Softpanorama

Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
May the source be with you, but remember the KISS principle ;-)
Skepticism and critical thinking is not panacea, but can help to understand the world better

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”


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[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 08, 2019] The Myth of Shareholder Primacy naked capitalism

Nov 08, 2019 | www.nakedcapitalism.com

The Myth of Shareholder Primacy Posted on November 6, 2019 by Yves Smith 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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=It+is+way+to+early+to+falsely+declare+that+the+individual+Carte...+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98615">

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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=Yes%2C+a+holistic+account.+For+me+that+starts+with+accepting+ther...+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98768">

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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=Fine+comment%2C+Toby+and+may+I+submit+that+for+real+values+to+shi...+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98385">

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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=Thank+you%2C+Tim.%0AYes%2C+the+evolution+of+consciousness+is+central....+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98420">

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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=yes+%2C++boundaries+present+profit+opportunities.+++The+nation+st...+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98437">

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

"Share On Twitter" target="_blank" href="https://twitter.com/intent/tweet?text=Yes.+Your+summation+reminds+me+strongly+of+Lewis+Mumford%26%238217%3B...+&url=https%3A%2F%2Foff-guardian.org%2F2019%2F10%2F16%2Fat-the-feet-of-mammon%2F%23comment-98465">

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.

Click here to support the Prospect's brand of independent impact journalism.

[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. 1

Magdoff's focus was on a period when imperialism was severely resisting economic decolonization in the third world, with newly independent third world countries taking control over their own resources. He highlighted the entire armory of weapons used by imperialism. But he was writing in a period that predated the onset of neoliberalism. Today, we not only have decades of neoliberalism behind us, but the neoliberal regime itself has reached a dead end. Contemporary imperialism has to be discussed within this setting.

Globalization and Economic Crisis

There are two reasons why the regime of neoliberal globalization has run into a dead end. The first is an ex ante tendency toward global overproduction; the second is that the only possible counter to this tendency within the regime is the formation of asset-price bubbles, which cannot be conjured up at will and whose collapse, if they do appear, plunges the economy back into crisis. In short, to use the words of British economic historian Samuel Berrick Saul, there are no "markets on tap" for contemporary metropolitan capitalism, such as had been provided by colonialism prior to the First World War and by state expenditure in the post-Second World War period of dirigisme . 2

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. As Paul Baran and Paul Sweezy argued in Monopoly Capital , following the lead of Michał Kalecki and Josef Steindl, such a rise in the share of economic surplus, or a shift from wages to surplus, has the effect of reducing aggregate demand since the ratio of consumption to income is higher on average for wage earners than for those living off the surplus. 3 Therefore, assuming a given level of investment associated with any period, such a shift would tend to reduce consumption demand and hence aggregate demand, output, and capacity utilization. In turn, reduced capacity utilization would lower investment over time, further aggravating the demand-reducing effect arising from the consumption side.

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.

Historically, while labor has not been, and is still not, free to migrate from the third world to the metropolis, capital, though juridically free to move from the latter to the former, did not actually do so , except to sectors like mines and plantations, which only strengthened, rather than broke, the colonial pattern of the international division of labor. 4 This segmentation of the world economy meant that wages in the metropolis increased with labor productivity, unrestrained by the vast labor reserves of the third world, which themselves had been caused by the displacement of manufactures through the twin processes of deindustrialization (competition from metropolitan goods) and the drain of surplus (the siphoning off of a large part of the economic surplus, through taxes on peasants that are no longer spent on local artisan products but finance gratis primary commodity exports to the metropolis instead).

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

At the same time, such relocation of activities, despite causing impressive growth rates of gross domestic product (GDP) in many third world countries, does not lead to the exhaustion of the third world's labor reserves. This is because of another feature of contemporary globalization: the unleashing of a process of primitive accumulation of capital against petty producers, including peasant agriculturists in the third world, who had earlier been protected, to an extent, from the encroachment of big capital (both domestic and foreign) by the postcolonial dirigiste regimes in these countries. Under neoliberalism, such protection is withdrawn, causing an income squeeze on these producers and often their outright dispossession from their land, which is then used by big capital for its various so-called development projects. The increase in employment, even in countries with impressive GDP growth rates in the third world, falls way short of the natural growth of the workforce, let alone absorbing the additional job seekers coming from the ranks of displaced petty producers. The labor reserves therefore never get used up. Indeed, on the contrary, they are augmented further, because real wages continue to remain tied to a subsistence level, even as metropolitan wages too are restrained. The vector of real wages in the world economy as a whole therefore remains restrained.

Although contemporary globalization thus gives rise to an ex ante tendency toward overproduction, state expenditure that could provide a counter to this (and had provided a counter through military spending in the United States, according to Baran and Sweezy) can no longer do so under the current regime. Finance is usually opposed to direct state intervention through larger spending as a way of increasing employment. This opposition expresses itself through an opposition not just to larger taxes on capitalists, but also to a larger fiscal deficit for financing such spending. Obviously, if larger state spending is financed by taxes on workers, then it hardly adds to aggregate demand, for workers spend the bulk of their incomes anyway, so the state taking this income and spending it instead does not add any extra demand. Hence, larger state spending can increase employment only if it is financed either through a fiscal deficit or through taxes on capitalists who keep a part of their income unspent or saved. But these are precisely the two modes of financing state expenditure that finance capital opposes.

Its opposing larger taxes on capitalists is understandable, but why is it so opposed to a larger fiscal deficit? Even within a capitalist economy, there are no sound economic theoretical reasons that should preclude a fiscal deficit under all circumstances. The root of the opposition therefore lies in deeper social considerations: if the capitalist economic system becomes dependent on the state to promote employment directly , then this fact undermines the social legitimacy of capitalism. The need for the state to boost the animal spirits of the capitalists disappears and a perspective on the system that is epistemically exterior to it is provided to the people, making it possible for them to ask: If the state can do the job of providing employment, then why do we need the capitalists at all? It is an instinctive appreciation of this potential danger that underlies the opposition of capital, especially of finance, to any direct effort by the state to generate employment.

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

It may be thought that this compulsion on the part of the state to accede to the demand of finance to eschew fiscal intervention for enlarging employment should not hold for the United States. Its currency being considered by the world's wealth holders to be "as good as gold" should make it immune to capital flight. But there is an additional factor operating in the case of the United States: that the demand generated by a bigger U.S. fiscal deficit would substantially leak abroad in a neoliberal setting, which would increase its external debt (since, unlike Britain in its heyday, it does not have access to any unrequited colonial transfers) for the sake of generating employment elsewhere. This fact deters any fiscal effort even in the United States to boost demand within a neoliberal setting. 7

Therefore, it follows that state spending cannot provide a counter to the ex ante tendency toward global overproduction within a regime of neoliberal globalization, which makes the world economy precariously dependent on occasional asset-price bubbles, primarily in the U.S. economy, for obtaining, at best, some temporary relief from the crisis. It is this fact that underlies the dead end that neoliberal capitalism has reached. Indeed, Donald Trump's resort to protectionism in the United States to alleviate unemployment is a clear recognition of the system having reached this cul-de-sac. The fact that the mightiest capitalist economy in the world has to move away from the rules of the neoliberal game in an attempt to alleviate its crisis of unemployment/underemployment -- while compensating capitalists adversely affected by this move through tax cuts, as well as carefully ensuring that no restraints are imposed on free cross-border financial flows -- shows that these rules are no longer viable in their pristine form.

Some Implications of This Dead End

There are at least four important implications of this dead end of neoliberalism. The first is that the world economy will now be afflicted by much higher levels of unemployment than it was in the last decade of the twentieth century and the early years of the twenty-first, when the dot-com and the housing bubbles in the United States had, sequentially, a pronounced impact. It is true that the U.S. unemployment rate today appears to be at a historic low, but this is misleading: the labor-force participation rate in the United States today is lower than it was in 2008, which reflects the discouraged-worker effect . Adjusting for this lower participation, the U.S. unemployment rate is considerable -- around 8 percent. Indeed, Trump would not be imposing protection in the United States if unemployment was actually as low as 4 percent, which is the official figure. Elsewhere in the world, of course, unemployment post-2008 continues to be evidently higher than before. Indeed, the severity of the current problem of below-full-employment production in the U.S. economy is best illustrated by capacity utilization figures in manufacturing. The weakness of the U.S. recovery from the Great Recession is indicated by the fact that the current extended recovery represents the first decade in the entire post-Second World War period in which capacity utilization in manufacturing has never risen as high as 80 percent in a single quarter, with the resulting stagnation of investment. 8

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.

There has been some discussion on how global value chains would be affected by Trump's protectionism. But the fact that global macroeconomics in the early twenty-first century will look altogether different compared to earlier has not been much discussed.

In light of the preceding discussion, one could say that if, instead of individual nation-states whose writ cannot possibly run against globalized finance capital, there was a global state or a set of major nation-states acting in unison to override the objections of globalized finance and provide a coordinated fiscal stimulus to the world economy, then perhaps there could be recovery. Such a coordinated fiscal stimulus was suggested by a group of German trade unionists, as well as by John Maynard Keynes during the Great Depression in the 1930s. 9 While it was turned down then, in the present context it has not even been discussed.

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.

Such a transition will not be easy; it will require promoting domestic peasant agriculture, defending petty production, moving toward cooperative forms of production, and ensuring greater equality in income distribution, all of which need major structural shifts. For smaller economies, it would also require their coming together with other economies to provide a minimum size to the domestic market. In short, the dead end of neoliberalism also means the need for a shift away from the so-called neoliberal development strategy that has held sway until now.

The third implication is the imminent engulfing of a whole range of third world economies in serious balance-of-payments difficulties. This is because, while their exports will be sluggish in the new situation, this very fact will also discourage financial inflows into their economies, whose easy availability had enabled them to maintain current account deficits on their balance of payments earlier. In such a situation, within the existing neoliberal paradigm, they would be forced to adopt austerity measures that would impose income deflation on their people, make the conditions of their people significantly worse, lead to a further handing over of their national assets and resources to international capital, and prevent precisely any possible transition to an alternative strategy of home market-based growth.

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.

The fourth implication is the worldwide upsurge of fascism. Neoliberal capitalism even before it reached a dead end, even in the period when it achieved reasonable growth and employment rates, had pushed the world into greater hunger and poverty. For instance, the world per-capita cereal output was 355 kilograms for 1980 (triennium average for 1979–81 divided by mid–triennium population) and fell to 343 in 2000, leveling at 344.9 in 2016 -- and a substantial amount of this last figure went into ethanol production. Clearly, in a period of growth of the world economy, per-capita cereal absorption should be expanding, especially since we are talking here not just of direct absorption but of direct and indirect absorption, the latter through processed foods and feed grains in animal products. The fact that there was an absolute decline in per-capita output, which no doubt caused a decline in per-capita absorption, suggests an absolute worsening in the nutritional level of a substantial segment of the world's population.

But this growing hunger and nutritional poverty did not immediately arouse any significant resistance, both because such resistance itself becomes more difficult under neoliberalism (since the very globalization of capital makes it an elusive target) and also because higher GDP growth rates provided a hope that distress might be overcome in the course of time. Peasants in distress, for instance, entertained the hope that their children would live better in the years to come if given a modicum of education and accepted their fate.

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. This changes the discourse away from the material conditions of people's lives to the so-called threat to the nation, placing the blame for people's distress not on the failure of the system, but on ethnic, linguistic, and religious minority groups, the other that is portrayed as an enemy. It projects a so-called messiah whose sheer muscularity can somehow magically overcome all problems; it promotes a culture of unreason so that both the vilification of the other and the magical powers of the supposed leader can be placed beyond any intellectual questioning; it uses a combination of state repression and street-level vigilantism by fascist thugs to terrorize opponents; and it forges a close relationship with big business, or, in Kalecki's words, "a partnership of big business and fascist upstarts." 10

Fascist groups of one kind or another exist in all modern societies. They move center stage and even into power only on certain occasions when they get the backing of big business. And these occasions arise when three conditions are satisfied: when there is an economic crisis so the system cannot simply go on as before; when the usual liberal establishment is manifestly incapable of resolving the crisis; and when the left is not strong enough to provide an alternative to the people in order to move out of the conjuncture.

This last point may appear odd at first, since many see the big bourgeoisie's recourse to fascism as a counter to the growth of the left's strength in the context of a capitalist crisis. But when the left poses a serious threat, the response of the big bourgeoisie typically is to attempt to split it by offering concessions. It uses fascism to prop itself up only when the left is weakened. Walter Benjamin's remark that "behind every fascism there is a failed revolution" points in this direction.

Fascism Then and Now

Contemporary fascism, however, differs in crucial respects from its 1930s counterpart, which is why many are reluctant to call the current phenomenon a fascist upsurge. But historical parallels, if carefully drawn, can be useful. While in some aforementioned respects contemporary fascism does resemble the phenomenon of the 1930s, there are serious differences between the two that must also be noted.

First, we must note that while the current fascist upsurge has put fascist elements in power in many countries, there are no fascist states of the 1930s kind as of yet. Even if the fascist elements in power try to push the country toward a fascist state, it is not clear that they will succeed. There are many reasons for this, but an important one is that fascists in power today cannot overcome the crisis of neoliberalism, since they accept the regime of globalization of finance. This includes Trump, despite his protectionism. In the 1930s, however, this was not the case. The horrors associated with the institution of a fascist state in the 1930s had been camouflaged to an extent by the ability of the fascists in power to overcome mass unemployment and end the Depression through larger military spending, financed by government borrowing. Contemporary fascism, by contrast, lacks the ability to overcome the opposition of international finance capital to fiscal activism on the part of the government to generate larger demand, output, and employment, even via military spending.

Such activism, as discussed earlier, required larger government spending financed either through taxes on capitalists or through a fiscal deficit. Finance capital was opposed to both of these measures and it being globalized made this opposition decisive . The decisiveness of this opposition remains even if the government happens to be one composed of fascist elements. Hence, contemporary fascism, straitjacketed by "fiscal rectitude," cannot possibly alleviate even temporarily the economic crises facing people and cannot provide any cover for a transition to a fascist state akin to the ones of the 1930s, which makes such a transition that much more unlikely.

Another difference is also related to the phenomenon of the globalization of finance. The 1930s were marked by what Lenin had earlier called "interimperialist rivalry." The military expenditures incurred by fascist governments, even though they pulled countries out of the Depression and unemployment, inevitably led to wars for "repartitioning an already partitioned world." Fascism was the progenitor of war and burned itself out through war at, needless to say, great cost to humankind.

Contemporary fascism, however, operates in a world where interimperialist rivalry is far more muted. Some have seen in this muting a vindication of Karl Kautsky's vision of an "ultraimperialism" as against Lenin's emphasis on the permanence of interimperialist rivalry, but this is wrong. Both Kautsky and Lenin were talking about a world where finance capital and the financial oligarchy were essentially national -- that is, German, French, or British. And while Kautsky talked about the possibility of truces among the rival oligarchies, Lenin saw such truces only as transient phenomena punctuating the ubiquity of rivalry.

