exception); they have other fish to fry (see below).

@soren in Goldman's post ( http://bit.ly/TrbJSB ) and other commenters here:

"Quota against Asians" is not entirely wrong, but it's too strong because it implies the forward intent is about limiting their numbers.

Put another way, Unz believes the Ivies are failing their meritocractic mission by over-admitting a group that is neither disadvantaged nor has highest technical credentials; and this comes at the expense of a group that is more often disadvantaged and with higher technical credentials. The Ivies would likely reply, "well, we define 'meritocractic mission' differently".

That may be a legitimate counter, but it's also what needs more expansion and sunlight.

But Unz' analysis has a broader causation vs correlation gap. Just because admissions is essentially zero-sum doesn't mean every large discrepancy in it is, even after allowing for soft biases. I've mentioned these earlier in passing, but here are just a couple other factors of note:

Admissions is accountable for selection AND marketing and matriculation – these are not always complementary forces. Essentially, you want to maximize both the number and distribution (racial, geographic, types of accomplishment, etc.) of qualified applicants, but also the number you can safely turn down but without discouraging future applications, upsetting certain stakeholders (specific schools, admissions counselors/consultants, etc.) or "harming" any data in the US News rankings. And you have a very finite time to do this, and – not just your competition, but the entire sector – is essentially doing this at the same time. You can see how an admissions process would develop certain biases over time to limit risks in an unpredictable, high volume market, even if rarely intended to target a specific group. Ivy fixation (but especially around HYP) is particularly concentrated in the Northeast – a sample from several top HS' across America (public and private) would show much larger application and matriculation variations among their top students than would be assumed from Unz's thesis. Different Ivies have different competitors/peers, which influences their diversity breakdowns – to some degree, they all co-compete, but just as often don't. E.g.: Princeton often overlaps with Georgetown and Duke, Columbia with NYU and Cooper Union, Cornell with SUNY honors programs because it has some "in state" public colleges, etc.

There's much more, of course, but returning to Unz's ethnographic thesis, I have this anecdote: we have two friends in finance, whose families think much of their success. The 1st is Asian, went to Carnegie Mellon, and is a big bank's trading CTO; the 2nd is Jewish, went to Wharton, and is in private equity.

Put another way, while both families shared a pretty specific vision of success, they differed a lot in the execution. The upper echelon of universities, and the kinds of elite-level mobility they offer, are much more varied than even 25 years ago. While the relative role of HYP in our country, and their soft biases in admission, are "true enough" to merit discussion, it's probably not the discussion that was in this article.


candid_observer November 30, 2012 at 11:23 pm GMT

Alex,

While you may have a point as to the difficulty in some cases of identifying a Jewish surname, the most important thing methodologically is that the criteria be performed uniformly if one is comparing Jewish representation today vs. that of other periods. I can't think, for example, of any reason that Cohens or Levys or Golds should be any less well represented today as opposed to many years ago if indeed there has not been an underlying shift in numbers of Jews in the relevant categories. (Nor, for that matter, should issues like intermarriage affect the numbers much here - for every mother whose maiden name is Cohen who marries a non-Jew with a non-Jewish surname, and whose half Jewish child will be counted as non-Jewish, there is, on average, going to be a man named Cohen who will marry a non-Jew, and whose half Jewish child will be counted as Jewish.)


Bud Wood November 30, 2012 at 11:43 pm GMT

One might suppose that all this "inequity" and "discrimination" matters if we're keeping score. However, seems to me that too much emphasis is typically placed on equality whereas real criteria in productive and satisfying lives are neglected. Kind'a like some people wanting bragging rights as much, if not more, than wanting positive reality.

I guess I just went about my way and lived a pretty god life (so far). Who knows?; maybe those "bragging rights" are meaningful.

Bud Wood
Grad – Stanford Elec Engrg.


Neil Schipper December 1, 2012 at 4:54 am GMT

Thought provoking article.

Ditto to many comments about the "last name problem", even if its correction weakens but doesn't invalidate the argument. (One imagines, chillingly, a new sub-field: "Jewish last name theory", seeking to determine proportionalities of classic names validated against member/donor lists of synagogues and other Jewish organizations.)

Regarding the 20% inner ring suggestion, it suffers from its harsh transition. Consider a randomized derating scheme: a random number between some lower bound (say 0.90) and 1.00 is applied to each score on the ranked applicant list.

The added noise provides warmth to a cold test scores list. Such an approach nicely captures the directive: "study hard, but it's not all about the grades".

By adjusting the lower bound, you can get whatever degree of representativeness relative to the application base you want.

That it's a "just a number" (rather than a complex subjectivity-laden labyrinth incessantly hacked at by consultants) could allow interesting conversations about how it could relate to the "top 1% / bottom 50%" wealth ratio. The feedback loop wants closure.


Alex December 1, 2012 at 6:12 am GMT

You missed my point, candid. A relatively small proportion of Jews, intermarried or otherwise, have distinctive Jewish names. I didn't make that 10-12% figure up. It's been cited in numerous local Jewish population studies and is used in part (but certainly far from whole) to help estimate those populations. It's also been significantly dragged down over the years as the Jewish population (and hence the surname pool) has diversified, not just from intermarriage, but in-migration from groups who often lack "distinctive Jewish surnames" such as Jews from the former Soviet Union. Consider also that for obvious reasons, Hillel, which maintains Jewish centers on most campus, has an incentive to over-report by a bit. Jewish populations on college campuses in the distant past were easier to gather, given that it was far less un-PC to simply point blank inquire what religious background applicants came from.

Again, I'm not saying there isn't a downward trend in Jewish representation among high achievers (which, even if one were to accept Unz's figures, Jews would still be triple relative to were they "should" be). But Unz has made a pretty significant oversight in doing his calculations. That may happen to further suit his personal agenda, but it's not reality.


Anonymous December 1, 2012 at 3:42 pm GMT

This is interesting, but I suspect mostly bogus, based on your not having a decent algorithm for discovering if someone's Jewish.

I'm not sure what exact mechanism you're using to decide if a name is Jewish, but I'm certain it wouldn't have caught anyone, including myself, in my father's side of the family (Sephardic Jews from Turkey with Turkish surnames), nor my wife's family, an Ellis Island Anglo name. Or probably most of the people in her family. And certainly watching for "Levi, Cohen and Gold*" isn't going to do anything.

And none of us have even intermarried!


conatus December 1, 2012 at 4:10 pm GMT

Isn't the point about Jewish over representation in the Ivy League about absolute numbers?

Yes the Jewish demographic has a higher IQ at 115 to the Goyishe Kop 100 but Jewish people are only 2% of the population so you have 6 million Jewish people vying with 200 million white Goys for admission to the Ivy League and future control of the levers of power. That is a 33 times larger Bell curve so the right tail of the Goys' Bell curve is still much larger than the Jewish Bell curve at IQ levels of 130 and 145, supposedly there are seven times more Goys with IQs of 130 and over 4 times more Goys with IQs of 145. So why the equality of representation, one to one, Jewish to white Goy in the Ivy Leagues?


Andrew says: • Website Show Comment Next New Comment December 1, 2012 at 6:29 pm GMT

http://www.huffingtonpost.com/andrew-phu-quoc-nguyen/asian-american-students_b_2173993.html I hope everyone can participate in gaining admittance and everyone can improve the system legally. Real repair is needed.


Amanda December 1, 2012 at 6:34 pm GMT

Russell K. Nieli on study by Thomas Espenshade and Alexandria Radford (mentioned by Unz):

"When lower-class whites are matched with lower-class blacks and other non-whites the degree of the non-white advantage becomes astronomical: lower-class Asian applicants are seven times as likely to be accepted to the competitive private institutions as similarly qualified whites, lower-class Hispanic applicants eight times as likely, and lower-class blacks ten times as likely. These are enormous differences and reflect the fact that lower-class whites were rarely accepted to the private institutions Espenshade and Radford surveyed. Their diversity-enhancement value was obviously rated very low."

..


Scott Locklin says: • Website Show Comment Next New Comment December 1, 2012 at 10:09 pm GMT

Having worked with folks from all manner of "elite" and not so elite schools in a technical field, the main conclusion I was able to draw was folks who went to "elite" colleges had a greater degree of entitlement. And that's it.


Shlomo December 2, 2012 at 4:27 am GMT

If all of the author's suspicions are correct, the most noteworthy takeaway would be that Jewish applicants have absolutely no idea that they are being given preferential treatment when applying to Ivys.

Not that they think they are being discriminated against or anything, but no Jewish high school student or their parents think they have any kind of advantage, let alone such a huge one. Someone should tell all these Jews that they don't need to be so anxious!

Also, I know this is purely anecdotal but having gone to an ivy and knowing the numbers of dozens of other Jews who have also gone, I don't think I have ever witnessed a "surprise" acceptance, where someone got in with a score under the median.


Anonymous December 2, 2012 at 5:22 am GMT

I don't doubt for a minute that it's increasingly difficult for Asian students to get into so-called "elite" universities. Having grown up in that community, I know a lot of people who were pressured into applying at Harvard and Yale but ended up *gasp* going to a very good local school. My sarcasm aside, we can't really deny that having Harvard on your CV can virtually guarantee a ticket to success, regardless of whether or not you were just a C student. It happens.

But what worries me about that is the fact that I know very well how hard Asian families tend to push their children. They do, after all, have one of the highest suicide rates and that's here in the US. If by some means the Asian population at elite universities is being controlled, as I suspect it is, that's only going to make tiger mothers push their children even harder. That's not necessarily a good thing for the child's psyche, so instead of writing a novel here, I'll simply give you this link. Since the author brought up the subject of Amy Chua and her book, I think it's a pretty fitting explanation of the fears I have for my friends and their children if this trend is allowed to continue.

http://www.asianmanwhitewoman.com/jocelyn/editorial/tiger-mother-rebuttal-why-east-west-mothers-are-superior/


Anonymous December 2, 2012 at 9:16 pm GMT

to respond to Alice Zindagi
Asian American does not have higher suicide rate.

http://www.apa.org/pi/oema/resources/ethnicity-health/asian-american/suicide.aspx


Anonymous says: • Website Show Comment Next New Comment December 2, 2012 at 9:30 pm GMT

As a former admissions staff person at Princeton, I always sigh when I read articles on elite college admissions processes which build cases on data analysis but which fail to consult with admissions experts on the interpretation of that data.

I am neither an expert in sociology, nor am I a statistician, but I have sat in that chair, reading thousands of essays, and I have a few observations:

The most selective part of any college's admissions process is the part where students themselves decides whether or not to apply. Without data on the actual applicant sets, it is, at the least, misleading to attribute incongruities between the overall population's racial/ethnic/income/what-have-you characteristics and the student bodies' make-ups entirely to the admission decisions. The reality is that there is always a struggle in the admission offices to compensate for the inequities that the applicant pool itself delivers to their doorsteps. An experienced admission officer can tell you that applicants from cultures where academics and education are highly valued, and where the emphasis on a single test is quite high, will generally present with very high SAT scores. Race does not seem to be correlated, but immigrant status from such a culture is highly correlated. (This may partially explain Unz's observation of a "decline" in Jewish scores, although I also do not believe that the surname tool for determining which scores are "Jewish" holds much water.) One of the reasons that such students often fare less well in holistic application processes is that the same culture that produces the work ethic and study skills which benefit SAT performance and GPA can also suppress activities and achievement outside of the academic arena. Therefore, to say that these students are being discriminated against because of race is a huge assumption. The true questions is whether the students with higher test scores are presenting activity, leadership and community contributions comparable to other parts of the applicant pool which are "overrepresented". All of these articles seem to miss the point that a freshman class is a fixed size pie chart. Any piece that shrinks or grows will impact the other slices. My first thought upon reading Unz' argument that the Asian slice shrank was, "What other pieces were forced to grow?" Forced growth in another slice of the class is the more likely culprit for this effect, much more likely than the idea that all of the Ivies are systematically discriminating against the latest victim. I could go on and on, but will spare you! My last note is to educate Mr. Unz on what an "Assistant Director" is in college admissions. Generally that position is equivalent to a Senior Admission Officer (one step up from entry level Admission Officer), while the head of the office might be the Dean and the next step down from that would be Associate Deans (not Assistant Directors). So while Michelle Hernandez was an Assistant Director, she was not the second in charge of Admissions, as your article implies. A minor distinction, but one which is important to point out so that her expertise and experience, as well as my own, as AN Assistant Director of Admission at Princeton, are not overstated.

A last personal note: During Princeton's four month reading season, I worked 7 days a week, usually for about 14 hours a day, in order to give the fullest, most human and considerate reading of each and every applicant that I could give. I am sure that the admission profession has its share of incompetents, corruptible people and just plain jerks, and apparently some of us are not intelligent enough to judge the superior applicants . . . . But most of us did it for love of the kids at that age (they are all superstars!), for love of our alma maters and what they did for us, and because we believed in the fairness of our process and the dignity with which we tried to do it.

The sheer numbers of applicants and the fatigue of the long winters lend themselves to making poor jokes such as the "Night of 1000 Lee's", but a good dean of admission will police such disrespect, and encourage the staff, as mine did, to read the last applicant of the day with the same effort, energy and attention paid to the first. We admission folk have our honor, despite being underpaid and playing in a no-win game with regard to media coverage of our activities. I am happy to be able to speak up for the integrity of my former colleagues and the rest of the profession.


Michael O'Hearn says: • Website Show Comment Next New Comment December 2, 2012 at 9:43 pm GMT

My own position has always been strongly in the former camp, supporting meritocracy over diversity in elite admissions.

When these Ivy League institutions were first begun in the colonial period, they were not strictly speaking meritocratic. The prevailing idea was that Christocentric education is the right way to go, both from an eschatological and a temporal perspective, and the central focus was on building and strengthening family ties. The Catholic institutions of higher learning took on the vital role of preserving Church tradition from apostolic times and were thus more egalitarian and universalist. The results went far beyond all expectations.

Nothing lasts forever. Your premise misses the essential point that the economy is for man and not vice-versa.


Michael O'Hearn says: • Website Show Comment Next New Comment December 3, 2012 at 3:09 am GMT

Perhaps this should have been titled The Reality of American Mediocrity ?


Janet Mertz December 4, 2012 at 12:56 am GMT

Many of the statements in this article relating to Jews are rather misleading: for while the Hillel data regarding percentage of students who self-identify as Jews may be fairly accurate, the numbers the author cites based upon "likely Jewish names" are a gross under-count of the real numbers, leading to the appearance of a large disparity between the two which, in reality, does not exist. The reason for the under-count is that a large percentage of American Jews have either Anglicized their family name or intermarried, resulting in their being mistaken for non-Hispanic whites. Thus, one ends up with incorrect statements such as "since 2000, the percentage (of Jewish Putnam Fellows) has dropped to under 10 percent, without a single likely Jewish name in the last seven years". The reality is that Jews, by Hillel's definition of self-identified students, have continued to be prominent among the Putnam Fellows, US IMO team members, and high scorers in the USA Mathematical Olympiad. I have published a careful analysis of the true ethnic/racial composition of the very top-performing students in these math competitions from recent years (see, Andreescu et al. Notices of the AMS 2008; http://www.ams.org/notices/200810/fea-gallian.pdf ). For example, Daniel Kane, a Putnam Fellow in 2002-2006, is 100% of Jewish ancestry; his family name had been Cohen before it was changed. Brian Lawrence was a Putnam Fellow in 2007, 2008, 2010, and 2011; his mother is Jewish. Furthermore, many of the non-Jewish Putnam Fellows in recent years are Eastern European or East-Asian foreigners who matriculated to college in the US; they were not US citizen non-Jewish whites or Asian-Americans, respectively. Rather, my data indicate that in recent years both Jews and Asians have been 10- to 20-over-represented in proportion to their percentage of the US population among the students who excel at the highest level in these math competitions. The authors conclusions based upon data from other types of competitions is likely similarly flawed.


mannning December 4, 2012 at 6:28 am GMT

The title of this piece captured me to read what it was all about. What was discussed was admissions into elite colleges as the only focus on "meritocracy" in America. That leaves the tail of the distribution of high IQ people in America, minus those that make it into elite colleges, to be ignored, especially those that managed to be admitted to Cal Tech, or MIT, or a number of other universities where significant intellectual power is admitted and fostered. this seems to further the meme that only the elite graduates run the nation. They may have an early advantage through connections, but I believe that the Fortune 400 CEO's are fairly evenly spread across the university world.


Eric Rasmusen December 4, 2012 at 4:45 pm GMT

A couple more thoughts:

(1) Jews are better at verbal IQ, Asians at math. Your measures are all math. That woudl be OK if all else were equal across time, but especially because Jews care a lot about admissions to Ivies, what we'd expect is that with growing Asian competition in math/science, Jews would give up and focus their energy on drama/writing/service. I wonder if Jewish kids are doing worse in music competitions too? Or rather- not even entering any more.

(2) For college numbers, adjustment for US/foreign is essential. How many Asians at Yale are foreign? It could well be that Asian-Americans are far more under-represented than it seems, because they face quota competition from a billion Chinese and a billion Indians. Cal Tech might show the same result as the Ivies.

(3) A separate but interesting study would be of humanities and science PhD programs. Different things are going on there, and the contrast with undergrads and with each other might be interseting.

MEH 0910 December 5, 2012 at 1:13 pm GMT

Half Sigma wrote about this Ron Unz article :

I also learned that Jews are no longer as prominent in math and science achievement, and that's not surprising to me at all, because everyone in the elite knows that STEM is for Asians and middle-class kids. Jewish parents have learned that colleges value sports and "leadership" activities more than raw academic achievement and nerdy activities like math olympiads, and that the most prestigious careers are value transference activities which don't require science or high-level math.

You should re-read my critique of Amy Chua's parenting advice . Jews have figured out that's crappy advice for 21st century America.

biaknabato December 6, 2012 at 12:59 am GMT

The higher representation of Jews in the Ivies compared to Asians who have better average academic records compared to Jews (applicants that is ) in the Ivies is due to the greater eligibility of Jews for preferences of every kind in the Ivies. In a typical Ivy school like Harvard, at least 60% of the freshman class will disappear because of the vast system of preferences that exists. There is no doubt that there is racial animus involved despite the denials of the Ivies and other private universities despite the constant denials involved like that of Rosovsky who happens to be a historian by training. Jews are classified as white in this country, hence there would presumably greater affinity for them among the white Board of Trustees and the adcom staff. This is in contrast to Asians who do not share the same culture or body physiogonomy as whites do.

I had read the Unz article and the Andrew Goldman response to it. I just do not agree with Unz with his solutions to this problem. First of all private schools are not going to give legacy preferences and other kinds of preferences for the simple reason that it provides a revenue stream. Harvard is nothing but a business just like your Starbucks or Mcdonald's on the corner.

Around the world private universities regarded as nothing but the dumping ground of the children of the wealthy, the famous and those with connections who cannot compete with others with regards to their talent and ability regardless of what anyone will say from abroad about the private universities in their own country. Bottomline is in other countries , the privates simply do not get the top students in the country, the top public school does. People in other countries will simply look askance at the nonsensical admissions process of the Ivies and other private schools, the system that the Ivies use for admission does not produce more creative people contrary to its claims.

The Goldman response has more to do with the humanities versus math . My simple response to Andrew Goldman would be this : a grade of A in Korean history is different from a grade of A in Jewish history, it is like comparing kiwis and bananas. The fast and decisive way of dealing with this problem is simply to deprive private schools of every single cent of tax money that practices legacy preferences and other kinds repugnant preferences be it for student aid or for research and I had been saying that for a long time. I would like to comment on the many points that had been raised here but I have no time.

Eric Rasmusen December 7, 2012 at 4:16 pm GMT

The solution to a lot of problems would be transparency. I'd love to see the admissions and grade data of even one major university. Public universities should be required to post publicly the names, SAT scores, and transcripts of every student. Allowing such posting should be a requirement for admission.

The public could then investigate further if, for example, it turned out that children of state senators had lower SAT scores. Scholars could then analyze the effect of diversity on student performance.

Of course, already many public universities (including my own, Indiana), post the salaries of their professors on the web, and I haven't seen much analysis or muckraking come out of that.

Anonymous December 8, 2012 at 12:29 am GMT

One factor hinted at in the article, but really needing to be addressed is the "school" that is being attended.

By this, I mean, you need philosophy students to keep the philosophy department going. When I was in college 20 years ago, I was a humanities major. I took 1 class in 4 years with an Asian American student. 1 class. When I walked through the business building, it was about 50% Asian.

Could Asian-American students only wanting to go to Harvard to go into business, science, or math be skewing those numbers? I don't know, but it's just a thought to put out there.

Anonymous says: • Website December 9, 2012 at 12:44 am GMT

You are preaching to the choir! I blog on this extensively on my Asian Blog: JadeLuckClub. This has been going on for the last 30 years or more! All my posts are here under Don't ID as Asian When Applying to College:

http://jadeluckclub.com/category/asian-in-america/dont-id-as-asian-when-applying-to-college/

biaknabato December 12, 2012 at 7:42 am GMT

All private schools basically practice legacy prefrences and other kinds of preferences and this practice has been going on in the Ivies since time immemorial. The income revenue from these gallery of preferences will certainly not encourage the Ivies to give them up.

In many countries around the world, private universiites are basically the dumping ground for the children of the wealthy , the famous and the well connected who could not get into the top public university of their choice in their own country. This no different from the Ivies in this country where these Ivies and other private universities are just a corral or holding pen for the children of the wealthy, the famous and the well connected and the famous who could not compete with others based on their won talent or ability.

Abroad you have basically 3 choices if you could not get into the top public university of that country , they are:

  1. Go to a less competetive public university
  2. Go to a private university
  3. or go abroad to schools like the Ivies or in other countries where the entrance requirements to a public or private university are less competetive compared to the top public universities in your own home country.

You can easily tell a top student from another country, he is the guy who is studying in this country under a government scholarship ( unless of course it was wrangled through corruption ). the one who is studying here through his own funds or through private means is likely to be the one who is a reject from the top public university in his own country. That is how life works.

I am generally satisfied with the data that Ron provided about Jews compared to Asians where Jews are lagging behind Asians at least in grades and SAT scores in the high school level, from the data I had seen posted by specialized schools in NY like Stuy , Bronx Sci, Brook Tech, Lowell (Frisco ) etc.

Ron is correct in asserting that the Ivies little represents the top students in this country. Compare UCLA and for example. For the fall 2011 entering freshman class at UCLA , there were 2391 domestic students at UCLA compared to 1148 at Harvard who scored above 700 in the Math portion of the SAT and there were 439 domestic students who scored a perfect 800 in the Math portion of the SAT at UCLA, more than Harvard or MIT certainly. For the fall 2012 freshman classs at UCLA the figure was 2409 and 447 respectively.

We can devise a freshman class that will use only income, SATS,grades as a basis of admissions that will have many top students like UCLA has using only algorithms.

The central test of fairness in any admissions system is to ask this simple question. Was there anyone admitted under that system admitted over someone else who was denied admission and with better grades and SAT scores and poorer ? If the answer is in the affirmative, then that system is unfair , if it is in the negative then the system is fair.

Anonymous December 12, 2012 at 7:20 pm GMT

I like the comments from Chales Hale. (Nov. 30, 2012) He says: "Welcome to China". It said all in three words. All of these have been experienced in China. They said there is no new things under the sun. History are nothing but repeated, China with its 5000 years experienced them all.

biaknabato December 12, 2012 at 11:01 pm GMT

I meant that there were 439 domestic students in the fall 2011 freshman class at UCLA and 447 domestic students in the fall 2012 freshman class at UCLA who scored a perfect score of 800 in the Math portion of the SAT. In either case it is bigger than what Harvard or MIT has got.

In fact for the fall 2011 of the entire UC system there were more students in the the freshman class of the entire UC system who scored above 700 in the Math portion of the SAT than the entire fall 2011 freshman of the Ivy League (Cornell not included since it is both a public and a private school )'

As I mentioned earlier there were 2409 domestic students in the fall 2012 UCLA freshman class who scored above 700 in the Math portion of the SAT. We know that Harvard had only 1148 domestic students in its fall 2011 freshman class who scored above 700 in the Math portion of the SAT, why would Harvard ever want to have that many top students like Berkeley or UCLA have ? The answer to that is simple , it has to do with money. For every additional student that Harvard will enroll it would mean money being taken out of the endowment .

Since the endowment needs constant replenishment. Where would these replenishment funds come from ? From legacies,from the children of the wealthy and the famous etc. of course . It would mean more legacy admits, more children of the wealthy admitted etc.
That would mean that the admission rate at Harvard will rise, the mean SAT score of the entering class will be no different from the mean SAT scores of the entering freshman classes of Boston University and Boston College
down the road. With rising admission rates and lower mean SAT scores for the entering freshman class that prospect will not prove appetizing or appealing to the applicant pool.

Harvard ranks only 8th after Penn State in the production of undergrads who eventually get Doctorates in Science and Engineering. Of course Berkeley has the bragging rights for that kind of attribute.

biaknabato December 12, 2012 at 11:32 pm GMT

In the scenario I had outlined above, it would mean that the mean SAT score of the Harvard freshman class will actually go down if it tried to increase the size of its freshman class and that kind of prospect ia unpalatable to Harvard and that is the reason as to why it wants to maintain its current " air of exclusivity ".

There is another way of looking at the quality of the Harvard student body. The ACM ICPC computer programming competition is regarded as the best known college competition among students around the world , it is a grueling programming marathon for 2 or 3 days presumably. Teams from universities around the world vie to win the contest that is dubbed the "Battle of the Brains " What is arguably sad is that Ivy schools, Stanford and other private schools teams fielded in the finals of the competition are basically composed of foreign students or foreign born students and foreign born coaches.

The University of Southern California team in this competition in its finals section was made up of nothing but foreign Chinese students and a Chinese coach. The USC team won the Southern California competition to win a slot in the finals. Apparently they could not find a domestic student who could fill the bill. However the USC team was roundly beaten by teams from China and Asia,Russia and Eastern Europe. The last time a US team won this competition was in 1999 by Harvey Mudd, ever since the US had gone downhill in the competition with the competition being dominated by China and Asia and by countries from Eastern Europe and Russia. Well I guess USC's strategy was trying to fight fire with fire (Chinese students studying in the US versus Chinese students from the Mainland ), and it failed.

Been there December 13, 2012 at 5:32 am GMT

Thank you Mr. Unz for scratching the surface of the various forms of corruption surrounding elite college admissions. I hope that your next article further discusses the Harvard Price (and Yale Price and Brown Price etc). The recent press surrounding the Hong Kong couple suing the person they had retained to pave their children's way into Harvard indicates the extent of the problem. This Hong Kong couple just were not savvy enough to lay their money down where it would produce results.
Additionally, a discussion of how at least some North Eastern private schools facilitate the corrupt process would be illuminating.
Finally, a more thorough discussion of whether the Asian students being admitted are US residents or nationals or whether they are foreign citizens would also be worth while and reveal. I suspect, an even lower admit percentage for US resident citizens of Asian ethnicity.
For these schools to state that their acceptances are need blind is patently untrue and further complicates the admissions process for students who are naive enough to believe that. These schools should come clean and just say that after the development admits and the wealthy legacy admits spots are purchased, the remaining few admits are handed out in a need blind fashion remembering that many of admit pools will already be filled by the development and wealthy legacy admits resulting in extraordinarily low rates for certain non-URM type candidates (I estimate in the 1% range).

Anonymous December 13, 2012 at 6:39 pm GMT

"By contrast, a similarly overwhelming domination by a tiny segment of America's current population, one which is completely misaligned in all these respects, seems far less inherently stable, especially when the institutional roots of such domination have continually increased despite the collapse of the supposedly meritocratic justification. This does not seem like a recipe for a healthy and successful society, nor one which will even long survive in anything like its current form."

I completely agree that it is not healthy for one tiny segment of our population to basically hold all the key positions in every major industry in this country. If Asians or Blacks (who look foreign) all of a sudden ran education, media, government, and finance in this country, there would be uproar and resistance. But because Jewish people look like the majority (whites), they've risen to the top without the masses noticing.

But Jewish people consider themselves a minority just like blacks and Asians. They have a tribal mentality that causes stronger ethnic nepotism than most other minority groups. And they can get away with it because no one can say anything to them lest they be branded "jew-hunters" or "anti-semists."

The question is, "where do we go from here?" True race-blind meritocracy will never be instituted on a grand scale in this country both in education and in the work force. One group currently controls most industries and the only way this country will see more balance is if other groups take more control. But if one group already controls them all and controls succession plans, how will there ever be more balance?

Larry Long says: • Website December 14, 2012 at 4:33 am GMT

If Jews become presidents or regents of universities, that's a credit to their ability. Nothing sinister there.

But when Jews (or anyone) buy into an institution to create the 'Goldman School of Business', or when they give large donations, that is not a credit to anyone's ability and there may well be something sinister there.

It is no secret that corporations and individuals look for influence, if not control, in return for cash. The same thinking can easily affect admissions policy.

It's always the same. In spite of all the jingoism about "democracy" and "freedoms" and the "free market capitalist system", the trail of money obfuscates and corrupts. It is still very true that whoever pays the piper, calls the tune. And naive to believe otherwise.

How recent was it that Princeton cancelled its anti-Semitism classes for lack of participation, and at least one Jewish organisation was screaming that Princeton would never get another penny from any Jew, ever.

That is close to absolute control of a curriculum. I give you money, and you teach what I want you to teach.

How far is that from I give you money and you admit whom I want you to admit? Or from I give you money and you hire whom I want?

A university that is properly funded by the government – "the people" – doesn't have these issues because there is nothing you can buy.

Operating educational institutions as a business, just like charities and health care, will always produce this kind of corruption.

Two other points:

1. It occurred to me that the lowly-paid underachiever admissions officers might well have been mostly Jewish, and hired for that reason, and that in itself could skew the results in a desired manner.

2. I think this is a serious criticism of the othewise excellent article:

At the end, Ron Unz wants us to believe that a $30-billion institution, the finest of its kind in the world, the envy of the known universe and beyond, the prime educator of the world's most prime elites, completely abandons its entire admissions procedures, without oversight or supervision, to a bunch of dim-witted losers of "poor human quality" who will now choose the entire next generation of the nation's elites. And may even take cash payments to do so.

Come on. Who are you kidding? Even McDonald's is smarter than this.

Anonymous December 14, 2012 at 3:00 pm GMT

Some of the comments suggest major problems with estimating who is Jewish. But the authors information is underpinned by data collected by Jewish pressure groups for the purpose of ensuring the gravy train keeps flowing. It's either their numbers, or the numbers are consistent with their numbers.

Anonymous December 14, 2012 at 7:54 pm GMT

This article, to me, is shocking and groundbreaking. I don't think anyone has gone this in-depth into this biased and un-meritocratic system. This is real analysis based on real numbers.

Why is this not getting more coverage in the media? Why are people so afraid to talk about this?

Achaean December 15, 2012 at 12:50 pm GMT

There is an excellent analysis of this article at The Occidental Observer by Kevin MacDonald, "Ron Unz on the Illusory American Meritocracy". The MSM is ignoring Unz's article for obvious reasons.

tomo December 15, 2012 at 10:46 pm GMT

I don't know if there's any truth behind the idea that Japanese Americans have become lazy relative to their Korean and Chinese counterparts. I've grew up in Southern California, a part of the country with a relatively high percentage of Japanese Americans, yet I've know very few other Japanese Americans in my life. I can recall one Japanese American classmate in jr. high, and one Japanese classmate in my high school (who returned to Japan upon graduating). Even at the UC school I attended for undergrad, I was always the only Japanese person in the every class, and the Japanese Student Association, already meager in numbers, was almost entirely made up of Japanese International students who were only here for school.

If, in fact, 1% of California is made up of Japanese Americans, I suspect they are an aging population. I also think many 2nd and 3rd generation Japanese Americans are only partially Japanese, since, out of necessity, Japanese Americans have a very high rate of out marriage.

Anonymous December 20, 2012 at 5:04 pm GMT

The carefully researched article makes a strong case that there is some discrimination against Asian-Americans at the Ivy League schools.

On the other hand, I don't see how a percentage of 40-60% Asian-Americans at the selective UC schools, even given the higher percentage of Asian-Americans in California, does not perhaps reflect reverse discrimation, or at least affirmative action on their behalf. To be sure one way or the other, we would have to see their test scores AND GPA, apparently the criteria that the UC schools use for admission, considered as well in the normalization of this statistical data.

Lynn December 20, 2012 at 6:37 pm GMT

The replies to date make some good points but also reflect precisely the biases pointed out in the article as likely causing the discussed distortions.

1) use of name data in achievement vs use of Hillel data for Ivy admits: definitely an issue but is this only one of the measures used in this study. Focusing only on this obscures the fact that Jewish enrollment as measured over time by Hillel numbers (apples to apples) increased significantly over the past decade while the percent of Jewish high school age students relative to other groups declined. One explanation for this surge could be that Jewish students became even more academically successful than they have been in the past. The achievement data using Jewish surnames is used to assess this thesis in the absence of other better data. Rejecting the surname achievement data still leaves a huge enrollment surge over time in Jewish attendance at the Ivies relative to their percentage of the population.

2) many comments accept that the numbers show disproportionate acceptance and enrollment growth but simply then go on to assert that Jewish students really are smarter (absolutely or in gaming the system) relying on anecdotal evidence that is not at all compelling. All definitions of "smarter" contain value judgments". Back in the '20s the argument was that the Ivies should rely more on objective testing to remove bias against the then high testing Jewish students; now the writers argue conveniently wthat the new subjective tests that are applied to disproportionately admit Jewish students over higher scoring Asians and non-Jewish Caucasians are better measures. In both cases, there is still an issue of using a set of factors that disproportionately favors one group. In all such cases of significant disproportionate admits, the choice of the factors used to definemmerit and their application should be carefully evaluated for bias. The burden of proof should shift to those defending the status quo in this situation. In any event, it is clear that given the large applicant pool, there is no shortage of non-Jewish caucasians and Asians who are fully qualified, so if the desire was there for a balanced entering class, the students are available to make it happen

3) the numbers don't break down admissions between men and women. When my child was an athletic recruit to Harvard, we received an ethnic breakdown of the prior year's entering class. I was surprised to discover that the Caucasian population skewed heavily male and the non-white/Asian population skewed heavily female. It seemed that Harvard achieved most of its ethnic diversity that year by admitting female URMs, which made being a Caucasian female the single most underrepresented group relative to its percentage in the school age population. I'm curious if this was an anomaly or another element of bias in the admissions process.

Titanium Dragon December 20, 2012 at 9:59 pm GMT

I will note that there is one flaw in this whole argument, and that flaw is thus:

Harvard and Yale aren't the best universities in the country. As someone who went to Vanderbilt, I knew people who had been to those universities, and their evaluation was that they were no better – and perhaps actually worse – than Vanderbilt, which is "merely" a top 25 university.

While there is a great deal of, shall we say, "insider trading" amongst graduates of those universities, in actuality they aren't actually the best universities in the country today. That honor probably goes to MIT and Caltech, which you note are far more meritocratic. But most of the other best universities are probably very close in overall level, and some of them might have a lot of advantages over those top flight universities.

Or to put it simply, the Ivy League ain't what it used to be. Yeah, it includes some of the best universities in the country, but there are numerous non-Ivy League universities that are probably on par with them. This may indeed be in part a consequence of some of what you have described in the article, as well as a sense of complacency.

I suspect that in twenty or thirty years a lot of Ivy League graduates are going to feel a lot less entitled simply because there has been an expansion of the top while they weren't paying attention.

Anonymous December 21, 2012 at 9:06 am GMT

I'm against the Ivies going up to 30-50% Asian but I'm also against the over-representation of a tiny minority group. This country is going to go downhill if we continue to let one group skirt a fair application process just because they possess money and influence. Who will stand up for fairness and equality?

McRoss December 22, 2012 at 12:49 am GMT

Many of those commenting above don't seem to be picking up on Unz's evidence of bias against white Gentiles, which by meritocratic measures is far worse than the bias against Asian Americans.

A drop of 70 PERCENT??? What's going on? Why is so much of the discussion that this article has spawned focused only on Asian Americans and (secondarily) Jews?

Anonymous December 22, 2012 at 4:11 am GMT

National Merit Scholarship semifinalists are chosen based on per-state percentiles.

What this means is that NMS semifinalist numbers would be skewed _against_ a high-performing demographic group to the extent that group's demographics concentrate geographically. Mr. Unz acknowledges that geographical skewing of Jewish populations is huge. However, he ignores its effect on the NMS semifinalist numbers he uses as a proxy for academic performance on a _national_ level to predict equitable distributions at _national_ universities.

Please somebody explain to me how this oversight isn't fatal to his arguments

Anonymous December 25, 2012 at 3:22 am GMT

Surely the author must be aware that approximately half the children with "Jewish" names are not fully Jewish. Over half of the marriages west of the Mississippi are reportedly mixed. Many non-Jews have last names that start with "Gold". Just these two facts make the entire analysis ridiculous. Hillel does not keep statistics on how Jewish a student is, while many of Levys and Cohens are not actually Jewish. What would we call Amy Chua's daughters? Jewish or Asian? It is therefore impossible to tease out in a multi-racial society who is who.

Anonymous December 25, 2012 at 9:12 am GMT

Mr. Unz,

I am an elementary school teacher at a Title One school in northern California. I supported your "English for the Children" initiative when it was introduced.
However, the law of unintended consequences has kicked in, and what exists now is not at all what you (or anyone else, for that matter) had intended.
The school day was not lengthened to create a time slot for English language instruction. Instead, history and science classes were elbowed aside to make way for mediocre English language instruction. These usually worthless classes have crowded out valuable core academic instruction for English language learners.

To make matters worse, while English language learners are in ESL classes, no academic instruction in science or history can be given to "regular" students because that would lead to issues of "academic inequity." In other words, if the Hispanic kids are missing out on history, the black kids have to miss out on it, too.

As a teacher, I hope you will once again consider bringing your considerable talents to focus on the education of low-income minority children in California.

Sincerely,
Shelly Moore

Anonymous December 25, 2012 at 4:50 pm GMT

Fascinating and disturbing article.

Could it be that the goal of financial, rather than academic, achievement, makes many young people uninterested in competing in the science and math competitions sought out by the Asian students? I wonder about the different percentages of applicants to medical school versus law or business.
I must also add that I am surprised that the author used the word "data" as singular, rather than plural. Shouldn't he be stating that the data ARE, not IS; or SHOW, not SHOWS.

Anonymous December 25, 2012 at 7:18 pm GMT

The author perhaps pays an incredible amount of attention to those with strengths in STEM fields (Science, technology, engineering, and math), even though the proportion of all native-born white students majoring in these fields has plummetted in recent decades. That means that he overlooks a shift in what kinds of training is considered "prestigious," and that this might be reflected in the pursuits of students in high school. Perhaps there is a movement away from Jewish students' focus on Math Olympiad because they are in no way interested in majoring in math or engineering fields, instead preferring economics or business. Is that the fault of the students, or of the rewards system that corporate America has set up?

Jobs in STEM fields pay considerably less than do jobs in numerous professions - investment banking and law. So that is why ~ 40% of the Harvard graduating class - including many of its Jewish students - pursue that route. But to rely on various assessments of math/science/computing as the measure of intelligence fails to incorporate how the rewards structure in our society has changed over time.

I teach at an Ivy League university, and believe that many of the authors' arguments have merit, but there are also many weaknesses in his argument. He sneers at Steinberg and the other sociologists he cites for not quite getting how society has changed - but he clearly doesn' tunderstand how other aspects of our society have changed. Many of our most talented undergrads have no desire to pursue careers in STEM fields. Entrance into STEM jobs even among those who majored in those fields is low, and there is very high attrition from those fields, among both men and women. Young adults and young professionals are voting with their feet. While our society might be better off with more Caltech grads and students interested in creating our way to a better future rather than pursuing riches on wall street, one cannot fault students for seeking to maximize their returns on their expensive education. That's the system we have presented them with, at considerable cost to the students and their families.

Personally, what I found profoundly disturbing is not the overrepresentation of Jewish students or the large presence of Asians who feel they are discriminated against, but the fact that Ivy League schools have not managed to increase their representation of Blacks for the last 3 decades. We all compete for the same talent pool. And until the K-12 system is improved, Black representation won't increase without others screaming favoritism. The other groups - high performing Asians, middle class Jews - will do fine, even if they don't get into Ivy League schools but have to "settle" for elite private schools. But if the Ivy Leagues are the pathway to prestige and power, than we're not broadening our power base enough to adequately reprewsent the demographic shifts reshaping our nation. more focus on that, please.

Anonymous says: • Website December 25, 2012 at 8:23 pm GMT

I've been an SAT tutor for a long time in West Los Angeles (a heavily Asian city), and I feel that at least some of Asians' over-representation in SAT scores and NMS finalists is due to Asian parents putting massive time and money into driving their children's success in those very statistics.

In my experience, Asian parents are more likely than other parents to attempt to ramrod their kids through test prep in order to increase their scores. For example, the few students I've ever had preparing for the PSAT - most students prepare only for the SAT - were all Asian.

Naturally, because it's so strange to be preparing for what is supposed to be a practice test, I asked these parents why their 9th or 10th grade child was in this class, and the answer was that they wanted to do well on the PSAT because of its use in the NMS! Similarly, many Asian immigrants send their children to "cram school" every day after regular school lets out (and I myself have taught SAT at one of these institutions), essentially having their students tutored in every academic subject year-round from early in elementary school.

Because whites are unlikely to do this, it would seem to me that the resulting Asian academic achievement is analogous to baseball players who use steroids having better stats than baseball players who do not.

It seems reasonable that the "merit" in "meritocracy" need not be based solely on test scores and grades, and that therefore a race-based quota system is not the only conclusion that one can draw from a decrease in the attendance rate of hard-driving test-preppers. Maybe the university didn't want to fill its dorms with grade-grubbers who are never seen because they're holed up in the library 20 hours a day, and grade-grubbers just happen to be over-represented in the Asian population?

Unz's piece analyzes only the data that lead up to college - when the Asian parents' academic influence over their children is absolute - whereas the Ivy League schools he criticizes are most concerned with what their students do during and after college. Is the kid who went to cram school his entire life as likely to join student organizations? To continue practicing his four instruments once his mom isn't forcing him to take lessons 4 days a week? To start companies and give money to his university? Or did he just peak early because his parents were working him so hard in order to get him into that college?

That's an article I'd like to read.

Dismalist December 25, 2012 at 10:49 pm GMT

The analysis is a tour de force!

However, the remedies considered are not. It is silly to believe that all abilities can be distilled into a small set of numbers, and anyway, no one knows what abilities will succeed in marketplaces. The source of the problem is the lack of competition in education, including higher education, a situation written in stone by current accreditation procedures. The solution to the problem is entry. Remember Brandeis U? With sufficient competition, colleges could take whomever they pleased, on whatever grounds, and everyone would get a chance.

Anonymous December 25, 2012 at 11:11 pm GMT

Concerning the drop in non-Jewish white enrollment:

I am a recent graduate of a top public high school, where I was a NMS, individual state champion in Academic Decathlon, perfect ACT score, National AP Scholar, etc. etc. Many of my friends – almost exclusively white and Asian – had similar backgrounds and were eminently qualified for Ivy. None of us even applied Ivy, let alone considered going there. Why? At $60,000/yr, the cost is simply not worth it, since none of us would have been offered anything close to substantial financial aid and our parents were unable/unwilling to fully fund our educations. Meanwhile, my Asian friends applied to as many Ivies as they could because it was understood that (a) their parents would foot the bill if they got in or (b) they would take on a large debt load in order to do it.

This article discounts financial self-selection, which (at least based on my own, anecdotal evidence) is more prevalent than we tend to think.

Anonymous December 26, 2012 at 12:18 am GMT

Three points:

  1. The author ignores the role that class plays in setting kids up for success. At one point he notes, "Given that Asians accounted for just 1.5 percent of the population in 1980 and often lived in relatively impoverished immigrant families. . ." When I was at Harvard in the mid-1980s, there were two distinct groups of Asian students: children of doctors, academics, scientists and businesspeople who came from educated families in China, Korea and Vietnam, and therefore grew up with both strong educational values and parental resources to push them; and a much smaller group of kids from Chinatown and Southeast Asian communities, whose parents were usually working class and uneducated. The second group were at a severe disadvantage to the first, who were able to claim "diversity" without really having to suffer for it.
  2. I would expect you'd see the same difference among higher-caste educated South Asian Brahmins and Indians from middle and lower castes or from places like Guyana. It is ridiculous to put South Asians and East Asians in the same category as "Asian." They have different cultural traditions and immigration histories. Ask any Indian parent what race they are and they'll answer "Caucasian." Grouping them without any kind of assessment of how they might be different undermines the credibility of the author.
  3. The takeaway is not that affirmative action is damaging opportunities for whites, but that whites are losing against Asians. The percentage of Hispanic and Black students at leading schools is still tiny. Hence, if invisible quotas for Asians are lifted, there will be far fewer white students at these schools. This isn't because of any conspiracy, but because white students are scoring lower than the competition on the relevant entry requirements. I would love to see an article in this publication titled, "Why White Students Are Deficient." How about some more writing about "The White Student Achievement Gap?"
Simon December 26, 2012 at 2:35 am GMT

As parents of 2 HYP grads, We can tell you from experience that Asian students are not under-represented in the Ivies today. (In fact, I think they are slightly over represented, for the same reasons and stats the author cited).

True, if one looks at stats, such as SAT, scientific competition awards etc, it seems to imply that a +35% enrollment of Asian students is warranted. However, these indicators are just a small part of a "holistc" approach in predicting the success of a candidate not only in the next 4 years, but the individual's success in life and be able to impact and contribute to society later.

I have seen candidates of Asian background, who score almost full mark in SAT but was less than satisfactory in all other aspects of being a potential achiever in life.

Granted, if one wants to be an achiever in science and technology, by all means go with Caltech and MIT. But if one wants an real "education" and be a leader later on in life, one has to have other qualities as well (skin color is NOT one of them). Of course, history, and current cultural and political climate may influence the assessment of such qualities because it is highly subjective. (Is is unfair to pick a pleasant looking candidate over a lesser one, if the rest are the same?)

That is why an interview with the candidates is a good way to assess a potential applicant. I always encourage my children to conduct interviews locally for their alma mater.

I just hope that the Ivies do not use this holistic approach to practice quota policies.

Oh btw I am Asian.

S

Anonymous December 26, 2012 at 2:42 am GMT

Here's a quote from a friend just today about this related topic: "Just like the Catholic church in the middle ages recruited the smartest peasants in order to forestall revolutionary potential, and to learn mind bending religious dogma to befuddle the remaining peasants, current practice is much the same. To twist Billy Clinton's mantra, "its the economy stupid", No ,"its the co opted brains"! "

We can substitute economics dogma to the befuddlement mix. The bottom line is every ruling elite has co-opted the top 1%-5% of high wage earners, to make the pyramid work. Sociology writing is all over this. Veblen, Weber, etc. We can see this little group created everywhere minerals or natural resources are coveted by private empires.

The universities are doing exactly what they are supposed to do to protect the interests of the Trustees and Donors who run them for a reason. They are a tool of, not a cause of, the inequality and over-concentration. It is interesting how the story goes into hairsplitting and comparing Asians to others, etc. But, the real story is a well understood sociology story. This article explains why Napoleon established free public education after the French Revolution.

Anonymous December 26, 2012 at 2:53 am GMT

This is a fascinating article. So much data. So many inferences. It's hardly surprising to any parent of high school students that college admissions are only marginally meritocratic. Whether that's a good a thing or a bad thing is an open question. I think meritocracy has a place in college admissions. But not the only place. Consider athletics, which are themselves almost exclusively meritocratic. Only the best among the best are offered Division I scholarships. The same, I think, applies to engineering schools, the physical sciences, and (to a lesser degree), elite law schools. It also applies to auto-mechanics, plumbers, and electricians. Regarding the humanities (a field in which I hold a PhD), not so much. I think Unz's beef is less with admissions policies per se (which I agree are mind-bogglingly opaque) than with the status of elite institutions. I also think, and I may be wrong, that Unz appears heading down the Bobby Fisher highway, intimating that those pesky Jews are

Anonymous December 26, 2012 at 4:19 am GMT

America never promised success through merit or equality. That is the American "dream." America promises freedom of religious belief and the right to carry a gun.

Anonymous says: • Website Show Comment Next New Comment December 26, 2012 at 4:16 pm GMT

This is a fascinating and extremely important article which I am very eager to discuss privately with the author, having spent my whole life in higher education, albeit with a unique perspective. I was flabbergasted the findings about Jewish and non-Jewish white representation, and intrigued, all the more so since my own ancestry is evenly divided between those two groups. I do want to make one criticism, however of something the author said about the 1950s which I do not think is correct.

At one point in the article the author makes the claim that the breakdown of Ivy League Jewish quotas in the 1950s reflected the power of Jews in the media and Hollywood. The statistics he gives about their representation there may be correct, but the inference, I believe, is unsustainable. The Proquest historical database includes the Washington Post, New York Times, and many other major newspapers. I did a search for "Harvard AND Jewish AND quota" for the whole period 1945-65 and it turned up only 20 articles, not one of which specifically addressed the issue of Jewish quotas at Harvard and other Ivy League schools. The powerful Jews of that era had reached their positions by downplaying their origins–often including changes in their last names–and they were not about to use their positions overtly on behalf of their ethnic group. (This could be, incidentally, another parallel with today's Asians.) Those quotas were broken down, in my opinion, because of a general emphasis on real equality among Americans in those decades, which also produced the civil rights movement. The Second World War had been fought on those principles.
I could not agree more that the admissions policies of the last 30 years have produced a pathetic and self-centered elite that has done little if any good for the country as a whole.

Anonymous says: • Website Show Comment Next New Comment December 27, 2012 at 4:48 am GMT

It is really refreshing to see in print what we all know by experience, but I have to wonder out loud, what is our higher purpose? Surely, you have a largely goal than merely exposing corruption in the academy. Lastly, I have to wonder out loud, how would the predicament of the working class fit into your analysis? I thank you for this scathing indictment of higher ed that has the potential to offer us a chillingly sobering assessment.

Jordan December 27, 2012 at 5:12 am GMT

This is why we need to reinstate a robust estate tax or "death tax" as conservatives derisively call it. To break the aristocracy described in this article. No less than Alexis de Tocqueville said that the estate tax is what made America great and created a meritocracy (which now is weaker and riddled with loopholes, thus the decline of America). Aristocracies dominated Europe for centuries because they did not tax the inheritance.

Anonymous December 27, 2012 at 9:09 pm GMT

The day when I learned so many Chinese ruling class' offspring are either alumni or current students of Harvard (the latest example being Bo GuaGua), it was clear to me Harvard's admission process is corrupt. How would any ivy college determine "leadership" quality? Does growing up in a leader's family give you more innate leadership skills? Harvard obviously thinks so.

Therefore, it's not surprising that Ron said the following on this subject. " so many sons and daughters of top Chinese leaders attend college in the West ..while our own corrupt admissions practices get them an easy spot at Harvard or Stanford, sitting side by side with the children of Bill Clinton, Al Gore, and George W. Bush." I hope world peace will be obtained within reach in this approach.

The chilling factor is a hardworking Chinese immigrant's child in the U.S. would have less chance of getting into ivies than these children of privileged.

It was also very disappointing to see another Asian parent whose children are HYP alumni saying too many Asians in ivies, despite the overwhelming evidence showing otherwise.

Peter December 28, 2012 at 3:37 am GMT

Perhaps it's to be expected given the length of the article (over 22,000 words), but so many of the objections and "oversights" raised in the comments are in fact dealt with – in detail and with a great deal of respect – by Unz in the article itself.

For example, this:

National Merit Scholarship semifinalists are chosen based on per-state percentiles.

What this means is that NMS semifinalist numbers would be skewed _against_ a high-performing demographic group to the extent that group's demographics concentrate geographically. Mr. Unz acknowledges that geographical skewing of Jewish populations is huge. However, he ignores its effect on the NMS semifinalist numbers he uses as a proxy for academic performance on a _national_ level to predict equitable distributions at _national_ universities.

Please somebody explain to me how this oversight isn't fatal to his argument

because geographical skewing of Asian populations is also huge, yet we don't witness the same patterning in admissions data pertaining to Asian students. As the article states: "Geographical diversity would certainly hurt Asian chances since nearly half their population lives in just the three states of California, New York, and Texas."

Unz goes on to note: "Both groups [Jews and Asians] are highly urbanized, generally affluent, and geographically concentrated within a few states, so the 'diversity' factors considered above would hardly seem to apply; yet Jews seem to fare much better at the admissions office."

So there's your answer.

And aside from the fact that your "basic question" has a very simple answer, it's just ludicrous in any case to suggest that the validity of the entire article rests on a single data point.

Anonymous December 28, 2012 at 5:30 pm GMT

There is no doubt this is more of a political issue than the academic one. If only merit is considered then asian american would constitute as much as 50% of the student population in elite universities. Politically and socially this is not a desired outcome. Rationale for affirmative action for the african americans and hispanics is same – leaving a large population is in elite institution is not desired, it smacks of segregation.

But the core issue remains unsolved. Affirmative action resulted in higher representation but not the competitiveness of the blacks. I am afraid whites are going the similar path.

Anonymous December 28, 2012 at 7:47 pm GMT

Anyone famliar with sociology and the research on social stratification knows that meritocracy is a myth; for example, if one's parents are in the bottom decile of the the income scale, the child has only a 3% chance to reach the top decile in his or her lifetime. In fact, in contrast to the Horatio Alger ideology, the U.S. has lower rates of upward mobility than almost any other developed country. Social classses exist and they tend to reproduce themselves.

The rigid class structure of the the U.S. is one of the reasons I support progressive taxation; wealth may not always be inherited, but life outcomes are largely determined by the class position of one's parents. In this manner, it is also a myth to believe that wealth is an individual creation;most financially successful individuals have enjoyed the benefits of class privilege: good and safe schools, two-parent families, tutors, and perhaps most important of all, high expecatations and positive peer socialization (Unz never mentions the importants of peeer groups, which data show exert a strong causal unfluence on academic performance).

And I would challenge Unz's assertion that many high-performing Asians come from impovershed backgrounds: many of them may undereport their income as small business owners. I believe that Asian success derives not only from their class background but their culture in which the parents have authority and the success of the child is crucual to the honor of the family. As they assimilate to the more individualist American ethos, I predict that their academic success will level off just as it has with Jews.

Anonymous December 29, 2012 at 2:31 am GMT

1. HYP are private universities: the success of their alumni verifies the astuteness of their admissions policies.
2. Mr. Unz equates "merit" with "academic". I wonder how many CalTech undergrads would be, or were, admitted, to HYP (and vice-versa).
3. I would like ethnic or racial stats on, for several examples, class officers, first chair musicians*, job holders, actors^, team captains, and other equally valuable (in the sense of contributing to an entering freshman class) high-school pursuits.*By 17, I had been a union trombonist for three years; at Princeton, I played in the concert band, the marching band, the concert orchestra, several jazz ensembles, and the Triangle Club orchestra.^A high school classmate was John Lithgow, the superb Hollywood character actor. Harvard gave him a full scholarship – and they should have.

Rosell December 29, 2012 at 8:00 am GMT

What if we were one homogeneous ethnic group? What dynamic would we set up then?

I suggest taking the top 20% on straight merit, based on SAT scores, whether they crammed for them or not, and take the next 50% from the economically poorest of the qualified applicants (1500 – 1600 on the SAT?) by straight ethnicity percentages to directly reflect population diversity, and 30% at random to promote some humility, and try that for 20 years and see what effects are produced in the quality of our economic and political leadership. And of course, keep them all in the dark as to how they actually got admitted.

Maybe one effect is that more non-ivy league schools will be tapped by the top recruiters.

Anonymous December 29, 2012 at 12:31 pm GMT

Jewish wrote:

"Surely the author must be aware that approximately half the children with "Jewish" names are not fully Jewish. Over half of the marriages west of the Mississippi are reportedly mixed. Many non-Jews have last names that start with "Gold". Just these two facts make the entire analysis ridiculous. Hillel does not keep statistics on how Jewish a student is, while many of Levys and Cohens are not actually Jewish. What would we call Amy Chua's daughters? Jewish or Asian? It is therefore impossible to tease out in a multi-racial society who is who."

Well, there are several arguments to be made. First, unless you are advocating that there has been a mass adoption of words like "Gold" in non-Jewish last names these past 10, 15 years, that argument sinks like a stone. Second, by selecting for specifically Jewish last names, intermarriage can be minimized but not eliminated. How many kids with the lastname "Goldstein" was a non-Jew in the last NMS? Not likely a lot of them.

Intermarriage can account for some fog, but not all, not by a longshot. Your entire argument reeks of bitter defensiveness. You have to come to grips that Jews have become like the old WASPs, rich, not too clever anymore, and blocking the path forward for brighter, underrepresented groups.

Sucks to be you.

Anonymous December 29, 2012 at 6:23 pm GMT

With all due respect, I was worried that I would get an answer that lazily points to the part of the essay that glosses over this point (which mind you I had combed through carefully before posting my question). However, I was hoping that in response someone might respond who had thought a little more carefully about the statistical fallacy in Unz's essay: that far-reaching statements about nation-wide academic performance can be drawn directly from per-state-percentiles.

Yes, Asian Americans, like Jews, have concentrations. But their geographical distributions differ. Yes, it might be possible that upon careful analysis of relative distributions of populations and NMS semifinalists in each state Unz might be able to draw a robust comparison: he might even come up with the same answer. The point that I made is that he doesn't even try.

Given the lengths Unz goes to calculate and re-calculate figures _based_on_ the assumption of _equal_ geographic distributions among Asians and Jews, it is - and I stand by this - a disservice to the reader that no effort (beyond hand-waving) is made to quantitatively show the assumption is at all justified.

Jewess December 30, 2012 at 2:02 am GMT

The statistical analysis used in this article is flawed. The author uses last names to identify the religion (or birth heritage) of NMS semifinalists? Are you serious? My son was a (recent) National Merit Finalist and graduated from an ivy league university. His mother is Jewish; his father is not, thus he has a decidedly WASP surname and according to the author's methods he would have been classified as WASP. With the growing numbers of interfaith and mixed-race children how can anyone draw conclusions about race and religion in the meritocracy or even "IQ" argument? Anecdotally, my son reported that nearly half his classmates at his ivy league were at least one-quarter Jewish (one or more parents or one grandparent). To use last names (in lieu of actual demographic data) to make the conclusion that Jews are being admitted to ivies at higher rates than similarly qualified Asians is irresponsible.

Anonymous January 2, 2013 at 2:49 am GMT

Essentially, the leftist forces in this country are trying to put the squeeze on white gentiles from both directions.

Affirmative action for underachieving minorities to take the place of white applicants.

Meritocracy for highly achieving Asians to push down white applicants, while never mentioning that full meritocracy would push out other minorities as well (that's not politically correct).

The whole thing has become more about political narrative than actual concern for justice. I want you to know that as an Asian man who graduated from Brown, I sympathize with you.

Anonymous January 11, 2013 at 4:40 pm GMT

Very interesting article. The case that East Asian students are significantly underrepresented and Jewish students overrepresented at Ivy League schools is persuasive, although not dispositive. The most glaring flaw in the analysis is the heavy reliance on performance on the PSAT (the discussion of the winners of the various Olympiad and Putnam contests has little informational value relevant to admissions, since those winners are the outliers on the tail of the distribution), which is a test that can be prepped for quite easily. Another flaw is the reliance on last names to determine ethnicity, which I doubt works well for Jews, although it probably works reasonably well for East Asians.

Unfortunately, the article is also peppered with (very) thinly supported (and implausible) claims like Asians are better at visuospatial skills, worse at verbal skills, and that the situation is reversed for Jews. This kind of claim strikes me as racial gobbledygook, and at least anecdotally belied if one considers the overrepresentation of Jews among elite chess players, both in the US and worldwide.

In any event, the fundamental point is that the PSAT (as is the case with all standardized tests) is a fixed target that can be studied for. Whether one chooses to put in 100s of hours studying for the PSAT is not, and should not be, the only criterion used for admissions.

I find the relative percentage of East Asians and Jews at schools like MIT (and also Caltech and Berkeley, although obviously those are in part distorted by the heavy concentration of East Asians in California) as compared to HYP as strong evidence that the admissions process at HYP advantages Jews and disadvantages East Asians.

I suspect, though, that the advantages Jews enjoy in the admissions process are unconscious and unintentional, whereas the disadvantages suffered by East Asians are quite conscious and intentional.

Anonymous January 14, 2013 at 3:30 pm GMT

The graph entitled "Asians Age 18-21 and Elite College Enrollment Trends, 1990-2011″ is misleading. It contrasts percentage of enrolled Asian students vs. the total number of the eligible Asian applicants. Therefore, it led to a flawed argument when comfusing number vs. percentage . For proof, if a similar graph of Hispanic student percentage vs. eligible applicants were drawn, it would appear that they were discriminated against as well. So would be the Black!

Anonymous says: • Website Show Comment Next New Comment January 21, 2013 at 5:03 am GMT

Hi

well, even a fair and objective admission criteria can have devastating consequences. here at IIT, we admit about 1 in 100. this has the same effect on student ethics, career options and so on. in fact, even worse, since IIT is an engineering college, the very definition of engineering in India has now distorted as serving international finance or distant masters in a globalized world. our own development problems remain unattended.

see http://www.cse.iitb.ac.in/~sohoni/RD.pdf

also, the above is a part of the current trend of knowledge concentration, i.e., a belief that only a few universities can impart us "true" knowledge or conduct "true" research.
see http://www.cse.iitb.ac.in/~sohoni/kpidc.pdf

regs, milind.

Anonymous January 24, 2013 at 1:21 am GMT

This is a very valuable article. It deals with a subject that has received too little attention. I believe that cultural bias in many cases outweighs the racial bias in the selection program. Time and again, I have seen young people with great potential being selected against because they are culturally different from what the selectors are looking for (often people who are like them culturally). The article's mentioning that students who participated in R.O.T.C., F.F.A. and/or 4H are often passed over is a good illustration.

It was interesting to note that the girl who wrote an essay on how she dealt with being caught in a drug violation found acceptance. I suspect that a student with similar academic qualifications who wrote an essay on the negative aspects of drug use would not be so lucky.

LMM

Thos. January 27, 2013 at 3:39 am GMT

comes news that Yale President Levin's successor will be Peter Salovey, tending to confirm Unz's observations regarding the grossly disproportionate number of Jewish presidents at Ivy League schools.

JF January 29, 2013 at 10:36 am GMT

All very interesting but I am among the National Merit Scholars from California who has a not obviously Jewish name despite having two Jewish parents. It was changed in the 1950s due to anti-Semitism and an urge to assimilate. A lot of other names can be German or Jewish for example. I suspect in light of that and intermarriage cases where the mom is Jewish and the dad is not, not to mention a lot of Russian names, you may be undercounting Jews among other things. Although to be fair, you are probably also undercounting some half-Asians given most of those marriages have a white husband and Asian wife.

Raymond February 4, 2013 at 4:43 pm GMT

I'm an Asian HYP grad. I applaud this article for being so extremely well researched and insightful. It's an excellent indictment of the arbitrariness and cultural favoritism concentrated in the hands of a very small group of unqualified and ideologically driven admissions officers. And I hasten to add that I am a liberal Democratic, an avid Obama supporter, and a strong proponent of correcting income inequality and combating discrimination in the workplace.

To me, the most compelling exhibit was the one towards the end which showed the % relative representation of enrolled students to highly-qualified students (I wish the article labeled the exhibits). This chart shows that in the Ivies, which administer highly subjective admission criteria, Jews are overrepresented by 3-4x, but in the California schools and MIT, which administer more objective criteria, Jews are overrepresented by only 0-50%, a range that can easily be explained by methodology or randomness.

This single exhibit is unequivocal evidence to me of systematic bias in the Ivy League selection process, with Jews as the primary beneficiary. I tend to agree with the author this this bias is unlikely to be explicit, but likely the result of cultural favoritism, with a decision-making body that is heavily Jewish tending to favor the activities, accomplishments, personalities, etc. of Jewish applicants.

The author has effectively endorsed one of the core tenets of modern liberalism – that human beings tend to favor people who look and act like themselves. It's why institutions dominated by white males tend to have pro-white male biases. The only twist here is that the decision-making body in this instance (Ivy League admissions committees) is white-Jewish, not white-Gentile.

So if you're a liberal like me, let's acknowledge that everyone is racist and sexist toward their own group, and what we have here is Jews favoring Jews. We can say that without being anti-semitic, just like we can say that men favor men without being anti-male, or whites favor whites without being anti-white.

Anonymous February 8, 2013 at 4:47 am GMT

Just some puzzling statistics: In p. 32, second paragraph, it is mentioned "The Asian ratio is 63% slightly above the white ratio of 61 percent", then in the third paragraph "However, if we separate out the Jewish students, their
ratio turns out to be 435 percent, while the residual ratio for non-Jewish whites drops to just 28 percent, less than half of even the Asian figure", leading to the conclusion that "As a consequence, Asians appear under-represented relative to Jews by a factor of seven, while non-Jewish whites are by far the most under-represented group of all". Not very clear on the analysis!