In contrast, what we have today is not nation-based finance capitals, but international finance capital into whose corpus the finance capitals drawn from particular countries are integrated. This globalized finance capital does not want the world to be partitioned into economic territories of rival powers ; on the contrary, it wants the entire globe to be open to its own unrestricted movement. The muting of rivalry between major powers, therefore, is not because they prefer truce to war, or peaceful partitioning of the world to forcible repartitioning, but because the material conditions themselves have changed so that it is no longer a matter of such choices. The world has gone beyond both Lenin and Kautsky, as well as their debates.

Not only are we not going to have wars between major powers in this era of fascist upsurge (of course, as will be discussed, we shall have other wars), but, by the same token, this fascist upsurge will not burn out through any cataclysmic war. What we are likely to see is a lingering fascism of less murderous intensity , which, when in power, does not necessarily do away with all the forms of bourgeois democracy, does not necessarily physically annihilate the opposition, and may even allow itself to get voted out of power occasionally. But since its successor government, as long as it remains within the confines of the neoliberal strategy, will also be incapable of alleviating the crisis, the fascist elements are likely to return to power as well. And whether the fascist elements are in or out of power, they will remain a potent force working toward the fascification of the society and the polity, even while promoting corporate interests within a regime of globalization of finance, and hence permanently maintaining the "partnership between big business and fascist upstarts."

Put differently, since the contemporary fascist upsurge is not likely to burn itself out as the earlier one did, it has to be overcome by transcending the very conjuncture that produced it: neoliberal capitalism at a dead end. A class mobilization of working people around an alternative set of transitional demands that do not necessarily directly target neoliberal capitalism, but which are immanently unrealizable within the regime of neoliberal capitalism, can provide an initial way out of this conjuncture and lead to its eventual transcendence.

Such a class mobilization in the third world context would not mean making no truces with liberal bourgeois elements against the fascists. On the contrary, since the liberal bourgeois elements too are getting marginalized through a discourse of jingoistic nationalism typically manufactured by the fascists, they too would like to shift the discourse toward the material conditions of people's lives, no doubt claiming that an improvement in these conditions is possible within the neoliberal economic regime itself. Such a shift in discourse is in itself a major antifascist act . Experience will teach that the agenda advanced as part of this changed discourse is unrealizable under neoliberalism, providing the scope for dialectical intervention by the left to transcend neoliberal capitalism.

Imperialist Interventions

Even though fascism will have a lingering presence in this conjuncture of "neoliberalism at a dead end," with the backing of domestic corporate-financial interests that are themselves integrated into the corpus of international finance capital, the working people in the third world will increasingly demand better material conditions of life and thereby rupture the fascist discourse of jingoistic nationalism (that ironically in a third world context is not anti-imperialist).

In fact, neoliberalism reaching a dead end and having to rely on fascist elements revives meaningful political activity, which the heyday of neoliberalism had precluded, because most political formations then had been trapped within an identical neoliberal agenda that appeared promising. (Latin America had a somewhat different history because neoliberalism arrived in that continent through military dictatorships, not through its more or less tacit acceptance by most political formations.)

Such revived political activity will necessarily throw up challenges to neoliberal capitalism in particular countries. Imperialism, by which we mean the entire economic and political arrangement sustaining the hegemony of international finance capital, will deal with these challenges in at least four different ways.

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.

Even if capital controls are put in place, where there are current account deficits, financing such deficits would pose a problem, necessitating some trade controls. But this is where the second instrument of imperialism comes into play: the imposition of trade sanctions by the metropolitan states, which then cajole other countries to stop buying from the sanctioned country that is trying to break away from thralldom to globalized finance capital. Even if the latter would have otherwise succeeded in stabilizing its economy despite its attempt to break away, the imposition of sanctions becomes an additional blow.

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.

Two aspects of such intervention are striking. One is the virtual unanimity among the metropolitan states, which only underscores the muting of interimperialist rivalry in the era of hegemony of global finance capital. The other is the extent of support that such intervention commands within metropolitan countries, from the right to even the liberal segments.

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.

Notes
  1. Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969).
  2. Samuel Berrick Saul, Studies in British Overseas Trade, 1870–1914 (Liverpool: Liverpool University Press, 1960).
  3. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
  4. One of the first authors to recognize this fact and its significance was Paul Baran in The Political Economy of Growth (New York: Monthly Review Press, 1957).
  5. Joseph E. Stiglitz, " Inequality is Holding Back the Recovery ," New York Times , January 19, 2013.
  6. For a discussion of how even the recent euphoria about U.S. growth is vanishing, see C. P. Chandrasekhar and Jayati Ghosh, " Vanishing Green Shoots and the Possibility of Another Crisis ," The Hindu Business Line , April 8, 2019.
  7. For the role of such colonial transfers in sustaining the British balance of payments and the long Victorian and Edwardian boom, see Utsa Patnaik, "Revisiting the 'Drain,' or Transfers from India to Britain in the Context of Global Diffusion of Capitalism," in Agrarian and Other Histories: Essays for Binay Bhushan Chaudhuri , ed. Shubhra Chakrabarti and Utsa Patnaik (Delhi: Tulika, 2017), 277-317.
  8. Federal Reserve Board of Saint Louis Economic Research, FRED, "Capacity Utilization: Manufacturing," February 2019 (updated March 27, 2019), http://fred.stlouisfed.org .
  9. This issue is discussed by Charles P. Kindleberger in The World in Depression, 1929–1939 , 40th anniversary ed. (Oakland: University of California Press, 2013).
  10. Michał Kalecki, " Political Aspects of Full Employment ," Political Quarterly (1943), available at mronline.org.
  11. Joseph Schumpeter had seen Keynes's The Economic Consequences of the Peace as essentially advocating such state intervention in the new situation. See his essay, "John Maynard Keynes (1883–1946)," in Ten Great Economists (London: George Allen & Unwin, 1952).

Utsa Patnaik is Professor Emerita at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Her books include Peasant Class Differentiation (1987), The Long Transition (1999), and The Republic of Hunger and Other Essays (2007). Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money(2009), and Re-envisioning Socialism(2011).

[Sep 09, 2019] What's the True Unemployment Rate in the US? by Jack Rasmus

Highly recommended!
Notable quotes:
"... The real unemployment rate is probably somewhere between 10%-12%. ..."
"... The U-6 also includes what the labor dept. calls involuntary part time employed. It should include the voluntary part time as well, but doesn't (See, they're not actively looking for work even if unemployed). ..."
"... But even the involuntary part time is itself under-estimated. I believe the Labor Dept. counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn't count those who have second and third involuntary part time jobs. That would raise the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and 'missing labor force' is grossly underestimated. ..."
"... The labor dept. also misses the 1-2 million workers who went on social security disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2008 and hasn't come down much (although the government and courts are going after them). ..."
"... The way the government calculates unemployment is by means of 60,000 monthly household surveys but that phone survey method misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well). ..."
"... The SSDI, undocumented, underground, underestimation of part timers, etc. are what I call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%. ..."
Sep 09, 2019 | www.counterpunch.org

The real unemployment rate is probably somewhere between 10%-12%. Here's why: the 3.7% is the U-3 rate, per the labor dept. But that's the rate only for full time employed. What the labor dept. calls the U-6 includes what it calls discouraged workers (those who haven't looked for work in the past 4 weeks). Then there's what's called the 'missing labor force'–i.e. those who haven't looked in the past year. They're not calculated in the 3.7% U-3 unemployment rate number either. Why? Because you have to be 'out of work and actively looking for work' to be counted as unemployed and therefore part of the 3.7% rate.

The U-6 also includes what the labor dept. calls involuntary part time employed. It should include the voluntary part time as well, but doesn't (See, they're not actively looking for work even if unemployed).

But even the involuntary part time is itself under-estimated. I believe the Labor Dept. counts only those involuntarily part time unemployed whose part time job is their primary job. It doesn't count those who have second and third involuntary part time jobs. That would raise the U-6 unemployment rate significantly. The labor Dept's estimate of the 'discouraged' and 'missing labor force' is grossly underestimated.

The labor dept. also misses the 1-2 million workers who went on social security disability (SSDI) after 2008 because it provides better pay, for longer, than does unemployment insurance. That number rose dramatically after 2008 and hasn't come down much (although the government and courts are going after them).

The way the government calculates unemployment is by means of 60,000 monthly household surveys but that phone survey method misses a lot of workers who are undocumented and others working in the underground economy in the inner cities (about 10-12% of the economy according to most economists and therefore potentially 10-12% of the reported labor force in size as well). The labor dept. just makes assumptions about that number (conservatively, I may add) and plugs in a number to be added to the unemployment totals. But it has no real idea of how many undocumented or underground economy workers are actually employed or unemployed since these workers do not participate in the labor dept. phone surveys, and who can blame them.

The SSDI, undocumented, underground, underestimation of part timers, etc. are what I call the 'hidden unemployed'. And that brings the unemployed well above the 3.7%.

Finally, there's the corroborating evidence about what's called the labor force participation rate. It has declined by roughly 5% since 2007. That's 6 to 9 million workers who should have entered the labor force but haven't. The labor force should be that much larger, but it isn't. Where have they gone? Did they just not enter the labor force? If not, they're likely a majority unemployed, or in the underground economy, or belong to the labor dept's 'missing labor force' which should be much greater than reported. The government has no adequate explanation why the participation rate has declined so dramatically. Or where have the workers gone. If they had entered the labor force they would have been counted. And their 6 to 9 million would result in an increase in the total labor force number and therefore raise the unemployment rate.

All these reasons–-i.e. only counting full timers in the official 3.7%; under-estimating the size of the part time workforce; under-estimating the size of the discouraged and so-called 'missing labor force'; using methodologies that don't capture the undocumented and underground unemployed accurately; not counting part of the SSI increase as unemployed; and reducing the total labor force because of the declining labor force participation-–together means the true unemployment rate is definitely over 10% and likely closer to 12%. And even that's a conservative estimate perhaps." Join the debate on Facebook More articles by: Jack Rasmus

Jack Rasmus is author of the recently published book, 'Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression', Clarity Press, August 2017. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com .

[Aug 31, 2019] The motivator is "Gap Psychology," the human desire to distance oneself from those below (on any scale), and to come nearer to those above.

Aug 31, 2019 | www.nakedcapitalism.com

Rodger Malcolm Mitchell , August 31, 2019 at 8:45 am

The motivator is " Gap Psychology ," the human desire to distance oneself from those below (on any scale), and to come nearer to those above.

The rich are rich because the Gap below them is wide, and the wider the Gap, the richer they are .

And here is the important point: There are two ways the rich widen the Gap: Either gain more for themselves or make sure those below have less.

That is why the rich promulgate the Big Lie that the federal government (and its agencies, Social Security and Medicare) is running short of dollars. The rich want to make sure that those below them don't gain more, as that would narrow the Gap.

Off The Street , August 31, 2019 at 10:56 am

Negative sum game, where one wins but the other has to lose more so the party of the first part feels even better about winning. There is an element of sadism, sociopathy and a few other behaviors that the current systems allow to be gamed even more profitably. If you build it, or lobby to have it built, they will come multiple times.

[Aug 26, 2019] Free trade movement can be called the corporate liberation movement

Aug 26, 2019 | economistsview.typepad.com

JohnH -> Plp... , August 24, 2019 at 12:17 PM

Shibboleths falling left and right ... how soon before some 'free' trade fundamentalists like Krugman finally come around to acknowledging that it was all laissez-faire rebranded as 'free' trade? It was all about cheap labor, property rights, profits, and avoiding taxes and paying for externalities ... pure laissez-faire... stuff that Krugman and his ilk refuse to address or rectify in their corporatist columns lauding 'free' trade.
Plp -> JohnH... , August 24, 2019 at 12:17 PM
I call it the corporate liberation movement

... ... ..

JohnH -> Plp... , August 24, 2019 at 03:20 PM
Exactly, problem is that many Democrats remain totally loyal even though the party switched directions 30 years ago and these gullible folks have yet to figure out that the New Democrats incorporated the policies of Bush 41 Republicans while trying to maintain a fake veneer of FDR.

[Aug 19, 2019] JPMorgan's Dimon Among CEOs Rejecting Investor-Centric Model by Anders Melin and Jeff Green

Jamie Dimon and other leaders at some of the world's largest companies said they plan to abandon the long-held view that shareholders' interests should come first amid growing public discontent over income inequality and the burgeoning cost of health care and higher education.
Aug 19, 2019 | www.bloomberg.com

The purpose of a corporation is to serve all of its constituents, including employees, customers, investors and society at large, the Business Roundtable said Monday in a statement. Dimon, the chief executive officer of JPMorgan Chase & Co., heads the group.

"While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders," the group said in the statement. "Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity."

The 181 signatories include BlackRock Inc.'s Laurence Fink, Bank of New York Mellon Corp.'s Charlie Scharf and the CEOs of several Wall Street banks, including Goldman Sachs Group Inc., Morgan Stanley and Moelis & Co. It also includes Amazon.com Inc. founder Jeff Bezos, the world's richest person.

Fundamental Premise

The shift in corporate priorities comes as some politicians and critics question whether the fundamental premise of American capitalism should be revamped. Some executives also have complained that an outsize focus on share prices and quarterly results hamper their ability to build businesses for the long term.

The group's statement offers scant detail on how the commitments will be converted into action and presents no road map for getting there. Many companies vow to do good things but often resist releasing data to let others independently verify such promises. And it will fall on CEOs, who on average last no longer than six years, to convince fickle investors, including powerful activists, that shifting resources will pay off in the long term.

The idea that businesses exist primarily to benefit shareholders -- also known as shareholder primacy -- took hold in corporate America in the 1980s. In 1997, the Business Roundtable embraced the idea in a document outlining governance principles.

The concept has been criticized for leading to a fixation on short-term results and helping fuel the rapid increase in executive pay. Last year, public companies in the U.S. began disclosing the difference between their CEOs' compensation and that of their median workers. At S&P 500 firms, the average ratio is about 280-to-1, according to data compiled by Bloomberg.

Both Dimon and Fink have written open letters saying that chief executives should take on a larger responsibility for tackling societal matters and, at times, take stances on politically controversial topics.

'Sensitive' Issues

"Stakeholders are pushing companies to wade into sensitive social and political issues -- especially as they see governments failing to do so effectively," Fink wrote this year. The message echoed a position he took in 2018 urging CEOs to make a more positive contribution to society. BlackRock oversees almost $7 trillion in assets.

In April, Dimon challenged fellow chief executives to get more involved in social causes and public-policy matters.

"In the past, boards and advisers to boards advised company CEOs to keep their head down and stay out of the line of fire," Dimon said in a letter to shareholders. "Now the opposite may be true. If companies and CEOs do not get involved in public-policy issues, making progress on all these problems may be more difficult."

-- With assistance by Michelle Davis, and Jenn Zhao

( Updates with obstacles in sixth paragraph. )

[Aug 05, 2019] A legacy of 'free' trade deals, pitting US labor against slave labor abroad while the profiteers stuck their windfall profits into tax havens offshore.

Aug 05, 2019 | economistsview.typepad.com

anne , August 02, 2019 at 09:57 AM

http://cepr.net/data-bytes/jobs-bytes/jobs-2019-08

August 2, 2019

Economy Adds 164,000 Jobs in July, Employment Rate Hits New High for Recovery
By Dean Baker

Total hours in manufacturing is down by 0.2 percent over the last year.

The Bureau of Labor Statistics reported that the economy added 164,000 jobs in July, with the employment-to-population ratio (EPOP) inching up to 60.7 percent, a new high for the recovery. The unemployment rate was unchanged at 3.7 percent. There were downward revisions of 41,000 to the prior two months' data, bringing the average rate of job growth for the last three months to 140,000.

The big job gainers in July were professional and technical services, which added 30,800 jobs, and health care, which added 30,400 jobs. The former is slightly above the 25,000 average of the last 12 months, while the latter is somewhat below the average of 33,800.

The goods-producing sector fared poorly in July. Mining and logging lost 5,000 jobs. Coal mining was especially hard hit, losing 800 jobs, which is 1.5 percent of employment in the industry. Construction added just 4,000 jobs, well below its average of 16,800 over the last year.

Manufacturing added 16,000 jobs, slightly above its average gain of 13,100, but this was accompanied by a decline of 0.3 hours in the length of the average workweek. The index of aggregate hours in manufacturing is now down by 0.2 percent over the last year. For production workers, it is down by 0.7 percent.

Manufacturing wages have also lagged. The average hourly wage is up just 2.5 percent over the last year. With the decline in hours, the average weekly wage in manufacturing is up just 1.0 percent over the last year.

Restaurants added 15,400 jobs, down from an average of 21,100 over the last year. Hotel employment fell by 5,200, possibly reflecting the drop in foreign tourism. Retail employment fell 3,600, bringing its drop to 59,900 (0.4 percent of total employment) over the last year.

Employment in insurance jumped 11,400 in July, compared to an average of just 2,800 over the last year. There was also an anomalous jump in local education employment of 11,700, likely reflecting changes in the timing of the school year.

Year-over-year wage growth was up slightly at 3.2 percent, but the annualized rate of wage growth comparing the last three months (May, June, July) with prior three months (February, March, April), is just 2.8 percent.

... ... ...

Involuntary part-time employment fell by 363,000 and is now well below its prerecession share of employment. By contrast, voluntary part-time employment is lower in the first seven months of 2019 than the year-round average for 2018. Voluntary part-time had jumped in 2014, following the implementation of the ACA, as workers were no longer as dependent on employers for health insurance. However, it is now falling as a share of total employment.

Another discouraging item is a drop of 0.9 percentage points in the share of unemployment due to quits. The current 13.8 percent share is low given the 3.7 percent unemployment rate and suggests workers are reluctant to quit jobs without a new job lined up.

On the whole, this is clearly a positive employment report. However, it does indicate job growth is slowing and it is not clear that wage growth is picking up steam.

Christopher H. said in reply to anne... , August 02, 2019 at 10:51 AM
no wage gains b/c capital has dominated labor
JohnH -> Christopher H.... , August 02, 2019 at 02:39 PM
A legacy of 'free' trade deals, pitting US labor against slave labor abroad while the profiteers stuck their windfall profits into tax havens offshore.
John Dixon -> JohnH... , August 02, 2019 at 08:40 PM
Lol, free trade my ass. US has been doing "free trade" since 1934. John, my advice, stop the sheet. The entire goods part of the economy crested in 1979 and that has little to do with trade, considering pre 1934 economy had vast inequality, even worse in some respect than now.

That is what happens when the rest of the world recovers from war. You either do free trade and develop a financial stranglehold,, or socialize the means of production and consume less.Your free lunch posts sicken me.

[Aug 04, 2019] We see that the neoliberal utopia tends imposes itself even upon the rulers.

Highly recommended!
Aug 04, 2019 | jessescrossroadscafe.blogspot.com

"Thus we see how the neoliberal utopia tends to embody itself in the reality of a kind of infernal machine, whose necessity imposes itself even upon the rulers. Like the Marxism of an earlier time, with which, in this regard, it has much in common, this utopia evokes powerful belief - the free trade faith - not only among those who live off it, such as financiers, the owners and managers of large corporations, etc., but also among those, such as high-level government officials and politicians, who derive their justification for existing from it.

For they sanctify the power of markets in the name of economic efficiency, which requires the elimination of administrative or political barriers capable of inconveniencing the owners of capital in their individual quest for the maximisation of individual profit, which has been turned into a model of rationality. They want independent central banks.

And they preach the subordination of nation-states to the requirements of economic freedom for the masters of the economy, with the suppression of any regulation of any market, beginning with the labour market, the prohibition of deficits and inflation, the general privatisation of public services, and the reduction of public and social expenses."

Pierre Bourdieu, L'essence du néolibéralisme

[Aug 04, 2019] to the liberal economists, free markets were markets free from rent seeking, while to the neoliberals free markets are free from government regulation.

Highly recommended!
Aug 04, 2019 | www.nakedcapitalism.com

Ian Perkins , August 4, 2019 at 10:16 am

Excellent article, I agree.
As regards clear language and definitions, I much prefer Michael Hudson's insistence that, to the liberal economists, free markets were markets free from rent seeking, while to the neoliberals free markets are free from government regulation.
"As governments were democratized, especially in the United States, liberals came to endorse a policy of active public welfare spending and hence government intervention, especially on behalf of the poor and disadvantaged. neoliberalism sought to restore the centralized aristocratic and oligarchic rentier control of domestic politics."
http://michael-hudson.com/2014/01/l-is-for-land/ – "Liberal"

[Aug 02, 2019] Does the New York Times Have an Editing Program that Automatically Puts "Free" Before "Trade?

Aug 02, 2019 | economistsview.typepad.com

anne , August 02, 2019 at 04:21 AM

http://cepr.net/blogs/beat-the-press/does-the-new-york-times-have-an-editing-program-that-automatically-puts-free-before-trade

August 1, 2019

Does the New York Times Have an Editing Program that Automatically Puts "Free" Before "Trade?"
By Dean Baker

Readers must be wondering because it happens so frequently in contexts where it is clearly inappropriate. The latest example is in an article * about the state of the race for the Democratic presidential nomination following the second round of debates.

The piece told readers:

"After a few candidates used the Detroit debate to demand that Mr. Biden account for Mr. Obama's record on issues such as deportations and free trade, Mr. Biden was joined by some of the former president's advisers, who chastised the critics for committing political malpractice."

The word "free" in this context adds nothing and is in fact wrong. The Obama administration did virtually nothing to promote free trade in highly paid professional services, like physicians services, which would have reduced inequality. It only wanted to reduce barriers that protected less educated workers, like barriers to trade in manufactured goods.

And, it actively worked to increase patent and copyright protections, which are the complete opposite of free trade. These protections also have the effect of increasing inequality.

Given the reality of trade policy under President Obama it is difficult to understand why the New York Times felt the need to modify "trade" with the adjective "free." Maybe it needs to get this editing program fixed.

* https://www.nytimes.com/2019/08/01/us/politics/biden-obama.html

[Aug 02, 2019] 'Free' trade deals and income inequality

Aug 02, 2019 | economistsview.typepad.com

JohnH , July 22, 2019 at 10:03 PM

The Democratic leadership and their megaphones in the media refuse to consider the possibility that 'free' trade deals had anything to do with rising income inequality and the resentment that led to Trump's election. It's much easier to promote the notion that hapless Hillary's loss could be pinned on Putin or on racism and to dismiss Trumps voters as hopeless deplorables.

However, Dean Baker noted last week: "The basic point is a simple one that has a long pedigree in economics dating back to the famous Stolper-Samuelson trade theorem. The United States has relatively more highly-educated workers (college degree or more) than developing countries and relatively fewer less-educated workers (less than a college degree). This means that when we open trade to China and other developing countries, we would expect to see more highly educated workers benefit and less highly educated workers lose.

We saw this story in action in the last decade in a really big way. From 2000 to 2007 we lost 20 percent of all manufacturing jobs in the United States. (This is before the Great Recession; the job loss was due to the explosion of the trade deficit in these years, not the collapse of the housing bubble.) We lost 40 percent of the jobs held by union members in manufacturing in these years.

It is important to remember that the Stolper-Samuelson prediction on non-college educated workers being losers (roughly two-thirds of the labor force) is a balanced trade story. The picture is of course worse when the U.S. runs a large trade deficit, since most of what we import is manufactured goods, a sector which employs a disproportionate number of non-college educated workers."
http://cepr.net/blogs/beat-the-press/the-u-s-china-trade-war-will-workers-lose

This theory is bolstered by a Brookings report: In "The Decline of the U.S. Labor Share," authors Michael Elsby of the University of Edinburgh, Bart Hobijn of the Federal Reserve Bank of San Francisco, and Aysegul Sahin of the Federal Reserve Bank of New York find that the decline of the labor share, which has been driven by a decline in the share of payroll compensation in national income over the last 25 years, is likely due to the offshoring of the labor-intensive component of the US supply chain.
https://www.brookings.edu/bpea-articles/the-decline-of-the-u-s-labor-share/

Back in 1992 many Democrats opposed NAFTA, but Bill Clinton triangulated with Republicans to get it passed. Then Clinton signed China PNTR, granting China full access to WTO, whereupon the great sucking sound of jobs going to China began at full throttle.

It was a neat trick that Republicans played--let Democrats take the fall for the eventual unpopularity and resulting resentment for the adverse effects of 'free' trade. Surprisingly enough, the corrupt, sclerotic Team Pelosi still embraces 'free' trade, basically serving up the Rust Belt to Trump on a silver platter.

And people who should know better, think Krugman, still find little to criticize about the way 'free' trade was implemented, despite rising inequality and right-wing populism that it engendered. Back in 2000 Krugman even had the chutzpah to claim that 'free' trade would be good for labor! Such behavior tends to beg the question of whose side the Democratic leadership and Krugman and his ilk are really on hint: Wall Street really loves 'free' trade.

RC (Ron) Weakley said in reply to JohnH... , July 23, 2019 at 04:40 AM
The political economic establishment is replete with diverse but largely complementary motives. Global humanists raise the standard of living in poor countries while wealthy capitalists collect rents from the arbitrage of lower standards of living in poor countries. Establishment elites all have their price, but not all have the same price.

Yet, diverse elites hanging out together is more fun than a backyard barbeque with factory workers no matter how good the barbeque and coleslaw is. Coleslaw does not pair well with caviar, at least not real caviar, the kind made of fish roe. Cowboy and cowgirl caviar is another thing entirely, pairing well with barbeque and coleslaw as long as you have some tortilla chips too.

It is a rainy day here today and I have not had brunch yet.

Christopher H. said in reply to RC (Ron) Weakley... , July 23, 2019 at 07:56 AM
"Global humanists raise the standard of living in poor countries "

maybe b/c it takes very little to raise up the global poor, but have you seen what happened in Greece and Puerto Rico?

These places like Mexico should have moved to first world status after the Cold War ended but are still stuck and getting worse.

I think the global situation is more of a mixed back. Countries are going authoritarian b/c of neoliberalism: Putin, Turkey, Trump, Brexit, Hungary, etc.

Immigrants and refugees are being scapegoated.

RC (Ron) Weakley said in reply to Christopher H.... , July 23, 2019 at 09:38 AM
Yes, of course you are correct in that.
Gibbon1 -> Christopher H.... , July 27, 2019 at 12:59 AM
> Immigrants and refugees are being scapegoated.

I like to say about immigrants and refugees. At least the jobs they're working are here and not in China. Which means they're spending the money they earn here and not in China.

JohnH -> RC (Ron) Weakley... , July 23, 2019 at 09:18 AM
'Free' trade was not advertised as being a zero sum game. It was supposed to have been an example of large benefits and small losses on both sides.

However, the way it was designed by those who designed it (chiefly multi-nationals), the enormous benefits got captured by a small minority, while a large majority suffered losses, at least in the United States.

Sad to see that the 'free' trade zealots still refuse to do anything constructive to mitigate the losses, or even acknowledge that there were major adverse effects and so we have Trump as a result

RC (Ron) Weakley said in reply to JohnH... , July 23, 2019 at 09:43 AM
Yes, indeed. Multinational corporations perversely redefined comparative advantage to mean global arbitrage opportunities against labor and regulatory standards. Low wages buy poison air and water while corporations just collect the rents.
mulp -> RC (Ron) Weakley... , July 23, 2019 at 02:04 PM
"Yes, indeed. Multinational corporations perversely redefined comparative advantage to mean global arbitrage opportunities against labor and regulatory standards. Low wages buy poison air and water while corporations just collect the rents."

Which corporations exactly have or are extracting high rents from pollution in China or India or Africa in ways that have not profited you personally?

The only big rent seeker related to pollution are big oil, and its been the opposition to a high carbon tax in the US that's failed to drive out pillage and plunder rents.

If Trump were true to his rhetoric, his first tariff would have been $50 a barrel on imported oil based on Saudi Arabia taking advantage of stupid Americans, getting rich selling US oil and then forcing US to spend trillions waging wars to protect Saudi rent extraction screwing Americans.


China, in contrast, has built so much capital, it's destroyed most global corporate rent seeking. China is, as a national policy, determined to bankrupt big oil, Saudi Arabia, etc.

China is "stealing" US corporate monopoly power by creating competing corporations which price at costs, ie, at zero rent.

Some argue that hiring employees of US global corporations is theft.

But that was something that corporations in California accused each other of doing in the 90s.

And something employers did as industry rose in the US, leading to company towns, and goons to prevent workers from stealing from their employer by setting themself up in business based on their unique skills and knowledge honed by working for big business.

Eg, Tesla "stealing" from Edison by going to work for Westinghouse.

US businesses invented golden handcuffs in the era defined by IBM. It was California that challenged the golden handcuff corporate establishment.


What did these Californians promise? Wealth from high rent extraction.

But China has destroyed that California rent extraction gravy train as a means of stealing from each other.

RC (Ron) Weakley said in reply to mulp ... , July 24, 2019 at 04:54 AM
[Not to belabor the obvious -]

https://www.theregister.co.uk/2013/08/05/chinese_apple_suppliers_investigated_for_water_pollution/

Chinese Apple suppliers face toxic heavy metal water pollution charges

Foxconn denies allegations, Apple reiterates zero-tolerance stance


By Rik Myslewski 5 Aug 2013 at 18:54


Chinese environmental regulators have launched an investigation into two Apple suppliers – one being the giant iDevice assembler Foxconn – in response to allegations that the companies' factories are using nearby rivers as dumping grounds for huge amounts of toxic heavy metals.

"If you're severely exceeding emissions standards, then we will punish you," Chinese environmental regulator Ding Yudong told The Wall Street Journal, speaking of the investigations into Foxconn and UniMicron.

Both companies are based in Taiwan, are listed among Apple's suppliers, and have manufacturing plants in mainland China. The factories in question are in the industrial area of Kushan, located between Shanghai and Suzhou.

According to the WSJ, the investigations were sparked by allegations from Chinese activist and 2012 Goldman Environmental Prize winner Ma Jun, a director of China's Institute of Public & Environmental Affairs (IPE).

Four other environmental groups joined the IPE in accusing Foxconn and UniMicron of dumping heavy metals into the Huangcangjing and Hanputang rivers. Those two rivers flow into the Yangtze and Huangpu rivers, which supply Shanghai with drinking water.

Foxconn has denied the charges, telling Bloomberg that its Kushun factory follows all applicable environmental regulations. Plant manager Yang Jixian was said much the same, according to China's Xinhua News Agency. UniMicron remains mum.