Let me try to make a guess on the calculation of this statistics ratio: Assume that all groups in NMS will apply, with mA=Asians, mJ=Jews, mW=Whites be the respective numbers in NMS. Suppose that nA, nJ, and nW are those Asians, Jews, and Whites finally admitted. Then if the statistics ratio for G means ((nG)/(mG))/(mG/mNMS), where mNMS is the total number in the NMS, then the ratio will amplify the admission rate (nG/mG) by (mNMS/mG) times and becomes very large or very small for small group size. For example, for a single person group, being admitted will give a ratio as large as mNMS, and a zero for not being admitted. Why can this ratio be used for comparing under-representation between different groups?

Anonymous February 14, 2013 at 12:29 am GMT

Very well. Loved the fact that the author put a lot into reseaching this piece. But i would like to know how many asians who manage to attend this ivy schools end up as nobel leaurets and professors?? This demonstrates the driving force behind the testscore prowess of the asians-financial motivation. The author talks about asians being under-represented in the ivies but even though they manage to attend then what?? do they eventually become eintiens and great nobel leurets or great cheese players. Also what is the stats like for asian poets, novelist, actors.etc Pls focus should be given on improving other non-ivy schools since we have a lots of high SAT test scores than high running universities.

Al February 23, 2013 at 3:13 pm GMT

Look at Nobel prizes, field medals and all kind of prizes and awards that recognize lifetime original academic contributions. Not many asians there yet. Perfect grades or SAT scores does not guarantee creativity, original thinking, intelectual curiosity or leadership. The problem is that those things are hard to measure and very easy to fake in an application.

Fred February 24, 2013 at 7:11 pm GMT

Loved all the research in the article and I am on board with the idea that moving in the tiger mother direction will kill creativity in young people. And I agree with the observation that our country's top leadership since 1970 or so has been underwhelming and dishonest especially in the financial services industry which draws almost entirely from the Ivies.

However, I am not so convinced that the over representation of Jewish students in the Ivy league is created by intentional bias on the part of Jewish professors or administrators at these institutions. Is it possible that admissions officers select Jewish applicants at such a high rate because they are more likely to actually attend? Once a family of four's income exceeds $160k the net price calculation for a year at Harvard jumps up pretty quickly. By the time you hit annual income of $200k you are looking at $43k/yr or $172k for 4 years. And at the lower income levels, even if a family has to pay just $15k a year, how will they do that if they are struggling to make it as it is? Do they want/does their student want to graduate with $60k worth of debt? Why not choose a great scholarship offer from a state university to pay nothing at all or go to community college for 2 years and then on to the state public institution?

There are many options for top students who can compete at the Ivy level. If I am an admissions officer looking to fill slots left over after minority admissions (ones poor enough to get the education for free and thus to say yes), legacies, athletic recruits, and the few super special candidates, wouldn't I choose those most likely to take me up on the admissions offer and protect my yield number? Might an easy way to get this done be to consult a demographic tool showing net worth by zip code? And to stack the yield odds a little more in my favor might I also choose families with Jewish appearing last names knowing they would be extremely likely to accept my offer since I obviously have recent history to show me that these families say yes to our prices? I think this is a much more plausible explanation then assuming some secret quota in force at these schools.

I am a conservative but I cannot believe Jewish liberals would go that far just to ensure more Jewish liberals attend their institutions or to keep conservative white non Jewish middle income students out. Dollars and cents and the perception a yield number conveys about the desirability of a school are what is at work here in my humble opinion.

Anonymous February 26, 2013 at 8:09 pm GMT

There is a very simple solution. There is no legal definition of race. Simply check the "Negro" (or "African-American" or whatever it is called today) box on the application form. You don't look it? Neither do many others, because your ancestry is really mixed. This may get you in. It won't hurt your chances, which are essentially zero before you check that box. At the very least, it will make it harder for the bigots in the admissions office to exercise their bigotry.

Anonymous March 1, 2013 at 7:13 pm GMT

"Look at Nobel prizes, field medals and all kind of prizes and awards that recognize lifetime original academic contributions. Not many asians there yet. Perfect grades or SAT scores does not guarantee creativity, original thinking, intelectual curiosity or leadership. The problem is that those things are hard to measure and very easy to fake in an application."

Last year, 75% of Ph.D candidates where foreign born, most of which were either Indian or Chinese. You should rely on statistics that are more current and relevant.

Doom March 12, 2013 at 8:45 pm GMT

Wow, another article on how corrupt higher eduation is.

Folks, open your eyes a bit. Online education is growing massively; sharing this growth are websites that write academic papers (even Ph.D. theses) on demands .these websites in toto have nearly as many customers as there are online students.

Harvard is unusual in that they actually banned students for cheating. Every investigation of cheating on campus shows it exists on a massive scale, and reports of half or more of a class cheating are quite common in the news.

The reason for this is simple: administrators care about retention, nothing else. Faculty have long since gotten the message. I've taught in higher education for nearly 25 years now, and I've seen many faculty punished for catching cheaters; not once has there been any reward.

Over 90% of remedial students fail to get a 2-year degree in three years, yet administration sees no issue with talking them into loans that will keep them in debt forever. Admin sees no issue with exploiting the vulnerable for personal gain, of course.

Here's what higher education is today: desperate people take out loans to go to college. They use the money to pay the tuition, and they use the money to buy academic papers because they really aren't there for college, they're there for the checks. Their courses are graded by poorly paid faculty (mostly adjuncts), again paid by those checks. The facutly are watched over by administrators to make sure there is no integrity to the system and again, admin is paid by those checks (in fact, most of the tuition money goes to administrators).

Hmm, what part of this could be changed that would put integrity back into the system?

Anonymous March 12, 2013 at 10:18 pm GMT

I think your sources who claim to be familiar with China are very wrong concerning entrance into Chinese universities, especially those so-called upper tier unis. It is well known amongst most Chinese students who take the gaokao, the all-or-nothing university entrance examination, bribes, guanxi (connections) and just being local, are often better indicators of who will be accepted.

• Replies: @KA Same and some more in India.
In India it is politics of the gutter. Someone can get to medical school and engineering school even if he or she did not qualify,if scored say 3 points out of 1000 points as long as he or she belonged to lower caste of Hindu. The minimum requirements they have to fulfill is to pass the school leaving examinations with science subjects .A passing level is all that matters . The process then continues (in further education -master , training, post doctoral, and in job and in promotion)
While upper caste Hindu or Christian or Muslim may not be allowed despite scoring 999 out of 1000. It is possible and has happened.
Unfortunately the lower caste has not progressed much. Upper caste Hindus have misused this on many occasions and continue to do do by selling themselves as lower caste with legal loopholes .Muslim or Christians can't do that for they can't claim to be Hindu
Bobby March 13, 2013 at 1:57 am GMT

Ron Unz is a brilliant man. He created software that made him rich, and has written articles on all kinds of subjects. But apparently, Ron shares a problem with a very tiny number of humanity. Ron is one of those oddball characters, that, no matter where the truth leads him, he simply has to express it, regardless of political correctness. He did this in California with the debate on English,etc.

Compared to the administrators of these Ivy League Institutions, Ron is a mental giant, not even near being in the same class as these supposedly important but in reality, worthless beurocrats.

Thom March 13, 2013 at 7:04 pm GMT

If ten million Gentile whites and Asians changed their surname to Kaplan, Levy, Golden, Goldstein, Goldman, it obviously would throw a monkey wrench into the process of ethnic favoritism.

To paraphrase Unz - the "shared group biases" of Ivy League college admission officers that have "extreme flexibility and subjectivity", does harm white Gentiles and Asians, but only because the process lacks objective, meritocratic decision making, and in its place is a vile form of corrupt cronyism and favoritism.

Anonymous March 21, 2013 at 4:39 pm GMT

An Asian speaking here, I agree that America isn't a meritocracy, but has it ever been? It seems like this article's falling for the oldest trick in the book - looking back at the "good old days". I'd argue that now more than ever, the barrier to entry is lower than ever, and that every individual can rise to the occasion and innovate for the better. Places like Exeter (my alma mater) aren't just playgrounds for the rich - I'm not extremely wealthy, and neither were my classmates. Most of us were even on financial aid. Don't just point fingers at institutions to account for shortcomings - if you had the stroke of fortune to be born in a nation with such opportunity, with hard work and CREATIVITY and INNOVATION, anything is possible.

Has anyone thought about why the test-prep business has expanded so much? It's to feed into the very same system that you're complaining about. Be the change you wish to see in the world, not a victim of it. To many of the Asians out there, I'd say get over your 4.0 GPA and 2400 SAT score and be unique for once.

Michael N Moore March 28, 2013 at 7:52 pm GMT

To put Unz's findings in social and historical perspective, it is important to understand where Jewish academics come from. The Eastern European Jews who immigrated to Northeast US in the Twentieth Century ran into an immigrant world dominated by Catholics and particularly Irish Catholics. The Irish, who were as "hungry" as the Jews got control over government and its ancillary economic benefits. I wasn't there at the time, but I imagine we Irish did not do much to help Jewish immigrants compared with Catholic immigrants.

One area abandoned by the Catholic Church was public and secular education. The Church formed its own educational Catholic ghetto. Jewish immigrants adopted the public-secular educational world as their own and became strong adherents of education as the key to Americanization. Education became their small piece of turf. The only memorable political conflict between Jews and AfricanAmericans in New York City was over control of the public schools.

Just as the Irish react against affirmative action for non-Irish in government jobs, the descendants of these Jewish immigrants react to the plagiarism of their assimilation plan by the Chinese/Koreans. When you have de facto Irish affirmative action you don't want de jure African American affirmative action. When you have Jewish "meritocracy" you don't want Asian meritocracy.

The result is what you see today. The Irish still have a stranglehold on government related jobs in the Northeast with a smattering of minorities ("New Irish") and the Jews try to protect their secular education turf from the "New Jews". It's just business. Don't take it personally.

marc April 7, 2013 at 4:12 pm GMT

All I can say is see a book: "Ivy League Fools and Felons"' by Mack Roth. Lots of them are kids of corrupt people in all fields.

But I disagree that opportunity is being closed off to most Americans. Here in North Dakota I work for a high school graduate, self made trucking millionaire. Five years ago she was a secretary in Iowa. But she got off her butt and went to where the money is circulating. Just my 2 cents

Anonymous April 7, 2013 at 8:18 pm GMT

Sorry, but quick correction regarding rankings (and I only have to say this because I go to MIT). Technically, MIT and Caltech are *both* ranked the same. The only reason why Caltech appears on the list before MIT is because it come before it alphabetically to suggest otherwise would be untrue. When you look at individual departments, you'll find that MIT consistently ranks higher than that of Caltech in all engineering disciplines and most scientific disciplines. Also, personally speaking, MIT has a far better humanities program that Caltech (especially in the fields of economics, political science, philosophy, and linguisitics). We do have a number of Pulitizer Prize winners who teach here.

Also generally, in academic circle, MIT is usually viewed with higher regard than Caltech, although that isn't to say Caltech isn't a fantastic school (it really and truly is–I loved it there and I wish more people knew more about it)

Rand April 7, 2013 at 10:27 pm GMT

One observation about methodology that struck me while reading this:

The Jewish population of universities is being evaluated based on Hillel statistics, with the "Non-Jewish white" population being based on the white population minus the Jewish population.

This can be problematic when you consider that these population are merging at a pretty high rate. (I don't have much information here, but this is from the header of the wikipedia article: "The 1990 National Jewish Population Survey reported an intermarriage rate of 52 percent among American Jews.")

What percentage of partially Jewish students identify as "Jewish" or does Hillel identify as Jewish? If you're taking a population that would have once identified as "white" and now identifying them as Jewish, obviously you'll see some Jewish inflation, and white deflation. And when a large percentage of this population bears the names "Smith", "Jones", "Roberts" etc., you're obviously not going to see a corresponding increase in NMS scores evaluated on the basis of last names.

Of course, I have no idea what methodology Hillel is using, but I wouldn't be surprised to learn that it's an inflated one.

NotAmerican April 15, 2013 at 4:56 pm GMT

Thank you Mr. Unz for this provocative article. It isn't the author's first one on Jewish & Asian enrollment at Ivy League colleges. I remember another one, in the 1990s I believe.

According to what I read, less and less American Jews apply for medical school nationwide, and Jewish women are very educated, but it comes also with a low birthrate and high median age. It makes the recent spike in Jewish admissions at Harvard College all the more curious, intriguing.

This month, the NY Times published a list of the highest earners in the hedge fund industry in 2012, and 8 out of 10 were Jewish. Are certain universities aggressively seeking donations from this super rich demographic since the 2000s?

History has a way of repeating itself.

NotAmerican April 15, 2013 at 5:01 pm GMT

I'm referring to HYP(Harvard-Yale-Princeton)'s history, during the Gilded Age for example.

Ira April 21, 2013 at 2:12 pm GMT

The young American Jew is not like his grandparents. They are just as fun loving and lazy as any other. This is the result of a lack of perceived persecution that use to keep the group together. In the major cities, half of the young people leave the tribe through intermarriage. This is human nature. The Rabbis changed the rules some time ago to define a Jew as coming from the mother, so the Jewish man would marry a Jewish woman, instead of a woman outside of the tribe. Read the Bible. In David's time, the men had an eye for good looking women outside of the tribe(like all men). Now days, the young people just laugh at the Rabbi's words.

Instead of the old folks liberal ideas of race and ethnic divisions, let us change it to go by economic class. According to liberal thought, intelligence is equally distributed throughout all economic classes, so higher education admissions should be by economic class, and not the old divisive ideas of race and ethnic background. After all, affirmative action programs are institutionalized racism and racial profiling.

• Replies: @KA Yes . You have points . This is one of the fears that drove the Zionist to plan of Israel in 1880 . It was the fear of secular life free from religious persecution and freedom to enjoy life to its fullest in the post industrial non religious Europe guided by enlightenment that drove them embrace the religious ethnic mix concept of statehood.
N. Joseph Potts April 29, 2013 at 7:43 pm GMT

These and many other ills would be alleviated if government would stop: (a) banning aptitude tests or even outright discrimination as determinants of employment; (b) subsidizing private institutions such as Harvard; and (c) close down all government schools, starting with state institutions of "higher learning."

I know, pie in the sky. But the author's suggestions by comparison are mere Band-Aids.

Clark Coleman May 14, 2013 at 4:13 am GMT

Great analysis, but pie-in-the-sky prescription, which was presumably just intended to be thought provoking. If you want to know why Harvard would never adopt the author's recommendation, just read what he wrote:

"But if it were explicitly known that the vast majority of Harvard students had merely been winners in the application lottery, top businesses would begin to cast a much wider net in their employment outreach, and while the average Harvard student would probably be academically stronger than the average graduate of a state college, the gap would no longer be seen as so enormous, with individuals being judged more on their own merits and actual achievements. A Harvard student who graduated magna cum laude would surely have many doors open before him, but not one who graduated in the bottom half of his class."

I wonder why Harvard officials would desire this outcome?

Anonymous May 23, 2013 at 4:00 am GMT

So a lot of ivy league presidents with Jewish-sounding names somehow influence admissions staff who may not have Jewish-sounding names to favor undeserving applicants because they also have Jewish-sounding names? And this is because of some secret ethnic pride thing going on? And nobody's leaked this conspiracy to the outside world until our whistle blowing author? The guy's a nut job.

foo May 31, 2013 at 5:31 am GMT

Benj Pollock says: [...stuf...]

What a weird ad-hominem attack! One of the weakest I have seen..you should really be calling the author an "anti-semite" shouldn't you ?

Anonymous July 27, 2013 at 5:04 pm GMT

All of your statistics are highly suspect due to the enormous, and rapid annual increase in Jewish intermarriage. I do not have the statistics, but over many years, it certainly appears that Jewish men are far more likely to intermarry than Jewish women (the lure of the antithesis to their Jewish mother??) and to complicate matters further, Jewish men seem to have a predilection for Asian women, at least in the greater NY Metro Area. But that still does not represent the majority of Jewish men marrying Christians. QED. More Jewish last names, for children who are DNA wise only half Jewish than non Jewish names for the intermarried. And if one wanted to get really specific, the rapidly rising intermarriage is diluting the "Jewish" genetic pool's previously demonstrable intelligence superiority., strengthened by the fact that most couples use the Jewish fathers last name.
These observations are in no way associated with how the various Jewish denominations define 'Jewish"

Methinks the statistics are highly flawed.

NB says: • Website Show Comment Next New Comment December 5, 2013 at 7:52 pm GMT

I have posted a critique of Unz's article here: http://alum.mit.edu/www/nurit

Columbia statistician Andrew Gelman discusses it here: http://andrewgelman.com/2013/10/22/ivy-jew-update/

In short: Unz substantially overestimated the percentage of Jews at Harvard while grossly underestimating the percentage of Jews among high academic achievers, when, in fact, there is no discrepancy.

In addition, Unz's arguments have proven to be untenable in light of a recent survey of incoming Harvard freshmen conducted by The Harvard Crimson, which found that students who identified as Jewish reported a mean SAT score of 2289, 56 points higher than the average SAT score of white respondents.

Walter Sobchak December 11, 2013 at 3:43 am GMT

I have a couple of thoughts about this article:

First. I was thrilled to see your advocacy of admissions by lottery. I have advocated such a plan on various websites that I participate in, but you have written the first major article advocating it that I have seen. Congratulations.

Just a small quibble with your plan, I would not allow the schools any running room for any alternatives to the lottery. They have not demonstrated any willingness to administer such a system fairly. After a few years of pure lottery it would be time to evaluate it and see if they should be allowed any leeway, but I wouldn't allow any variation before that.

I would hypothesize that one effect of a lottery admissions plan would be a return to more stringent grading in the class rooms. It would be useful to the faculty to weed out the poor performers more quickly, and the students might have less of an attitude of entitlement.

Second, I am glad that you raised the issue of corruption of the admissions staffs. It would be a new chapter in human history if there was no straight out bribe taking of by functionaries in their positions. My guess is that the bag men are the "high priced consultants". Pay them a years worth of tuition money and a sufficient amount will flow to the right places to get your kid in to wherever you want him to go.

Third, three observations about Jewish Students.

First, Jews are subject to mean reversion just like everybody else.

Second, the kids in the millennial generation were, for the most part, born into comfortable middle class and upper class homes. The simply do not have the drive that their immigrant grandparents and great-grandparents had. I see this in my own family. My wife and I had immigrant parents, and we were pretty driven academically (6 degrees between us). Our kids, who are just as bright as we were, did not show that same edge, and it was quite frustrating to us. None of them have gone to a graduate or professional school. They are all working and are happy, but driven they aren't.

Third, Hillel's numbers of Jewish students on their website should be taken cum grano salis. All three of our kids went to Northwestern U. (Evanston, IL) which Hillel claimed was 20% Jewish. Based on our personal observations of kids in their dorms and among their friends, I think the number is probably 10% or less.

Finally, the side bar on Paying Tuition to a Hedge Fund. I too am frustrated with the current situation among the wealthy institutions. I think that it deserves a lot more attention from policy makers than it has received. The Universities have received massive benefits from the government (Federal and state) - not just tax exemptions, but grants for research and to students, subsidized loans, tax deductions for contributions, and on, and on. They have responded to this largess by raising salaries, hiring more administrators, spending billions on construction, and continually raising tuitions far faster than the rate of inflation. I really do not think the tax payers should be carrying this much of a burden at a time when deficits are mounting without limit.

Henry VIII solved a similar problem by confiscating assets. We have constitutional limits on that sort of activity, but I think there a lot of constitutional steps that should be considered. Here a few:

1. There is ample reason to tax the the investment gains of the endowments as "unrelated business taxable income" (UBTI, see IRS Pub 598 and IRC §§ 511-515) defined as income from a business conducted by an exempt organization that is not substantially related to the performance of its exempt purpose. If they do not want to pay tax on their investments, they should purchase treasuries and municipals, and hold them to maturity.

2. The definition of an exempt organization could be narrowed to exclude schools that charge tuition. Charging $50,000/yr and sitting on 30G$ of assets looks a lot more like a business than a charity.

3. Donations to overly rich institutions should be non deductible to the donors. Overly rich should be defined in terms of working capital needs and reserves for depreciation of physical assets.

jholloway August 23, 2014 at 4:40 am GMT

Ron,

Is the proposed mechanism that Jewish university presidents create a bias in the admissions department?

That could be tested by comparing Jewish student percentages between schools with Christian and Jewish presidents. If Christian presidents produce student bodies with a high proportion of Jews, then Jewish ethnocentrism is not the cause. (We'd have to find a way to control for presidents' politics.)

If admissions departments are discriminating in favor of liberals, that will boost the proportion of all liberals, including many Jews, but it will be political discrimination, not ethnic discrimination. (Both are bad, but we should be accurate.)

Liberals see a discrepancy in ethnic outcomes and consider it proof of ethnic discrimination. Are we doing the same thing?

KA October 12, 2014 at 2:34 pm GMT

After Russian emancipation, the Jews from Pale settlement spread out and took up jobs in government services, secured admissions in technical and medical schools, and established positions in trade in just two decades. Then they started interconnecting and networking more aggressively to eliminate competition and deny the non-Jews the opportunities that the non Jews rightfully claimed. This pattern was also evident in Germany after 1880 and in Poland between interwars .

The anti-Jewish sentiment seen in pre revolutionary Russia was the product of this ethnic exclusivisity and of the tremendous in-group behaviors .

KA October 12, 2014 at 2:41 pm GMT
@Ira The young American Jew is not like his grandparents. They are just as fun loving and lazy as any other. This is the result of a lack of perceived persecution that use to keep the group together. In the major cities, half of the young people leave the tribe through intermarriage. This is human nature. The Rabbis changed the rules some time ago to define a Jew as coming from the mother, so the Jewish man would marry a Jewish woman, instead of a woman outside of the tribe. Read the Bible. In David's time, the men had an eye for good looking women outside of the tribe(like all men). Now days, the young people just laugh at the Rabbi's words.

Instead of the old folks liberal ideas of race and ethnic divisions, let us change it to go by economic class. According to liberal thought, intelligence is equally distributed throughout all economic classes, so higher education admissions should be by economic class, and not the old divisive ideas of race and ethnic background. After all, affirmative action programs are institutionalized racism and racial profiling.

Yes . You have points . This is one of the fears that drove the Zionist to plan of Israel in 1880 . It was the fear of secular life free from religious persecution and freedom to enjoy life to its fullest in the post industrial non religious Europe guided by enlightenment that drove them embrace the religious ethnic mix concept of statehood.

KA October 12, 2014 at 2:59 pm GMT
@Anonymous I think your sources who claim to be familiar with China are very wrong concerning entrance into Chinese universities, especially those so-called upper tier unis. It is well known amongst most Chinese students who take the gaokao, the all-or-nothing university entrance examination, bribes, guanxi (connections) and just being local, are often better indicators of who will be accepted.

Same and some more in India. In India it is politics of the gutter. Someone can get to medical school and engineering school even if he or she did not qualify, if scored say 3 points out of 1000 points as long as he or she belonged to lower caste of Hindu. The minimum requirements they have to fulfill is to pass the school leaving examinations with science subjects .A passing level is all that matters . The process then continues (in further education -master , training, post doctoral, and in job and in promotion)

While upper caste Hindu or Christian or Muslim may not be allowed despite scoring 999 out of 1000. It is possible and has happened. Unfortunately the lower caste has not progressed much. Upper caste Hindus have misused this on many occasions and continue to do do by selling themselves as lower caste with legal loopholes .Muslim or Christians can't do that for they can't claim to be Hindu

Ivy October 16, 2014 at 3:20 am GMT

Takeaways:
Jews are really good at networking and in-group activity. They have centuries of practice, and lived a meritocratic existence of self-sorting in the Pale and elsewhere.
That is evident to all who look.

Other groups have different approaches, and different organizational or affiliation bonds, based on their history, culture and other factors.

NE Asians share some traits, and both value education as a way to improve themselves and to some extent their groups.
S Asians will demonstrate their own approach, focusing heavily on STEM.

Expect demographics to win out, given 2.5B Asians versus a smaller NAM or NE European-base populace.

Anonymous November 26, 2014 at 5:06 pm GMT

Thanks for the informative article. Your proposal sounds reasonable. Another option would be to attempt to vastly decrease the significance of these elite private schools. Why should we allow undemocratic little fiefdoms to largely control entry into our country's ruling class? It would probably be considerably more fair, more transparent and more efficient to pour a lot of resources into our public universities. If Berkeley, Michigan, UVA, UMass, etc. were completely free, for instance–or if they provided students with living expenses as well as free tuition, the quality of their students would conceivably surpass that of the Ivy League's, and over time the importance and prestige of Harvard, Stanford, etc. would diminish. Instead, we are subsidizing students at elite private colleges more than those at public colleges–an absurd state of affairs (see this article, whose author is a bit of an ideologue but who is right on this issue: http://www.csmonitor.com/Business/Robert-Reich/2014/1014/How-the-government-spends-more-per-student-at-elite-private-universities-than-public ).

Truth December 25, 2014 at 4:04 pm GMT

Mr. Unz; thank you for the long, informational and scholarly article. I read the whole thing, and from Sailer I am familiar with your reputation as a certified genius. I must admit however, after the 5-10,000 words you had written, I was a bit shocked that your answer to how to improve elite University enrollment, was to FLIP A FIGURATIVE COIN.

I expected some chart with differential equations that I would have to consult my much more intelligent brother, the electrical engineer to explain to me. Not that it does not make a lot of sense.

The issue with your solution is that you go from a three class university:
1) Legacy Admits
2) Non athletic, black admits
3) everyone else

to a much-more rigid, two class university:

1) academic admits
2) coin-flip admits

One tier being one of the smartest 15-18 year olds in the world, the other being "somewhat better than good student at Kansas State."

Talk about a hierarchy!

Anonymous March 11, 2015 at 3:34 am GMT

My brother works at a little ivy league school. Well endowed because the parents Dun and Bradstreet reports are at the top of the selection sheets with parents jobs also. Extra points for finance and government jobs at executive levels.

This article was excellent and reinforced everything he has told me over the years. One thing he did mention i would like to add. Asians, which for years were their choice for filling minority quotas, are horrible when it comes to supporting the alma mater financially during the fund drives. This information was confirmed by several other schools in the area when they tried a multi-school drive in the far east and south east asia to canvas funds and returned with a pitiful sum.

Joe Franklin August 20, 2015 at 8:25 pm GMT

Diversity is a scheme that is the opposite of a meritocracy. Diversity is a national victim cult that generally demonizes gentiles, and more specifically demonizes people that conform to a jewish concocted profile of a nazi.

Why would anyone use the word diversity in the same sentence as the word meritocracy?

Joe Franklin August 29, 2015 at 4:42 pm GMT

"Are elite university admissions based on meritocracy and diversity as claimed?" Why would anybody claiming to be intelligent include meritocracy and diversity in the same sentence?

Part White, Part Native September 1, 2015 at 6:45 am GMT

@Sean Gillhoolley Harvard is a university, much like Princeton and Yale, that continues based on its reputation, something that was earned in the past. When the present catches up to them people will regard them as nepotistic cauldrons of corruption.

Look at the financial disaster that befell the USA and much of the globe back in 2008. Its genesis can be found in the clever minds of those coming out of their business schools (and, oddly enough, their Physics programs as well). They are teaching the elite how to drain all value from American companies, as the rich plan their move to China, the new land of opportunity. When 1% of the population controls such a huge portion of the wealth, patriotism becomes a loadstone to them. The elite are global. Places like Harvard cater to them, help train them to rule the world....but first they must remake it.

I agree, common people would never think of derivatives , nor make loans based on speculation .

Gandydancer December 26, 2015 at 1:43 am GMT

"Tiffany Wang['s] SAT scores were over 100 points above the Wesleyan average, and she ranked as a National Merit Scholarship semifinalist "

"Julianna Bentes her SAT scores were somewhat higher than Tiffany's "

Did Ms. Wang underperform on her SATs? NMS semifinalist status depends purely on the score on a very SAT-like test being at a 99.5 percentile level, as I understand it (and I was one, albeit a very long time ago) and I gather from the above that her SAT scores did not correspond to the PSAT one. That is, merely " 100 points above the Wesleyan average" doesn't seem all that exceptional. Or am I wrong?

Mr. Unz several times conflates NMS semifinalist status with being a top student. Which I most definitely was not. It's rather an IQ test. As was the SAT.

[Nov 30, 2019] The Fed Detests Free Markets

Nov 30, 2019 | www.zerohedge.com

You see, free markets are a great idea in theory. Or you can call it "capitalism", or combine the two and say "free market capitalism". There's very little wrong with it in theory. You have an enormous multitude of participants in an utterly complex web of transitions, too complex for the human mind to comprehend, and in the end that web figures out what values all sorts of things, and actions etc., have.

I don't think capitalism in itself is a bad thing; what people don't like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much.

It's like nature, really, like evolution, but it's Darwin AND empathy, individuals AND groups. The problem is, and this is where it diverges from nature, you have to make sure the markets remain free, that certain participants -or groups thereof- don't bend the rules in their own favor. In that sense it's very similar to what the human race has been doing to nature for a long time, and increasingly so.

Now, if you limit the discussion to finance and economics, there would appear to be one institution that's in an ideal place to make sure that this "rule-bending" doesn't take place, that markets are fair and free, or as free as can be. That institution is a central bank. But whaddaya know, central banks do the exact opposite: they are the ones making sure markets are not free.

In the ideal picture, free markets are -or would be- self-correcting, and have an inbuilt self-regulating mechanism. If and when prices go up too much, the system will make sure they go lower, and vice versa. It's what we know from physics and biology as a negative -self correcting- feedback loop. The self-correcting mechanism only activates if the system has veered too much in one direction, but we fail to see that as good thing when applied to both directions, too high and too low (yes, Goldilocks, exactly).

It's only when people start tweaking and interfering with the system, that it fails. Negative feedback vs positive feedback are misunderstood terms simply because of their connotation. After all, who wants anything negative? But this is important in the free markets topic, because as soon as a central bank starts interfering in, name an example, housing prices in a country, the system automatically switches from negative feedback to positive -runaway- feedback, there is no middle ground and there is no way out anymore, other than a major crash or even collapse.

Well, we're well on our way to one of those. Because the Fed refused to let the free market system work. They, and the banks they represent, wanted the way up but then refused the way down. And now we're stuck in a mindless positive feedback loop (new highs in stocks on a daily basis), and there's nothing Jay Powell and his minions can do anymore to correct it.

The system has its own correction mechanism, but Greenspan, Bernanke, Yellen and now Powell thought they could do better. Or maybe they didn't and they just wanted their banker friends to haul in all the loot, it doesn't even matter anymore. They've guaranteed that there are no free markets, because they murdered self-correction.

Same goes, again, for ECB and BOJ; they're just Fed followers (only often even crazier). In fact since they have no petrodollar, they don't just follow, they have to do the Fed one better. Which is why they have negative interest rates -and the US does not -yet-: it's the only way to compete with the reserve currency. Of course today even the Fed, and "even even" the PBOC, are discussing moving to negative rates, and by now we're truly talking lemmings on top of a cliff.

"Let's throw $10 trillion at the wall just so home prices or stock prices don't go down!" Yeah, but if they've been rising a lot, maybe that's the only direction they can and should go. It may not be nice for banks and so-called "investors", but it's the only way to keep the system healthy. If you don't allow for the negative feedback self-correction, you can only create much bigger problems than you already have. And then you will get negative feedback squared and cubed.


White Nat , 11 minutes ago link

((( Greenspan, Bernanke, & Yellen ))) did their job like good little satanic ((( moneychangers ))).

They destroyed the middle class while making their billionaire ((( khaveyrim ))) immeasurably more wealthy.

Now the top .1% own as much as the bottom 90%.

Mission Accomplished.

NYC_Rocks , 11 minutes ago link

Author conflicts himself in the article. This paragraph is utterly stupid:

"I don't think capitalism in itself is a bad thing; what people don't like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much."

We have a healthcare cartel and massively subsidized costs (medicare, etc). It's not a free market at all. It's a cartel. The Fed is a true monopoly. Free markets would be much better for roads, hospitals and public services - all of those are horrible everywhere I've lived.

ThrowAwayYourTV , 14 minutes ago link

Investing is the biggest scam this side of the milkyway. I see it all the time and its nailing future generations to the deck of a sinking ship.

Everytime I see one of those multi million or multi billion jobs, like a shopping mall or some resort going up all I can say is, "Its never going to get paid off in the investors lifetime. Since most of the people that invested in them are in their 60's, 70's and 80's.

They just skim the money off the top until the day they die and all that will be left are hollowed out abandoned shells for the next generations to pay taxes on just to have them torn down and the whole polluted mess cleaned up.