Apple spokeswoman Kitty Potter told Bloomberg, "We do not tolerate environmental violations of any kind and regularly audit our suppliers to make sure they are in compliance."

The WSJ interviewed a few Kushan locals about the levels of pollution in nearby rivers. One, Zhao Pingxing, said, "We used to catch cuttlefish there, and it was so clear we could see a meter down," he said – and told the WSJ that although he occasionally fishes there these days, he doesn't eat what he catches.

Another, identified only by his surname Yao, said, "Even if my hands were dirty, I wouldn't wash them in this water."

That water, however, is second in line in China's environmental cleanup plans. Late last month, the Middle Kingdom announced that it would spend $277bn on an effort it's calling the Airborne Pollution Prevention and Control Action Plan in response, no doubt, to such events as the choking "Airpocalypse" that blanketed the Beijing area this January.

Water pollution, however, is on the Chinese government's list for cleanup efforts over the next five years, according to China Daily. Perhaps after that program begins, the regulations that Foxconn, UniMicron, and others will face will be more stringent, Zhao will be able to eat his fish, Yao will be able to wash his hands, and Potter will no longer have to issue canned "We do not tolerate environmental violations" statements.

*

[US firms can collect rents just by sourcing from Chinese firms that pay low wages and pollute just as well as they can exploit their hands-on partnerships. Rents laundered at arms length are no less destructive to either exploited workers or displaced workers. Most partnerships between Chinese and US firms places the direct exploitation in Chinese hands while most of the rents go to US firms.

I got the money, honey, if you got the crime.]

Rising returns to US capital demonstrate that the rentier is far from dead. ]

mulp -> RC (Ron) Weakley... , July 24, 2019 at 05:43 AM
I'm reading aboout US coal companies declaring bankruptcy to shed their mine reclamation costs, while already having shed hundreds of billions in coal pollution from mining techniques since circa 1980, plus coal ash pollution, also largely since the 80s.

The US has burned coal for two centuries, but swag, 40% of the coal burned in the US has been since the passaage of tthe clean water and clean air acts.

China has acted several times faster, and punished pollution violations much harsher, than the US, England, ....

RC (Ron) Weakley said in reply to mulp ... , July 24, 2019 at 10:05 AM
Understood, but when I refer to pollution then I am not just referring to CO2 or even primarily CO2 or even CO2 at all. Anthropogenic climate change is a much different beast that biological and chemical pollutants that poison the water and air. We are all dying slowly anyway and at least we will not be lying cold in the ground.

Don't get me wrong though. I have long believed that climate change poses a serious threat and possibly even an existential risk to much of humanity. OTOH, semantics prevents me from lumping a dangerous excess of otherwise beneficial and necessary atmospheric compounds together with pathogens. We breath out CO2 and plants make sugar from it using photosynthesis. It is an essential part of the nature of living things.

kurt -> RC (Ron) Weakley... , July 25, 2019 at 09:54 AM
I agree on all of this - however, I don't think that the way to solve this is by destroying free trade. Instead, fix the distributional and environmental issues and redistribute the low marginal utility $.
RC (Ron) Weakley said in reply to kurt... , July 27, 2019 at 05:08 AM
You are most likely correct to the extent that anything at all will be done to correct for the use of trade as a tool of financial arbitrage in global labor and pollution markets. OTOH, in some far distant time that may not be as far off as we would like to think, the economy of localization of production will reassert itself against greatly rising transportation costs. Of course, that will not happen all at once and it will come about in move to optimize transportation of goods to market and resources to production that will be accompanied by much substitution in production and consumption.

However, the world would have been better off if developed nations would have shared their capital assets with developing nations to the ends of optimizing transportation and expanding product development around the world from the get go. We once had the opportunity to make a better world, but now we are faced only with the opportunity to survive the world that we made instead - or not.

Mr. Bill -> RC (Ron) Weakley... , July 31, 2019 at 11:46 PM
That is what neo-liberal economics has always been about. Labor arbitrage.

It is interesting that the conglomerate media frames it as higher prices for American consumers.

Unemployed people prefer cheaper goods from Asia.

RC (Ron) Weakley said in reply to Mr. Bill... , August 01, 2019 at 05:27 AM
Yes sir, exactly.
mulp -> JohnH... , July 23, 2019 at 01:33 PM
"Free' trade was not advertised as being a zero sum game. It was supposed to have been an example of large benefits and small losses on both sides."

You are clearly very right wing in demanding a billion dollars in benefits at a dollar in costs because you reject zero sum as a hard rule in all trade, whether in a store, a community, within a nation, and between nations.

West Virginia has suffered, not from global trade, but because of local trade. Global trade has slowed its economic decline because it can produce met coal which costs customers ten times steam coal.

US policies that are supoosedly to cut costs, increased "costs" to WV workers, by killing their jobs, which is a lower cost requiring lower benefits, eg less income to keep paying higher living costs. Cutting living costs is not a good thing when its forced on you by lower incomes.

If the US economic policy was to hike costs, say hiking taxes, fees, tolls, fares to pay to build better transportation capital, then demand for steel in the US would be so high that WV would be mining several times as much met coal, which costs consumers ten times as much as steam coal.

"However, the way it was designed by those who designed it (chiefly multi-nationals), the enormous benefits got captured by a small minority, while a large majority suffered losses, at least in the United States."

Strange you consider at least 250 million Chinese workers to be a minority relative to a much smaller number of American workers who are worse off from the left and right worship of cutting living costs.

Zero sum is axiomatic, so lower living costs means lower benefits, especially lower wages. High wages are a costly benefit that increase living costs.

mulp -> RC (Ron) Weakley... , July 23, 2019 at 01:06 PM
"Global humanists raise the standard of living in poor countries while wealthy capitalists collect rents from the arbitrage of lower standards of living in poor countries. Establishment elites all have their price, but not all have the same price."

But as a "global humanist", the goal is to raise the living costs of poor nations up to the living costs of say the US in 1950 in two generations instead of the maybe five generations it took the US to get to 1950 living costs.

The only way to increase living costs is some agency which pays more workers more money to work more. In the US, the agents were the railroad building from 1840 to 1990, the good roads building fromm1920 to 1970, the lifting of education standards from 8th grade circa 1920 to 14th grade by 1970.

What confuses conservatives is the concept of price and cost. A lower price increases costs. The current cost of going to the moon is zero because the price to send the first person to the moon since 1972 is at least $10 billion, and a realistic business plan sets the cost at $25-50 billion. A price of $10 million to go to the moon and return a year later will result in massive increased costs to humans who pay the lower price of living on the moon for an extended time.

Global trade increases living costs for poor people in order to improve their lives. But increasing their living standard requires paying them to work produce more of somethings than they can possibly consume, which is then sold to nations capable of producing more high cost and price items than the global economy can afford.

For the US to be able to produce 10 billion bushels of grain when the global market is only able to pay for 8 billion is a big problem. The pre-globalization solution was to kill jobs in poor naations by the US government dumping grain on poor nations at a price of zero.

Would you advocate isolationism that creates a great depression, a la the 20s and 30s US economic policies. No exports, no trade, thus forcing costs down as prices are forced down with higher and higher unemployment?

[Jul 06, 2019] It wasn't just free trade that the white working class voters of the rust belt states were angry about, it was also high immigration

Notable quotes:
"... government for the centre ground has been about management- the days when the US New Deal funded by taxing the rich and which built the wealth Americans now miss, and the Labour post war government that built the NHS [and taxed the rich] is part of history. Instead we have no new innovation but a little bit of tweaking with banks and global business. ..."
"... In return the gutted communities become less smart and given bread and circuses but their privilege and lack of mobility means they don't travel to pick fruit elsewhere- yet they still demand food on the table and the only ones prepared to travel and work hard are the even greater poor. ..."
Nov 10, 2016 | discussion.theguardian.com

CosmoCrawley, 10 Nov 2016 10:44

It wasn't just free trade that the white working class voters of the rust belt states were angry about, it was also high immigration. Naomi doesn't mention this, probably because fluid borders is one policy which the Davos class and left-liberals like herself agree on.

Such a[n intersection left] coalition is possible. In Canada, we have begun to cobble it together under the banner of a people's agenda called The Leap Manifesto, endorsed by more than 220 organisations from Greenpeace Canada to Black Lives Matter Toronto, and some of our largest trade unions.

And if such a coalition of the usual suspects got off the ground in the USA it would just about seal a second term for Donald.

Cuniform -> CosmoCrawley 0 1

Would this be a movement that would see us being turned from supine consumers back into citizens who actively care about more than a new TV?

Otherwise, look to see a recurrence, here and elsewhere, of the riots we saw in England in 2011.

JulesBywaterLees -> CosmoCrawley

government for the centre ground has been about management- the days when the US New Deal funded by taxing the rich and which built the wealth Americans now miss, and the Labour post war government that built the NHS [and taxed the rich] is part of history. Instead we have no new innovation but a little bit of tweaking with banks and global business.

No government wants to upset the powers that run the economy- so a multinational can move its workforce to a country with lower pay, lower environmental regulation- it can use the inequality to move not only manufacturing but people.

In return the gutted communities become less smart and given bread and circuses but their privilege and lack of mobility means they don't travel to pick fruit elsewhere- yet they still demand food on the table and the only ones prepared to travel and work hard are the even greater poor.

And the right simply blames the immigrants, the others and you believe them.

nollafgm -> Cuniform

don't stop at 2011, the precedent started in 1934 in Nuremberg Germany. Trump used the same how to manual written by Goebbels, he got the idea from the Romans.

[Jul 06, 2019] It always seems very odd to me that so many people who think like that profess to be Christian. 'Poverty equals moral failure' is the complete opposite of what Jesus Christ got into so much trouble for saying.

Notable quotes:
"... The idea of the 'American dream' seems to have morphed into a nasty belief that if you're poor it's your own fault. You didn't 'want it enough'. You must be secretly lazy and undeserving, even if you're actually working three jobs to survive, or even if there are no jobs. ..."
"... It always seems very odd to me that so many people who think like that profess to be Christian. 'Poverty equals moral failure' is the complete opposite of what Jesus Christ got into so much trouble for saying. ..."
Jul 06, 2019 | discussion.theguardian.com

zephirine -> josephinireland

The idea of the 'American dream' seems to have morphed into a nasty belief that if you're poor it's your own fault. You didn't 'want it enough'. You must be secretly lazy and undeserving, even if you're actually working three jobs to survive, or even if there are no jobs.

This view has taken hold in the UK too, where the tabloids peddle the view that anyone who claims state benefits must be a fraud. But at least, people here and in mainland Europe have the direct experience of war within living memory and we understand that you can lose everything through no fault of your own. In the US, even when there's a natural disaster like Katrina it seems to be the poor people's fault for not having their own transport and money to go and stay somewhere else.

It always seems very odd to me that so many people who think like that profess to be Christian. 'Poverty equals moral failure' is the complete opposite of what Jesus Christ got into so much trouble for saying.

[Jul 02, 2019] Yep! The neolib scum hate poor people and have superiority complex>

Highly recommended!
Notable quotes:
"... Both neoliberal-driven governments and authoritarian societies share one important factor: They care more about consolidating power in the hands of the political, corporate and financial elite than they do about investing in the future of young people and expanding the benefits of the social contract and common good. ..."
"... Michael Yates (economist) points out throughout his book 'The Great Inequality', capitalism is devoid of any sense of social responsibility and is driven by an unchecked desire to accumulate capital at all costs. As power becomes global and politics remains local, ruling elites no longer make political concessions to workers or any other group that they either exploit or consider disposable. ..."
"... At bottom, neoliberals believe in a social hierarchy of "haves" and "have nots". They have taken this corrosive social vision and dressed it up with a "respectable" sounding ideology which all boils down to the cheap labor they depend on to make their fortunes. ..."
"... The ugly truth is that cheap-labour conservatives just don't like working people. They don't like "bottom up" prosperity, and the reason for it is very simple. "Corporate lords" have a harder time kicking them around. ..."
Apr 10, 2018 | www.theguardian.com

Originally from: Seven signs of the neoliberal apocalypse - Van Badham - Opinion - The Guardian

slorter, 27 Apr 2018 01:37

Both neoliberal-driven governments and authoritarian societies share one important factor: They care more about consolidating power in the hands of the political, corporate and financial elite than they do about investing in the future of young people and expanding the benefits of the social contract and common good.

Michael Yates (economist) points out throughout his book 'The Great Inequality', capitalism is devoid of any sense of social responsibility and is driven by an unchecked desire to accumulate capital at all costs. As power becomes global and politics remains local, ruling elites no longer make political concessions to workers or any other group that they either exploit or consider disposable.

At bottom, neoliberals believe in a social hierarchy of "haves" and "have nots". They have taken this corrosive social vision and dressed it up with a "respectable" sounding ideology which all boils down to the cheap labor they depend on to make their fortunes.

The ugly truth is that cheap-labour conservatives just don't like working people. They don't like "bottom up" prosperity, and the reason for it is very simple. "Corporate lords" have a harder time kicking them around.

Once you understand this about the cheap-labor conservatives, the real motivation for their policies makes perfect sense. Remember, cheap-labour conservatives believe in social hierarchy and privilege, so the only prosperity they want is limited to them. They want to see absolutely nothing that benefits those who work for an hourly wage.

You also need to remember that voting the coalition out, which you need to do, will not necessarily give you a neoliberal free zone; Labor needs to shed some the dogma as well.

bryonyed -> slorter , 27 Apr 2018 01:41

Yep! The neolib scum hate poor people and have complexes of deservedness.

[Jun 25, 2019] Menu

Jun 25, 2019 | www.nakedcapitalism.com

Fearless commentary on finance, economics, politics and power Recent Items The Sham of Shareholder Capitalism Posted on June 24, 2019 by Yves Smith Yves here. While Richard Murphy makes some important points in his post, he unwittingly implies that shareholder capitalism could work as advertised absent the way investors lose ownership rights when they acquire stock through pooled vehicles.

In fact, the choice that legislators and regulators made to promote liquidity in stock markets inevitably resulted in weak governance. From a 2013 post :

Amar Bhide, now a professor at the Fletcher School and a former McKinsey consultant and later proprietary trader, questions the policy bias towards more liquidity in financial markets. Officials (and of course intermediaries) favor it because they lower funding costs. Isn't cheaper money always better? Bhide argues that it can come with hidden costs, and those costs are sometime substantial.

He first took up the argument in a 1993 Harvard Business Review article, "Efficient Markets, Deficient Governance." Its assessment was pretty much ignored because it was too far from orthodox thinking. He started with some straightforward observations:

US rules protecting investors are the most comprehensive and well enforced in the world .Prior to the 1930s, the traditional response to panics had been to let investors bear the consequences The new legislation was based on a different premise: the acts [the Securities Act of 1933 and the Securities and Exchange Act of 1934] sought to protect investors before they incurred losses.

He then explained at some length that extensive regulations are needed to trade a promise as ambiguous as an equity on an arm's length, anonymous basis. Historically, equity investors had had venture-capital-like relationships with the owner/managers: they knew them personally (and thus could assess their character), were kept informed of how the businesses was doing. At a minimum, they were privy to its strategy and plans; they might play a more active role in helping the business succeed.

By contrast, investors in equities that are traded impersonally can't know all that much. A company can't share competitively sensitive information with transient owners. Stocks are also more liquid if ownership is diffuse, which makes it harder for any investor or even group of investors to discipline underperforming managers. It's much easier for them to sell their stock and move on rather than force changes. And an incompetent leadership group can still ignore the message of a low stock price, not just because they are rarely replaced, but also because they can rationalize the price as not reflecting the true state of the company compared to its competitors, which is simply not available to the public.

Bhide's concern is hardly theoretical. The short term orientation of the executives of public companies, their ability to pay themselves egregious amounts of money, too often independent of actual performance, their underinvestment in their businesses and relentless emphasis on labor cost reduction and headcount cutting are the direct result of anonymous, impersonal equity markets. Many small businessmen and serial entrepreneurs hold the opposite attitude of that favored by the executives of public companies: they do their best to hang on to workers and will preserve their pay even if it hurts their own pay. Stagnant worker wages and underemployment are a direct result of companies' refusal to share productiivty gains with workers, and that dates to trying to improve the governance problems Bhide discussed by linking executive pay to stock market performance. That did not fix the governance weaknesses and created new problems of its own.

An issue that we've also discussed regularly is that the idea that companies are to be operated for the benefit of shareholders is an idea made up by economists with no legal foundation. Equity is a weak and ambiguous claim: you get a vote on some matters, you get dividends if we make money and even then if we feel like it, and we can dilute your interest at any time. Equity is a residual claim, the last in line after everything else is taken care of.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an "anti-poverty campaigner and tax expert". He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics . He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

The FT published a report last week that commented on an important issue. That is the collapse of shareholder capitalism.

The issue is a simple one to summarise. Apparently about two thirds of all private owners of quoted shares in the UK now own their shares through nominee pooled funds. As such they are not recorded as the legal owners of these shares. They have no voting rights. And no right to attend shareholder meetings. They don't even have the right to accounts. And they have given an institution, who does not own the shares in reality, the right to exercise their vote in the company.

This matters for a number of reasons.

First, this makes a mockery of shareholder capitalism. The company has no idea who its shareholders are. And it is wholly unaccountable to them. The idea that somehow shareholders are at the centre of corporate concern is shown to be a sham, yet again, by this.

Second, this undermines audit. Bizarrely, audit reports are still addressed to shareholders. What is apparent is that many do not get them. No wonder auditing is becoming so removed from reality.

Third, this breaks down any pretence that there is effective corporate governance. There cannot be when many company members are disenfranchised.

Fourth, the concentration of power in the hands of passive nominee owners reinforces the control of a small ruling elite in quoted businesses, who are insulated by this arrangement from any real accountability whilst being able to pretend that it exists.

Fifth, this means tax fraud can be much more easily disguised.

And lastly, it shows the owners of shares just don't care and so are not the custodians for business that we need.

In essence, we have a form of capitalism that claims to be for shareholders and yet that is clearly a sham. No wonder it is not working.


Tomonthebeach , June 24, 2019 at 3:13 am

Most shareholders lack the savvy to fuss over board member actions. So, today we have mutual fund manager capitalism . It might work better. If I own 100 shares, who cares? If I own 1,000,000 shares, board's better listen. Now if we can only get our mutual funds to kick ass about abuses like bonuses for failure, worker abuse, etc.

Phacops , June 24, 2019 at 8:15 am

Activist fund managers? Nope. Several years ago, and despite pointing out that high executive compensation injures shareholder value, I was told that there is no interest in voting shares to limit compensation of executives.

Off The Street , June 24, 2019 at 9:58 am

Fourth, the concentration of power in the hands of passive nominee owners reinforces the control of a small ruling elite in quoted businesses, who are insulated by this arrangement from any real accountability whilst being able to pretend that it exists.

Those nominee owners don't seem all that passive. Pay no attention to that man behind the curtain.

John Wright , June 24, 2019 at 10:55 am

Note, Warren Buffet disagreed with a Coca Cola pay package, but he could not actually vote against it (he abstained).

See https://www.businessinsider.com/warren-buffet-v-coca-cola-plan-to-pay-executives-13-billion-2014-10

"Warren Buffett is the largest shareholder in Coke with a 9.1% stake in the business. He had abstained from voting through the original pay guidelines, saying at the time "I could never vote against Coca-Cola, but I couldn't vote for the plan either."

So much for investor activism on Buffett's part.

The article is titled "Warren Buffett Wins A Battle Against Coca-Cola's Plan To Pay Its Bosses $13 Billion" even though Buffett could not find his way to actually vote AGAINST the pay package and abstaining simply means one's vote isn't counted.

If independently wealthy Buffett cannot find the courage to vote against a pay package he finds egregious, one wonders if other fund managers, of lower independence and wealth will show much activism in bucking corporate management.

Ape , June 24, 2019 at 7:13 am

Coase's theorem isn't a theorem -- and it's not even right! Worshipping liquidity so that equilibrium models fit (which is backwards, right?) is insane. Coase is a religion, not a scientific model (and definitely not a theorem).

And these kind of things show how bad an equilibrium analysis is of economic systems. Even the tiniest bump in the manifold, and you get turbulence which can lead to storms. Dumping liquidity into a turbulent system and you get more turbulence (which eventually becomes self-sustaining structures in the face of the very even flow you were trying to create )

Steve Ruis , June 24, 2019 at 8:37 am

I mis-read the lead as "The Sham e of Shareholder Capitalism". Whatever happened to corporations that had responsibilities/commitments to anything besides shareholders? Since said shareholders are, in effect, absentee landlords, executives are running the game for what? Their own benefit? I'm shocked, shocked I tell you.

Oh , June 24, 2019 at 9:26 am

The major shareholders, mostly the CEO, CEO et al, are there to feather their own nest. While the right wingers repeat that the corporation should take care of shareholder interest, they actually mean these majority shareholders, who loot the corporation for their own benefit.

Arizona Slim , June 24, 2019 at 3:54 pm

Yet another example of control fraud.

caloba , June 24, 2019 at 10:11 am

I've always been struck by one contradiction inherent in the pooled fund model, with its customary emphasis on performance relative to indices or comparable funds. If an extremely large mutual fund goes underweight a listed stock (relative to its target benchmark index or the competition) you could easily end up with the largest holder of that stock having a financial interest in the stock's underperformance.

Norm , June 24, 2019 at 10:14 am

A theoretical economic justification for almost any aspect of large scale capitalism is prima facie ridiculous. Like everything else, capitalism is a game of power and although it's pleasant to dream about countervailing power being held by consumers, investors, competitors and employees, the only enduring form of resistance to CEO governance is government. Unfortunately, the part of government that has been charged with controlling the corporation has been AWOL for a long, long time. The Democrats, the supposed champion of everyone who is not a CEO have long ago crossed the line and serve the other side (hopefully, prayerfully, with some exceptions).

Just as an exercise that might shed light on the effectiveness of the funds (hedge & mutual) ability/willingness to constrain the CEOs, it would be interesting to know how frequently these funds put forth any resistance to debt funded stock buy backs, which, at least temporarily, enhance the funds' holdings.

Generalfeldmarschall von Hindenburg , June 24, 2019 at 11:14 am

When you examine the deep structure, isn't Wall Street really just an American version of GOSPLAN?

Susan the other` , June 24, 2019 at 11:19 am

Liquidity. Without it the system doesn't work and is prone to freezing up. So naturally, shareholders looked like liquidity incarnate in 1990. Liquidity made more urgent by all the mismanagement of the economy and the inability to understand and control inflation; Paul Volker's rate hike. And to make those nominee funds look like honest business Milton Friedman began to tout shareholder rights and values. It makes sense – how it all happened. I remember thinking, What happened to good old fashioned capitalism? more than once. This went hand in hand with the new and improved MBA, preferably from Harvard and the valuation of efficiencies that were short sighted and superficial. How many corporations got rid of their excess baggage, fired all their old hands, hired new managers, etc? Then off-shoring. It amounted to decimation in order to free up liquidity – sounds like an oxymoron now. It was based on nothing more than optimism. Which to my thinking runs sorta parallel to ponzi. It was inevitable that shareholder capitalism was used as an excuse for tax loops and fraud. Agents, "nominee funds", are happily removed from reality. It became open season for private equity, money laundering, whatever. Liquidity became synonymous with profit taking. All those equities were "ambiguous promises " which were nothing more than "residual claims" offered by nominee proxies offering no good corporate governance. So the question pops up, What happens now that liquidity has blown itself up? Its fitting that all the central banks are infusing money into the system as fast as they can because they must balance out the massive inequality that occurred – even though that money isn't getting to the right party. It's so beyond nuts. How do we make things work again? And so to the point – what does a share really mean – does it carry both rights and obligations?, what does it mean to be a shareholder and what are the corporate obligations to shareholders and to society? -to labor (therefore to management and good corporate governance). All those questions just got left in the dust.

readerOfTeaLeaves , June 24, 2019 at 2:21 pm

Sincerely appreciate this post.
I hadn't connected several dots in quite this way before.

OpenThePodBayDoorsHAL , June 24, 2019 at 5:29 pm

Until 1982 it was illegal for a company to borrow money in order to buy back their own shares. Il-Le-Gal. Because it was so obviously share price manipulation by insiders.

Just reinstate that, and clean up shareholder options issuance while you're at it.

Result? Share prices would more accurately reflect the company's financial performance. You remember that stuff: things like earnings per share, market share, new product launches, cost containment. Good governance would follow.

Instead what we have today is just one big casino, run for the benefit of insiders.

RBHoughton , June 24, 2019 at 9:08 pm

Very grateful for this bit of rare clarity about financial intermediaries and the games they play.

Back in the beginning of joint-stock companies everyone knew they were dodgy investments run by dodgy people. You put only a small amount of your capital in them and the bulk in government stock.

Now they have bought the protection they need, secured limited liability for their acts and got a corrupt Treasury to enact that a company is a person. Speaks volumes about our political representatives.

Tom Bradford , June 24, 2019 at 9:57 pm

A sensible article from the viewpoint of one outside looking in. But as I see it Murphy is still living in the 19th Century.

Me? I'm retired and have $100,000 to invest for an income to sustain me. I can invest that $100,000 in one company, pore over its accounts, watch its director's every move and snap at their heels if I don't think I'm getting the return I should be. Of course if it's a $1billion company my snapping isn't going to have much effect. And if the Company goes under I've lost my retirement savings.

Or I could invest $10,000 in ten companies. I'd have to choose the ten, of course, on the basis of public information and wouldn't be able to scrutinize them all equally, and my stake would make my snapping at the heels of the directors even less of a consideration. However I have only a 10% chance of a total loss, and a 10% chance of sharing any spectacular success.

Or I could put the $100,000 in a managed – or even a passive – fund. There I'd have less than a 1% loss if the Company goes under and a return that should pretty much reflect what the general economy was doing. I'd only get a tiny slice of any spectacular commercial successes, but that's the consequence of not gambling which is what choosing to invest in one or two companies in fact is.

In short, for someone in retirement, pooled investment makes the best sense. And while I don't know the actual figures I would be prepared to gamble a small amount that a considerable slice the total amount invested in the stock market is 'owned' by the retired, or the sooner or later to be retired.

[Jun 23, 2019] Neoliberalism promised freedom instead it delivers stifling control by George Monbiot

Notable quotes:
"... By rolling back the state, neoliberalism was supposed to have allowed autonomy and creativity to flourish. Instead, it has delivered a semi-privatised authoritarianism more oppressive than the system it replaced. ..."
"... Workers find themselves enmeshed in a Kafkaesque bureaucracy , centrally controlled and micromanaged. Organisations that depend on a cooperative ethic – such as schools and hospitals – are stripped down, hectored and forced to conform to suffocating diktats. The introduction of private capital into public services – that would herald a glorious new age of choice and openness – is brutally enforced. The doctrine promises diversity and freedom but demands conformity and silence. ..."
"... Their problem is that neoliberal theology, as well as seeking to roll back the state, insists that collective bargaining and other forms of worker power be eliminated (in the name of freedom, of course). So the marketisation and semi-privatisation of public services became not so much a means of pursuing efficiency as an instrument of control. ..."
"... Public-service workers are now subjected to a panoptical regime of monitoring and assessment, using the benchmarks von Mises rightly warned were inapplicable and absurd. The bureaucratic quantification of public administration goes far beyond an attempt at discerning efficacy. It has become an end in itself. ..."
Apr 10, 2019 | www.theguardian.com

Thousands of people march through London to protest against underfunding and privatisation of the NHS. Photograph: Wiktor Szymanowicz/Barcroft Images M y life was saved last year by the Churchill Hospital in Oxford, through a skilful procedure to remove a cancer from my body . Now I will need another operation, to remove my jaw from the floor. I've just learned what was happening at the hospital while I was being treated. On the surface, it ran smoothly. Underneath, unknown to me, was fury and tumult. Many of the staff had objected to a decision by the National Health Service to privatise the hospital's cancer scanning . They complained that the scanners the private company was offering were less sensitive than the hospital's own machines. Privatisation, they said, would put patients at risk. In response, as the Guardian revealed last week , NHS England threatened to sue the hospital for libel if its staff continued to criticise the decision.

The dominant system of political thought in this country, which produced both the creeping privatisation of public health services and this astonishing attempt to stifle free speech, promised to save us from dehumanising bureaucracy. By rolling back the state, neoliberalism was supposed to have allowed autonomy and creativity to flourish. Instead, it has delivered a semi-privatised authoritarianism more oppressive than the system it replaced.

Workers find themselves enmeshed in a Kafkaesque bureaucracy , centrally controlled and micromanaged. Organisations that depend on a cooperative ethic – such as schools and hospitals – are stripped down, hectored and forced to conform to suffocating diktats. The introduction of private capital into public services – that would herald a glorious new age of choice and openness – is brutally enforced. The doctrine promises diversity and freedom but demands conformity and silence.

Much of the theory behind these transformations arises from the work of Ludwig von Mises. In his book Bureaucracy , published in 1944, he argued that there could be no accommodation between capitalism and socialism. The creation of the National Health Service in the UK, the New Deal in the US and other experiments in social democracy would lead inexorably to the bureaucratic totalitarianism of the Soviet Union and Nazi Germany.

He recognised that some state bureaucracy was inevitable; there were certain functions that could not be discharged without it. But unless the role of the state is minimised – confined to defence, security, taxation, customs and not much else – workers would be reduced to cogs "in a vast bureaucratic machine", deprived of initiative and free will.

By contrast, those who labour within an "unhampered capitalist system" are "free men", whose liberty is guaranteed by "an economic democracy in which every penny gives a right to vote". He forgot to add that some people, in his capitalist utopia, have more votes than others. And those votes become a source of power.

His ideas, alongside the writings of Friedrich Hayek , Milton Friedman and other neoliberal thinkers, have been applied in this country by Margaret Thatcher, David Cameron, Theresa May and, to an alarming extent, Tony Blair. All of those have attempted to privatise or marketise public services in the name of freedom and efficiency, but they keep hitting the same snag: democracy. People want essential services to remain public, and they are right to do so.

If you hand public services to private companies, either you create a private monopoly, which can use its dominance to extract wealth and shape the system to serve its own needs – or you introduce competition, creating an incoherent, fragmented service characterised by the institutional failure you can see every day on our railways. We're not idiots, even if we are treated as such. We know what the profit motive does to public services.