NO WAY most of these projects will ever get paid off before they're totally useless to society. Look at all those falling down apartment buildings in the cities. Once a great investment now a great pile of worthless junk.

Blankfuck , 15 minutes ago link

THE NOT QE PONZI

New York Fed Adds $92.7 Billion to Markets

The Federal Reserve Bank of New York added $92.7 billion in temporary liquidity to the financial system on Tuesday.

wakeupscreaming , 24 minutes ago link

" In the ideal picture, free markets are -or would be- self-correcting"

Yeppers. That is why when globalists exclaim "we have a LABOR SHORTAGE in ________ industry", it's b.s.

If you have a labor shortage, the rules of supply and demand would dictate that the company owners must pay higher prices (wages) to employees to retain them, and attract new ones. It's exactly what happens to consumers when there is a lemon, tomato or gas shortage -- prices go up and we all pay. When companies attract employees with higher wages, the market responds -- kids in school realize if they want a job, they could go into that industry and get snapped up easily -- since there's a supposed "labor shortage". And voila, no more "labor shortage" and the market corrects itself.

That should happen, but it doesn't, as globalists manipulate the market by allowing in more surplus labor (mass immigration) from developing countries, which is labor market manipulation -- forever gaming the system so they always have more leverage and the upper-hand in wage negotiations. If you have a "labor shortage" and are offering minimum wage, no one is going to step up for those jobs, other than the immigrants you just flooded into your country.

[Nov 26, 2019] The Illiberal World Order

Notable quotes:
"... Despite massive amounts of evidence to the contrary, such people now enthusiastically whitewash the decades preceding Trump to turn it into a paragon of human liberty, justice and economic wonder. You don't have to look deep to understand that resistance liberals are now actually conservatives, brimming with nostalgia for the days before significant numbers of people became wise to what's been happening all along. ..."
"... Lying to yourself about history is one of the most dangerous things you can do. If you can't accept where we've been, and that Trump's election is a symptom of decades of rot as opposed to year zero of a dangerous new world, you'll never come to any useful conclusions ..."
"... Irrespective of what you think of Bernie Sanders and his policies, you can at least appreciate the fact his supporters focus on policy and real issues ..."
"... An illiberal democracy, also called a partial democracy, low intensity democracy, empty democracy, hybrid regime or guided democracy, is a governing system in which although elections take place, citizens are cut off from knowledge about the activities of those who exercise real power because of the lack of civil liberties; thus it is not an "open society". There are many countries "that are categorized as neither 'free' nor 'not free', but as 'probably free', falling somewhere between democratic and nondemocratic regimes". This may be because a constitution limiting government powers exists, but those in power ignore its liberties, or because an adequate legal constitutional framework of liberties does not exist. ..."
Nov 26, 2019 | www.zerohedge.com

The Illiberal World Order by Tyler Durden Mon, 11/25/2019 - 21:45 0 SHARES

Authored by Michael Krieger via Liberty Blitzkrieg blog,

From a big picture perspective, the largest rift in American politics is between those willing to admit reality and those clinging to a dishonest perception of a past that never actually existed. Ironically, those who most frequently use "post-truth" to describe our current era tend to be those with the most distorted view of what was really happening during the Clinton/Bush/Obama reign.

Despite massive amounts of evidence to the contrary, such people now enthusiastically whitewash the decades preceding Trump to turn it into a paragon of human liberty, justice and economic wonder. You don't have to look deep to understand that resistance liberals are now actually conservatives, brimming with nostalgia for the days before significant numbers of people became wise to what's been happening all along.

They want to forget about the bipartisan coverup of Saudi Arabia's involvement in 9/11, all the wars based on lies, and the indisputable imperial crimes disclosed by Wikileaks, Snowden and others. They want to pretend Wall Street crooks weren't bailed out and made even more powerful by the Bush/Obama tag team, despite ostensible ideological differences between the two. They want to forget Epstein Didn't Kill Himself.

Lying to yourself about history is one of the most dangerous things you can do. If you can't accept where we've been, and that Trump's election is a symptom of decades of rot as opposed to year zero of a dangerous new world, you'll never come to any useful conclusions. As such, the most meaningful fracture in American society today is between those who've accepted that we've been lied to for a very long time, and those who think everything was perfectly fine before Trump. There's no real room for a productive discussion between such groups because one of them just wants to get rid of orange man, while the other is focused on what's to come. One side actually believes a liberal world order existed in the recent past, while the other fundamentally recognizes this was mostly propaganda based on myth.

Irrespective of what you think of Bernie Sanders and his policies, you can at least appreciate the fact his supporters focus on policy and real issues. In contrast, resistance liberals just desperately scramble to put up whoever they think can take us back to a make-believe world of the recent past. This distinction is actually everything. It's the difference between people who've at least rejected the status quo and those who want to rewind history and perform a do-over of the past forty years.

A meaningful understanding that unites populists across the ideological spectrum is the basic acceptance that the status quo is pernicious and unsalvageable, while the status quo-promoting opposition focuses on Trump the man while conveniently ignoring the worst of his policies because they're essentially just a continuation of Bush/Clinton/Obama. It's the most shortsighted and destructive response to Trump imaginable. It's also why the Trump-era alliance of corporate, imperialist Democrats and rightwing Bush-era neoconservatives makes perfect sense, as twisted and deranged as it might seem at first. With some minor distinctions, these people share nostalgia for the same thing.

This sort of political environment is extremely unhealthy because it places an intentional and enormous pressure on everyone to choose between dedicating every fiber of your being to removing Trump at all costs or supporting him. This anti-intellectualism promotes an ends justifies the means attitude on all sides. In other words, it turns more and more people into rhinoceroses.

Eugène Ionesco's masterpiece, Rhinoceros, is about a central European town where the citizens turn, one by one, into rhinoceroses. Once changed, they do what rhinoceroses do, which is rampage through the town, destroying everything in their path. People are a little puzzled at first, what with their fellow citizens just turning into rampaging rhinos out of the blue, but even that slight puzzlement fades quickly enough. Soon it's just the New Normal. Soon it's just the way things are a good thing, even. Only one man resists the siren call of rhinocerosness, and that choice brings nothing but pain and existential doubt, as he is utterly profoundly alone.

– Ben Hunt, The Long Now, Pt. 2 – Make, Protect, Teach

A political environment where you're pressured to choose between some ridiculous binary of "we must remove Trump at all costs" or go gung-ho MAGA, is a rhinoceros generating machine. The only thing that happens when you channel your inner rhinoceros to defeat rhinoceroses, is you get more rhinoceroses. And that's exactly what's happening.

The truth of the matter is the U.S. is an illiberal democracy in practice, despite various myths to the contrary.

An illiberal democracy, also called a partial democracy, low intensity democracy, empty democracy, hybrid regime or guided democracy, is a governing system in which although elections take place, citizens are cut off from knowledge about the activities of those who exercise real power because of the lack of civil liberties; thus it is not an "open society". There are many countries "that are categorized as neither 'free' nor 'not free', but as 'probably free', falling somewhere between democratic and nondemocratic regimes". This may be because a constitution limiting government powers exists, but those in power ignore its liberties, or because an adequate legal constitutional framework of liberties does not exist.

It's not a new thing by any means, but it's getting worse by the day. Though many of us remain in denial, the American response to various crises throughout the 21st century was completely illiberal. As devastating as they were, the attacks of September 11, 2001 did limited damage compared to the destruction caused by our insane response to them. Similarly, any direct damage caused by the election and policies of Donald Trump pales in comparison to the damage being done by the intelligence agency-led "resistance" to him.

So are we all rhinoceroses now?

We don't have to be. Turning into a rhinoceros happens easily if you're unaware of what's happening and not grounded in principles, but ultimately it is a choice. The decision to discard ethics and embrace dishonesty in order to achieve political ends is always a choice. As such, the most daunting challenge we face now and in the chaotic years ahead is to become better as others become worse. A new world is undoubtably on the horizon, but we don't yet know what sort of world it'll be. It's either going to be a major improvement, or it'll go the other way, but one thing's for certain -- it can't stay the way it is much longer.

If we embrace an ends justifies the means philosophy, it's going to be game over for a generation. The moment you accept this tactic is the moment you stoop down to the level of your adversaries and become just like them. It then becomes a free-for-all for tyrants where everything is suddenly on the table and no deed is beyond the pale. It's happened many times before and it can happen again. It's what happens when everyone turns into rhinoceroses.

* * *

If you enjoyed this, I suggest you check out the following 2017 posts. It's never been more important to stay conscious and maintain a strong ethical framework.

Do Ends Justify the Means?

[Nov 25, 2019] What the word freedom means?

Nov 25, 2019 | www.moonofalabama.org

jayc , Nov 22 2019 21:14 utc | 19

In the past, I thought that Hong Kong was dominated by a narrow rich oligarchy with rules that kept the input from hoi-polloi to the minimum, which meant low taxes for business and the rich etc. From the point of view of Cato Institute it is the definition of paradise, but the life in paradise may have its discontent.

Compare with Chile that has exemplary record of "property rights" since Pinochet era with a constitution that makes it very hard to change, and yet, the locals are not happy and neither Russian nor Bolivarian agitators were identfied.

Or Colombia, another shiny bastion of democracy, allowing very wide spectrum of relationship between bosses and workers (assassinations of uppity organizers included). I would be curious if systematic and widespread murder in the defense of freedom merits downgrading in Cato Institute world freedom index.

AK74 , Nov 23 2019 6:48 utc | 61

Here's a handy piece of advice for non-American nations around the world: Whenever some American starts running its mouth about crusading for Freedom, Democracy, Human Rights, or similar propaganda slogans, get ready to defend your nation. These slogans are merely the American version of the White Man's Burden and Western Civilizing Mission.

They are a clear and present threat that the American predator is slouching towards you.

chu teh , Nov 23 2019 2:26 utc | 46

Trump's is trying to teach us something?

"I stand with freedom,..."

A working definition of "Freedom" is "absence of".

So, from what does he want to be absent of? He does not say. We should ask him.

Freedom from starvation? Ignorance? Health? Money? Jobs? Contaminated drinking water?..Who knows ? !

So Trump is coaching us deplorables that freedom is literally nonsense unless we say "freedom from ____ ". [we have to fill in the blank space to make any sense!]

I am sure he knows that. Doesn't he? I am sure you, dear reader,knows it, too.

karlof1 , Nov 23 2019 2:43 utc | 47
chu teh @44--

Trump wants freedom from taxation. And he wants to be free to oppress others. Also, see Hudson's definition of the term in his J is for Junk Economics as Trump was totally schooled in neoliberal economics.

Piotr Berman , Nov 23 2019 4:44 utc | 54
"Hong Kong is a repressive police state" says Joshua Wong, and yet it is consistently near the top of the list in the Cato Institute world freedom index.

[Nov 11, 2019] Capitalism and innovation

Nov 11, 2019 | www.moonofalabama.org

Noirette , Nov 11 2019 16:16 utc | 125

Quote: "A recent Global Times editorial ( .. ) the West was incapable of seeing and thus appreciating the critical role of the Communist Party of China in directing China's success since Western dogma says government's incapable of being dynamic or innovative -- that only the private sector is capable of being that and doing so. And thanks to the teaching of the false Neoliberal doctrine as truth in schools and universities, Western governments and their publics will continue to do the wrong thing by following a false path.." -- karlof1 @ 60

Quote: "If you read many who come and comment at MoA that supposedly are "educated" you will notice that they continue to think and write in terms of the conflict being between socialism and capitalism (...) China is 80% capitalistic as are other "socialistic" countries but what matters is what part of the social economy is socialism versus capitalism." -- psychohistorian @ 72

Even long-ago groups (1) set aside 'capital to invest' in the shape of making tools (costly in materials, expertise, time ), keeping seeds (ditto), training children/youth to hunt, build shelter, give warnings, etc. Accumulating one good or another for a reserve store in slim times, for transformation at a later date - commodities - (reeds,coverings, etc.) or for favorable exchange, or even for coercion. By necessity, all such societies were socialistic, in the sense that sharing and re-distribution played a vital part, without which all would have collapsed.

Rent seeking or monopolisitic capture existed in the sense of a powerful ppl claiming a stipend (rake-off?), leaders lived better / had more wives / more space / whatever because of decisionary power, status, built on 'skill' or 'success' or 'x', perhaps merely dynastic, (small tribe), or, later, because of supervision and control posts that were needed to enable larger societies to function (Priest administration which regulated stores, exchanges, contracts - Sumeria), often resting on an over-arching narrative like a religious one. Here too socialism was at the core: without re-distribution to the poor, perhaps for their work, care offered to women and children, and regular debt forgiveness (formalised in Sumeria but existing before of course, in the 'buddy no prob' style) the society would have broken down.

Capitalism and socialism are modern terms (18th, 19th? cent.) and are strands that exist in all human and maybe even some animal groups. Meme key-words (i.e. not needed when analysing how one society functions, any will be both in part) that serve today as a rallying cry:

"Sorry...but the conflict is between socialism and capitalism...between the rich and the working masses, especially those who work and still they remain poor....as has always been....who says otherwise is only trying to fool the masses " Sasha 76.

Yes, a class struggle between the working 'poor' and rentier domineering 'rich' is boiling over now.

1. upper paleolithic to early sumeria, snippets


flankerbandit , Nov 11 2019 17:25 utc | 136

Noirette...thanks for an interesting and informative comment...

Also for calling attention to Karlof's comment at 60...

Utilization of the Entrepreneurial aspects of Capitalism that provide for dynamicism and innovation works as long as they're employed for the public's benefit...

This idea of the supposed 'innovation' inherent in 'entrepreneurial capitalism' is another one of those myths that are just taken for granted and assumed to be true...

It's not quite like that...if we think of innovation as being specific to advancements in science and technology [as opposed to say process innovation in social organization or resource management etc]...then this idea is certainly false...

The advancement of science rests on education...it's as simple as that...the more resources you devote to building up an academic and scientific infrastructure, the more scientific innovations will be forthcoming...

The alleged 'dynamicism' of private enterprise is failing miserably in this regard...the prime example being America's increasing lag in the most scientifically demanding endeavors, like spaceflight and advanced armaments...both of which are completely privatized...

It was only during the 1960s Apollo program where an intensive top-down government effort yielded impressive progress...that successful strategy was then promptly abandoned and top-flight science handed off to the profit-seeking private sector...with disastrous consequences...

Today, the US has been dependent on political rival Russia for human spaceflight for nearly a decade...as well as rocket engines for its critical national security rocket launches...[which it cannot manufacture itself]...

The gap in advanced armaments technology is just as startling...with Russia clearly opening a large lead in groundbreaking hypersonic technologies, scramjet engines etc...

For those who have had an inside view of the aerospace industry over the last decades, the gap in technical capability is truly startling...for instance, there would be no ISS if not for the Russian Mir space station technology on which the ISS is based...

When looking at why this state of affairs has come to be, it is helpful to have again an inside perspective on the absolutely huge academic and scientific infrastructure that was built up during the Soviet era...

In the meantime, the capitalist US is not the least concerned with building up such a national science capability...this is obvious...recent figures on STEM graduates...

We note that China produces nearly 10 times as many as the US, with only four times the population...Russia with half the US population produces as many...

In engineering it is even more pronounced...

We note that even Iran, with one quarter the US population [but with a decidedly socialist system] is near the US in both categories...

The US is becoming a third-rate power in science and technology...[and no iphones and other consumer gizmos don't really count for anything]...

The simple fact is that in order to truly innovate, you need to have a PLAN...crony capitalism like the US defense industry, or the privatization of space technology are really producing diddly squat...

juliania , Nov 11 2019 18:26 utc | 141
Thanks to all posters. The information about Bolivia is sobering but very helpful. I was struck also by karlof1's repost of his email to psychohistorian @ 60:

"...What the Chinese are doing as you noted is keeping the primary sink of Capital under public auspices such that all major public supporting infrastructures are publicly owned and operated. Even the Communist Party of China is publicly owned--which is what political parties within the West ought to be so they can't be captured like the P and R-parties to work against the public interest..."

So, I was thinking what does it mean in the US to have a publicly owned political party - something like publicly owned businesses? Only small donations permitted to the party coffers? Sort of like unions are structured? That seems a possible and interesting development. This country ought to be able to attempt this.

We might say the Green Party tries, but maybe the FDR model isn't the appropriate one to this day and age. I don't think younger folk (then me) are 'turned on' by FDR since the generational link is broken. And maybe too they are not turned on by 'isms' either.

I like the last words of your quote above, karlof1 - maybe a "Public Interest Party", PIP for short? I wish Grieved was posting, hope he/she is in good health. The input on China from Grieved's research in depth has been very helpful.

Public interest is very far reaching, and takes in models from Russia and China to Venezuela and Bolivia, with Syria and Ukraine right there in the mix as well. It's a far reaching concept that rises above the 'ism's'.

William Gruff , Nov 11 2019 22:58 utc | 161
flankerbandit @136 points out that capitalist entrepreneurial innovation is a farce, but I would like to add some points.

Lots of really cool tech was developed in the US after WWII and up to the early 1980s. Much of this came from giant corporate research institutes (think Bell Labs, Palo Alto Research Center, IBM's Watson Works, etc). From the mid-1980s to the present these incredibly productive research institutes have all but vanished. The remnants of what remains of those corporate labs certainly don't produce very much of interest anymore.

Why did capitalism create these labs, and what happened to cause their decline?

The research institutes came into existence because AT&T used to be a monopoly.

Americans didn't have so much of a "business friendly" fetish back in the 1950s as they do now. As a result they were extremely suspicious of and hostile to AT&T for being a monopoly. Of course, it made sense to have a unified communications network across the nation, so AT&T as a monopoly could provide better service than dozens of smaller competing businesses. The capitalist propaganda against nationalization was intense, so the public settled for hardcore regulation of the monopoly instead. Part of this regulation was a requirement that AT&T spend a hefty chunk of their revenue on research and development.

The problem, from a capitalist perspective, was that the amount mandated be spent on R&D by the regulations was far more than AT&T management could come up with profit-bearing lines of research for. As a consequence they hired scientists and set them up in laboratories just to consume the required number of dollars. This is to say that as a result of heavy regulations AT&T began to pour money into pure research rather than the applied type of research that can be justified to bean counters. This resulted in mountains of science, much of which remains lost in old filing cabinets to this day.

Those who like to meta-study science itself will tell you that most pure research doesn't really yield anything worthwhile. At the same time, most of the really big advances come from pure research. The successes of this pure research led AT&T to branch out into a wide range of technologies beyond just telephones and telegraphs. This began to be a business threat to other big players in the tech industries like IBM, who then had to set up their own huge freewheeling research institutes in order to remain competitive. Due solely to AT&T being forced by the government to setting up extensive research labs, many other businesses across a multitude of sectors of the economy were likewise forced to heavily invest in R&D.

Of course, AT&T would rather have just given that money spent on R&D to their investors, so they lobbied to have the regulations removed. By the end of the 1970s the American public had been successfully brainwashed by capitalist mass media into feeling a need for "business-friendly" government, and deregulation was the order of the day (thank you Jimmy Carter for starting that!). Even as such, people of that time were not ready for an unregulated monopoly to control telecommunications, so AT&T was broken up into smaller units that could focus on just making the biggest profit possible. The "Baby Bells" rode on the momentum of their former success, neglecting research and running their infrastructure into the ground. America then went from having the best communications infrastructure in the world, literally decades ahead of everyone else on the planet, to barely staying above third world status.

With Bell Labs reduced to a joke, there was no longer a justification for others like IBM and Xerox to keep spending on pure research themselves. Pure research was rationalized away. That said, what is referred to as "pre-market" research is still done today, even if not in the giant corporate research institutes. This is now done in universities on the public dime. The "innovative entrepreneurial capitalist enterprises" circle the college campuses like vultures waiting for students and faculty to develop something they can make money off of and when they see it they swoop in and snatch it away for a tiny fragment of its cost and value.

The point here is that AT&T was so micromanaged by government regulators that it should have just been directly managed by those regulators. AT&T should have been nationalized rather than broken up. Capitalism had nothing whatsoever to do with AT&T's prodigious technological productivity. That "innovation" was 100% the result of government "interference" in the Market. Most of the heavy lifting for innovation today comes from "pre-market" research at universities and is funded by the public. Very little fundamental innovation in the world today is financed by private investors.

The take-away? You don't need capitalism for innovation. On the contrary, capitalism interferes with and holds back innovation.

flankerbandit , Nov 12 2019 1:15 utc | 169
William G on capitalism and innovation...

Thanks for a very good case study...yes, for all intents and purposes AT&T might just as well be labeled under 'state owned enterprise' at the time...

And that was another era...I will add here that the 'golden' three decades or so after the war, life in the US for ordinary folks really was pretty good...

The shop floor worker took home a decent pay on which a family could live nicely without a second income...own a nice home and send the kids to college...most of the manufacturing jobs were considered 'semi-skilled' labor, but were in fact quite skilled by today's standards...

The company president took home maybe ten times that of the shop floor worker...the financialization of everything that wasn't nailed down had not yet even started...

I went to college in Michigan [quite far from home] in the 1980s and knew family friends there...the elder patriarch had worked at GM, starting as just a guy on the line, but moved up to foreman and was an incredible source of technical knowledge about manufacturing...the house they retired in, in Grosse Pointe was nothing to sneeze at...

This kind of fair deal and upward mobility for the ordinary worker is long gone now...with temp jobs, no benefits and working in an Amazon warehouse for 11 bucks an hour [under sweatshop conditions literally]...

[An entire series from this local paper on Amazon here...]

Of course this doesn't stop the government from showering King Bezos with billions of our tax dollars to come up with some grifter scheme involving supposed rocket engines and spacecraft...

So yes, those were much different times...and yes, capitalism does not lead to innovation...

[Nov 09, 2019] The Managers' Coup d'Etat in Health Care Appears Complete - a Study of Top Health Care Influencers

Nov 09, 2019 | www.nakedcapitalism.com

The authors concluded that

perceived influence over US health care of chief executives of health systems is increasing. To the extent that the ranking validly reflects influence, the sharp rise in the influence of chief executive officers at the expense of representatives of patients or health professionals may underscore the increasing industrialization of health care. It is not possible to find patients, patient advocates, clinicians, or clinician advocates at the top of this list . This trend placing health care influencers within C-suites, accountable to boards mostly comprising other corporate leaders, may explain the rise of business language and thinking

They suggested that it is possible that there is a

causal association between the concentration of executive influence and problems of patient care derived from efforts to optimize operational efficiency and financial performance, for example, clinician burnout , the heavy burden of treatment afflicting patients with chronic conditions, and the erection of barriers to care to optimize 'payer mix.'

Dr Montori also said in the interview

Americans increasingly find themselves in a corporate-centric healthcare echo-chamber , one in which the public will increasingly approach tough policy decisions having heard only the viewpoint from the top.

'The primary goals of CEOs are to advance the mission of their organization,' Montori says. 'If all that influences healthcare are the ideas of people who advocate for the success of their organizations, people who are not served by them will not have their voices heard.'

Furthermore, he suggested that the public may be befuddled by the current health policy debates, including those about universal health care and the possibility of reducing the power of commercial health insurance companies because

in the rest of the narrative all that they hear is about are the successes of biotech, the successes of tech companies, and the successes of healthcare corporations who achieve high levels of innovation thanks to the bold leadership of their executives. It's why we have been calling for greater awareness of the industrialization of healthcare for some time now

Summary

The new study by Longman, Ponce, Alvarez-Villalobos and Montori adds to the evidence that health care has been taken over by business-trained managers, and in the US, especially by large commercial health care organizations run by such managers.

Since we started Health Care Renewal , we have frequently discussed the rise of generic managers, which later we realized has been called managerialism. Managerialism is the belief that trained managers are better leaders of health care, and every other sort of organization, than are than people familiar with the particulars of the organizations' work. Managerialism has become an ascendant value in health care over the last 30 years. The majority of hospital CEOs are now management trained, but lacking in experience and training in medicine, direct health care, biomedical science, or public health. And managerialism is now ascendant in the US government. Our president, and many of his top-level appointees, are former business managers without political experience or government experience.

We noted an important article in the June, 2015 issue of the Medical Journal of Australia(1) that made these points:

– businesses of all types are now largely run by generic managers, trained in management but not necessarily knowledgeable about the details of the particular firm's business
– this change was motivated by neoliberalism (also known as economism or market fundamentalism )
– managerialism now affects all kinds of organizations, including health care, educational and scientific organizations
– managerialism makes short-term revenue the first priority of all organizations
– managerialism undermines the health care mission and the values of health care professionals

Generic or managerialist managers by definition do not know much about health care, or about biomedical science, medicine, or public health. They are prototypical ill-informed leadership , and hence may blunder into actual incompetence. They are trained that they have a right to lead any sort of organization, which breeds arrogance. These managers are not taught about the values of health care professionals. Worse, they are taught in their business style training about the shareholder value dogma, which states that the main objective of any organization is to increase revenue. Thus, they often end up hostile to the fundamental mission of health care, to put care of the patient and the health of the population ahead of all other concerns, which we have called mission-hostile management. (Furthermore, it appears that the shareholder value dogma is just smokescreen to cover the real goal of managers, increasing their own wealth, e.g., look here .) Finally, arrogance and worship of revenue allows self-interested and conflicted, and even sometimes corrupt leadership.

Managerialists may be convinced that they are working for the greater good. However, I am convinced that our health care system would be a lot less dysfunctional if it were led by people who actually know something about biomedical science, health care, and public health, and who understand and uphold the values of health care and public health professionals – even if that would cost a lot of very well paid managerialists their jobs.

Maybe someday the top "influencers" in health care will actually be people who know something about health care and actually care about patients' and the public's health.


1 Kings , November 9, 2019 at 4:51 am

'We've got to protect our phoney-baloney jobs, gentlemen.' William J. Le Petomane

James Miller , November 9, 2019 at 4:58 am

John Raulston Saul, in "Voltaire's Bastards", has produced an intellectual fireworks display that deals directly with the problem Dr.Poses sees pretty clearly. Endhoven proposes an attack on what he sees as a regressive medieval remnant, a Guild, an attack that has been pretty successful in a broad swath of our neoliberal world. Saul would recognize that attack immediately, and despise it. It's what he wrote about with such fiery contempt.. And in my opinion, he's right.

Managerialists, purveyors of "reason", are leaving a trail of disaster in pretty much every area where their influence is powerful. Their ivy league, MBA-dominated education seemingly has failed to provide any sense of the human feelings and needs that must be an essential part of successful planning or policy. The bottom line trumps all else, and generates disaster as well as shareholder value. Treat yourself, as well as tantalize your wits. Read it.

flora , November 9, 2019 at 5:20 am

Thanks for this post. Two quotes that sum up much of the overpriced disfunction, imo.

Managerialism is the belief that trained managers are better leaders of health care, and every other sort of organization, than are than people familiar with the particulars of the organizations' work.

Better leaders toward what goal?

– managerialism makes short-term revenue the first priority of all organizations

Brooklin Bridge , November 9, 2019 at 6:54 am

managerialism makes short-term revenue the first priority of all organizations

Except when it comes to manufacturing ideologies. There, they are quite capable of taking the long view with think tanks, generational influence (stacking) of the judical system, education, politics and policy and so on.* It's not as if they are unaware of the concept of laying foundations. But short term revenue seems to be tightly coupled in their view to what they get to put in their pockets which in turn (perhaps ironically by the foundation builders: self worth by comparative metrics) has been tightly coupled to their perceived worth as human beings.

(Ultimately, I believe, the phenomenon of comparative metrics literally projects the homeless -or in this case the paucity of care for whole segments of society- into existence and maintains their numbers in relation to those of the "managers.") Interestingly, the mix of origins, whether such seminal ideas ( "eat your vegetables, think of the starving Chineese" ) are vernacular and borrowed and repurposed or canonical and disseminated helps in no small part to obscure the process.

*Even if the managers are not always the drivers, they are aware of the value.

Synoia , November 9, 2019 at 6:12 am

When doctors graduate from medical school with $500,000 in debt, what is the primary lesson they have learned?

[Nov 09, 2019] Under neoliberalism Democracy is about equality of money ? Under neoliberalism the rule of law means maintianing social position of upper classes vs majority of population, which is moral imbecility. Unjust laws do not make for justice.

Nov 09, 2019 | crookedtimber.org

steven t johnson 11.08.19 at 4:36 pm 77

More directly on topic, the difficulties in defining neoliberalism usefully I think come from 1) an incoherent political spectrum centered on overly specific policies which will vary according to time and place and the vicissitudes of world economy and war, rather than on class 2) the lack of a sound analysis of what bourgeois democracy is 3) an economic analysis that omits economic history, leaving most of the discussion decontextualized.

1) Basically, the liberal state, the neoliberal state and a host of other variants share the view of freedom as the right to buy what you can afford, to sell what you own and to do whatever you want in the meantime. It is a vision centered on property as the essence of humanity. See Benjamin Constant. And this is true even for people who try to imagine a non-market sphere for other aspects of life. The most common form today is perhaps the notion of the family as a private haven, the center of civil (as opposed to political) society. But nobody escapes reality, this is purely ideological, an illusionary escape from class society. The more the family is a private haven, the more it is a private prison.

The problem with placing neoliberalism on a spectrum is that practically everyone whose opinion would be accepted as legitimate for expression, fundamentally shares this vision. Disagreements about the inevitable lapses from the ideal are inevitable, but will change. In the earliest days of capitalism, expropriating Church lands was liberalism, even if the Wars of Religion, the Dutch revolution and the English reformation are conveniently omitted as essential. A continental power like France or Russia needed more intervention in its economy to create a military than England or Japan. The superficial differences confuse how much overlap there is between neoliberalism and every other acceptable school.

2) Possession of property of course puts people in different places in social life. Neoliberalism and the old liberalism alike held that freedom and justice were a balance of classes, that the state would maintain. How interventionist the state must be, again would vary. But the legitimacy of any intervention is held to be based not just on whether it was meant to maintain the proper balance of classes, but upon whether it was done with consent.

Today the usual phrase is the rule of law. But this is a claim the means justify the ends, which is moral imbecility. Unjust laws do not make for justice.

The real justification for the rule of law is as an ends in itself, as social order no matter what, where class freedoms are safe. The overlap between this commitment from neoliberalism and other arrangements should be obvious, not confusing, but it is what is is. Democracy is about equality of money. In political terms, the spectrum of capitalist forms of the political regime, runs from the libertarian/neoliberal ideal on the left (there is a reason libertarians reprint Constant and Mill, even Sidney!) to fascism on the right.

Fascism is an essential alternative weapon in the greater struggle, where individuals sacrifice for the power of the nation, which means the ruling classes of the nation, in substance though not in person. The tolerable version of social democracy lie somewhere in the center, putting class collaboration and corporate freedom above the purest visions of freedom, which would be preposterous universe of small business owners and farmers and professionals. But the notion democracy means human rights is purely ideological, refuted by history. It means citizen rights, because, the rules are all.

3) The novel issues that provoked the emergence of a neoliberalism distinct from the other political philosophies are as much a product of economic history (change!) as the disappearance Court vs. Country as the axis of politics in England. I suggest that, while Slobodian may be correct that the loss of empire was hugely important to a group who devised some justifications for neoliberalism, in practice, the decline, then disappearance of the gold standard, the increasing importance of finance, the US hegemony over the world, the commitment to reversing the Great Compression, to restoring a more just balance (as they see it,) between capital and labor were important. In US domestic politics, the secular stagnation in real wages, despite the increased labor as wives entered the labor force, were the point. And it is by no means clear that there are any significant forces opposing this.

[Nov 08, 2019] The Myth of Shareholder Primacy by Sahil Jai Dutta

Notable quotes:
"... Third, the notion of shareholder primacy helped to offload managerial responsibility. An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice. Managers lamented the fact they had no choice but to disregard workers and other stakeholders because of shareholder power. Rhetorically, shareholders were deemed responsible for corporate problems. Yet in practice, managers, more often than not, enrolled shareholders into their own projects, using the newly-formed alliance with shareholders to pocket huge returns for themselves. ..."
"... If shareholder demands are understood to be the major problem in corporate life, then the solution is to grant executives more space. Yet the history of shareholder value tells us that managers have been leading the way in corporate governance. They do not need shielding from shareholders or anyone else and instead need to be made accountable for their decisions. Critiques of shareholder primacy risk muddying the responsibility of managers who have long put their own interests first. Perhaps the reason why executives are now so ready to abandon shareholder primacy, is because it never really existed. ..."
Nov 06, 2019 | www.nakedcapitalism.com
By Sahil Jai Dutta, a lecturer in political economy at the University of Goldsmiths, London and Samuel Knafo, a Senior Lecturer in the Department of International Relations at the University of Sussex. Originally published at the PERC blog

In the late 1960s, a young banker named Joel Stern was working on a project to transform corporate management. Stern's hunch was that the stock market could help managers work out how their strategies were performing. Simply, if management was effective, demand for the firm's stock would be high. A low price would imply bad management.