The Amazon warehouse in Swansea – the company has patented a wristband that can track workers' movements.

Photograph: Matt Cardy/Getty Images

So successive governments decided that if they could not privatise our core services outright, they would subject them to "market discipline". Von Mises repeatedly warned against this approach. "No reform could transform a public office into a sort of private enterprise," he cautioned. The value of public administration "cannot be expressed in terms of money". "Government efficiency and industrial efficiency are entirely different things."

"Intellectual work cannot be measured and valued by mechanical devices." "You cannot 'measure' a doctor according to the time he employs in examining one case." They ignored his warnings.

Their problem is that neoliberal theology, as well as seeking to roll back the state, insists that collective bargaining and other forms of worker power be eliminated (in the name of freedom, of course). So the marketisation and semi-privatisation of public services became not so much a means of pursuing efficiency as an instrument of control.

Public-service workers are now subjected to a panoptical regime of monitoring and assessment, using the benchmarks von Mises rightly warned were inapplicable and absurd. The bureaucratic quantification of public administration goes far beyond an attempt at discerning efficacy. It has become an end in itself.

Its perversities afflict all public services. Schools teach to the test , depriving children of a rounded and useful education. Hospitals manipulate waiting times, shuffling patients from one list to another. Police forces ignore some crimes, reclassify others, and persuade suspects to admit to extra offences to improve their statistics . Universities urge their researchers to write quick and superficial papers , instead of deep monographs, to maximise their scores under the research excellence framework.

As a result, public services become highly inefficient for an obvious reason: the destruction of staff morale. Skilled people, including surgeons whose training costs hundreds of thousands of pounds, resign or retire early because of the stress and misery the system causes. The leakage of talent is a far greater waste than any inefficiencies this quantomania claims to address.

New extremes in the surveillance and control of workers are not, of course, confined to the public sector. Amazon has patented a wristband that can track workers' movements and detect the slightest deviation from protocol. Technologies are used to monitor peoples' keystrokes, language, moods and tone of voice. Some companies have begun to experiment with the micro-chipping of their staff . As the philosopher Byung-Chul Han points out , neoliberal work practices, epitomised by the gig economy, that reclassifies workers as independent contractors, internalise exploitation. "Everyone is a self-exploiting worker in their own enterprise."

The freedom we were promised turns out to be freedom for capital , gained at the expense of human liberty. The system neoliberalism has created is a bureaucracy that tends towards absolutism, produced in the public services by managers mimicking corporate executives, imposing inappropriate and self-defeating efficiency measures, and in the private sector by subjection to faceless technologies that can brook no argument or complaint.

Attempts to resist are met by ever more extreme methods, such as the threatened lawsuit at the Churchill Hospital. Such instruments of control crush autonomy and creativity. It is true that the Soviet bureaucracy von Mises rightly denounced reduced its workers to subjugated drones. But the system his disciples have created is heading the same way.

George Monbiot is a Guardian columnist

[Jun 23, 2019] What has been very noticeable about the development of bureaucracy in the public and private spheres over the last 40 years (since Thatcher govt of 79) has been the way systems are designed now to place responsibility and culpability on the workers delivering the services - Teachers, Nurses, social workers, etc.

Apr 11, 2019 | discussion.theguardian.com

Galluses , 11 Apr 2019 07:26

What has been very noticeable about the development of bureaucracy in the public and private spheres over the last 40 years (since Thatcher govt of 79) has been the way systems are designed now to place responsibility and culpability on the workers delivering the services - Teachers, Nurses, social workers, etc. While those making the policies, passing the laws, overseeing the regulations- viz. the people 'at the top', now no longer take the rap when something goes wrong- they may be the Captain of their particular ship, but the responsibility now rests with the man sweeping the decks. Instead they are covered by tying up in knots those teachers etc. having to fill in endless check lists and reports, which have as much use as clicking 'yes' one has understood those long legal terms provided by software companies.... yet are legally binding. So how the hell do we get out of this mess? By us as individuals uniting through unions or whatever and saying NO. No to your dumb educational directives, No to your cruel welfare policies, No to your stupid NHS mismanagement.... there would be a lot of No's but eventually we could say collectively 'Yes I did the right thing'.
promisingproper -> Dianeandguy , 11 Apr 2019 08:00
Staff distress? Cleaning ( in another county) was privatised to make profit in Thatcher times.The work of two cleaners became the task of one person. Extra duties were loaded on -serving meals and drinks, fetching blankets and equipment. Wages dropped by a small degree -but important when we ere earning, say, £65 a week. Indemnity/insurance against catching infections was withdrawn. Firstly owned by Jeyes and then sold on to Rentokill ,obviously good for shareholders. A new 'manager' appeared with their own office.
fairshares -> rjb04tony , 11 Apr 2019 07:17
'The left wing dialogue about neoliberalism used to be that it was the Wild West and that anything goes. Now apparently it's a machine of mass control.'

It is the Wild West and anything goes for the corporate entities, and a machine of control of the masses. Hence the wish of neoliberals to remove legislation that protects workers and consumers.

[Jun 23, 2019] The assessment and monitoring are for the little people - teachers and children, as they can't be trusted.

Apr 10, 2019 | discussion.theguardian.com

mirotto -> ID7696310

, 10 Apr 2019 17:26
No-one.

They're businesses, therefore by definition efficient and responsible. Haha.

The assessment and monitoring are for the little people - teachers and children, as they can't be trusted.

[Jun 23, 2019] Quantomania -- this is the word I have been needing for some time now!

Apr 10, 2019 | discussion.theguardian.com

penelo , 10 Apr 2019 20:43

Quantomania -- this is the word I have been needing for some time now! So much better than having to say "obsession with quantity" all the time.

Would it be useful to add quantism and quantist too? Maybe even quantistic and quantistical ?

[Jun 23, 2019] Public-service workers are now subjected to a panoptical regime of monitoring and assessment, using the benchmarks von Mises rightly warned were inapplicable and absurd

Apr 10, 2019 | discussion.theguardian.com

izaakwalton , 11 Apr 2019 00:55

As someone who thinks von Mises and Hayek made invaluable contributions to economics I was surprised to see such a ringing endorsement for Mises's ideas in the Guardian:

"Public-service workers are now subjected to a panoptical regime of monitoring and assessment, using the benchmarks von Mises rightly warned were inapplicable and absurd."

That is spot on. Yes, Mises thought that workers should no more be allowed to corner a market in labour than companies should be allowed to create monopolies in products, and this is certainly a point where he can be criticized. Using the name "neoliberal" to cover
such very different ideas as Milton's and Hayek's though is absurd - they had completely opposite ideas about vast government spending to recover from recession. Try looking up John James Cowperthwaite, who oversaw post-war development in Hong Kong by getting government out of the way.

He forbade the use of any performance targets of the type Blair brought in, and refused to compile GDP statistics, thinking the government would game them.

Both von Mises and Hayek would be horrified at the money printing of modern central banks, especially since 2008. To ascribe modern policy to their ideas is simply nonsense - they did not (as far as I know) ever suggest central control of interest rates , stock buying by central banks or saving a bank that has failed through fraud and greed.

If "neoliberalism" is our present dominant ideology, then please do not use the word to describe their work.

[Jun 23, 2019] As a matter of semantics, neo-liberalism delivered on the promise of freedom...for capitalists

Apr 10, 2019 | discussion.theguardian.com

marshwren , 10 Apr 2019 22:29

As a matter of semantics, neo-liberalism delivered on the promise of freedom...for capitalists to be free of ethical accountability, social responsibility, and government regulation and taxes...

[Jun 23, 2019] Only entrepreneurs - those close to the market - can know 'the truth' about anything.

Jun 23, 2019 | discussion.theguardian.com

economicalternative , 11 Apr 2019 20:42

Finally. A writer who can talk about neoliberalism as NOT being a retro version of classical laissez faire liberalism. It is about imposing "The Market" as the sole arbiter of Truth on us all.

Only the 'Market' knows what is true in life - no need for 'democracy' or 'education'.

Neoliberals believe - unlike classical liberals with their view of people as rational individuals acting in their own self-interest - people are inherently 'unreliable', stupid.

Only entrepreneurs - those close to the market - can know 'the truth' about anything.

To succeed we all need to take our cues in life from what the market tells us. Neoliberalism is not about a 'small state'. The state is repurposed to impose the 'all knowing' market on everyone and everything. That is neoliberalism's political project. It is ultimately not about 'economics'.

[Jun 23, 2019] This is a remarkably similar summation of Rand's worldview of entire classes of people: if you are poor, you deserve it

Jun 23, 2019 | discussion.theguardian.com

HolyInsurgent -> GeorgeMonbiot , 5 Mar 2012 22:44

But the world didn't work like that, and the people who didn't fit had to be shoved under the wheel of history.

This is a remarkably similar summation of Rand's worldview of entire classes of people: if you are poor, you deserve it. Expect nothing from the State to raise you from the cycle of poverty. The State is evil and should be eliminated. No evil can come from the Business Culture (or more accurately the Business Cult). The U.S. Republican worldview summed up right there.

The only sane response to Ayn Rand is the creation of the Human Values Project , where creating a better world for all is its manifesto and mandate.

Many thanks for the article. The Right keep erecting her on a pedestal and saying her ideas are infallible like the Pope. She can't be pulled down off that pedestal enough times.

[Jun 23, 2019] If Jeff Bezos could hire 1st graders he obviously would

Notable quotes:
"... Your claim is not that people decide rights via participation in political process (social contract), it is that there are universal natural individual rights that cannot be violated based in... something; there is no negotiability like there is with the social contract. Your apparantly foundationless rights cannot be changed by political process - so where do they come from? ..."
"... Your claim is that some quality of people grants immutable rights, not that rights are decided by people. Are you of the strain that thinks we should be allowed to starve our kids (Rothbard)? Or that non-capitalist societies are fair game to be killed and enslaved, to have thier land put to 'better' use (Locke)? Perhaps that latter one underlies the feeling that it would be easy to up sticks and move to some undefined piece of land. ..."
"... You have changed the nice things you listed now, you said maternity leave/pay, weekends, etc. Those were granted by collective potitical action, not the generosity of the capitalists. If Jeff Bezos could hire 1st graders he obviously would. ..."
"... The State is the gun. Always has been, always will be. And yes, there is a place for the gun in society - defence - but not in extorting money from peaceful people. ..."
Apr 12, 2019 | discussion.theguardian.com

wariquari -> Pushers11 , 12 Apr 2019 16:56

Your claim is not that people decide rights via participation in political process (social contract), it is that there are universal natural individual rights that cannot be violated based in... something; there is no negotiability like there is with the social contract. Your apparantly foundationless rights cannot be changed by political process - so where do they come from?

Your claim is that some quality of people grants immutable rights, not that rights are decided by people. Are you of the strain that thinks we should be allowed to starve our kids (Rothbard)? Or that non-capitalist societies are fair game to be killed and enslaved, to have thier land put to 'better' use (Locke)? Perhaps that latter one underlies the feeling that it would be easy to up sticks and move to some undefined piece of land.

You have changed the nice things you listed now, you said maternity leave/pay, weekends, etc. Those were granted by collective potitical action, not the generosity of the capitalists. If Jeff Bezos could hire 1st graders he obviously would.

So you having to leave because you don't wamt to participate in tax paying is coercion, but people having to leave because they don't want to live under Libertarianism isn't?

Incidentally, which countries at the top of the PISA or OECD rankings do not have massive state education?

As for Hong Kong, its entire existence is predicated on extreme acts of aggression by the British. The opium trade and its profits started the ball rolling after an aggressive war. The Hong Kong authority also owns most of the land, leasing it; they therefore have massive influence on who gets what and what they do with it - more so than most other nations.

Pushers11 -> wariquari , 12 Apr 2019 10:44

"As you are free to leave, no individual state institution is is forcing you to participate under pain of violence. If the fact you have no place to go that does not take tax means that you are coerced, then someone who cannot live but by participation in free-market capitalism would also be coerced into participation"

I think we won't agree on this because we have a fundamentally different understanding of coercion. The way I see it, I should not have a leave the place I live in to not have coercive action taking away my money. I should be able to say, no thanks. It is the difference between my willingly purchasing something and a mugger taking my money at gunpoint. The State is the gun. Always has been, always will be. And yes, there is a place for the gun in society - defence - but not in extorting money from peaceful people.

And people can and do live without being part of the capitalist system. They can live off the land. They can set up communes. They can use a barter system if they want. Capitalism just gives people more opportunities, but they can opt out if they want. Or move to a place that doesn't have capitalism, like many places in Africa or South America or Cuba. Funny who must people try to leave those places though. Millions do not flock there. They do the other way round.

"In your opinion."

Yes, true. In my opinion. But I have backed that opinion up with a well reasoned argument for my position. It didn't just come out of thin air. It comes from recognising the nature of government is force, violence and coercion. Again, it is the gun in society. And in my opinion, I think it is wrong, immoral and will always lead to bad outcomes to use the gun to solve societies more tricky problems. And we can clearly see the bad results of public / State education, socialised healthcare, welfare, government involvement in the economy, etc, etc, etc. All do badly.

"Did I? I didn't sign up before birth to participate, and I have no other options but to participate or die."

You have other options, as previously mentioned. Live off the land, move to a non-capitalist country, set up a commune, etc.

"Still unsure upon what these rights are based. The mere fact that people can reason does not necessarily instill or ground right."

Where else can they come from? If you say "government". Well when does government get its power and decide on your rights? From the people that make up government. So we are back to people again.

"You tell us elsewhere that we don't really have capitalism, the state and other actors dominate and fiddle etc. Now you clam capitalism has provided all these nice things* - pick one."

No. It is not a case of picking one. It is not an "either / or" situation. Economic freedom and economic oppression exist on a sliding scale. You have more free economies, like the US (especially prior to 1913) and you have less free economies, like the USSR or Cuba. The parts of freedom we have, give us the good stuff, gives us innovation and allows society to grow richer and lift more people out of poverty. The more bad stuff that gets involved, the less we have, the more society stagnates. The USSR was a lot poorer and dirtier (environmentally) and had a lot more famine and waste because it was highly centrally controlled.

"So it had nothing to do with quasi-British authorities selling narcotics to mainland China then?"

Not much. There may have been some of that but nowhere near enough to explain the explosion of wealth in HK.

[Jun 23, 2019] T>here has never been free-market capitalism

Notable quotes:
"... And there has never been free-market capitalism. A misnomer if ever there was one. ..."
Mar 06, 2012 | discussion.theguardian.com

PSmd , 6 Mar 2012 09:35

@silverwhistle

We ARE social animals. Which is why I laugh when I hear right-wing opinions compared to the laws of the jungle. As far as I can gather, in the jungle, there are no such things as property laws, inheritance, land enclosure, or indeed money! Humanity's development is as socialised societies, with surpluses, consent, and so on.

And there has never been free-market capitalism. A misnomer if ever there was one.

[Jun 23, 2019] Two things characterize neo-liberalism. Deception and repression of labor.

Apr 11, 2019 | discussion.theguardian.com

mi Griffin , 11 Apr 2019 01:15

2 simple points that epitomize neo liberalism.