What sounds obvious now was revolutionary at the time. Until then profits were the key barometer of success. But profits were a crude measure and easy to manipulate. Financial markets, Stern felt, could provide a more precise measure of the value of management because they were based on more 'objective' processes, beyond the firm's direct control. The value of shares, he believed, represented the market's exact validation of management. Because of this, financial markets could help managers determine what was working and what was not.

In doing this, Stern laid the foundation for a 'shareholder value' management that put financial markets at the core of managerial strategy.

Stern would probably never have imagined that these ideas would 50 years later be castigated as a fundamental threat to the future of liberal capitalism. In recent times everyone from the Business Roundtable group of global corporations, to the Financial Times , to the British Labour Party has lined up to condemn the shareholder ideology.

"Fifty years of shareholder primacy," wrote the Financial Times, "has fostered short-termism and created an environment of popular distrust of big business."

It is not the first time Stern's creation has come under fire. A decade ago Jack Welsh, former CEO of General Electric declared shareholder value " probably the dumbest idea in the world ". And 15 years before then, British political commentator Will Hutton, among others, found paperback fame with his book The State We're In preaching much the same message.

To critics, the rise of shareholder value is a straightforward story , that has been told over and over again. Following a general crisis of postwar profitability in the late 1970s, corporate managers came under fire from disappointed shareholders complaining about declining returns. Shareholder revolts forced managers to put market capitalisation first. The rise of stock options to compensate corporate managers entrenched shareholder value by aligning the interests of managers and shareholders. Companies began sacrificing productive investments, environmental protections, and worker security to ensure shareholder returns were maximised. The fear of stock market verdicts on quarterly reports left them no choice.

This account fits a widespread belief that financiers and rentiers mangled the postwar golden era of capitalism. More importantly, it suggests a simple solution: liberate companies from the demands of shareholders. Freed from the short-term pursuit of delivering shareholder returns, companies could then return to long-term plans, productive investments, and higher wages.

In two recent articles , we have argued that this critique of shareholder value has always been based on a misunderstanding. Stern and the shareholder value consultants did not aim to put shareholders first. They worked to empower management. Seen in this light, the history of the shareholder value ideology appears differently. And it calls for alternative political responses.

To better understand Stern's ideas, it is important to grasp the broader context in which he was writing. In the 1960s, a group of firms called the conglomerates were pioneering many of the practices that later became associated with the shareholder revolution: aggressive mergers, divestitures, Leverage buy-outs (LBOs), and stock repurchasing.

These firms, such as Litton Industries, Teledyne and LTV revolutionised corporate strategy by developing new techniques to systematically raise money from financial markets. They wheeled and dealed their divisions and used them to tap financial markets to finance further predatory acquisitions. Instead of relying on profits from productive operations, they chased speculative transactions on financial markets to grow.

These same tactics were later borrowed by the 1980s corporate raiders, many of which were in fact old conglomerators from the 1960s. The growing efficiency with which these raiders captured undervalued firms on the stock market and ruthlessly sold off their assets to finance further acquisitions put corporate America on alert.

With fortunes to be made and lost, no manager could ignore the stock market. They became increasingly concerned with their position on financial markets. It was in this context that corporate capitalism first spoke of the desire to 'maximise shareholder value'. While sections of the corporate establishment were put on the defensive, the main reason for this was not that shareholders imposed their preferences on management. Instead, it was competitor managers using the shareholder discourse as a resource to expand and gain control over other firms. Capital markets became the foundation of a new form of financialised managerial power.

These changes made the approach of management consultants championing shareholder value attractive. The firm founded by Stern and his business partner Bennett Stewart III took advantage of the situation. They sold widely their ideas about financial markets as a guideline for corporate strategy to firms looking to thrive in this new environment.

As the discourse and tools of shareholder value took hold, they served three distinct purposes. First, they provided accounting templates for managerial strategies and a means to manage a firm's standings on financial markets. The first and most famous metric for assessing just how much value was being created for shareholders was one Stern himself helped develop, Economic Value Added (EVA).

Second, they became a powerful justification for the idea that managers should be offered share options. This was in fact an old idea floated in the 1950s by management consultants such as Arch Patton of McKinsey as a means to top-up relatively stagnant managerial pay. Yet it was relaunched in this new context as part of the promise to 'align the interests of managers with shareholders.' Stock options helped managerial pay skyrocket in the 1990s, a curious fact for those who believe that managers were 'disciplined' by shareholders.

Third, the notion of shareholder primacy helped to offload managerial responsibility. An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice. Managers lamented the fact they had no choice but to disregard workers and other stakeholders because of shareholder power. Rhetorically, shareholders were deemed responsible for corporate problems. Yet in practice, managers, more often than not, enrolled shareholders into their own projects, using the newly-formed alliance with shareholders to pocket huge returns for themselves.

Though shareholder demands are now depicted as the problem to be solved, the same reformist voices have in the past championed shareholders as the solution to corporate excesses. This was the basis for the hope around the ' shareholder spring ' in 2012, or the recent championing of activist shareholders as ' labour's last weapon' .

By challenging the conventional narrative, we have emphasised how it is instead the financialisation of managerialism , or the way in which corporations have leveraged their operations on financial markets, that has characterised the shareholder value shift. Politically this matters.

If shareholder demands are understood to be the major problem in corporate life, then the solution is to grant executives more space. Yet the history of shareholder value tells us that managers have been leading the way in corporate governance. They do not need shielding from shareholders or anyone else and instead need to be made accountable for their decisions. Critiques of shareholder primacy risk muddying the responsibility of managers who have long put their own interests first. Perhaps the reason why executives are now so ready to abandon shareholder primacy, is because it never really existed.


vlade , November 6, 2019 at 5:11 am

Uber. WeWork. Theranos.

I rest my case.

notabanktoadie , November 6, 2019 at 5:51 am

Imagine if all corporations were equally owned by the entire population? Then shareholder primacy would just be representative democracy, no?

But, of course, corporations are not even close to being equally owned by the entire population and part of the blame must lie with government privileges for private credit creation whereby the need to share wealth and power with the entire population is bypassed – in the name of "efficiency", one might suppose.

But what good is the "efficient" creation of wealth if it engenders unjust and therefore dangerous inequality and levies noxious externalities?

Michael , November 6, 2019 at 7:59 am

"An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice."

Amorphous? Anonymous? Anybody who faced one of Milken's raiders, or paid Icahn's Greenmail, would disagree. Nelson Putz, er, Peltz just forced P&G to start eating into the foundation of the business to feed his greed. There's nothing amorphous or anonymous about activist shareholders, especially when they take over a company and start carving it up like a Thanksgiving turkey.

Synoia , November 6, 2019 at 8:00 am

Shareholder primacy or Creditor Primacy?

Creditors, or bond holders, appear to be the more powerful. Shareholders have no legal recourse to protect their "ownership." Bondholders do have legal recourse.

Either way, many corporations more serve up their than serve their customers and the general public. There is this belief that if a corporation is profitable, that's good but does not include a public interest (for example Monsanto and Roundup.)

vlade , November 6, 2019 at 9:48 am

Managers used to fear the creditors more than shareholders, that's very much true.

But that has gone out of the window recently, as debt investors just chase return, so it's seller's world, and few of them (debt investors) want to take losses as they are much harder to recoup than before. So extend and pretend is well and alive.

In other words, one of the byproducts of QE is that the company management fears no-one, and is more than happy to do whatever they want.

The problem is the agency. If we assume that we want publicly traded companies (which IMO is not a given), the current incentives are skewed towards management paying themselves.

The problem with things like supervisory boards, even if they have high worker representation, is that those are few individuals, and often can be (directly or indirectly) corrupted by the management.

The "shares" incentive is just dumb, at least in the way it's currently structured. It literally gives only upside, and often even realisable in short/medium term.

d , November 6, 2019 at 4:23 pm

And thats how we got Boeing and PG&E. Just don't think thats the entire list, don't think there is enough room for that

rd , November 6, 2019 at 5:57 pm

Corporations are artificial creations of the state. They exist in their current form under a complex series of laws and regulations, but with certain privileges, such as Limited Liability Corporations. It is assumed that these creatures will enhance economic activity if they are given these privileges, but there is no natural law, such as gravity, that says these laws and regulations need to exist in their current form. They can be changed at will be legislatures.

This is why I despise the Citizens United decision which effectively gives these artificial creations the same rights as people. i don't believe that Thomas Jefferson would have found that to be "a self-evident truth." I think that Citizens United will be regarded as something akin to the Dred Scott decision a century from now.

Shareholder primacy is an assumption that hasn't been challenged over the past couple of decades, but can be controlled by society if it so desires.

Jeremy Grimm , November 6, 2019 at 11:12 am

The semantics of "shareholder primacy" are problematic. The word "shareholder" in this formula echoes the kind problems that whirl around a label like "farmer". A shareholder is often characterized in economics texts as an individual who invests money hoping to receive back dividends and capital gains in the value and valuation of a company as it earns income and grows over time. Among other changes -- changes to the US tax laws undermined these quaint notions of investment, and shareholder. The coincident moves for adding stock options to management's pay packet [threats of firing are supposed to encourage the efforts of other employees -- why do managers needs some kind of special encouragement?], legalizing share buybacks, and other 'financial innovations' -- worked in tandem to make investment synonymous with speculation and shareholders synonymous with speculators, Corporate raiders, and the self-serving Corporate looters replacing Corporate management.

This post follows a twisting road to argue previous "critique of shareholder value has always been based on a misunderstanding" and arrives at a new critique of shareholder value "challenging the conventional narrative." This post begins by sketching Stern's foundation for 'shareholder value' with the assertion imputed to him: "if management was effective, demand for the firm's stock would be high. A low price would imply bad management." The post then claims "What sounds obvious now was revolutionary at the time." But that assertion does not sound at all obvious to me. In terms of the usual framing of the all-knowing Market the assertion sounds like a tautology, built on a shaky ground of Neolilberal economic religious beliefs.

I believe "shareholder primacy" is just one of many rhetorical tools used to argue for the mechanisms our Elites constructed so they could loot Corporate wealth. There is no misunderstanding involved.

xkeyscored , November 6, 2019 at 12:07 pm

"But that assertion does not sound at all obvious to me."
I think you're severely understating this. I'd call it total [family blogging family blog]. As you go on to imply, it takes an act of pure faith, akin to religious faith in Dawkins' sense of belief in the face of evidence to the contrary, to assume or assert this nonsense, except insofar as it's tautological – if the purpose of management is to have a high share price, then obviously the latter reflects the effectiveness of the former.

Susan the Other , November 6, 2019 at 1:06 pm

Well, we're all stakeholders now. There probably isn't much value to merely being a shareholder at this point. First let's ask for a viable definition of "value" because it's pretty hard to financialize an undefined "value" and nobody can financialize an empty isolated thing like the word "management". Things go haywire. What we can do with this seed of an idea is finance the preservation and protection of some defined value. And we can, in fact, leverage a healthy planet until hell freezes over. No problem.

PKMKII , November 6, 2019 at 2:07 pm

This fits within a Marxist analysis as the material conditions spurred the ideological justifications of the conditions, not the ideology spurring the conditions.

mael colium , November 6, 2019 at 5:15 pm

Easy to bust this open by legislating against limited liability. Corporates were not always limited liability, but it was promoted as a means to encourage formation of risky businesses that would otherwise never develop due to risk averse owners or managers. This was promoted as a social compact, delivering employment and growth that would otherwise be unattainable. Like everything in life, human greed overcomes social benefits.

Governments world wide would and should step up and regulate to regain control, rather than fiddling at the margins with corporate governance regulation. They won't, because powerful vested interests will put in place those politicians who will do their bidding. Another nail in the democracy coffin. The only solution will be a cataclysmic event that unites humanity.

RBHoughton , November 7, 2019 at 12:30 am

I think about stock markets as separate from companies and I'm wrong. Each of the stock exchanges I have heard of started off when 4-5 local companies invested a few thousand each in renting a building and a manager to run an exchange hoping it would attract investment, promote their shares and pay for itself.

I remember when one of the major components of the Hong Kong Exchange, Hutchison, had a bad year and really needed some black magic to satisfy the shareholders, the Deputy Chairman abandoned his daytime job and spent trading hours buying and selling for a fortnight to contribute something respectable for the annual accounts. Somebody paid and never knew it. This was at the start of creative accounting and the 'anything goes' version of capitalism that the article connects with Litton Industries, Teledyne and LTV but was infecting the entire inner circle of the money.

[Nov 03, 2019] The U.S. Only Pretends to Have Free Markets by Thomas Philippon

Oct 29, 2019 | www.theatlantic.com

Thomas Philippon Professor of Finance at New York University

When I arrived in the United States from France in 1999, I felt like I was entering the land of free markets. Nearly everything -- from laptops to internet service to plane tickets -- was cheaper here than in Europe.

Twenty years later, this is no longer the case. Internet service, cellphone plans, and plane tickets are now much cheaper in Europe and Asia than in the United States, and the price differences are staggering. In 2018, according to data gathered by the comparison site Cable , the average monthly cost of a broadband internet connection was $29 in Italy, $31 in France, $32 in South Korea, and $37 in Germany and Japan. The same connection cost $68 in the United States, putting the country on par with Madagascar, Honduras, and Swaziland. American households spend about $100 a month on cellphone services, the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics indicates. Households in France and Germany pay less than half of that, according to the economists Mara Faccio and Luigi Zingales.

cover of "The Great Reversal"
This article was adapted from The Great Reversal: How America Gave Up on Free Markets .

None of this has happened by chance. In 1999, the United States had free and competitive markets in many industries that, in Europe, were dominated by oligopolies. Today the opposite is true. French households can typically choose among five or more internet-service providers; American households are lucky if they have a choice between two, and many have only one. The American airline industry has become fully oligopolistic; profits per passenger mile are now about twice as high as in Europe, where low-cost airlines compete aggressively with incumbents.

This is in part because the rest of the world was inspired by the United States and caught up, and in part because the United States became complacent and fell behind. In the late 1990s, legally incorporating a business in France took 15 administrative steps and 53 days; in 2016, it took only four days . Over the same period, however, the entry delay in the United States went up from four days to six days. In other words, opening a business used to be much faster in the United States than in France, but it is now somewhat slower. More Stories

Read more: How economists' faith in markets broke America

The irony is that the free-market ideas and business models that benefit European consumers today were inspired by American regulations circa 1990. Meanwhile, in industry after industry in the United States -- the country that invented antitrust laws -- incumbent companies have increased their market power by acquiring nascent competitors, heavily lobbying regulators, and lavishly spending on campaign contributions. Free markets are supposed to punish private companies that take their customers for granted, but today many American companies have grown so dominant that they can get away with offering bad service, charging high prices, and collecting, exploiting, and inadequately guarding their customers' private data.

In Europe, greater integration among national economies turned out to be a force for greater competition within individual economies. The very same politicians who disliked free markets at home agreed to promote them at the European level. Why? Because everyone understood that the single market required independent regulators as well as a commitment that individual countries would not subsidize their domestic champions.

As it turned out, politicians were more worried about the regulator being captured by the other country than they were attracted by the opportunity to capture the regulator themselves. French (or German) politicians might not like a strong and independent antitrust regulator within their own borders, but they like even less the idea of Germany (or France) exerting political influence over the EU's antitrust regulator. As a result, if they are to agree on any supranational institution, it will have a bias toward more independence.

The case of the industrial giants Alstom and Siemens provided an almost perfect test of my theory. After Germany's Siemens and France's Alstom decided in 2017 to merge their rail activities, the EU's two largest and most influential member states both wanted the merger approved. But the EU's powerful competition commissioner, Margrethe Vestager, stood her ground. She and her team concluded that the merger "would have significantly reduced competition" in signaling equipment and high-speed trains, "depriving customers, including train operators and rail-infrastructure managers, of a choice of suppliers and products." The European Commission blocked the merger in February 2019.

In the United States, meanwhile, antitrust enforcement has become less stringent, while the debate over market competition has become highly ideological and untethered from what data actually show.

A central argument of the Chicago school of antitrust -- whose laissez-faire approach was influential in persuading American regulators to take a more hands-off attitude toward mergers -- is that monopoly power is transient because high profits attract new competitors. If profits rise in one industry and fall in another, one would expect more entry of new firms in the former than in the latter. This used to be true -- until the late 1990s. Since about 2000, however, high profits have persisted, rather than attracting new competitors to the American market. This suggests a shift from an economy where entry acted as a fundamental rebalancing mechanism to one where high profits mostly reflect large barriers to entry. The Chicago school took free entry for granted and underestimated the many ways in which large firms can keep new rivals out.

What the Chicago school got right, however, is that some of these barriers to entry come from excessive regulations. In some industries, licensing rules directly exclude new competitors; in other cases, regulations are complex enough that only the largest companies can afford to comply.

Instead of debating more regulation versus less -- as ideologues on the left and right tend to do -- Americans should be asking which regulations protect free markets and which ones raise barriers to entry.

Creeping monopoly power has slowly but surely suffocated the middle class. From 2000 to 2018, the median weekly earnings of full-time workers increased from $575 to $886, an increase of 54 percent, but the Consumer Price Index increased by 46 percent. As a result, the real labor income of the typical worker has grown by less than one-third of 1 percent a year for nearly two decades. This explains in part why much of the middle class distrusts politicians, believes the economic system is rigged, and even rejects capitalism altogether.

What the middle class may not fully understand, however, is that much of its stagnation is due to the money that monopolists and oligopolists can squeeze out of consumers. Telecoms and airlines are some of the worst offenders, but barriers to entry also drive up the prices of legal, financial, and professional services. Anticompetitive behavior among hospitals and pharmaceutical companies is a significant contributor to the exorbitant cost of health care in the United States.

Read more: The economist who would fix the American dream

In my research on monopolization in the American economy, I estimate that the basket of goods and services consumed by a typical household in 2018 cost 5 to 10 percent more than it would have had competition remained as healthy as it was in 2000. Competitive prices would directly save at least $300 a month per household, translating to a nationwide annual household savings of about $600 billion.

And this figure captures only half of the benefits that increased competition would bring. Competition boosts production, employment, and wages. When firms face competition in the marketplace, they also invest more, which drives up productivity and further increases wages. Indeed, my research indicates that private investment -- broadly defined to include plants and equipment, as well as software, research and development, and intellectual property -- has been surprisingly weak in recent years, despite low interest rates and record profits and stock prices. Monopoly profits do not translate into increased investment. Instead, just as economic theory predicts, they flow into dividends and share buybacks.

Taking into account these indirect effects, I estimate that the gross domestic product of the United States would increase by almost $1 trillion and labor income by about $1.25 trillion if we could return to the levels of competition that prevailed circa 2000. Profits, on the other hand, would decrease by about $250 billion. Crucially, these figures combine large efficiency gains shared by all citizens with significant redistribution toward wage earners. The median household would earn a lot more in labor income and a bit less in dividends.

If America wants to lead once more in this realm, it must remember its own history and relearn the lessons it successfully taught the rest of the world. While legal scholars and elected officials alike have shown more interest in antitrust in the United States of late, much of that attention has been focused exclusively on the major internet platforms. To promote greater economic prosperity, a resurgence of antitrust would need to tackle both new and old monopolies -- the Googles and Facebooks and the pharmaceutical and telecom companies alike.

Regardless of these predictable challenges, renewing America's traditional commitment to free markets is a worthy endeavor. Truly free and competitive markets keep profits in check and motivate firms to invest and innovate. The 2020 Democratic presidential campaign has already generated some interesting policy proposals, but none that, like restoring free markets, would increase labor income by more than $1 trillion. Taxes cannot solve all of America's problems. Taxes can redistribute. Competition can redistribute, but it can also grow the pie.


This article was adapted from The Great Reversal: How America Gave Up on Free Markets .

[Oct 28, 2019] A Violent Indifference - The God of the Market and Its Toxic Cult o

Oct 28, 2019 | jessescrossroadscafe.blogspot.com

"Behold the aggrieved, reactive creature fashioned by neoliberal reason and its effects, who embraces freedom without the social contract, authority without democratic legitimacy, and vengeance without values or futurity. Far from the calculating, entrepreneurial, moral, and disciplined being imagined by Hayek and his intellectual kin, this one is angry, amoral, and impetuous, spurred by unavowed humiliation and thirst for revenge.

The intensity of this energy is tremendous on its own, and also easily exploited by plutocrats, rightwing politicians, and tabloid media moguls whipping it up and keeping it stupid. It does not need to be addressed by policy producing its concrete betterment because it seeks mainly psychic anointment of its wounds. For this same reason it cannot be easily pacified -- it is fueled mainly by rancor and unavowed nihilistic despair. It cannot be appealed to by reason, facts, or sustained argument because it does not want to know, and it is unmotivated by consistency or depth in its values or by belief in truth.

Its conscience is weak while its own sense of victimization and persecution runs high. It cannot be wooed by a viable alternative future, where it sees no place for itself, no prospect for restoring its lost supremacy. The freedom it champions has gained credence as the needs, urges, and values of the private have become legitimate forms of public life and public expression.

Having nothing to lose, its nihilism does not simply negate but is festive and even apocalyptic, willing to take Britain over a cliff, deny climate change, support manifestly undemocratic powers, or put an unstable know-nothing in the most powerful position on earth, because it has nothing else. It probably cannot be reached or transformed yet also has no endgame.

But what to do with it? And might we also need to examine the ways these logics and energies organize aspects of left responses to contemporary predicaments?"

Wendy Brown, Neoliberalism's Frankenstein

[Oct 21, 2019] Idolatry of money and the so-called market and its allegedly 'neutral' distributive mechanisms do not produce the best of all possible worlds as a result of people trading with each other in pursuit of ever more money

Oct 21, 2019 | off-guardian.org

Toby Russell

If it is true that humans very often fall in worship at the feet of Mammon, which very few reasonable people would contest, and if this idolatry produces almost wholly unwanted outcomes, a few important observations immediately follow.

The first might be that the so-called market and its allegedly 'neutral' distributive mechanisms do not produce the best of all possible worlds as a result of people trading with each other in pursuit of ever more money. The primary reason for this is that market fundamentalism takes no account of power and its symbiotic relationship with money; indeed, it is logically required by its fundamental tenets to deem money a 'neutral veil' that enables market activity as a kind of infinite and inert catalyst.

The second, and far more important, is what we hold to be valuable at the cultural level, and how we go about systemically measuring and distributing that value. Currently, money is the primary, almost only, tool for that job. Thus, if we cannot financially afford to do a thing, that thing is not worth doing by definition, even to the point of actively not doing what is actually affordable and desirable in terms of available resources and know-how to protect and nourish the environment that makes our very existence possible. Essentially, this 'illogic' is how societies operate today. With money as their guiding value system deep in their core functioning we are congenitally condemned to choose 'profitable' endeavours that are in fact destructive and socially corrosive over the long term.

The third is that there is thus something badly wrong in our cultural sense of what value is, how to generate it, and how to distribute it. The cure for this ill lies, in part, in dissolving the boundaries between various relevant disciplines – e.g., ecology, physics, sociology, economics, etc. – to some degree. For, while market-based economics wholly dominates how we think about and operate money, the general problem so sharply illustrated in the article above will persist, even though most of us, the vast majority of us, want that problem to go away. One pivotal element of what ought to be undertaken, in my view, is a very critical and open-minded look at how price and scarcity are interlocked, and how their symbiotic relationship influences how we perceive value, then over-consume as guided by that highly incomplete perception, and consequently fail to prioritize vital human vales such as trust, meaning and belonging.

Toby Russell
I wish I could, vexarb, but know only of a few decent ones that critique rather than offer solid ideas for complete overhauls, which is what is needed. One little volume that at least examines some alternative money systems and is also easy reading is Richard Douthwaite's "The Ecology of Money".

Aside from that there's Herman Daley's multi-decade commitment to steady-state economics, though he only recently began looking at the money system as a driver of perpetual growth, and I'm not sure what he's put forth on that pivotal point.

There's also "Sacred Economics" by Charles Eisenstein, but his offered solution – negative interest rates funding a guaranteed income as a kind of flowing 'money out from the top / money in at the bottom' dynamic – is likely both impractical and paradoxically too rooted in compound interest and money-profit to really work as expected, though that's my personal opinion. Besides, when radically new is needed, open-minded experimentation is the order of the day.

There's also biophysical economics , but I've only looked at it briefly and that was quite a while ago.

If you read German, there's Franz Hoermann's Infogeld , which is the idea that most interests me. It includes novelties such as asymmetrical prices that are determined scientifically/democratically in terms of actual biophysical costs rather than via so-called 'price discovery', guaranteed basic provision (not income), earning Infomoney for studying, parenting, staying healthy, etc., and a broad philosophical approach that recognizes how complex and subtle real value is, and that linear numbers simply cannot measure it. I translated/paraphrased much of his work a few years ago. It can be found here . It's not a fully fleshed-out idea, just a collection of sketched pieces, but with work and experimentation it might become what's needed

vexarb
Toby, many thanks for your considered reply. I have marked two of your recommendations for my own reading and as presents for the Festive Season to my grand daughter who is studying both ecology and biophysics: "The Ecology of Money" and Biophysical Economics. The latter seems to be an expansion of Findlay's notion (as a chemist) that wealth ought to be measured in units of energy (an idea which was taken up by our professor of Chemical Thermodynamics in the 50s by comparing nations in terms of their "energy slaves per capita". Ecology and Biophysics are sciences, which is why I was attracted by your 3 principles in the first place.

Anecdote to explain where I am coming from: Many years ago Shell Oil inflated the price of their oil reserves; this caused a flutter in business news but I could not understand what the fuss was about because Shell's figures did not affect the real amount of oil that was actually there, underground.

Toby Russell
Interesting. And if we go back to the 1930s we find the work of another chemist, Frederick Soddy, who also tackled economics and wealth, in particular how to design a money system that acted in accordance with physical laws, so to speak (e.g. "The Role of Money"). I believe he won a Nobel Prize for his chemistry, but was soundly poopooed by the economists of the time for meddling in their business.

I personally think that wealth and value, as synonyms, cannot ever be objectively defined or measured as they are rooted in subjective experience. Any new economics worth the effort will need to take proper account of this fact, alongside all the necessary biophysics and ecology of course. All schools of the dismal 'science' do address this issue, but with varying degrees of philosophical rigour. The treatments of subjective value I have looked into within economics thus far are unsatisfactory (behavioural economics somewhat excepted), with the market invariably posited as a neutral (thus scientific) 'objectifier' of all that subjective trading between households and firms.

vexarb
Toby, firstly thanks for the gentle correction: yes it was Soddy who proposed "energy pence", though Findlay was very keen on Chemistry in the Service of Humankind. And I agree thoroughly with your own doubt "that wealth and value, as synonyms, cannot ever be objectively defined or measured as they are rooted in subjective experience."

"A person who knows the price of everything and the value of nothing" -- Oscar Wilde.

Your remark seems to throw an interesting light on a well known saying by Rabbi Jeshuah of Nazareth: "You cannot serve both God and Mammon" -- if by God you mean the Creator of All Things Bright and Beautiful, All Creatures Great and Small, All things Wise and Wonderful"; and my Mammon you mean the Creator of Fiat Money alone.

Toby Russell
Excellent, thank you for that, BigB! Wow, and John McMurtry got a mention in there. I'll see your McMurtry and raise you a Jackson

(I have to say, your thinking and hopes align quite tightly with those of Franz Hoermann. Shame his work is in German. He's a kind of nutty professor, works in a Viennese university in Rechnungswesen or something, which is some form of accountancy, but is very widely read and open-minded.)

Around 2007/2008, I became obsessed with money systems for obvious reasons. I started a blog sharing my angry insights and laying out as clearly and angrily as I could Why Money Has To Go! What I discovered is that people don't want to know, can't imagine a world without money, and I concluded that the cultural lag preventing radical change is a true representation of where we are as a species, as consciousness in human form. Our state of consciousness is as natural as everything else. After all, there is only nature. Even deliberate, malicious distortions of nature are part of nature. And that's when I really started working on myself, which is of course the work of lifetimes. Because, to paraphrase that infamous Michael Jackson song; you can't change them, you can only change yourself.

BigB
Have you read any late Merleau-Ponty? He was largely overshadowed by his better known friends Sarte and Simone de Beauvoir. After his death he slipped into the shadow of Sartre's shadow of fame – and was largely forgotten.

He was a huge influence on Varela. Around 2005: some of his late lecture notes turned up – made by an anonymous student – and there were several books published. This has sparked a minor revival in his significance: which I have been revisiting for the last few years.

He held the view of the nature we know as a *constructum* a scientific representationalism that is an active barrier – not to the nature 'without' but the nature within. The *chair du monde* the 'flesh of the world' the heart of all creation and experience.

He was undergoing a Gestalt: to put pure phenomenological experience at the heart of nature – thus liberating science from itself. Echoes of Schrodinger, Bohr, Eccles,: presaging Bohm, Varela, Bitbol etc.

Unfortunately, he died suddenly of a stroke. Sartre and de Beauvoir stole the limelight 'till now.

https://www.radicalphilosophy.com/article/late-merleau-ponty-revived

Regarding money value systems. I wholly concur with you and your "nutty professor" Hoermann. The general or Husserlian 'natural attitude' is based on money. What is hard to discern: is that it is based on it whether people have 'skin in the game'. Everyone wishes the market to do well: because they have 'dreams in the game'. If the economy does well: there will be a return to progress and prosperity – where 'I' will do well. This has nothing to do with access to capital. Access to dreams and values linked to capital are all that is required. Free-enterprise market based economies are really 'desire-dream production' facilities. Linking Freudian pleasure principles to actual production and valorisation of capital. This is Mark Fisher's 'Capitalist Realism'.

That is why the production function is not linked to any real world values. If it were: production – desire-dream production – would stop. Which is why Ayers, Keen, Kummel, Spash et al will be rejected. Because exergy and entropy considerations end the desire-dream "actual fantasy" production. And it can never be restarted.

The real reasons for which are not lack of resources (input source degradation) – or waste pollution of sinks (output sink degradation) they are lack of imagination. If you take away the current money-value nexus: you take away the Self that is invested – self-invested: at all market levels (not just capital markets) – in those values. Value and asset stripping the epochal Cartesian subjectivity of its worth. The paradox is that worth is already less than zero – due to the market failure and artificial intervention of the Central Banks.

Cartesian subjectivity is self-invested in a Capitalist Realism that is about to asset strip and devalue every form of desire-dream production – downgrading entire continents of human aspirations to 'negative yielding junk' status. That is Capitalist Realism. In the coming market failure: everyone fails. There will be carnage – and deaths. And a tsunami of recrimination and blame.

A tiny percentage of 'Cassandras' will be powerless to stop this. All the information is in the public domain. I had no trouble finding any of it. The picture is crystal clear. Whilst the majoritarian involvement is with desire-dream production of perpetual motion prosperity: something entirely different is actually occurring. I cannot think of anyone that is looking at the coming collapse as anything other than the end of another business cycle. We'll just start another business cycle. How?

It's a fair question: one very few want to confront. There is no Plan B: because there is no doubt of the answer. The current political debate is pure pantomime and fantasy if you apply real world dynamical constraints. I wish Steve Keen every success: though I truly believe it has come too late in the day.

I think we would have more success following Merleau-Ponty and foregoing the entire reliance on desire-dream production. Whole people who are actuating life and creation as a syngenesis – the 'together creation' of a valueless value-equality system – don't need spurious dreams. They are living the dream right now. No need to rape the earth. Only preserve it as the only shared value production system we have. But you already know this.

BigB
Unbeknownst to me: Ted Trainer has been reviewing a similar reading list to me. And drawn the same "true prophecy" conclusion: we are already in a post-production world.

https://www.resilience.org/stories/2019-10-17/why-de-growth-is-essential-a-rejection-of-left-ecomodernists-phillips-sharzer-bastini-and-parenti/

Maybe we will notice one day!

vexarb
From the above discussion, one could conclude that conventional economic theory is standing on its head: it uses money as a measure of wealth, when in reality wealth is the measure of money.

Take the Icelanders for example: the only "Western" country to follow China's excellent practice of jailing crooked bankers. The Icelandic Leader did not look at the enormous sums stolen, and exclaim in awe, These crooks are too big to fail. Instead, Iceland looked at their real wealth: water, fish, a fragile but productive soil, and geothermal energy. So they cocked a snook at British PM George Brown who called Icelanders "terrorists", jailed their crooked bankers and their crooked politicians, and are doing much better than the UK's Classical Monetarist economy.

Toby Russell
Precisely. In a very real sense, we are a simple 180 degree twist away from something wonderful. Its our collective somnambulist imagination that stands in our way.
BigB
Precisely.

WEALTH:
From Middle English – *wele* = wellbeing; welfare

closely allied to HEALTH – *hoelp* = wholeness; being whole (among other roots).

The word has been engineered in use into a narrowly defined measure of accumulation.

Real wealth is simply being here. Economies do not allow for that anymore.

Toby Russell
Thank you. No, I hadn't heard of Merleau-Ponty but will now look into him. It sounds very observant, clear sighted. There is so much of this stuff out there, but the deep dog-whistle excellence of public-relations brain washing has been able to keep the infantile solipsism – which I take to be Cartesian subjectivity – alive and kicking in its pram of consumer conveniences. Who knows what the cost will be.
BigB

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It is way to early to falsely declare that the individual Cartesian subject is dead. But it its disembodied subjectivity is under threat: from the very science that stands between us and nature.

We supposedly live in a positivist empirical scientific paradigm. Supposedly: because we left us out of the representation. And the rational empirical Self we invented from science and philosophy is nowhere to be found for anyone who cares to look. Which is too few unfortunately.

No one wants to totally debunk science: only to liberate an observer participant/dependent second order science – with first person phenomenology at its heart. After all: we do not experience ourselves via self-reports to others who dictate back to us what and who we can be. Actually, we pretty much do exactly that for the moment.

To bridge the gap: Varela proposed his 'neurophenomenology' – which was a rigorous first person accounting "mutually constraining" the third person neursoscientific lab approach (how much we are supposed to learn from 'rubber hand' illusions – I have never quite been sure. In fact I believe this 'third person' approach to be quite distorting and very possibly even dangerous we 'hallucinate' consciousness; reality is an illusion; etc).

We need to end up with a holistic account – not a 'Frankenstein' paradigm stitched together from phantom limb pains; whole body illusions; aphasia and lesion studies; etc.

We are whole: not the sum of our dead deterministic parts! What a pity Varela died too soon too.

Toby Russell

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Yes, a holistic account. For me that starts with accepting there is no matter, just information; no space, just the mathematics of dimension, volume, distance, etc.; no energy, just the mathematics and physics of force, attraction, repulsion, etc.: all information. There is only experience, which is a necessary property of consciousness. We cannot know what is 'beyond' that, because it lies outside what we are. We cannot even know if anything 'beyond' consciousness is possible.

And yes, the proposition that dead bits and pieces can be arranged in such a way as to create the 'illusion' of life and consciousness is wholly untenable. Just the simple query: "Who or what is being deceived by the illusion?" bursts that bubble. Or ought to. People do so cling to their beliefs

Tim Jenkins

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Fine comment, Toby and may I submit that for real values to shine through, on collective societal 'growth' & evolution of consciousness, harmonised with critical reasoning, then the very first thing we need to get rid of is the IMF & Co.

Now that Kristalina Georgieva is the new M.D. people should be able to quickly see clearly, that after her 1,001 days at the WBO and her previous pathetic E.U. C.V. one does not need to understand ANYthing to do with how the system truly functions presently & how it could be made to work for the people.

Stalinka's wholly unsuitable levels of deception, distraction & professional incompetence, combined with her love & respect for Mafia Bosses, (literally), in her own personal drive of pure self-interest and fuck Bulgaria and the Bulgarians mentality, was well proven when she sided against Irina Bokova for Secretary General of the U.N. :- purely to get on side with Merkel, May & BG PM Borisov's alliance with Anglo-Zionist-Capitalists & NATO's non-existent interest in the Palestinian Problem. Bokova, on the other hand, had actually done more than just getting down to work in changing Law and scything Budgets @UNESCO and since serving as boss of UNESCO, thanks to Bokova we can now proceed legally, theoretically, against any genocidal policy of war, because in Law,
"The Destruction of Culture is a Terrorist Act "
A solid foundation from which to work from,
in securing Palestinian 'values' & property rights.
Forget the IMF & Stalinka's rhetoric: we don't grow olives in Bulgaria, but have much to trade with those who do and after Erdogan's "Operation Olive Branch", it is high time people penalised Rhetoric & rewarded Sincerity in actions, not empty words inverting
& perverting reality . . . to twist trust, spin meaning & annulate cultural belonging.
"This idolatry produces almost wholly unwanted outcomes" no 'ifs', Toby.

Greetings,
Tim

Toby Russell

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Thank you, Tim.

Yes, the evolution of consciousness is central. Indeed, I don't think we'll manage to lastingly root out our need for corruptible institutions like the IMF and World Bank and BIS etc., until we have developed or evolved a robust cultural desire to do things very differently. I don't feel a top-down change can happen. And for radical change to be bottom up, effective, sustainable and true to who we are as humans, we have to change in our consciousness, away from fear, distrust and greed, towards love, trust and sharing. And these things take time

smoe

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yes , boundaries present profit opportunities. The nation states are bounded human containers.. the humans caught in the containers are fed the information that makes up the environment and so they only know what is made available to them. That means those in control of the propaganda can differentiate the humans and then sort them by binaries..
like gun control, or politicians, or race, place of origin, social factors, education, mental ability, religion or just about anything.. But separation is not enough, those in control of the information (propaganda) then polarize the thinking or feelings of the persons in the differentiated groups; its like a football game, everyone is either for the Red Team and strongly against the blue team, or vice-a-versa.

If you exchange a new born child, born to a Jewish family in New York, for a child born the same day in Iran.and and the parents of the exchanged children mature in their own native societies the non genetic child, 24 years later. the adult version of these two now matured children will hate each other, not be able to speak the language of the other and be committed to a vastly different set of goals and hold a vastly different set of basic beliefs.

Nation state encapsulation allows to different humanity and propaganda allows to polarize the thinking of those incarcerated within the nation states. These two things (boundary and propaganda) account for, or are the basis of citizen support for all wars, and binary differences that lead to reasoned differences of opinions. War comes about when some greedy person (usually those supporting the leader and the leader) wants something the polarized other side has or refuses to yield on.

Toby Russell

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Yes. Your summation reminds me strongly of Lewis Mumford's The Myth of the Machine, which is about how unchecked ego – the mythic solar hero run rampant – structures societies as mechanical-processional systems revolving around its hidden fears and need for final control of everything. Of course there is never enough control and it all breaks in the end, as narcissism must.

I should add, though, that diversity is vital. Life without diversity is impossible. The way for us all, unique as we are, to communicate as successfully as possible with each other, is to have zero beliefs, as you suggest in another comment above. That means almost zero propaganda, and that little which might remain – there may always be a need for some common vision of what life is about as part of meaning making and the fact that humans are social beings – must be explicit and transparent, and always open to robust questioning.

[Oct 05, 2019] Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts

Highly recommended!
Oct 05, 2019 | economistsview.typepad.com

likbez -> anne... , October 05, 2019 at 04:40 PM

Anne,

Let me serve as a devil advocate here.

Japan has a shrinking population. Can you explain to me why on the Earth they need economic growth?

This preoccupation with "growth" (with narrow and false one dimensional and very questionable measurements via GDP, which includes the FIRE sector) is a fallacy promoted by neoliberalism.

Neoliberalism proved to be quite sophisticated religions with its own set of True Believers in Eric Hoffer's terminology.

A lot of current economic statistics suffer from "mathiness".

For example, the narrow definition of unemployment used in U3 is just a classic example of pseudoscience in full bloom. It can be mentioned only if U6 mentioned first. Otherwise, this is another "opium for the people" ;-) An attempt to hide the real situation in the neoliberal "job market" in which has sustained real unemployment rate is always over 10% and which has a disappearing pool of well-paying middle-class jobs. Which produced current narco-epidemics (in 2018, 1400 people were shot in half a year in Chicago ( http://www.chicagotribune.com/news/breaking/ct-met-weekend-shooting-violence-20180709-story.html ); imagine that). While I doubt that people will hang Pelosi on the street post, her successor might not be so lucky ;-)

Everything is fake in the current neoliberal discourse, be it political or economic, and it is not that easy to understand how they are deceiving us. Lies that are so sophisticated that often it is impossible to tell they are actually lies, not facts. The whole neoliberal society is just big an Empire of Illusions, the kingdom of lies and distortions.

I would call it a new type of theocratic state if you wish.

And probably only one in ten, if not one in a hundred economists deserve to be called scientists. Most are charlatans pushing fake papers on useless conferences.

It is simply amazing that the neoliberal society, which is based on "universal deception," can exist for so long.

[Sep 26, 2019] The decrepitating of the world's society can be traced back to the crap, contemporary economics, the purview of the Ivy league. Somehow, labor arbitrage was accepted as a worthy objective. America lost it's way.

Sep 26, 2019 | economistsview.typepad.com

Mr. Bill , September 22, 2019 at 09:55 PM

The decrepitating of the world's society can be traced back to the crap, contemporary economics, the purview of the Ivy league. Somehow, labor arbitrage was accepted as a worthy objective. America lost it's way.
Paine -> Mr. Bill... , September 23, 2019 at 06:12 AM
Joe stiglitz is an honored product of the ivy system

And he has conducted a 50 year demolition of standard micro economics as taught in the 101 class rooms of collegiate AMERIKA

[Sep 22, 2019] Is the Unemployment Rate Tied to the Divorce Rate

Yes it is, but only for couples with low level of marital satisfaction.
Notable quotes:
"... They also looked at marital breakup more generally, focusing on when couples decided to end their relationships (not necessarily if or when they got divorced). Their findings revealed that when men were unemployed, the likelihood that either spouse would leave the marriage increased. What about the woman's employment status? For husbands, whether their wife was employed or not was seemingly unimportant-it was unrelated to their decision to leave the relationship. It did seem to matter for wives, though, but it depended upon how satisfied they were with the marriage. ..."
"... When women were highly satisfied, they were inclined to stay with their partner regardless of whether they had employment. However, when the wife's satisfaction was low, she was more likely to exit the relationship, but only when she had a job. ..."
Science of Relationships
The first study considers government data from all 50 U.S. states between the years 1960 and 2005.1 The researchers predicted that higher unemployment numbers would translate to more divorces among heterosexual married couples. Most of us probably would have predicted this too based on common sense-you would probably expect your partner to be able to hold down a job, right? And indeed, this was the case, but only before 1980. Surprisingly, since then, as joblessness has increased, divorce rates have actually decreased.

How do we explain this counterintuitive finding? We don't know for sure, but the researchers speculate that unemployed people may delay or postpone divorce due to the high costs associated with it. Not only is divorce expensive in terms of legal fees, but afterward, partners need to pay for two houses instead of one. And if they are still living off of one salary at that point, those costs may be prohibitively expensive. For this reason, it is not that uncommon to hear about estranged couples who can't stand each other but are still living under the same roof.

The second study considered data from a national probability sample of over 3,600 heterosexual married couples in the U.S. collected between 1987 and 2002. However, instead of looking at the overall association between unemployment and marital outcomes, they considered how gender and relationship satisfaction factored into the equation. 2

They also looked at marital breakup more generally, focusing on when couples decided to end their relationships (not necessarily if or when they got divorced). Their findings revealed that when men were unemployed, the likelihood that either spouse would leave the marriage increased. What about the woman's employment status? For husbands, whether their wife was employed or not was seemingly unimportant-it was unrelated to their decision to leave the relationship. It did seem to matter for wives, though, but it depended upon how satisfied they were with the marriage.

When women were highly satisfied, they were inclined to stay with their partner regardless of whether they had employment. However, when the wife's satisfaction was low, she was more likely to exit the relationship, but only when she had a job.

[Sep 22, 2019] Game of musical chairs became more difficult: the US economy seems to put out fewer and fewer chairs.

Notable quotes:
"... A good economy compensates for much social dysfunction. ..."
"... More than that, it prevents the worst of behaviors that are considered an expression of dysfunction from occurring, as people across all social strata have other things to worry about or keep them busy. Happy people don't bear grudges, or at least they are not on top of their consciousness as long as things are going well. ..."
"... This could be seen time and again in societies with deep and sometimes violent divisions between ethnic groups where in times of relative prosperity (or at least a broadly shared vision for a better future) the conflicts are not removed but put on a backburner, or there is even "finally" reconciliation, and then when the economy turns south, the old grudges and conflicts come back (often not on their own, but fanned by groups who stand to gain from the divisions, or as a way of scapegoating) ..."
"... "backwaters of America, that economy seems to put out fewer and fewer chairs." ~~Harold Pollack~ ..."
"... Going up through the chairs has become so impossible for those on the slow-track. Not enough slots for all the jokers within our once proud country of opportunities, ..."
"... George Orwell: "I doubt, however, whether the unemployed would ultimately benefit if they learned to spend their money more economically. ... If the unemployed learned to be better managers they would be visibly better off, and I fancy it would not be long before the dole was docked correspondingly." ..."
"... Perhaps you are commenting on the aspect that when (enough) job applicants/holders define down their standards and let employers treat them as floor mats, then the quality of many jobs and the labor relations will be adjusted down accordingly, or at the very least expectations what concessions workers will make will be adjusted up. That seems to be the case unfortunately. ..."
Nov 23, 2015 | economistsview.typepad.com
Avraam Jack Dectis said...
A good economy compensates for much social dysfunction.

A bad economy moves people toward the margins, afflicts those near the margins and kills those at the margins.

This is what policy makers should consider as they pursue policies that do not put the citizen above all else.

cm -> Avraam Jack Dectis...
"A good economy compensates for much social dysfunction."

More than that, it prevents the worst of behaviors that are considered an expression of dysfunction from occurring, as people across all social strata have other things to worry about or keep them busy. Happy people don't bear grudges, or at least they are not on top of their consciousness as long as things are going well.

This could be seen time and again in societies with deep and sometimes violent divisions between ethnic groups where in times of relative prosperity (or at least a broadly shared vision for a better future) the conflicts are not removed but put on a backburner, or there is even "finally" reconciliation, and then when the economy turns south, the old grudges and conflicts come back (often not on their own, but fanned by groups who stand to gain from the divisions, or as a way of scapegoating)

Dune Goon said...

"backwaters of America, that economy seems to put out fewer and fewer chairs." ~~Harold Pollack~

Going up through the chairs has become so impossible for those on the slow-track. Not enough slots for all the jokers within our once proud country of opportunities, not enough elbow room for Daniel Boone, let alone Jack Daniels! Not enough space in this county to wet a tree when you feel the urge! Every tiny plot of space has been nailed down and fenced off, divided up among gated communities. Why?

Because the 1% has an excessive propensity to reproduce their own kind. They are so uneducated about the responsibilities of birth control and space conservation that they are crowding all of us off the edge of the planet. Worse yet we have begun to *ape our betters*.

"We've only just begun!"
~~The Carpenters~

William said...

"Many of us know people who receive various public benefits, and who might not need to rely on these programs if they made better choices, if they learned how to not talk back at work, if they had a better handle on various self-destructive behaviors, if they were more willing to take that crappy job and forego disability benefits, etc."

George Orwell: "I doubt, however, whether the unemployed would ultimately benefit if they learned to spend their money more economically. ... If the unemployed learned to be better managers they would be visibly better off, and I fancy it would not be long before the dole was docked correspondingly."

cm said in reply to William...

A valid observation, but what you are commenting on is more about getting or keeping a job than managing personal finances.

Perhaps you are commenting on the aspect that when (enough) job applicants/holders define down their standards and let employers treat them as floor mats, then the quality of many jobs and the labor relations will be adjusted down accordingly, or at the very least expectations what concessions workers will make will be adjusted up. That seems to be the case unfortunately.

[Sep 22, 2019] Paul Krugman: Despair, American Style

Notable quotes:
"... In a recent interview Mr. Deaton suggested that middle-aged whites have "lost the narrative of their lives." That is, their economic setbacks have hit hard because they expected better. Or to put it a bit differently, we're looking at people who were raised to believe in the American Dream, and are coping badly with its failure to come true. ..."
"... the truth is that we don't really know why despair appears to be spreading across Middle America. But it clearly is, with troubling consequences for our society... ..."
"... Some people who feel left behind by the American story turn self-destructive; others turn on the elites they feel have betrayed them. ..."
"... What we are seeing is the long term impacts of the "Reagan Revolution." ..."
"... The affected cohort here is the first which has lived with the increased financial and employment insecurity that engendered, as well as the impacts of the massive offshoring of good paying union jobs throughout their working lives. Stress has cumulative impacts on health and well-being, which are a big part of what we are seeing here. ..."
"... Lets face it, this Fed is all about goosing up asset prices to generate short term gains in economic activity. Since the early 90s, the Fed has done nothing but make policy based on Wall Street's interests. I can give them a pass on the dot com debacle but not after that. This toxic relationship between wall street and the Fed has to end. ..."
"... there was a housing bubble that most at the Fed (including Bernanke) denied right upto the middle of 2007 ..."
"... Yellen, to her credit, has admitted multiple times over the years that low rates spur search for yield that blows bubbles ..."
"... Bursting of the bubble led to unemployment for millions and U3 that went to 10% ..."
"... "You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble in 2003-05 and that produced the great recession in the first place." ..."
"... Inequality has been rising globally, almost regardless of trade practices ..."
"... It is not some unstoppable global trend. This is neoliberal oligarchy coup d'état. Or as it often called "a quite coup". ..."
"... First of all, whether a job can or is offshored has little to do with whether it is "low skilled" but more with whether the workflow around the job can be organized in such a way that the job can be offshore. This is less a matter of "skill level" and more volume and immediacy of interaction with adjacent job functions, or movement of material across distances. ..."
"... The reason wages are stuck is that aggregate jobs are not growing, relative to workforce supply. ..."
"... BTW the primary offshore location is India, probably in good part because of good to excellent English language skills, and India's investment in STEM education and industry (especially software/services and this is even a public stereotype, but for a reason). ..."
"... Very rough figures: half a million Chicago employees may make less than $800 a week -- almost everybody should earn $800 ... ..."
"... Union busting is generally (?) understood as direct interference with the formation and operation of unions or their members. It is probably more common that employers are allowed to just go around the unions - "right to work", subcontracting non-union shops or temp/staffing agencies, etc. ..."
"... Why would people join a union and pay dues when the union is largely impotent to deliver, when there are always still enough desperate people who will (have to) take jobs outside the union system? Employers don't have to bring in scabs when they can legally go through "unencumbered" subcontractors inside or outside the jurisdiction. ..."
"... Credibility trap, fully engaged. ..."
"... The anti-knowledge of the elites is worth reading. http://billmoyers.com/2015/11/02/the-anti-knowledge-of-the-elites/ When such herd instinct and institutional overbearance connects with the credibility trap, the results may be impressive. http://jessescrossroadscafe.blogspot.com/2015/11/gold-daily-and-silver-weekly-charts-pop.html ..."
"... Suicide, once thought to be associated with troubled teens and the elderly, is quickly becoming an age-blind statistic. Middle aged Americans are turning to suicide in alarming numbers. The reasons include easily accessible prescription painkillers, the mortgage crisis and most importantly the challenge of a troubled economy. The Center for Disease Control and Prevention claims suicide rates now top the number of deaths due to automobile accidents. ..."
"... The suicide rate for both younger and older Americans remains virtually unchanged, however, the rate has spiked for those in middle age (35 to 64 years old) with a 28 percent increase (link is external) from 1999 to 2010. ..."
"... When few people kill themselves "on purpose" or die from self-inflicted but probably "unintended" harms (e.g. organ failure or accidental death caused by substance abuse), it can be shrugged off as problems related to the individual (more elaboration possible but not necessary). ..."
"... When it becomes a statistically significant phenomenon (above-noise percentage of total population or demographically identifiable groups), then one has to ask questions about social causes. My first question would be, "what made life suck for those people"? What specific instrument they used to kill themselves would be my second question (it may be the first question for people who are charged with implementing counter measures but not necessarily fixing the causes). ..."
"... Since about the financial crisis (I'm not sure about causation or coincidence - not accidental coincidence BTW but causation by the same underlying causes), there has been a disturbing pattern of high school students throwing themselves in front of local trains. At that age, drinking or drugging oneself to death is apparently not the first "choice". Performance pressure *related to* (not just "and") a lack of convincing career/life prospects has/have been suspected or named as a cause. I don't think teenagers suddenly started to jump in front of trains that have run the same rail line for decades because of the "usual" and centuries to millennia old teenage romantic relationship issues. ..."
Nov 09, 2015 | economistsview.typepad.com

"There is a darkness spreading over part of our society":

Despair, American Style, by Paul Krugman, Commentary, NY Times: A couple of weeks ago President Obama mocked Republicans who are "down on America," and reinforced his message by doing a pretty good Grumpy Cat impression. He had a point: With job growth at rates not seen since the 1990s, with the percentage of Americans covered by health insurance hitting record highs, the doom-and-gloom predictions of his political enemies look ever more at odds with reality.

Yet there is a darkness spreading over part of our society. ... There has been a lot of comment ... over a new paper by the economists Angus Deaton (who just won a Nobel) and Anne Case, showing that mortality among middle-aged white Americans has been rising since 1999..., while death rates were falling steadily both in other countries and among other groups in our own nation.

Even more striking are the proximate causes of rising mortality. Basically, white Americans are, in increasing numbers, killing themselves... Suicide is way up, and so are deaths from drug poisoning and ... drinking... But what's causing this epidemic of self-destructive behavior?...

In a recent interview Mr. Deaton suggested that middle-aged whites have "lost the narrative of their lives." That is, their economic setbacks have hit hard because they expected better. Or to put it a bit differently, we're looking at people who were raised to believe in the American Dream, and are coping badly with its failure to come true.

That sounds like a plausible hypothesis..., but the truth is that we don't really know why despair appears to be spreading across Middle America. But it clearly is, with troubling consequences for our society...

I know I'm not the only observer who sees a link between the despair reflected in those mortality numbers and the volatility of right-wing politics. Some people who feel left behind by the American story turn self-destructive; others turn on the elites they feel have betrayed them. No, deporting immigrants and wearing baseball caps bearing slogans won't solve their problems, but neither will cutting taxes on capital gains. So you can understand why some voters have rallied around politicians who at least seem to feel their pain.

At this point you probably expect me to offer a solution. But while universal health care, higher minimum wages, aid to education, and so on would do a lot to help Americans in trouble, I'm not sure whether they're enough to cure existential despair.

bakho said...

There are a lot of economic dislocations that the government after the 2001 recession stopped doing much about it. Right after the 2008 crash, the government did more but by 2010, even the Democratic president dropped the ball. and failed to deliver. Probably no region of the country is affected more by technological change that the coal regions of KY and WV. Lying politicians promise a return to the past that cannot be delivered. No one can suggest what the new future will be. The US is due for another round of urbanization as jobs decline in rural areas. Dislocation forces declining values of properties and requires changes in behavior, skills and outlook. Those personal changes do not happen without guidance. The social institutions such as churches and government programs are a backstop, but they are not providing a way forward. There is plenty of work to be done, but our elites are not willing to invest.

DrDick -> bakho...

The problem goes back much further than that. What we are seeing is the long term impacts of the "Reagan Revolution."

The affected cohort here is the first which has lived with the increased financial and employment insecurity that engendered, as well as the impacts of the massive offshoring of good paying union jobs throughout their working lives. Stress has cumulative impacts on health and well-being, which are a big part of what we are seeing here.

ilsm said...

Thuggee doom and gloom is about their fading chance to reinstate the slavocracy.

The fever swamp of right wing ideas is more loony than 1964.

Extremism is the new normal.

bmorejoe -> ilsm...

Yup. The slow death of white supremacy.

Peter K. -> Anonymous...

If it wasn't for monetary policy things would be even worse as the Republicans in Congress forced fiscal austerity on the economy during the "recovery."

sanjait -> Peter K....

That's the painful irony of a comment like that one from Anonymous ... he seems completely unaware that, yes, ZIRP has done a huge amount to prevent the kind of problems described above. He like most ZIRP critics fails to consider what the counterfactual looks like (i.e., something like the Great Depression redux).

Anonymous -> sanjait...

You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble in 2003-05 and that produced the great recession in the first place. Because preemptive monetary policy has gone out of fashion completely. And now we are going to repeat the whole process over when the present bubble in stocks and corporate bonds bursts along with the malinvestment in China, commodity exporters etc.

Peter K. -> Anonymous...

"liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."

sanjait -> Anonymous...

"You want regulation? I would like to see

1) Reinstate Glass Steagall

2) impose a 10bp trans tax on trading financial instruments."

Great. Two things with zero chance of averting bubbles but make great populist pablum.

This is why we can't have nice things!

"3) Outlaw any Fed person working for a bank/financial firm after they leave office."

This seems like a decent idea. Hard to enforce, as highly intelligent and accomplished people tend not to be accepting of such restrictions, but it could be worth it anyway.

likbez -> sanjait...

" highly intelligent and accomplished people tend not to be accepting of such restrictions, but it could be worth it anyway."

You are forgetting that it depends on a simple fact to whom political power belongs. And that's the key whether "highly intelligent and accomplished people" will accept those restrictions of not.

If the government was not fully captured by financial capital, then I think even limited prosecution of banksters "Stalin's purge style" would do wonders in preventing housing bubble and 2008 financial crush.

Please try to imagine the effect of trial and exile to Alaska for some period just a dozen people involved in Securitization of mortgages boom (and those highly intelligent people can do wonders in improving oil industry in Alaska ;-).

Starting with Mr. Weill, Mr. Greenspan, Mr. Rubin, Mr. Phil Gramm, Dr. Summers and Mr. Clinton.

Anonymous -> Peter K....

"2003-2005 didn't have excess inflation and wage gains."

Monetary policy can not hinge just on inflation or wage gains. Why are wage gains a problem anyway?

Lets face it, this Fed is all about goosing up asset prices to generate short term gains in economic activity. Since the early 90s, the Fed has done nothing but make policy based on Wall Street's interests. I can give them a pass on the dot com debacle but not after that. This toxic relationship between wall street and the Fed has to end.

You want regulation? I would like to see
1) Reinstate Glass Steagall
2) impose a 10bp trans tax on trading financial instruments.
3) Outlaw any Fed person working for a bank/financial firm after they leave office. Bernanke, David Warsh etc included. That includes Mishkin getting paid to shill for failing Iceland banks or Bernanke making paid speeches to hedge funds.


Anonymous -> EMichael...

Fact: there was a housing bubble that most at the Fed (including Bernanke) denied right upto the middle of 2007
Fact: Yellen, to her credit, has admitted multiple times over the years that low rates spur search for yield that blows bubbles
Fact: Bursting of the bubble led to unemployment for millions and U3 that went to 10%

what facts are you referring to?

EMichael -> Anonymous...

That FED rates caused the bubble.

to think this you have to ignore that a 400% Fed Rate increase from 2004 to 2005 had absolutely no effect on mortgage originations.

Then of course, you have to explain why 7 years at zero has not caused another housing bubble.

https://research.stlouisfed.org/fred2/series/FEDFUNDS

Correlation is not causation. Lack of correlation is proof of lack of causation.

pgl -> Anonymous...

"You are the guys who do not consider the counterfactual where higher rates would have prevented the housing bubble in 2003-05 and that produced the great recession in the first place."

You are repeating the John B. Taylor line about interest rates being held "too low and too long". And guess what - most economists have called Taylor's claim for the BS it really is. We should also note we never heard this BS when Taylor was part of the Bush Administration. And do check - Greenspan and later Bernanke were raising interest rates well before any excess demand was generated which is why inflation never took off.

So do keep repeating this intellectual garbage and we keep noting you are just a stupid troll.

anne -> anne...
http://www.pnas.org/content/early/2015/10/29/1518393112

September 17, 2015

Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century
By Anne Case and Angus Deaton

Midlife increases in suicides and drug poisonings have been previously noted. However, that these upward trends were persistent and large enough to drive up all-cause midlife mortality has, to our knowledge, been overlooked. If the white mortality rate for ages 45−54 had held at their 1998 value, 96,000 deaths would have been avoided from 1999–2013, 7,000 in 2013 alone. If it had continued to decline at its previous (1979‒1998) rate, half a million deaths would have been avoided in the period 1999‒2013, comparable to lives lost in the US AIDS epidemic through mid-2015. Concurrent declines in self-reported health, mental health, and ability to work, increased reports of pain, and deteriorating measures of liver function all point to increasing midlife distress.

Abstract

This paper documents a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013. This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround. The midlife mortality reversal was confined to white non-Hispanics; black non-Hispanics and Hispanics at midlife, and those aged 65 and above in every racial and ethnic group, continued to see mortality rates fall. This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. Although all education groups saw increases in mortality from suicide and poisonings, and an overall increase in external cause mortality, those with less education saw the most marked increases. Rising midlife mortality rates of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population. We comment on potential economic causes and consequences of this deterioration.

ilsm -> Sarah...

Murka is different. Noni's plan would work if it were opportune for the slavocracy and the Kochs and ARAMCO don't lose any "growth".

Maybe cost plus climate repair contracts to shipyards fumbling through useless nuclear powered behemoths for war plans made in 1942.

Someone gotta make big money plundering for the public good, in Murka!

CSP said...

The answers to our malaise seem readily apparent to me, and I'm a southern-born white male working in a small, struggling Georgia town.

1. Kill the national war machine
2. Kill the national Wall Street financial fraud machine
3. Get out-of-control mega corporations under control
4. Return savings to Main Street (see #1, #2 and #3)
5. Provide national, universal health insurance to everyone as a right
6. Provide free education to everyone, as much as their academic abilities can earn them
7. Strengthen social security and lower the retirement age to clear the current chronic underemployment of young people

It seems to me that these seven steps would free the American people to pursue their dreams, not the dreams of Washington or Wall Street. Unfortunately, it is readily apparent that true freedom and real individual empowerment are the last things our leaders desire. Shame on them and shame on everyone who helps to make it so.

DeDude -> CSP...

You are right. Problem is that most southern-born white males working in a small, struggling Georgia town would rather die than voting for the one candidate who might institute those changes - Bernie Sanders.

The people who are beginning to realize that the american dream is a mirage, are the same people who vote for GOP candidates who want to give even more to the plutocrats.

kthomas said...

The kids in Seattle had it right when WTO showed up.


Why is anyone suprised by all this?

We exported out jobs. First all the manufacturing. Now all of the Service jobs.


But hey...we helped millions in China and India get out of poverty, only to put outselves into it.


America was sold to highest bidder a long long time ago. A Ken Melvin put it, the chickens came home to roost in 2000.

sanjait -> kthomas...

So you think the problem with America is that we lost our low skilled manufacturing and call center tech support jobs?

I can sort of see why people assume that "we exported out jobs" is the reason for stagnant incomes in the U.S., but it's still tiresome, because it's still just wrong.

Manufacturing employment crashed in the US mostly because it has been declining globally. The world economy is less material based than ever, and machines do more of the work making stuff.

And while some services can be outsourced, the vast majority can't. Period.

Inequality has been rising globally, almost regardless of trade practices. The U.S. has one of the more closed economies in the developed world, so if globalization were the cause, we'd be the most insulated. But we aren't, which should be a pretty good indication that globalization isn't the cause.

cm -> sanjait...

Yes, the loss of "low skilled" jobs is still a loss of jobs. Many people work in "low skilled" jobs because there are not enough "higher skill" jobs to go around, as most work demanded is not of the most fancy type.

We have heard this now for a few decades, that "low skilled" jobs lost will be replaced with "high skill" (and better paid) jobs, and the evidence is somewhat lacking. There has been growth in higher skill jobs in absolute terms, but when you adjust by population growth, it is flat or declining.

When people hypothetically or actually get the "higher skills" recommended to them, into what higher skill jobs are they to move?

I have known a number of anecdotes of people with degrees or who held "skilled" jobs that were forced by circumstances to take commodity jobs or jobs at lower pay grades or "skill levels" due to aggregate loss of "higher skill" jobs or age discrimination, or had to go from employment to temp jobs.

And it is not true that only "lower skill" jobs are outsourced. Initially, yes, as "higher skills" obviously don't exist yet in the outsourcing region. But that doesn't last long, especially if the outsourcers expend resources to train and grow the remote skill base, at the expense of the domestic workforce which is expected to already have experience (which has worked for a while due to workforce overhangs from previous industry "restructuring").

likbez -> sanjait...

"Inequality has been rising globally, almost regardless of trade practices."

It is not some unstoppable global trend. This is neoliberal oligarchy coup d'état. Or as it often called "a quite coup".

sanjait -> cm...

"Yes, the loss of "low skilled" jobs is still a loss of jobs. Many people work in "low skilled" jobs because there are not enough "higher skill" jobs to go around, as most work demanded is not of the most fancy type.