1. Hayek's book 'The Road to Serfdom' uses an erroneous metaphor. He argues that if we allow gov regulation, services and spending to continue then we will end up serfs. However, serfs are basically the indentured or slave labourers of private citizens and landowners not of the state. Only in a system of private capital can there be serfs. Neo liberalism creates serfs not a public system.

2. According to Hayek all regulation on business should be eliminated and only labour should be regulated to make it cheap and contain it so that private investors can have their returns guaranteed. Hence the purpose of the state is to pass laws to suppress workers.

These two things illustrate neo-liberalism. Deception and repression of labour.

[Jun 19, 2019] America s Suicide Epidemic

Highly recommended!
Notable quotes:
"... A suicide occurs in the United States roughly once every 12 minutes . What's more, after decades of decline, the rate of self-inflicted deaths per 100,000 people annually -- the suicide rate -- has been increasing sharply since the late 1990s. Suicides now claim two-and-a-half times as many lives in this country as do homicides , even though the murder rate gets so much more attention. ..."
"... In some states the upsurge was far higher: North Dakota (57.6%), New Hampshire (48.3%), Kansas (45%), Idaho (43%). ..."
"... Since 2008 , suicide has ranked 10th among the causes of death in this country. For Americans between the ages of 10 and 34, however, it comes in second; for those between 35 and 45, fourth. The United States also has the ninth-highest rate in the 38-country Organization for Economic Cooperation and Development. Globally , it ranks 27th. ..."
"... The rates in rural counties are almost double those in the most urbanized ones, which is why states like Idaho, Kansas, New Hampshire, and North Dakota sit atop the suicide list. Furthermore, a far higher percentage of people in rural states own guns than in cities and suburbs, leading to a higher rate of suicide involving firearms, the means used in half of all such acts in this country. ..."
"... Education is also a factor. The suicide rate is lowest among individuals with college degrees. Those who, at best, completed high school are, by comparison, twice as likely to kill themselves. Suicide rates also tend to be lower among people in higher-income brackets. ..."
"... Evidence from the United States , Brazil , Japan , and Sweden does indicate that, as income inequality increases, so does the suicide rate. ..."
"... One aspect of the suicide epidemic is puzzling. Though whites have fared far better economically (and in many other ways) than African Americans, their suicide rate is significantly higher . ..."
"... The higher suicide rate among whites as well as among people with only a high school diploma highlights suicide's disproportionate effect on working-class whites. This segment of the population also accounts for a disproportionate share of what economists Anne Case and Angus Deaton have labeled " deaths of despair " -- those caused by suicides plus opioid overdoses and liver diseases linked to alcohol abuse. Though it's hard to offer a complete explanation for this, economic hardship and its ripple effects do appear to matter. ..."
"... Trump has neglected his base on pretty much every issue; this one's no exception. ..."
Jun 19, 2019 | www.nakedcapitalism.com

Yves here. This post describes how the forces driving the US suicide surge started well before the Trump era, but explains how Trump has not only refused to acknowledge the problem, but has made matters worse.

However, it's not as if the Democrats are embracing this issue either.

BY Rajan Menon, the Anne and Bernard Spitzer Professor of International Relations at the Powell School, City College of New York, and Senior Research Fellow at Columbia University's Saltzman Institute of War and Peace Studies. His latest book is The Conceit of Humanitarian Intervention Originally published at TomDispatch .

We hear a lot about suicide when celebrities like Anthony Bourdain and Kate Spade die by their own hand. Otherwise, it seldom makes the headlines. That's odd given the magnitude of the problem.

In 2017, 47,173 Americans killed themselves. In that single year, in other words, the suicide count was nearly seven times greater than the number of American soldiers killed in the Afghanistan and Iraq wars between 2001 and 2018.

A suicide occurs in the United States roughly once every 12 minutes . What's more, after decades of decline, the rate of self-inflicted deaths per 100,000 people annually -- the suicide rate -- has been increasing sharply since the late 1990s. Suicides now claim two-and-a-half times as many lives in this country as do homicides , even though the murder rate gets so much more attention.

In other words, we're talking about a national epidemic of self-inflicted deaths.

Worrisome Numbers

Anyone who has lost a close relative or friend to suicide or has worked on a suicide hotline (as I have) knows that statistics transform the individual, the personal, and indeed the mysterious aspects of that violent act -- Why this person? Why now? Why in this manner? -- into depersonalized abstractions. Still, to grasp how serious the suicide epidemic has become, numbers are a necessity.

According to a 2018 Centers for Disease Control study , between 1999 and 2016, the suicide rate increased in every state in the union except Nevada, which already had a remarkably high rate. In 30 states, it jumped by 25% or more; in 17, by at least a third. Nationally, it increased 33% . In some states the upsurge was far higher: North Dakota (57.6%), New Hampshire (48.3%), Kansas (45%), Idaho (43%).

Alas, the news only gets grimmer.

Since 2008 , suicide has ranked 10th among the causes of death in this country. For Americans between the ages of 10 and 34, however, it comes in second; for those between 35 and 45, fourth. The United States also has the ninth-highest rate in the 38-country Organization for Economic Cooperation and Development. Globally , it ranks 27th.

More importantly, the trend in the United States doesn't align with what's happening elsewhere in the developed world. The World Health Organization, for instance, reports that Great Britain, Canada, and China all have notably lower suicide rates than the U.S., as do all but six countries in the European Union. (Japan's is only slightly lower.)

World Bank statistics show that, worldwide, the suicide rate fell from 12.8 per 100,000 in 2000 to 10.6 in 2016. It's been falling in China , Japan (where it has declined steadily for nearly a decade and is at its lowest point in 37 years), most of Europe, and even countries like South Korea and Russia that have a significantly higher suicide rate than the United States. In Russia, for instance, it has dropped by nearly 26% from a high point of 42 per 100,000 in 1994 to 31 in 2019.

We know a fair amount about the patterns of suicide in the United States. In 2017, the rate was highest for men between the ages of 45 and 64 (30 per 100,000) and those 75 and older (39.7 per 100,000).

The rates in rural counties are almost double those in the most urbanized ones, which is why states like Idaho, Kansas, New Hampshire, and North Dakota sit atop the suicide list. Furthermore, a far higher percentage of people in rural states own guns than in cities and suburbs, leading to a higher rate of suicide involving firearms, the means used in half of all such acts in this country.

There are gender-based differences as well. From 1999 to 2017, the rate for men was substantially higher than for women -- almost four-and-a-half times higher in the first of those years, slightly more than three-and-a-half times in the last.

Education is also a factor. The suicide rate is lowest among individuals with college degrees. Those who, at best, completed high school are, by comparison, twice as likely to kill themselves. Suicide rates also tend to be lower among people in higher-income brackets.

The Economics of Stress

This surge in the suicide rate has taken place in years during which the working class has experienced greater economic hardship and psychological stress. Increased competition from abroad and outsourcing, the results of globalization, have contributed to job loss, particularly in economic sectors like manufacturing, steel, and mining that had long been mainstays of employment for such workers. The jobs still available often paid less and provided fewer benefits.

Technological change, including computerization, robotics, and the coming of artificial intelligence, has similarly begun to displace labor in significant ways, leaving Americans without college degrees, especially those 50 and older, in far more difficult straits when it comes to finding new jobs that pay well. The lack of anything resembling an industrial policy of a sort that exists in Europe has made these dislocations even more painful for American workers, while a sharp decline in private-sector union membership -- down from nearly 17% in 1983 to 6.4% today -- has reduced their ability to press for higher wages through collective bargaining.

Furthermore, the inflation-adjusted median wage has barely budged over the last four decades (even as CEO salaries have soared). And a decline in worker productivity doesn't explain it: between 1973 and 2017 productivity increased by 77%, while a worker's average hourly wage only rose by 12.4%. Wage stagnation has made it harder for working-class Americans to get by, let alone have a lifestyle comparable to that of their parents or grandparents.

The gap in earnings between those at the top and bottom of American society has also increased -- a lot. Since 1979, the wages of Americans in the 10th percentile increased by a pitiful 1.2%. Those in the 50th percentile did a bit better, making a gain of 6%. By contrast, those in the 90th percentile increased by 34.3% and those near the peak of the wage pyramid -- the top 1% and especially the rarefied 0.1% -- made far more substantial gains.

And mind you, we're just talking about wages, not other forms of income like large stock dividends, expensive homes, or eyepopping inheritances. The share of net national wealth held by the richest 0.1% increased from 10% in the 1980s to 20% in 2016. By contrast, the share of the bottom 90% shrank in those same decades from about 35% to 20%. As for the top 1%, by 2016 its share had increased to almost 39% .

The precise relationship between economic inequality and suicide rates remains unclear, and suicide certainly can't simply be reduced to wealth disparities or financial stress. Still, strikingly, in contrast to the United States, suicide rates are noticeably lower and have been declining in Western European countries where income inequalities are far less pronounced, publicly funded healthcare is regarded as a right (not demonized as a pathway to serfdom), social safety nets far more extensive, and apprenticeships and worker retraining programs more widespread.

Evidence from the United States , Brazil , Japan , and Sweden does indicate that, as income inequality increases, so does the suicide rate. If so, the good news is that progressive economic policies -- should Democrats ever retake the White House and the Senate -- could make a positive difference. A study based on state-by-state variations in the U.S. found that simply boosting the minimum wage and Earned Income Tax Credit by 10% appreciably reduces the suicide rate among people without college degrees.

The Race Enigma

One aspect of the suicide epidemic is puzzling. Though whites have fared far better economically (and in many other ways) than African Americans, their suicide rate is significantly higher . It increased from 11.3 per 100,000 in 2000 to 15.85 per 100,000 in 2017; for African Americans in those years the rates were 5.52 per 100,000 and 6.61 per 100,000. Black men are 10 times more likely to be homicide victims than white men, but the latter are two-and-half times more likely to kill themselves.

The higher suicide rate among whites as well as among people with only a high school diploma highlights suicide's disproportionate effect on working-class whites. This segment of the population also accounts for a disproportionate share of what economists Anne Case and Angus Deaton have labeled " deaths of despair " -- those caused by suicides plus opioid overdoses and liver diseases linked to alcohol abuse. Though it's hard to offer a complete explanation for this, economic hardship and its ripple effects do appear to matter.

According to a study by the St. Louis Federal Reserve , the white working class accounted for 45% of all income earned in the United States in 1990, but only 27% in 2016. In those same years, its share of national wealth plummeted, from 45% to 22%. And as inflation-adjusted wages have decreased for men without college degrees, many white workers seem to have lost hope of success of any sort. Paradoxically, the sense of failure and the accompanying stress may be greater for white workers precisely because they traditionally were much better off economically than their African American and Hispanic counterparts.

In addition, the fraying of communities knit together by employment in once-robust factories and mines has increased social isolation among them, and the evidence that it -- along with opioid addiction and alcohol abuse -- increases the risk of suicide is strong . On top of that, a significantly higher proportion of whites than blacks and Hispanics own firearms, and suicide rates are markedly higher in states where gun ownership is more widespread.

Trump's Faux Populism

The large increase in suicide within the white working class began a couple of decades before Donald Trump's election. Still, it's reasonable to ask what he's tried to do about it, particularly since votes from these Americans helped propel him to the White House. In 2016, he received 64% of the votes of whites without college degrees; Hillary Clinton, only 28%. Nationwide, he beat Clinton in counties where deaths of despair rose significantly between 2000 and 2015.

White workers will remain crucial to Trump's chances of winning in 2020. Yet while he has spoken about, and initiated steps aimed at reducing, the high suicide rate among veterans , his speeches and tweets have never highlighted the national suicide epidemic or its inordinate impact on white workers. More importantly, to the extent that economic despair contributes to their high suicide rate, his policies will only make matters worse.

The real benefits from the December 2017 Tax Cuts and Jobs Act championed by the president and congressional Republicans flowed to those on the top steps of the economic ladder. By 2027, when the Act's provisions will run out, the wealthiest Americans are expected to have captured 81.8% of the gains. And that's not counting the windfall they received from recent changes in taxes on inheritances. Trump and the GOP doubled the annual amount exempt from estate taxes -- wealth bequeathed to heirs -- through 2025 from $5.6 million per individual to $11.2 million (or $22.4 million per couple). And who benefits most from this act of generosity? Not workers, that's for sure, but every household with an estate worth $22 million or more will.

As for job retraining provided by the Workforce Innovation and Opportunity Act, the president proposed cutting that program by 40% in his 2019 budget, later settling for keeping it at 2017 levels. Future cuts seem in the cards as long as Trump is in the White House. The Congressional Budget Office projects that his tax cuts alone will produce even bigger budget deficits in the years to come. (The shortfall last year was $779 billion and it is expected to reach $1 trillion by 2020.) Inevitably, the president and congressional Republicans will then demand additional reductions in spending for social programs.

This is all the more likely because Trump and those Republicans also slashed corporate taxes from 35% to 21% -- an estimated $1.4 trillion in savings for corporations over the next decade. And unlike the income tax cut, the corporate tax has no end date . The president assured his base that the big bucks those companies had stashed abroad would start flowing home and produce a wave of job creation -- all without adding to the deficit. As it happens, however, most of that repatriated cash has been used for corporate stock buy-backs, which totaled more than $800 billion last year. That, in turn, boosted share prices, but didn't exactly rain money down on workers. No surprise, of course, since the wealthiest 10% of Americans own at least 84% of all stocks and the bottom 60% have less than 2% of them.

And the president's corporate tax cut hasn't produced the tsunami of job-generating investments he predicted either. Indeed, in its aftermath, more than 80% of American companies stated that their plans for investment and hiring hadn't changed. As a result, the monthly increase in jobs has proven unremarkable compared to President Obama's second term, when the economic recovery that Trump largely inherited began. Yes, the economy did grow 2.3% in 2017 and 2.9% in 2018 (though not 3.1% as the president claimed). There wasn't, however, any "unprecedented economic boom -- a boom that has rarely been seen before" as he insisted in this year's State of the Union Address .

Anyway, what matters for workers struggling to get by is growth in real wages, and there's nothing to celebrate on that front: between 2017 and mid-2018 they actually declined by 1.63% for white workers and 2.5% for African Americans, while they rose for Hispanics by a measly 0.37%. And though Trump insists that his beloved tariff hikes are going to help workers, they will actually raise the prices of goods, hurting the working class and other low-income Americans the most .

Then there are the obstacles those susceptible to suicide face in receiving insurance-provided mental-health care. If you're a white worker without medical coverage or have a policy with a deductible and co-payments that are high and your income, while low, is too high to qualify for Medicaid, Trump and the GOP haven't done anything for you. Never mind the president's tweet proclaiming that "the Republican Party Will Become 'The Party of Healthcare!'"

Let me amend that: actually, they have done something. It's just not what you'd call helpful. The percentage of uninsured adults, which fell from 18% in 2013 to 10.9% at the end of 2016, thanks in no small measure to Obamacare , had risen to 13.7% by the end of last year.

The bottom line? On a problem that literally has life-and-death significance for a pivotal portion of his base, Trump has been AWOL. In fact, to the extent that economic strain contributes to the alarming suicide rate among white workers, his policies are only likely to exacerbate what is already a national crisis of epidemic proportions.