We have heard this now for a few decades, that "low skilled" jobs lost will be replaced with "high skill" (and better paid) jobs, and the evidence is somewhat lacking. "

And that is *exactly my point.*

The lack of wage growth isn't isolated to low skilled domains. It's weak across the board.

What does that tell us?

It tells us that offshoring of low skilled jobs isn't the problem.

"And it is not true that only "lower skill" jobs are outsourced. Initially, yes, as "higher skills" obviously don't exist yet in the outsourcing region."

You could make this argument, but I think (judging by your own hedging) you know this isn't the case. Offshoring of higher skilled jobs does happen but it's a marginal factor in reality. You hypothesize that it may someday become a bigger factor ... but just notice that we've had stagnant wages now for a few decades.

My point is that offshoring IS NOT THE CAUSE of stagnating wages. I'd argue that globalization is a force that can't really be stopped by national policy anyway, but even if you think it could, it's important to realize IT WOULD DO ALMOST NOTHING to alleviate inequality.

cm -> sanjait...

I was responding to your point:

"So you think the problem with America is that we lost our low skilled manufacturing and call center tech support jobs?"

With the follow-on:

"I can sort of see why people assume that "we exported out jobs" is the reason for stagnant incomes in the U.S., but it's still tiresome, because it's still just wrong."

Labor markets are very sensitive to marginal effects. If let's say "normal" or "heightened" turnover is 10% p.a. spread out over the year, then the continued availability (or not) of around 1% vacancies (for the respective skill sets etc.) each month makes a huge difference. There was the argument that the #1 factor is automation and process restructuring, and offshoring is trailing somewhere behind that in job destruction volume.

I didn't research it in detail because I have no reason to doubt it. But it is a compounded effect - every percentage point in open positions (and *better* open positions - few people are looking to take a pay cut) makes a big difference. If let's say the automation losses are replaced with other jobs, offshoring will tip the scale. Due to aggregate effects one cannot say what is the "extra" like with who is causing congestion on a backed up road (basically everybody, not the first or last person to join).

"Manufacturing employment crashed in the US mostly because it has been declining globally. The world economy is less material based than ever, and machines do more of the work making stuff."

Are you kidding me? The world economy is less material based? OK maybe 20 years after the paperless office we are finally printing less, but just because the material turnover, waste, and environmental pollution is not in your face (because of offshoring!), it doesn't mean less stuff is produced or material consumed. If anything, it is market saturation and aggregate demand limitations that lead to lower material and energy consumption (or lower growth rates).

In the aftermath of the financial crisis, several nations (US and Germany among others) had programs to promote new car sales (cash for clunkers etc.) that were based on the idea that people can get credit for their old car, but its engine had to be destroyed and made unrepairable so it cannot enter the used car market and defeat the purpose of the program. I assume the clunkers were then responsibly and sustainably recycled.

cm -> sanjait...

"The lack of wage growth isn't isolated to low skilled domains. It's weak across the board.

What does that tell us?

It tells us taht offshoring of low skilled jobs isn't the problem."

This doesn't follow. First of all, whether a job can or is offshored has little to do with whether it is "low skilled" but more with whether the workflow around the job can be organized in such a way that the job can be offshore. This is less a matter of "skill level" and more volume and immediacy of interaction with adjacent job functions, or movement of material across distances. Also consider that aside from time zone differences (which are of course a big deal between e.g. US and Europe/Asia), there is not much difference whether a job is performed in another country or in a different domestic region, or perhaps just "working from home" 1 mile from the office, for office-type jobs. Of course the other caveat is whether the person can physically attend meetings with little fuss and expense - so remote management/coordination work is naturally not a big thing.

The reason wages are stuck is that aggregate jobs are not growing, relative to workforce supply. When the boomers retire for real in another 5-10 years, that may change. OTOH several tech companies I know have periodic programs where they offer workers over 55 or so packages to leave the company, so they cannot really hurt for talent, though they keep complaining and are busy bringing in young(er) people on work visa. Free agents, it depends on the company. Some companies hire NCGs, but they also "buy out" older workers.

cm -> cm...

Caveat: Based on what I see (outside sectors with strong/early growth), domestic hiring of NCGs/"fresh blood" falls in two categories:

Then there is also the gender split - "technical/engineering" jobs are overweighed in men, except technical jobs in traditionally "non-technical/non-product" departments which have a higher share of women.

All this is of course a matter of top-down hiring preferences, as generally everything is either controlled top-down or tacitly allowed to happen by selective non-interference.

cm -> sanjait...

"You could make this argument, but I think (judging by your own hedging) you know this isn't the case. Offshoring of higher skilled jobs does happen but it's a marginal factor in reality. You hypothesize that it may someday become a bigger factor ... but just notice that we've had stagnant wages now for a few decades."

I've written a lot of text so far but didn't address all points ...

My "hedging" is retrospective. I don't hypothesize what may eventually happen but it is happening here and now. I don't presume to present a representative picture, but in my sphere of experience/observation (mostly a subset of computer software), offshoring of *knowledge work* started in the mid to late 90's (and that's not the earliest it started in general - of course a lot of the early offshoring in the 80's was market/language specific customization, e.g. US tech in Europe etc., and more "local culture expertise" and not offshoring proper). In the late 90's and early 2000's, offshoring was overshadowed by the Y2K/dotcom booms, so that phase didn't get high visibility (among the people "affected" it sure did). Also the internet was not yet ubiquitous - broadband existed only at the corporate level.

Since then there has been little change, it is pretty much a steady state.

BTW the primary offshore location is India, probably in good part because of good to excellent English language skills, and India's investment in STEM education and industry (especially software/services and this is even a public stereotype, but for a reason).

Syaloch -> sanjait...

Whether low skilled jobs were eliminated due to offshoring or automation doesn't really matter. What matters is that the jobs disappeared, replaced by a small number of higher skill jobs paying comparable wages plus a large number of low skill jobs offering lower wages.

The aggregate effect was stagnation and even decline in living standards. Plus any new jobs were not necessarily produced in the same geographic region as those that were lost, leading to concentration of unemployment and despair.

sanjait -> Syaloch...

"Whether low skilled jobs were eliminated due to offshoring or automation doesn't really matter. "

Well, actually it does matter, because we have a whole lot of people (in both political parties) who think the way to fight inequality is to try to reverse globalization.

If they are incorrect, it matters, because they should be applying their votes and their energy to more effective solutions, and rejecting the proposed solutions of both the well-meaning advocates and the outright demagogues who think restricting trade is some kind of answer.

Syaloch -> sanjait...

I meant it doesn't matter in terms of the despair felt by those affected. All that matters to those affected is that they have been obsoleted without either economic or social support to help them.

However, in terms of addressing this problem economically it really doesn't matter that much either. Offshoring is effectively a low-tech form of automation. If companies can't lower labor costs by using cheaper offshore labor they'll find ways to either drive down domestic wages or to use less labor. For the unskilled laborer the end result is the same.

Syaloch -> Syaloch...

See the thought experiment I posted on the links thread, and then add the following:

Suppose the investigative journalist discovered instead that Freedonia itself is a sham, and that rather than being imported from overseas, the clothing was actually coming from an automated factory straight out of Vonnegut's "Player Piano" that was hidden in a remote domestic location. Would the people who were demanding limits on Freedonian exports now say, "Oh well, I guess that's OK" simply because the factory was located within the US?

Dan Kervick -> kthomas...

I enjoyed listening to this talk by Fredrick Reinfeldt at the LSE:

http://www.lse.ac.uk/newsAndMedia/videoAndAudio/channels/publicLecturesAndEvents/player.aspx?id=3253

Reinfeldt is a center-right politicians and former Swedish Prime Minister. OF course, what counts as center-right in Sweden seems very different from what counts as center-right in the US.

Perhaps there is some kind of basis here for some bipartisan progress on jobs and full employment.

William said...

I'm sure this isn't caused by any single factor, but has anyone seriously investigated a link between this phenomena and the military?

Veterans probably aren't a large enough cohort to explain the effect in full, but white people from the south are the most likely group to become soldiers, and veterans are the most likely group to have alcohol/drug abuse and suicide problems.

This would also be evidence why we aren't seeing it in other countries, no one else has anywhere near the number of vets we have.

cm -> William...

Vets are surely part of the aggregate problem of lack of career/economic prospects, in fact a lot of people join(ed) the military because of a lack of other jobs to begin with. But as the lack of prospects is aggregate it affects everybody.

Denis Drew said...

" At this point you probably expect me to offer a solution. But while universal health care, higher minimum wages, aid to education, and so on would do a lot to help Americans in trouble, I'm not sure whether they're enough to cure existential despair."


UNOINIZED and (therefore shall we say) politicized: you are in control of your narrative -- win or lose. Can it get any more hopeful than that? And you will probably win.

Winning being defined as labor eeking out EQUALLY emotionally satisfying/dissatisfying market results -- EQUAL that is with the satisfaction of ownership and the consumer. That's what happens when all three interface in the market -- labor interfacing indirectly through collective bargaining.

(Labor's monopoly neutralizes ownership's monopsony -- the consumers' willingness to pay providing the checks and balances on labor's monopoly.)

If you feel you've done well RELATIVE to the standards of your own economic era you will feel you've done well SUBJECTIVELY.

For instance, my generation of (American born) cab drivers earned about $750 for a 60 hour (grueling) work week up to the early 80s. With multiples strip-offs I won't detail here (will on request -- diff for diff cities) that has been reduced to about $500 a week (at best I suspect!) I believe and that is just not enough to get guys like me out there for that grueling work.

Let's take the minimum wage comparison from peak-to-peak instead of from peak-to-trough: $11 and hour in 1968 -- at HALF TODAY'S per capita income (economic output) -- to $7.25 today. How many American born workers are going to show up for $7.25 in the day of SUVs and "up-to-date kitchens" all around us. $8.75 was perfectly enticing for Americans working in 1956 ($8.75 thanks to the "Master of the Senate"). The recent raise to $10 is not good enough for Chicago's 100,000 gang members (out of my estimate 200,000 gang age minority males). Can hustle that much on the street w/o the SUBJECTIVE feeling of wage slavery.

Ditto hiring result for two-tier supermarket contracts after Walmart undercut the unions.

Without effective unions (centralized bargaining is the gold standard: only thing that fends off Walmart type contract muscling. Done that way since 1966 with the Teamsters Union's National Master Freight Agreement; the long practiced law or custom from continental Europe to French Canada to Argentina to Indonesia.

It occurred to me this morning that if the quintessential example of centralized bargaining Germany has 25% or our population and produces 200% more cars than we do, then, Germans produces 8X as many cars per capita than we do!

And thoroughly union organized Germans feel very much in control of the narrative of their lives.

cm -> Denis Drew...

"thoroughly union organized Germans"

No longer thoroughly, with recent labor market reforms the door has likewise been blown open to contingent workforces, staffing agencies, and similar forms of (perma) temp work. And moving work to nations with lower labor standards (e.g. "peripheral" Europe, less so outside Europe) has been going on for decades, for parts, subassembly, and even final assembly.

Denis Drew said...

Very rough figures: half a million Chicago employees may make less than $800 a week -- almost everybody should earn $800 ...

... putative minimum wage? -- might allow some slippage in high labor businesses like fast food restaurants; 33% labor costs! -- sort of like the Teamsters will allow exceptions when needed from Master agreements if you open up your books, they need your working business too, consumer ultimately sets limits.

Average raise of $200 a week -- $10,000 a year equals $5 billion shift in income -- out of a $170 billion Chicago GDP (1% of national) -- not too shabby to bring an end to gang wars and Despair American Style.

Just takes making union busting a felony LIKE EVERY OTHER FORM OF UNFAIR MARKET MUSCLING (even taking a movie in the movies). The body of laws are there -- the issues presumably settled -- the enforcement just needs "dentures."

cm -> Denis Drew...

Union busting is generally (?) understood as direct interference with the formation and operation of unions or their members. It is probably more common that employers are allowed to just go around the unions - "right to work", subcontracting non-union shops or temp/staffing agencies, etc.

cm -> Denis Drew...

Why would people join a union and pay dues when the union is largely impotent to deliver, when there are always still enough desperate people who will (have to) take jobs outside the union system? Employers don't have to bring in scabs when they can legally go through "unencumbered" subcontractors inside or outside the jurisdiction.

cm -> cm...

It comes down to the collective action problem. You can organize people who form a "community" (workers in the same business site, or similar aggregates more or less subject to Dunbar's number or with a strong tribal/ethnic/otherwise cohesion narrative). Beyond that, if you can get a soapbox in the regional press, etc., otherwise good luck. It probably sounds defeatist but I don't have a solution.

When the union management is outed for corruption or other abuses or questioable practices (e.g. itself employing temps or subcontractors), it doesn't help.

Syaloch said...

There was a good discussion of this on last Friday's Real Time with Bill Maher.

https://www.youtube.com/watch?v=Bl5kFZ-SZq4

Surprisingly, I pretty much agree with David Frum's analysis -- and Maher's comment that Trump, with his recent book, "Crippled America", has his finger on the pulse of this segment of the population. Essentially what we're seeing is the impact of economic stagnation upon a culture whose reserves of social capital have been depleted, as described in Robert Putnam's "Bowling Alone".

When the going gets tough it's a lot harder to manage without a sense of identity and purpose, and without the support of family, friends, churches, and communities. Facebook "friends" are no substitute for the real thing.

Peter K. said...

Jared Bernsetin:

"...since the late 1970s, we've been at full employment only 30 percent of the time (see the data note below for an explanation of how this is measured). For the three decades before that, the job market was at full employment 70 percent of the time."

We need better macro (monetary, fiscal, trade) policy.

Maybe middle-aged blacks and hispanics have better attitudes and health since they made it through a tough youth, have more realistic expectations and race relations are better than the bad old days even if they are far from perfect. The United States is becoming more multicultural.

Jesse said...

Credibility trap, fully engaged.

Jesse said...

The anti-knowledge of the elites is worth reading. http://billmoyers.com/2015/11/02/the-anti-knowledge-of-the-elites/ When such herd instinct and institutional overbearance connects with the credibility trap, the results may be impressive. http://jessescrossroadscafe.blogspot.com/2015/11/gold-daily-and-silver-weekly-charts-pop.html

Fred C. Dobbs said...

White, Middle-Age Suicide In America Skyrockets
Psychology Today - May 6, 2013
https://www.psychologytoday.com/blog/reading-between-the-headlines/201305/white-middle-age-suicide-in-america-skyrockets

Suicide, once thought to be associated with troubled teens and the elderly, is quickly becoming an age-blind statistic. Middle aged Americans are turning to suicide in alarming numbers. The reasons include easily accessible prescription painkillers, the mortgage crisis and most importantly the challenge of a troubled economy. The Center for Disease Control and Prevention claims suicide rates now top the number of deaths due to automobile accidents.

The suicide rate for both younger and older Americans remains virtually unchanged, however, the rate has spiked for those in middle age (35 to 64 years old) with a 28 percent increase (link is external) from 1999 to 2010. The rate for whites in middle-age jumped an alarming 40 percent during the same time frame. According to the CDC, there were more than 38,000 suicides (link is external) in 2010 making it the tenth leading cause of death in America overall (third leading cause from age 15-24).

The US 2010 Final Data quantifies the US statistics for suicide by race, sex and age. Interestingly, African-American suicides have declined and are considerably lower than whites. Reasons are thought to include better coping skills when negative things occur as well as different cultural norms with respect to taking your own life. Also, Blacks (and Hispanics) tend to have stronger family support, community support and church support to carry them through these rough times.

While money woes definitely contribute to stress and poor mental health, it can be devastating to those already prone to depression -- and depression is indeed still the number one risk factor for suicide. A person with no hope and nowhere to go, can now easily turn to their prescription painkiller and overdose, bringing the pain, stress and worry to an end. In fact, prescription painkillers were the third leading cause of suicide (and rising rapidly) for middle aged Americans in 2010 (guns are still number 1). ...

cm -> Fred C. Dobbs...

When few people kill themselves "on purpose" or die from self-inflicted but probably "unintended" harms (e.g. organ failure or accidental death caused by substance abuse), it can be shrugged off as problems related to the individual (more elaboration possible but not necessary).

When it becomes a statistically significant phenomenon (above-noise percentage of total population or demographically identifiable groups), then one has to ask questions about social causes. My first question would be, "what made life suck for those people"? What specific instrument they used to kill themselves would be my second question (it may be the first question for people who are charged with implementing counter measures but not necessarily fixing the causes).

Since about the financial crisis (I'm not sure about causation or coincidence - not accidental coincidence BTW but causation by the same underlying causes), there has been a disturbing pattern of high school students throwing themselves in front of local trains. At that age, drinking or drugging oneself to death is apparently not the first "choice". Performance pressure *related to* (not just "and") a lack of convincing career/life prospects has/have been suspected or named as a cause. I don't think teenagers suddenly started to jump in front of trains that have run the same rail line for decades because of the "usual" and centuries to millennia old teenage romantic relationship issues.

[Sep 22, 2019] The Despair of Learning That Experience No Longer Matters by Benjamin Wallace-Wells

Notable quotes:
"... If returns to experience are in decline, if wisdom no longer pays off, then that might help suggest why a group of mostly older people who are not, as a group, disadvantaged might become convinced that the country has taken a turn for the worse. It suggests why their grievances should so idealize the past, and why all the talk about coal miners and factories, jobs in which unions have codified returns to experience into the salary structure, might become such a fixation. ..."
Apr 12, 2017 | economistsview.typepad.com
RGC , April 12, 2017 at 06:41 AM
The Despair of Learning That Experience No Longer Matters

April 10, 2017

.....................

The arguments about Case and Deaton's work have been an echo of the one that consumed so much of the primary campaign, and then the general election, and which is still unresolved: whether the fury of Donald Trump's supporters came from cultural and racial grievance or from economic plight. Case and Deaton's scholarship does not settle the question. As they write, more than once, "more work is needed."

But part of what Case and Deaton offer in their new paper is an emotional logic to an economic argument.

If returns to experience are in decline, if wisdom no longer pays off, then that might help suggest why a group of mostly older people who are not, as a group, disadvantaged might become convinced that the country has taken a turn for the worse. It suggests why their grievances should so idealize the past, and why all the talk about coal miners and factories, jobs in which unions have codified returns to experience into the salary structure, might become such a fixation.

Whatever comes from the deliberations over Case and Deaton's statistics, there is within their numbers an especially interesting story.

http://www.newyorker.com/news/benjamin-wallace-wells/the-despair-of-learning-that-experience-no-longer-matters

[Sep 22, 2019] Neoliberalism Political Success, Economic Failure Portside by Robert Kuttner

Highly recommended!
The key to the success of neoliberal was a bunch on bought intellectual prostitutes like Milton Friedman and the drive to occupy economic departments of the the universities using money from the financial elite. which along with think tank continued mercenary army of neoliberalism who fought and win the battle with weakened New Del capitalism supporters. After that neoliberalism was from those departments like the centers of infection via indoctrination of each new generation of students. Which is a classic mixture of Bolsheviks methods and Trotskyite theory adapted tot he need of financial oligarchy.
Essentially we see the tragedy of Lysenkoism replayed in the USA. When false theory supported by financial oligarchy and then state forcefully suppressed all other economic thought and became the only politically correct theory in the USA and Western Europe.
Notable quotes:
"... The neoliberal counterrevolution, in theory and policy, has reversed or undermined nearly every aspect of managed capitalism -- from progressive taxation, welfare transfers, and antitrust, to the empowerment of workers and the regulation of banks and other major industries. ..."
"... Neoliberalism's premise is that free markets can regulate themselves; that government is inherently incompetent, captive to special interests, and an intrusion on the efficiency of the market; that in distributive terms, market outcomes are basically deserved; and that redistribution creates perverse incentives by punishing the economy's winners and rewarding its losers. So government should get out of the market's way. ..."
"... Now, after nearly half a century, the verdict is in. Virtually every one of these policies has failed, even on their own terms. ..."
"... Economic power has resulted in feedback loops of political power, in which elites make rules that bolster further concentration. ..."
"... The culprit isn't just "markets" -- some impersonal force that somehow got loose again. This is a story of power using theory. The mixed economy was undone by economic elites, who revised rules for their own benefit. They invested heavily in friendly theorists to bless this shift as sound and necessary economics, and friendly politicians to put those theories into practice. ..."
"... The grand neoliberal experiment of the past 40 years has demonstrated that markets in fact do not regulate themselves. Managed markets turn out to be more equitable and more efficient. ..."
"... The British political economist Colin Crouch captured this anomaly in a book nicely titled The Strange Non-Death of Neoliberalism . Why did neoliberalism not die? As Crouch observed, neoliberalism failed both as theory and as policy, but succeeded superbly as power politics for economic elites. ..."
"... The neoliberal ascendance has had another calamitous cost -- to democratic legitimacy. As government ceased to buffer market forces, daily life has become more of a struggle for ordinary people. ..."
"... After the Berlin Wall came down in 1989, ours was widely billed as an era when triumphant liberal capitalism would march hand in hand with liberal democracy. But in a few brief decades, the ostensibly secure regime of liberal democracy has collapsed in nation after nation, with echoes of the 1930s. ..."
"... As the great political historian Karl Polanyi warned, when markets overwhelm society, ordinary people often turn to tyrants. In regimes that border on neofascist, klepto-capitalists get along just fine with dictators, undermining the neoliberal premise of capitalism and democracy as complements. ..."
"... Classically, the premise of a "free market" is that government simply gets out of the way. This is nonsensical, since all markets are creatures of rules, most fundamentally rules defining property, but also rules defining credit, debt, and bankruptcy; rules defining patents, trademarks, and copyrights; rules defining terms of labor; and so on. Even deregulation requires rules. In Polanyi's words, "laissez-faire was planned." ..."
"... Around the same time, the term neoconservative was used as a self-description by former liberals who embraced conservatism, on cultural, racial, economic, and foreign-policy grounds. Neoconservatives were neoliberals in economics. ..."
"... Lavishly funded centers and tenured chairs were underwritten by the Olin, Scaife, Bradley, and other far-right foundations to promote such variants of free-market theory as law and economics, public choice, rational choice, cost-benefit analysis, maximize-shareholder-value, and kindred schools of thought. These theories colonized several academic disciplines. All were variations on the claim that markets worked and that government should get out of the way. ..."
"... Market failure was dismissed as a rare special case; government failure was said to be ubiquitous. Theorists worked hand in glove with lobbyists and with public officials. But in every major case where neoliberal theory generated policy, the result was political success and economic failure. ..."
"... For example, supply-side economics became the justification for tax cuts, on the premise that taxes punished enterprise. ..."
"... Robert Bork's "antitrust paradox," holding that antitrust enforcement actually weakened competition, was used as the doctrine to sideline the Sherman and Clayton Acts. Supposedly, if government just got out of the way, market forces would remain more competitive because monopoly pricing would invite innovation and new entrants to the market. In practice, industry after industry became more heavily concentrated. ..."
"... Human capital theory, another variant of neoliberal application of markets to partly social questions, justified deregulating labor markets and crushing labor unions. Unions supposedly used their power to get workers paid more than their market worth. Likewise minimum wage laws. But the era of depressed wages has actually seen a decline in rates of productivity growth ..."
"... Financial deregulation is neoliberalism's most palpable deregulatory failure, but far from the only one ..."
"... Air travel has been a poster child for advocates of deregulation, but the actual record is mixed at best. Airline deregulation produced serial bankruptcies of every major U.S. airline, often at the cost of worker pay and pension funds. ..."
"... Ticket prices have declined on average over the past two decades, but the traveling public suffers from a crazy quilt of fares, declining service, shrinking seats and legroom, and exorbitant penalties for the perfectly normal sin of having to change plans. ..."
"... A similar example is the privatization of transportation services such as highways and even parking meters. In several Midwestern states, toll roads have been sold to private vendors. The governor who makes the deal gains a temporary fiscal windfall, while drivers end up paying higher tolls often for decades. Investment bankers who broker the deal also take their cut. Some of the money does go into highway improvements, but that could have been done more efficiently in the traditional way via direct public ownership and competitive bidding. ..."
"... The Affordable Care Act is a form of voucher. But the regulated private insurance markets in the ACA have not fully lived up to their promise, in part because of the extensive market power retained by private insurers and in part because the right has relentlessly sought to sabotage the program -- another political feedback loop. The sponsors assumed that competition would lower costs and increase consumer choice. But in too many counties, there are three or fewer competing plans, and in some cases just one. ..."
"... In practice, this degenerates into an infinite regress of regulator versus commercial profit-maximizer, reminiscent of Mad magazine's "Spy versus Spy," with the industry doing end runs to Congress to further rig the rules. Straight-ahead public insurance such as Medicare is generally far more efficient. ..."
"... Several forms of deregulation -- of airlines, trucking, and electric power -- began not under Reagan but under Carter. Financial deregulation took off under Bill Clinton. Democratic presidents, as much as Republicans, promoted trade deals that undermined social standards. Cost-benefit analysis by the Office of Information and Regulatory Affairs (OIRA) was more of a choke point under Barack Obama than under George W. Bush. ..."
"... Dozens of nations, from Latin America to East Asia, went through this cycle of boom, bust, and then IMF pile-on. Greece is still suffering the impact. ..."
"... In fact, Japan, South Korea, smaller Asian nations, and above all China had thrived by rejecting every major tenet of neoliberalism. Their capital markets were tightly regulated and insulated from foreign speculative capital. They developed world-class industries as state-led cartels that favored domestic production and supply. East Asia got into trouble only when it followed IMF dictates to throw open capital markets, and in the aftermath they recovered by closing those markets and assembling war chests of hard currency so that they'd never again have to go begging to the IMF ..."
"... The basic argument of neoliberalism can fit on a bumper sticker. Markets work; governments don't . If you want to embellish that story, there are two corollaries: Markets embody human freedom. And with markets, people basically get what they deserve; to alter market outcomes is to spoil the poor and punish the productive. That conclusion logically flows from the premise that markets are efficient. Milton Friedman became rich, famous, and influential by teasing out the several implications of these simple premises. ..."
"... The failed neoliberal experiment also makes the case not just for better-regulated capitalism but for direct public alternatives as well. Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Much of it could be public. ..."
Aug 25, 2019 | portside.org
The invisible hand is more like a thumb on the scale for the world's elites. That's why market fundamentalism has been unmasked as bogus economics but keeps winning politically. This article appears in the Summer 2019 issue of The American Prospect magazine. Subscribe here .

Since the late 1970s, we've had a grand experiment to test the claim that free markets really do work best. This resurrection occurred despite the practical failure of laissez-faire in the 1930s, the resulting humiliation of free-market theory, and the contrasting success of managed capitalism during the three-decade postwar boom.

Yet when growth faltered in the 1970s, libertarian economic theory got another turn at bat. This revival proved extremely convenient for the conservatives who came to power in the 1980s. The neoliberal counterrevolution, in theory and policy, has reversed or undermined nearly every aspect of managed capitalism -- from progressive taxation, welfare transfers, and antitrust, to the empowerment of workers and the regulation of banks and other major industries.

Neoliberalism's premise is that free markets can regulate themselves; that government is inherently incompetent, captive to special interests, and an intrusion on the efficiency of the market; that in distributive terms, market outcomes are basically deserved; and that redistribution creates perverse incentives by punishing the economy's winners and rewarding its losers. So government should get out of the market's way.

By the 1990s, even moderate liberals had been converted to the belief that social objectives can be achieved by harnessing the power of markets. Intermittent periods of governance by Democratic presidents slowed but did not reverse the slide to neoliberal policy and doctrine. The corporate wing of the Democratic Party approved.

Now, after nearly half a century, the verdict is in. Virtually every one of these policies has failed, even on their own terms. Enterprise has been richly rewarded, taxes have been cut, and regulation reduced or privatized. The economy is vastly more unequal, yet economic growth is slower and more chaotic than during the era of managed capitalism. Deregulation has produced not salutary competition, but market concentration. Economic power has resulted in feedback loops of political power, in which elites make rules that bolster further concentration.

The culprit isn't just "markets" -- some impersonal force that somehow got loose again. This is a story of power using theory. The mixed economy was undone by economic elites, who revised rules for their own benefit. They invested heavily in friendly theorists to bless this shift as sound and necessary economics, and friendly politicians to put those theories into practice.

Recent years have seen two spectacular cases of market mispricing with devastating consequences: the near-depression of 2008 and irreversible climate change. The economic collapse of 2008 was the result of the deregulation of finance. It cost the real U.S. economy upwards of $15 trillion (and vastly more globally), depending on how you count, far more than any conceivable efficiency gain that might be credited to financial innovation. Free-market theory presumes that innovation is necessarily benign. But much of the financial engineering of the deregulatory era was self-serving, opaque, and corrupt -- the opposite of an efficient and transparent market.

The existential threat of global climate change reflects the incompetence of markets to accurately price carbon and the escalating costs of pollution. The British economist Nicholas Stern has aptly termed the worsening climate catastrophe history's greatest case of market failure. Here again, this is not just the result of failed theory. The entrenched political power of extractive industries and their political allies influences the rules and the market price of carbon. This is less an invisible hand than a thumb on the scale. The premise of efficient markets provides useful cover.

The grand neoliberal experiment of the past 40 years has demonstrated that markets in fact do not regulate themselves. Managed markets turn out to be more equitable and more efficient. Yet the theory and practical influence of neoliberalism marches splendidly on, because it is so useful to society's most powerful people -- as a scholarly veneer to what would otherwise be a raw power grab. The British political economist Colin Crouch captured this anomaly in a book nicely titled The Strange Non-Death of Neoliberalism . Why did neoliberalism not die? As Crouch observed, neoliberalism failed both as theory and as policy, but succeeded superbly as power politics for economic elites.

The neoliberal ascendance has had another calamitous cost -- to democratic legitimacy. As government ceased to buffer market forces, daily life has become more of a struggle for ordinary people. The elements of a decent middle-class life are elusive -- reliable jobs and careers, adequate pensions, secure medical care, affordable housing, and college that doesn't require a lifetime of debt. Meanwhile, life has become ever sweeter for economic elites, whose income and wealth have pulled away and whose loyalty to place, neighbor, and nation has become more contingent and less reliable.

Large numbers of people, in turn, have given up on the promise of affirmative government, and on democracy itself. After the Berlin Wall came down in 1989, ours was widely billed as an era when triumphant liberal capitalism would march hand in hand with liberal democracy. But in a few brief decades, the ostensibly secure regime of liberal democracy has collapsed in nation after nation, with echoes of the 1930s.

As the great political historian Karl Polanyi warned, when markets overwhelm society, ordinary people often turn to tyrants. In regimes that border on neofascist, klepto-capitalists get along just fine with dictators, undermining the neoliberal premise of capitalism and democracy as complements. Several authoritarian thugs, playing on tribal nationalism as the antidote to capitalist cosmopolitanism, are surprisingly popular.

It's also important to appreciate that neoliberalism is not laissez-faire. Classically, the premise of a "free market" is that government simply gets out of the way. This is nonsensical, since all markets are creatures of rules, most fundamentally rules defining property, but also rules defining credit, debt, and bankruptcy; rules defining patents, trademarks, and copyrights; rules defining terms of labor; and so on. Even deregulation requires rules. In Polanyi's words, "laissez-faire was planned."

The political question is who gets to make the rules, and for whose benefit. The neoliberalism of Friedrich Hayek and Milton Friedman invoked free markets, but in practice the neoliberal regime has promoted rules created by and for private owners of capital, to keep democratic government from asserting rules of fair competition or countervailing social interests. The regime has rules protecting pharmaceutical giants from the right of consumers to import prescription drugs or to benefit from generics. The rules of competition and intellectual property generally have been tilted to protect incumbents. Rules of bankruptcy have been tilted in favor of creditors. Deceptive mortgages require elaborate rules, written by the financial sector and then enforced by government. Patent rules have allowed agribusiness and giant chemical companies like Monsanto to take over much of agriculture -- the opposite of open markets. Industry has invented rules requiring employees and consumers to submit to binding arbitration and to relinquish a range of statutory and common-law rights.

Neoliberalism as Theory, Policy, and Power

It's worth taking a moment to unpack the term "neoliberalism." The coinage can be confusing to American ears because the "liberal" part refers not to the word's ordinary American usage, meaning moderately left-of-center, but to classical economic liberalism otherwise known as free-market economics. The "neo" part refers to the reassertion of the claim that the laissez-faire model of the economy was basically correct after all.

Few proponents of these views embraced the term neoliberal . Mostly, they called themselves free-market conservatives. "Neoliberal" was a coinage used mainly by their critics, sometimes as a neutral descriptive term, sometimes as an epithet. The use became widespread in the era of Margaret Thatcher and Ronald Reagan.

To add to the confusion, a different and partly overlapping usage was advanced in the 1970s by the group around the Washington Monthly magazine. They used "neoliberal" to mean a new, less statist form of American liberalism. Around the same time, the term neoconservative was used as a self-description by former liberals who embraced conservatism, on cultural, racial, economic, and foreign-policy grounds. Neoconservatives were neoliberals in economics.

Beginning in the 1970s, resurrected free-market theory was interwoven with both conservative politics and significant investments in the production of theorists and policy intellectuals. This occurred not just in well-known conservative think tanks such as the American Enterprise Institute, Heritage, Cato, and the Manhattan Institute, but through more insidious investments in academia. Lavishly funded centers and tenured chairs were underwritten by the Olin, Scaife, Bradley, and other far-right foundations to promote such variants of free-market theory as law and economics, public choice, rational choice, cost-benefit analysis, maximize-shareholder-value, and kindred schools of thought. These theories colonized several academic disciplines. All were variations on the claim that markets worked and that government should get out of the way.

Each of these bodies of sub-theory relied upon its own variant of neoliberal ideology. An intensified version of the theory of comparative advantage was used not just to cut tariffs but to use globalization as all-purpose deregulation. The theory of maximizing shareholder value was deployed to undermine the entire range of financial regulation and workers' rights. Cost-benefit analysis, emphasizing costs and discounting benefits, was used to discredit a good deal of health, safety, and environmental regulation. Public choice theory, associated with the economist James Buchanan and an entire ensuing school of economics and political science, was used to impeach democracy itself, on the premise that policies were hopelessly afflicted by "rent-seekers" and "free-riders."

Click here to read how Robert Kuttner has been unmasking the fallacies of neoliberalism for decades

Market failure was dismissed as a rare special case; government failure was said to be ubiquitous. Theorists worked hand in glove with lobbyists and with public officials. But in every major case where neoliberal theory generated policy, the result was political success and economic failure.

For example, supply-side economics became the justification for tax cuts, on the premise that taxes punished enterprise. Supposedly, if taxes were cut, especially taxes on capital and on income from capital, the resulting spur to economic activity would be so potent that deficits would be far less than predicted by "static" economic projections, and perhaps even pay for themselves. There have been six rounds of this experiment, from the tax cuts sponsored by Jimmy Carter in 1978 to the immense 2017 Tax Cuts and Jobs Act signed by Donald Trump. In every case some economic stimulus did result, mainly from the Keynesian jolt to demand, but in every case deficits increased significantly. Conservatives simply stopped caring about deficits. The tax cuts were often inefficient as well as inequitable, since the loopholes steered investment to tax-favored uses rather than the most economically logical ones. Dozens of America's most profitable corporations paid no taxes.

Robert Bork's "antitrust paradox," holding that antitrust enforcement actually weakened competition, was used as the doctrine to sideline the Sherman and Clayton Acts. Supposedly, if government just got out of the way, market forces would remain more competitive because monopoly pricing would invite innovation and new entrants to the market. In practice, industry after industry became more heavily concentrated. Incumbents got in the habit of buying out innovators or using their market power to crush them. This pattern is especially insidious in the tech economy of platform monopolies, where giants that provide platforms, such as Google and Amazon, use their market power and superior access to customer data to out-compete rivals who use their platforms. Markets, once again, require rules beyond the benign competence of the market actors themselves. Only democratic government can set equitable rules. And when democracy falters, undemocratic governments in cahoots with corrupt private plutocrats will make the rules.

Human capital theory, another variant of neoliberal application of markets to partly social questions, justified deregulating labor markets and crushing labor unions. Unions supposedly used their power to get workers paid more than their market worth. Likewise minimum wage laws. But the era of depressed wages has actually seen a decline in rates of productivity growth. Conversely, does any serious person think that the inflated pay of the financial moguls who crashed the economy accurately reflects their contribution to economic activity? In the case of hedge funds and private equity, the high incomes of fund sponsors are the result of transfers of wealth and income from employees, other stakeholders, and operating companies to the fund managers, not the fruits of more efficient management.

There is a broad literature discrediting this body of pseudo-scholarly work in great detail. Much of neoliberalism represents the ever-reliable victory of assumption over evidence. Yet neoliberal theory lived on because it was so convenient for elites, and because of the inertial power of the intellectual capital that had been created. The well-funded neoliberal habitat has provided comfortable careers for two generations of scholars and pseudo-scholars who migrate between academia, think tanks, K Street, op-ed pages, government, Wall Street, and back again. So even if the theory has been demolished both by scholarly rebuttal and by events, it thrives in powerful institutions and among their political allies.

The Practical Failure of Neoliberal Policies

Financial deregulation is neoliberalism's most palpable deregulatory failure, but far from the only one. Electricity deregulation on balance has increased monopoly power and raised costs to consumers, but has failed to offer meaningful "shopping around" opportunities to bring down prices. We have gone from regulated monopolies with predictable earnings, costs, wages, and consumer protections to deregulated monopolies or oligopolies with substantial pricing power. Since the Bell breakup, the telephone system tells a similar story of re-concentration, dwindling competition, price-gouging, and union-bashing.

Air travel has been a poster child for advocates of deregulation, but the actual record is mixed at best. Airline deregulation produced serial bankruptcies of every major U.S. airline, often at the cost of worker pay and pension funds.

Ticket prices have declined on average over the past two decades, but the traveling public suffers from a crazy quilt of fares, declining service, shrinking seats and legroom, and exorbitant penalties for the perfectly normal sin of having to change plans. Studies have shown that fares actually declined at a faster rate in the 20 years before deregulation in 1978 than in the 20 years afterward, because the prime source of greater efficiency in airline travel is the introduction of more fuel-efficient planes.

The roller-coaster experience of airline profits and losses has reduced the capacity of airlines to purchase more fuel-efficient aircraft, and the average age of the fleet keeps increasing. The use of "fortress hubs" to defend market pricing power has reduced the percentage of nonstop flights, the most efficient way to fly from one point to another.

Robert Bork's spurious arguments that antitrust enforcement hurt competition became the basis for dismantling antitrust. Massive concentration resulted. Charles Tasnadi/AP Photo

In addition to deregulation, three prime areas of practical neoliberal policies are the use of vouchers as "market-like" means to social goals, the privatization of public services, and the use of tax subsides rather than direct outlays. In every case, government revenues are involved, so this is far from a free market to begin with. But the premise is that market disciplines can achieve public purposes more efficiently than direct public provision.

The evidence provides small comfort for these claims. One core problem is that the programs invariably give too much to the for-profit middlemen at the expense of the intended beneficiaries. A related problem is that the process of using vouchers and contracts invites corruption. It is a different form of "rent-seeking" -- pursuit of monopoly profits -- than that attributed to government by public choice theorists, but corruption nonetheless. Often, direct public provision is far more transparent and accountable than a web of contractors.

A further problem is that in practice there is often far less competition than imagined, because of oligopoly power, vendor lock-in, and vendor political influence. These experiments in marketization to serve social goals do not operate in some Platonic policy laboratory, where the only objective is true market efficiency yoked to the public good. They operate in the grubby world of practical politics, where the vendors are closely allied with conservative politicians whose purposes may be to discredit social transfers entirely, or to reward corporate allies, or to benefit from kickbacks either directly or as campaign contributions.

Privatized prisons are a case in point. A few large, scandal-ridden companies have gotten most of the contracts, often through political influence. Far from bringing better quality and management efficiency, they have profited by diverting operating funds and worsening conditions that were already deplorable, and finding new ways to charge inmates higher fees for necessary services such as phone calls. To the extent that money was actually saved, most of the savings came from reducing the pay and professionalism of guards, increasing overcrowding, and decreasing already inadequate budgets for food and medical care.

A similar example is the privatization of transportation services such as highways and even parking meters. In several Midwestern states, toll roads have been sold to private vendors. The governor who makes the deal gains a temporary fiscal windfall, while drivers end up paying higher tolls often for decades. Investment bankers who broker the deal also take their cut. Some of the money does go into highway improvements, but that could have been done more efficiently in the traditional way via direct public ownership and competitive bidding.

Housing vouchers substantially reward landlords who use the vouchers to fill empty houses with poor people until the neighborhood gentrifies, at which point the owner is free to quit the program and charge market rentals. Thus public funds are used to underwrite a privately owned, quasi-social housing sector -- whose social character is only temporary. No permanent social housing is produced despite the extensive public outlay. The companion use of tax incentives to attract passive investment in affordable housing promotes economically inefficient tax shelters, and shunts public funds into the pockets of the investors -- money that might otherwise have gone directly to the housing.

The Affordable Care Act is a form of voucher. But the regulated private insurance markets in the ACA have not fully lived up to their promise, in part because of the extensive market power retained by private insurers and in part because the right has relentlessly sought to sabotage the program -- another political feedback loop. The sponsors assumed that competition would lower costs and increase consumer choice. But in too many counties, there are three or fewer competing plans, and in some cases just one.

As more insurance plans and hospital systems become for-profit, massive investment goes into such wasteful activities as manipulation of billing, "risk selection," and other gaming of the rules. Our mixed-market system of health care requires massive regulation to work with tolerable efficiency. In practice, this degenerates into an infinite regress of regulator versus commercial profit-maximizer, reminiscent of Mad magazine's "Spy versus Spy," with the industry doing end runs to Congress to further rig the rules. Straight-ahead public insurance such as Medicare is generally far more efficient.

An extensive literature has demonstrated that for-profit voucher schools do no better and often do worse than comparable public schools, and are vulnerable to multiple forms of gaming and corruption. Proprietors of voucher schools are superb at finding ways of excluding costly special-needs students, so that those costs are imposed on what remains of public schools; they excel at gaming test results. While some voucher and charter schools, especially nonprofit ones, sometimes improve on average school performance, so do many public schools. The record is also muddied by the fact that many ostensibly nonprofit schools contract out management to for-profit companies.

Tax preferences have long been used ostensibly to serve social goals. The Earned Income Tax Credit is considered one of the more successful cases of using market-like measures -- in this case a refundable tax credit -- to achieve the social goal of increasing worker take-home pay. It has also been touted as the rare case of bipartisan collaboration. Liberals get more money for workers. Conservatives get to reward the deserving poor, since the EITC is conditioned on employment. Conservatives get a further ideological win, since the EITC is effectively a wage subsidy from the government, but is experienced as a tax refund rather than a benefit of government.

Recent research, however, shows that the EITC is primarily a subsidy of low-wage employers, who are able to pay their workers a lot less than a market-clearing wage. In industries such as nursing homes or warehouses, where many workers qualified for the EITC work side by side with ones not eligible, the non-EITC workers get substandard wages. The existence of the EITC depresses the level of the wages that have to come out of the employer's pocket.

Neoliberalism's Influence on Liberals

As free-market theory resurged, many moderate liberals embraced these policies. In the inflationary 1970s, regulation became a scapegoat that supposedly deterred salutary price competition. Some, such as economist Alfred Kahn, President Carter's adviser on deregulation, supported deregulation on what he saw as the merits. Other moderates supported neoliberal policies opportunistically, to curry favor with powerful industries and donors. Market-like policies were also embraced by liberals as a tactical way to find common ground with conservatives.

Several forms of deregulation -- of airlines, trucking, and electric power -- began not under Reagan but under Carter. Financial deregulation took off under Bill Clinton. Democratic presidents, as much as Republicans, promoted trade deals that undermined social standards. Cost-benefit analysis by the Office of Information and Regulatory Affairs (OIRA) was more of a choke point under Barack Obama than under George W. Bush.

"Command and control" became an all-purpose pejorative for disparaging perfectly sensible and efficient regulation. "Market-like" became a fashionable concept, not just on the free-market right but on the moderate left. Cass Sunstein, who served as Obama's anti-regulation czar,uses the example of "nudges" as a more market-like and hence superior alternative to direct regulation, though with rare exceptions their impact is trivial. Moreover, nudges only work in tandem with regulation.

There are indeed some interventionist policies that use market incentives to serve social goals. But contrary to free-market theory, the market-like incentives first require substantial regulation and are not a substitute for it. A good example is the Clean Air Act Amendments of 1990, which used tradable emission rights to cut the output of sulfur dioxide, the cause of acid rain. This was supported by both the George H.W. Bush administration and by leading Democrats. But before the trading regime could work, Congress first had to establish permissible ceilings on sulfur dioxide output -- pure command and control.

There are many other instances, such as nutrition labeling, truth-in-lending, and disclosure of EPA gas mileage results, where the market-like premise of a better-informed consumer complements command regulation but is no substitute for it. Nearly all of the increase in fuel efficiency, for example, is the result of command regulations that require auto fleets to hit a gas mileage target. The fact that EPA gas mileage figures are prominently disclosed on new car stickers may have modest influence, but motor fuels are so underpriced that car companies have success selling gas-guzzlers despite the consumer labeling.

Image removed

Bill Clinton and his Treasury Secretary, Robert Rubin, were big promoters of financial deregulation.

Politically, whatever rationale there was for liberals to make common ground with libertarians is now largely gone. The authors of the 2017 Tax Cuts and Jobs Act made no attempt to meet Democrats partway; they excluded the opposition from the legislative process entirely. This was opportunistic tax cutting for elites, pure and simple. The right today also abandoned the quest for a middle ground on environmental policy, on anti-poverty policy, on health policy -- on virtually everything. Neoliberal ideology did its historic job of weakening intellectual and popular support for the proposition that affirmative government can better the lives of citizens and that the Democratic Party is a reliable steward of that social compact. Since Reagan, the right's embrace of the free market has evolved from partly principled idealism into pure opportunism and obstruction.

Neoliberalism and Hyper-Globalism

The post-1990 rules of globalization, supported by conservatives and moderate liberals alike, are the quintessence of neoliberalism. At Bretton Woods in 1944, the use of fixed exchange rates and controls on speculative private capital, plus the creation of the IMFand World Bank, were intended to allow member countries to practice national forms of managed capitalism, insulated from the destructive and deflationary influences of short-term speculative private capital flows. As doctrine and power shifted in the 1970s, the IMF, the World Bank, and later the WTO, which replaced the old GATT, mutated into their ideological opposite. Rather than instruments of support for mixed national economies, they became enforcers of neoliberal policies.

The standard package of the "Washington Consensus" of approved policies for developing nations included demands that they open their capital markets to speculative private finance, as well as cutting taxes on capital, weakening social transfers, and gutting labor regulation and public ownership. But private capital investment in poor countries proved to be fickle. The result was often excessive inflows during the boom part of the cycle and punitive withdrawals during the bust -- the opposite of the patient, long-term development capital that these countries needed and that was provided by the World Bank of an earlier era. During the bust phase, the IMF typically imposes even more stringent neoliberal demands as the price of financial bailouts, including perverse budgetary austerity, supposedly to restore the confidence of the very speculative capital markets responsible for the boom-bust cycle.

Dozens of nations, from Latin America to East Asia, went through this cycle of boom, bust, and then IMF pile-on. Greece is still suffering the impact. After 1990, hyper-globalism also included trade treaties whose terms favored multinational corporations. Traditionally, trade agreements had been mainly about reciprocal reductions of tariffs. Nations were free to have whatever brand of regulation, public investment, or social policies they chose. With the advent of the WTO, many policies other than tariffs were branded as trade distorting, even as takings without compensation. Trade deals were used to give foreign capital free access and to dismantle national regulation and public ownership. Special courts were created in which foreign corporations and investors could do end runs around national authorities to challenge regulation for impeding commerce.

At first, the sponsors of the new trade regime tried to claim the successful economies of East Asia as evidence of the success of the neoliberal recipe. Supposedly, these nations had succeeded by pursuing "export-led growth," exposing their domestic economies to salutary competition. But these claims were soon exposed as the opposite of what had actually occurred. In fact, Japan, South Korea, smaller Asian nations, and above all China had thrived by rejecting every major tenet of neoliberalism. Their capital markets were tightly regulated and insulated from foreign speculative capital. They developed world-class industries as state-led cartels that favored domestic production and supply. East Asia got into trouble only when it followed IMF dictates to throw open capital markets, and in the aftermath they recovered by closing those markets and assembling war chests of hard currency so that they'd never again have to go begging to the IMF. Enthusiasts of hyper-globalization also claimed that it benefited poor countries by increasing export opportunities, but as the success of East Asia shows, there is more than one way to boost exports -- and many poorer countries suffered under the terms of the global neoliberal regime.

Nor was the damage confined to the developing world. As the work of Harvard economist Dani Rodrik has demonstrated, democracy requires a polity. For better or for worse, the polity and democratic citizenship are national. By enhancing the global market at the expense of the democratic state, the current brand of hyper-globalization deliberately weakens the capacity of states to regulate markets, and weakens democracy itself.

When Do Markets Work?

The failure of neoliberalism as economic and social policy does not mean that markets never work. A command economy is even more utopian and perverse than a neoliberal one. The practical quest is for an efficient and equitable middle ground.

The neoliberal story of how the economy operates assumes a largely frictionless marketplace, where prices are set by supply and demand, and the price mechanism allocates resources to their optimal use in the economy as a whole. For this discipline to work as advertised, however, there can be no market power, competition must be plentiful, sellers and buyers must have roughly equal information, and there can be no significant externalities. Much of the 20th century was practical proof that these conditions did not describe a good part of the actual economy. And if markets priced things wrong, the market system did not aggregate to an efficient equilibrium, and depressions could become self-deepening. As Keynes demonstrated, only a massive jolt of government spending could restart the engines, even if market pricing was partly violated in the process.

Nonetheless, in many sectors of the economy, the process of buying and selling is close enough to the textbook conditions of perfect competition that the price system works tolerably well. Supermarkets, for instance, deliver roughly accurate prices because of the consumer's freedom and knowledge to shop around. Likewise much of retailing. However, when we get into major realms of the economy with positive or negative externalities, such as education and health, markets are not sufficient. And in other major realms, such as pharmaceuticals, where corporations use their political power to rig the terms of patents, the market doesn't produce a cure.

The basic argument of neoliberalism can fit on a bumper sticker. Markets work; governments don't . If you want to embellish that story, there are two corollaries: Markets embody human freedom. And with markets, people basically get what they deserve; to alter market outcomes is to spoil the poor and punish the productive. That conclusion logically flows from the premise that markets are efficient. Milton Friedman became rich, famous, and influential by teasing out the several implications of these simple premises.

It is much harder to articulate the case for a mixed economy than the case for free markets, precisely because the mixed economy is mixed. The rebuttal takes several paragraphs. The more complex story holds that markets are substantially efficient in some realms but far from efficient in others, because of positive and negative externalities, the tendency of financial markets to create cycles of boom and bust, the intersection of self-interest and corruption, the asymmetry of information between company and consumer, the asymmetry of power between corporation and employee, the power of the powerful to rig the rules, and the fact that there are realms of human life (the right to vote, human liberty, security of one's person) that should not be marketized.

And if markets are not perfectly efficient, then distributive questions are partly political choices. Some societies pay pre-K teachers the minimum wage as glorified babysitters. Others educate and compensate them as professionals. There is no "correct" market-derived wage, because pre-kindergarten is a social good and the issue of how to train and compensate teachers is a social choice, not a market choice. The same is true of the other human services, including medicine. Nor is there a theoretically correct set of rules for patents, trademarks, and copyrights. These are politically derived, either balancing the interests of innovation with those of diffusion -- or being politically captured by incumbent industries.

Governments can in principle improve on market outcomes via regulation, but that fact is complicated by the risk of regulatory capture. So another issue that arises is market failure versus polity failure, which brings us back to the urgency of strong democracy and effective government.

After Neoliberalism

The political reversal of neoliberalism can only come through practical politics and policies that demonstrate how government often can serve citizens more equitably and efficiently than markets. Revision of theory will take care of itself. There is no shortage of dissenting theorists and empirical policy researchers whose scholarly work has been vindicated by events. What they need is not more theory but more influence, both in the academy and in the corridors of power. They are available to advise a new progressive administration, if that administration can get elected and if it refrains from hiring neoliberal advisers.

There are also some relatively new areas that invite policy innovation. These include regulation of privacy rights versus entrepreneurial liberties in the digital realm; how to think of the internet as a common carrier; how to update competition and antitrust policy as platform monopolies exert new forms of market power; how to modernize labor-market policy in the era of the gig economy; and the role of deeper income supplements as machines replace human workers.

The failed neoliberal experiment also makes the case not just for better-regulated capitalism but for direct public alternatives as well. Banking, done properly, especially the provision of mortgage finance, is close to a public utility. Much of it could be public. A great deal of research is done more honestly and more cost-effectively in public, peer-reviewed institutions such as the NIH than by a substantially corrupt private pharmaceutical industry.

Social housing often is more cost-effective than so-called public-private partnerships. Public power is more efficient to generate, less prone to monopolistic price-gouging, and friendlier to the needed green transition than private power. The public option in health care is far more efficient than the current crazy quilt in which each layer of complexity adds opacity and cost. Public provision does require public oversight, but that is more straightforward and transparent than the byzantine dance of regulation and counter-regulation.

The two other benefits of direct public provision are that the public gets direct evidence of government delivering something of value, and that the countervailing power of democracy to harness markets is enhanced. A mixed economy depends above all on a strong democracy -- one even stronger than the democracy that succumbed to the corrupting influence of economic elites and their neoliberal intellectual allies beginning half a century ago. The antidote to the resurrected neoliberal fable is the resurrection of democracy -- strong enough to tame the market in a way that tames it for keeps.


Robert Kuttner is co-founder and co-editor of The American Prospect, and professor at Brandeis University's Heller School. His latest book is The Stakes: 2020 and the Survival of American Democracy . In addition to writing for the Prospect, he writes for HuffPost, The Boston Globe, and The New York Review of Books.

Read the original article at Prospect.org.

Used with the permission. © The American Prospect, Prospect.org, 2019. All rights reserved.

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[Sep 15, 2019] Wall Street Ignores Cyclical Jobs Growth Downturn As Employment Indicator Hits Great Recession Levels

Notable quotes:
"... Most of the ads for good jobs are fake. ..."
"... Instead of submitting a general application, as used to be the case in the past, and have the ability to work with the company to find the role that works best. HR has ruined a lot of good companies and their recruiting processes by going to rigid job descriptions instead of just hiring smart people and letting them work. ..."
Sep 15, 2019 | www.zerohedge.com

The Economic Cycle Research Institute's (ECRI) Lakshman Achuthan recently sat down with CNBC's Michael Santoli to discuss the jobs growth downturn. Keep in mind, this conversation was held on Wednesday, several days before Friday's disappointing jobs report.

Achuthan told Santoli there's a " very clear cyclical downturn in jobs growth, there's really no debating that, and it looks set to continue ."

Achuthan said January 2019 marked the cyclical peak in jobs growth, has been moving lower ever since, and the trend is far from over. Both nonfarm payrolls and the household survey year-over-year growth are in cyclical downturns, he said. While the economic narratives via the mainstream financial press continue to cheerlead that the consumer will lift all tides thanks to the supposedly strong jobs market, Achuthan believes the downturn in jobs growth will start to "undermine consumer confidence." And it's the loss in consumer confidence that could tilt the economy into recession.

He also said when examining cyclically sensitive sectors of the economy, there are already "questionable jobs numbers," such as a significant surge in the construction unemployment rate.

Achuthan said nonfarm payroll growth has plunged to a 17-month low, and the household survey is even weaker. He said the top nonfarm payroll line would be revised down by half a million jobs in the coming months, which would underline the weakness in employment.

Achuthan emphasized to Santoli that ECRI's recession call won't be "taken off the table. We've been talking about a growth rate cycle slowdown. We're slow-walking toward -- some recessionary window of vulnerability -- we're not there today -- but this piece of the puzzle [jobs growth downturn] is looking a bit wobbly. This is the main message that Wall Street is missing."

As Wall Street bids stocks to near-record highs on "trade optimism" and the belief that the consumer will save the day, in large part because of solid jobs growth. ECRI's Leading Employment Index, which correctly anticipated this downturn in jobs growth, is at its worst reading since the Great Recession .

And Wall Street's bet today is that the Fed can achieve a soft landing – as in 1995-96 – when it started the rate cut cycle the same month the inflation downturn was signaled by the U.S. Future Inflation Gauge (USFIG) turning lower.

However, this time around, the inflation downturn signal arrived in September 2018, the moment when the Fed should have started the cut cycle. With a ten-month lag in the cut cycle, belated rate cuts have always been associated with recession.

And now it should become increasingly clear to readers why President Trump has sounded the alarm about the need for 100bps rate cuts, quantitative easing, and emergency payroll tax cuts - it's because he's been briefed about the economic downturn that has already started.


GotAFriendInBen , 15 minutes ago link

Actually, MSM cheerleads rate cuts as the cure-all, instead of throwing shoes at Powell

Keyser , 41 minutes ago link

How do you continue to have jobs growth when the country is at full employment?

Typical ******** from C-NBC...

Alex Droog , 19 minutes ago link

The network that employs dotards like Jim Cramer to cheerlead the lemmings.

Build-It-Well , 1 hour ago link

Have we learned anything?

https://soundcloud.com/daniel-sullivan-505714723/little-saigon-report-170-have-we-learned-anything

Art_Vandelay , 1 hour ago link

I don't agree with him that the Fed can do anything to correct this, nor do they have an incentive to do so. The Fed is not on the consumer's side. They will appropriate funds to whoever they want to, just like 08, and give the middle finger to everyone else.

pitz , 1 hour ago link

Job quality is horrible, particularly for US citizen STEM workers. This has been the case since the downturn that began in the late 1990s. Trump needs to fully cancel the OPT program and almost eliminate the H-1B program. Major employers don't even bother considering US citizen STEM talent before they hire foreign nationals.

pump and dump , 1 hour ago link

Most of the ads for good jobs are fake.

pitz , 1 hour ago link

Yes, but they don't bother to come out and tell you its a fake ad. One of the tragedies of the online job application process is that it forces a person, with little to no knowledge of a company and its internals, to pick, out of potentially hundreds of roles, which one would be best for them.

Instead of submitting a general application, as used to be the case in the past, and have the ability to work with the company to find the role that works best. HR has ruined a lot of good companies and their recruiting processes by going to rigid job descriptions instead of just hiring smart people and letting them work.

ZD1 , 1 hour ago link

Congress first established the H-1B program with the The Immigration Act of 1990. It was supposed to be temporary.

Congress needs to abolish it.

Future Jim , 2 hours ago link

This seems to contradict the labor participation rate.

https://fred.stlouisfed.org/series/CIVPART

J S Bach , 2 hours ago link

"Wall Street Ignores Cyclical Slave Growth Downturn As Enslavement Indicator Hits Great Recession Levels"

Ahhh... what truth a few seconds of editing can convoke.

The EveryThing Bubble , 2 hours ago link

It's all rigged folks

don't believe anything you read

[Sep 10, 2019] Neoliberal Capitalism at a Dead End by Utsa Patnaik and Prabhat Patnaik

Highly recommended!
This is a Marxist critique of neoliberalism. Not necessary right but they his some relevant points.
Notable quotes:
"... The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. ..."
"... The ex ante tendency toward overproduction arises because the vector of real wages across countries does not increase noticeably over time in the world economy, while the vector of labor productivities does, typically resulting in a rise in the share of surplus in world output. ..."
"... While the rise in the vector of labor productivities across countries, a ubiquitous phenomenon under capitalism that also characterizes neoliberal capitalism, scarcely requires an explanation, why does the vector of real wages remain virtually stagnant in the world economy? The answer lies in the sui generis character of contemporary globalization that, for the first time in the history of capitalism, has led to a relocation of activity from the metropolis to third world countries in order to take advantage of the lower wages prevailing in the latter and meet global demand. ..."
"... The current globalization broke with this. The movement of capital from the metropolis to the third world, especially to East, South, and Southeast Asia to relocate plants there and take advantage of their lower wages for meeting global demand, has led to a desegmentation of the world economy, subjecting metropolitan wages to the restraining effect exercised by the third world's labor reserves. Not surprisingly, as Joseph Stiglitz has pointed out, the real-wage rate of an average male U.S. worker in 2011 was no higher -- indeed, it was marginally lower -- than it had been in 1968. 5 ..."
"... This ever-present opposition becomes decisive within a regime of globalization. As long as finance capital remains national -- that is, nation-based -- and the state is a nation-state, the latter can override this opposition under certain circumstances, such as in the post-Second World War period when capitalism was facing an existential crisis. But when finance capital is globalized, meaning, when it is free to move across country borders while the state remains a nation-state, its opposition to fiscal deficits becomes decisive. If the state does run large fiscal deficits against its wishes, then it would simply leave that country en masse , causing a financial crisis. ..."
"... The state therefore capitulates to the demands of globalized finance capital and eschews direct fiscal intervention for increasing demand. It resorts to monetary policy instead since that operates through wealth holders' decisions, and hence does not undermine their social position. But, precisely for this reason, monetary policy is an ineffective instrument, as was evident in the United States in the aftermath of the 2007–09 crisis when even the pushing of interest rates down to zero scarcely revived activity. 6 ..."
"... If Trump's protectionism, which recalls the Smoot-Hawley tariff of 1931 and amounts to a beggar-my-neighbor policy, does lead to a significant export of unemployment from the United States, then it will invite retaliation and trigger a trade war that will only worsen the crisis for the world economy as a whole by dampening global investment. Indeed, since the United States has been targeting China in particular, some retaliatory measures have already appeared. But if U.S. protectionism does not invite generalized retaliation, it would only be because the export of unemployment from the United States is insubstantial, keeping unemployment everywhere, including in the United States, as precarious as it is now. However we look at it, the world would henceforth face higher levels of unemployment. ..."
"... The second implication of this dead end is that the era of export-led growth is by and large over for third world economies. The slowing down of world economic growth, together with protectionism in the United States against successful third world exporters, which could even spread to other metropolitan economies, suggests that the strategy of relying on the world market to generate domestic growth has run out of steam. Third world economies, including the ones that have been very successful at exporting, would now have to rely much more on their home market ..."
"... In other words, we shall now have an intensification of the imperialist stranglehold over third world economies, especially those pushed into unsustainable balance-of-payments deficits in the new situation. By imperialism , here we do not mean the imperialism of this or that major power, but the imperialism of international finance capital, with which even domestic big bourgeoisies are integrated, directed against their own working people ..."
"... In short, the ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. To sustain itself, neoliberal capitalism starts looking for some other ideological prop and finds fascism. ..."
"... The first is the so-called spontaneous method of capital flight. Any political formation that seeks to take the country out of the neoliberal regime will witness capital flight even before it has been elected to office, bringing the country to a financial crisis and thereby denting its electoral prospects. And if perchance it still gets elected, the outflow will only increase, even before it assumes office. The inevitable difficulties faced by the people may well make the government back down at that stage. The sheer difficulty of transition away from a neoliberal regime could be enough to bring even a government based on the support of workers and peasants to its knees, precisely to save them short-term distress or to avoid losing their support. ..."
"... The third weapon consists in carrying out so-called democratic or parliamentary coups of the sort that Latin America has been experiencing. Coups in the old days were effected through the local armed forces and necessarily meant the imposition of military dictatorships in lieu of civilian, democratically elected governments. Now, taking advantage of the disaffection generated within countries by the hardships caused by capital flight and imposed sanctions, imperialism promotes coups through fascist or fascist-sympathizing middle-class political elements in the name of restoring democracy, which is synonymous with the pursuit of neoliberalism. ..."
"... And if all these measures fail, there is always the possibility of resorting to economic warfare (such as destroying Venezuela's electricity supply), and eventually to military warfare. Venezuela today provides a classic example of what imperialist intervention in a third world country is going to look like in the era of decline of neoliberal capitalism, when revolts are going to characterize such countries more and more. ..."
"... Despite this opposition, neoliberal capitalism cannot ward off the challenge it is facing for long. It has no vision for reinventing itself. Interestingly, in the period after the First World War, when capitalism was on the verge of sinking into a crisis, the idea of state intervention as a way of its revival had already been mooted, though its coming into vogue only occurred at the end of the Second World War. 11 Today, neoliberal capitalism does not even have an idea of how it can recover and revitalize itself. And weapons like domestic fascism in the third world and direct imperialist intervention cannot for long save it from the anger of the masses that is building up against it. ..."
Aug 25, 2019 | portside.org
Originally from: Monthly Review printer friendly
The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop.

Harry Magdoff's The Age of Imperialism is a classic work that shows how postwar political decolonization does not negate the phenomenon of imperialism. The book has two distinct aspects. On the one hand, it follows in V. I. Lenin's footsteps in providing a comprehensive account of how capitalism at the time operated globally. On the other hand, it raises a question that is less frequently discussed in Marxist literature -- namely, the need for imperialism. Here, Magdoff not only highlighted the crucial importance, among other things, of the third world's raw materials for metropolitan capital, but also refuted the argument that the declining share of raw-material value in gross manufacturing output somehow reduced this importance, making the simple point that there can be no manufacturing at all without raw materials.