Seamus Padraig , June 19, 2019 at 6:46 am

Trump has neglected his base on pretty much every issue; this one's no exception.

DanB , June 19, 2019 at 8:55 am

Trump is running on the claim that he's turned the economy around; addressing suicide undermines this (false) claim. To state the obvious, NC readers know that Trump is incapable of caring about anyone or anything beyond his in-the-moment interpretation of his self-interest.

JCC , June 19, 2019 at 9:25 am

Not just Trump. Most of the Republican Party and much too many Democrats have also abandoned this base, otherwise known as working class Americans.

The economic facts are near staggering and this article has done a nice job of summarizing these numbers that are spread out across a lot of different sites.

I've experienced this rise within my own family and probably because of that fact I'm well aware that Trump is only a symptom of an entire political system that has all but abandoned it's core constituency, the American Working Class.

sparagmite , June 19, 2019 at 10:13 am

Yep It's not just Trump. The author mentions this, but still focuses on him for some reason. Maybe accurately attributing the problems to a failed system makes people feel more hopeless. Current nihilists in Congress make it their duty to destroy once helpful institutions in the name of "fiscal responsibility," i.e., tax cuts for corporate elites.

dcblogger , June 19, 2019 at 12:20 pm

Maybe because Trump is president and bears the greatest responsibility in this particular time. A great piece and appreciate all the documentation.

Svante , June 19, 2019 at 7:00 am

I'd assumed, the "working class" had dissappeared, back during Reagan's Miracle? We'd still see each other, sitting dazed on porches & stoops of rented old places they'd previously; trying to garden, fix their car while smoking, drinking or dazed on something? Those able to morph into "middle class" lives, might've earned substantially less, especially benefits and retirement package wise. But, a couple decades later, it was their turn, as machines and foreigners improved productivity. You could lease a truck to haul imported stuff your kids could sell to each other, or help robots in some warehouse, but those 80s burger flipping, rent-a-cop & repo-man gigs dried up. Your middle class pals unemployable, everybody in PayDay Loan debt (without any pay day in sight?) SHTF Bug-out bags® & EZ Credit Bushmasters began showing up at yard sales, even up North. Opioids became the religion of the proletariat Whites simply had much farther to fall, more equity for our betters to steal. And it was damned near impossible to get the cops to shoot you?

Man, this just ain't turning out as I'd hoped. Need coffee!

Svante , June 19, 2019 at 7:55 am

We especially love the euphemism "Deaths O' Despair." since it works so well on a Chyron, especially supered over obese crackers waddling in crusty MossyOak™ Snuggies®

https://mobile.twitter.com/BernieSanders/status/1140998287933300736
https://m.youtube.com/watch?v=apxZvpzq4Mw

DanB , June 19, 2019 at 9:29 am

This is a very good article, but I have a comment about the section titled, "The Race Enigma." I think the key to understanding why African Americans have a lower suicide rate lies in understanding the sociological notion of community, and the related concept Emil Durkheim called social solidarity. This sense of solidarity and community among African Americans stands in contrast to the "There is no such thing as society" neoliberal zeitgeist that in fact produces feelings of extreme isolation, failure, and self-recriminations. An aside: as a white boy growing up in 1950s-60s Detroit I learned that if you yearned for solidarity and community what you had to do was to hang out with black people.

Amfortas the hippie , June 19, 2019 at 2:18 pm

" if you yearned for solidarity and community what you had to do was to hang out with black people."
amen, to that. in my case rural black people.
and I'll add Hispanics to that.
My wife's extended Familia is so very different from mine.
Solidarity/Belonging is cool.
I recommend it.
on the article we keep the scanner on("local news").we had a 3-4 year rash of suicides and attempted suicides(determined by chisme, or deduction) out here.
all of them were despair related more than half correlated with meth addiction itself a despair related thing.
ours were equally male/female, and across both our color spectrum.
that leaves economics/opportunity/just being able to get by as the likely cause.

David B Harrison , June 19, 2019 at 10:05 am

What's left out here is the vast majority of these suicides are men.

Christy , June 19, 2019 at 1:53 pm

Actually, in the article it states:
"There are gender-based differences as well. From 1999 to 2017, the rate for men was substantially higher than for women -- almost four-and-a-half times higher in the first of those years, slightly more than three-and-a-half times in the last."

jrs , June 19, 2019 at 1:58 pm

which in some sense makes despair the wrong word, as females are actually quite a bit more likely to be depressed for instance, but much less likely to "do the deed". Despair if we mean a certain social context maybe, but not just a psychological state.

Ex-Pralite Monk , June 19, 2019 at 10:10 am

obese cracker

You lay off the racial slur "cracker" and I'll lay off the racial slur "nigger". Deal?

rd , June 19, 2019 at 10:53 am

Suicide deaths are a function of the suicide attempt rate and the efficacy of the method used. A unique aspect of the US is the prevalence of guns in the society and therefore the greatly increased usage of them in suicide attempts compared to other countries. Guns are a very efficient way of committing suicide with a very high "success" rate. As of 2010, half of US suicides were using a gun as opposed to other countries with much lower percentages. So if the US comes even close to other countries in suicide rates then the US will surpass them in deaths. https://en.wikipedia.org/wiki/Suicide_methods#Firearms

Now we can add in opiates, especially fentanyl, that can be quite effective as well.

The economic crisis hitting middle America over the past 30 years has been quite focused on the states and populations that also tend to have high gun ownership rates. So suicide attempts in those populations have a high probability of "success".

Joe Well , June 19, 2019 at 11:32 am

I would just take this opportunity to add that the police end up getting called in to prevent on lot of suicide attempts, and just about every successful one.

In the face of so much blanket demonization of the police, along with justified criticism, it's important to remember that.

B:H , June 19, 2019 at 11:44 am

As someone who works in the mental health treatment system, acute inpatient psychiatry to be specific, I can say that of the 25 inpatients currently here, 11 have been here before, multiple times. And this is because of several issues, in my experience: inadequate inpatient resources, staff burnout, inadequate support once they leave the hospital, and the nature of their illnesses. It's a grim picture here and it's been this way for YEARS. Until MAJOR money is spent on this issue it's not going to get better. This includes opening more facilities for people to live in long term, instead of closing them, which has been the trend I've seen.

B:H , June 19, 2019 at 11:53 am

One last thing the CEO wants "asses in beds", aka census, which is the money maker. There's less profit if people get better and don't return. And I guess I wouldn't have a job either. Hmmmm: sickness generates wealth.

[Jun 16, 2019] Economic Growth A Short History of a Controversial Idea naked capitalism

Jun 16, 2019 | www.nakedcapitalism.com

https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F06%2Feconomic-growth-a-short-history-of-a-controversial-idea.html

https://eus.rubiconproject.com/usync.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> Economic Growth: A Short History of a Controversial Idea Posted on June 15, 2019 by Yves Smith By Gareth Dale, who teaches at Brunel University. He publishes occasionally in The Ecologist . This article includes passages from previously published texts, including 'The tide is rising, don't rock the boat!' Economic growth and the legitimation of inequality (2018), Seventeenth century origins of the growth paradigm (2017), and The growth paradigm: A critique (2012). Originally published at openDemocracy

The politics of economic growth are complex and contested as never before. In rich countries, rates of GDP growth have declined, decade after decade since the 1960s. The 2008 crash was deep, and the post-crisis recovery has been slow. This poses problems for governments, given that their 'performance legitimacy' requires some degree of popular approval of their perceived success in charting a growth path that satisfies the citizenry's demand for goods and services. Where growth is low and governments choose to respond with austerity programmes, these bring additional misery and hardship -- including tens of thousands of premature deaths in Britain alone .

In the same decades, growth scepticism has thrived. It takes two main forms: one highlights the impact of infinite growth on finite resources and on the natural environment. Recognition of the dangers of climate breakdown has transformed this debate – while mainstream opinion retains the traditional faith in growth, now refashioned as ' green growth ', the heretics are rallying to ' degrowth '.

The other emphasises the disconnect between growth and social well-being. The days are long gone when growth was seen as the fast track to general prosperity, as normal and natural as sunrise. It is well established that the relationship between growth and well-being is partial at best. Such a correlation does exist, but weakens after a certain point -- roughly speaking when per capita GDP exceeds $15,000. At higher levels, the translation of growth into improvements in health and well-being is tenuous. Other variables, notably levels of equality, are critical.

In combination, these developments have motivated the ' Beyond GDP ' agenda. Whether for reasons of growth scepticism or out of concern that if GDP growth remains slack governments' performance legitimacy will suffer too, political leaders, civil servants and academics -- among them Nicolas Sarkozy , Jacinda Ardern , Gus O'Donnell , Joseph Stiglitz and Amartya Sen -- are promoting alternative yardsticks.

To assess these debates it helps to dig into the history and morphology of the 'growth paradigm' -- the belief that economic growth is good, imperative, essentially limitless, and the principal remedy for a litany of social problems – and ask the following: when and how did this paradigm originate?

From Rain Dance to Nasdaq

One response was offered in 1960 by Elias Canetti . In quasi-Nietzschean vein, he invoked a transhistorical 'will to grow'. Humans are always striving for more . Whether the parent monitoring her child's weight or the state official seeking to augment her power, or the community expanding its population, we all want growth. The desire to accumulate goods, the drive for economic growth, the wish for prosperity – they are all innate to human social being. Humans in groups are driven to seek increase: of their numbers, of the conditions of production, and of the products they require and desire. The very earliest homo sapiens sought the enlargement of their "own horde through a plentiful supply of children." And later, in the age of modern industrial production, the growth drive came into its own.

"If there is now one faith, it is faith in production, the modern frenzy of increase; and all the peoples of the world are succumbing to it one after the other. Every factory is a unit serving the same cult. What is new is the acceleration of the process. What in former days was generation and increase of expectancy, directed towards rain or corn, has today become production itself." A straight line runs from the rain dance to the Nasdaq.

But this is to confuse the wiring of our current economy with the wiring of the human brain. Canetti's 'will to grow' doesn't withstand scrutiny. The diverse behaviours he describes can't be reduced to a single logic. The 'will' behind creating babies is quite unlike the will to accumulate acreage or gold. And the latter is relatively recent. For much of the human story, societies were nomadic or semi-nomadic, and organised in immediate-return systems . Stashes of food were set aside to tide the group over for days or weeks, but long-term storage was impractical. The accumulation of possessions would hamper mobility. The measures that such societies used to reduce the risks of scarcity centred not on accumulating stores of goods but on knowledge of the environment, and interpersonal relationships (borrowing, sharing, and so on). The moral economy of sharing necessitates a muscular egalitarianism that is undermined by the accumulation of property.

Logics of accumulation -- and, in the loosest sense, growth -- were not initiated until the Neolithic revolution. Its technological and institutional transformations included settled agriculture and storage, class division, states, warfare and territoriality, and, later, the invention of money. Population growth joined with class exploitation and interstate competition to expand the sway of agrarian empires. Farmers enlarged the ploughlands, scholars penned proposals for improving the organisation of agriculture or trade, merchants amassed wealth, and rulers, seeking to enlarge population and tribute, extended their domains. Only now -- in the post-Neolithic age -- did gold achieve its fetish quality as the source and symbol of power.

Scour the documents from ancient civilisations and you'll find tales of competition for territory and the accumulation of property, but nothing that resembles the modern growth paradigm. No conception of 'an economy' that can grow, still less of one that tends to the infinite. And you'll find little, if any, notion of linear historical progress. Instead, cyclical cosmologies prevailed. A partial exception is the fourteenth century polymath, Ibn Khaldun . He developed a sophisticated analysis of growth dynamics. But his ideas weren't widely adopted, and his theory is cyclical: it describes negative feedback mechanisms that ensure any economic upticks will necessarily hit barriers and retreat.

When, then, did the modern growth paradigm originate -- and why?

Petty's Arithmetic

The evolution of the growth paradigm was integrally connected to the capitalist system and its colonial thrusts. The basic link between the growth drive and capitalism is transparent. The latter is a system of competitive accumulation. The former, in suggesting that the system is natural and brings benefit also to the '99%', provides ideological cover in that growth serves as an idealised and democratised redescription of capital accumulation. But there's more to it than that. The capitalist transition was to a system of generalised commodity production, in which formal 'productive' economic activity takes the shape of commodities interacting through the price mechanism, in a regularised manner. If earlier political-economic thought had construed its subject as the affairs of the royal household, during the capitalist transition a new model emerged, with an interconnected market field posited as essentially outside the state.

In seventeenth-century England, just as the universe was being re-imagined by Newton et al as a machine determined by lawful regularities, the idea that economic behaviour follows natural laws became commonplace. By the close of the following century, Richard Cantillon had presented the market system as self-equilibrating, a machine that functions in a law-like manner; Quesnay's Tableau had depicted the economic system as a unified process of reproduction; Adam Smith had theorised the dynamics of economic growth; and philosophers (such as William Paley) had developed the creed that steady economic growth legitimates the social system and renders system-critical demands unnecessary and dangerous.

The same centuries experienced a revolution in statistics. In the England of 1600, the growth paradigm could scarcely have existed. No one knew the nation's income, or even its territory or population. By 1700 all these had been calculated , at least in some rough measure, and as new data arrived England's 'material progress' could be charted. Simultaneously, the usage of 'growth' had extended from the natural and concrete toward abstract phenomena: the growth of England's colonies in Virginia and Barbados, the ' growth of trade ,' and suchlike.

But the capitalist transition revolutionised much more than the formal economy and economic concepts. As land came to be regarded as a commodity-like object, the idea -- found to some degree in antiquity -- that nature exists to serve the purposes of landowners and is fundamentally external to human beings, gained definition. The early-modern regimes of abstract social labour and abstract social nature (i.e. the constitution of labour and nature as commodities) were sustained by the scientific revolution, and also by the construction of capitalist time . Over centuries, time became flattened into an abstract, infinite and divisible continuum, one that permitted economic life to be re-imagined as subject to continuous growth and cultivation . Morality was upended, too, most significantly in the discarding of the age-old proscriptions against acquisitiveness.

The more that economic activity came to be marshalled behind the imperatives of capital accumulation, the more it became subject to regimes of 'improvement' and quantification. In Jacobean and Cromwellian England, these practices and discourses proliferated. Agrarian-capitalist improvement was fuelled by scientific discoveries. These, in turn, were spurred on by the navigational and martial demands of explorers, freebooters and conquerors. European settlers in the New World not only exterminated and subjugated 'new' peoples, but turned to objectifying and cataloguing them, drawing comparisons with their own kind and 'improving' them. 'Improvement' and its theologically-intoxicated transplantation to colonial locations generated new data and new demands for detailed knowledge. How profitable is this tract of land, and its denizens? How can they be made more profitable ? Answering such questions was enabled by modern accounting techniques, with their sharper definition of such abstractions as profit and capital.

No surprise, then, that the first statistically rigorous accounting of the wealth of a country (as distinct from, say, a royal household) was conducted by a capitalist on a colonial mission . William Petty planted quantification at the heart of scientific economics, crafted to the purposes of English merchants and empire, and gaining ideological force from the sheen of objectivity with which economic statistics -- or 'political arithmetic' as he termed it -- comes coated. In his work the conquest of nature and the idea of nature as a machine, and of the economy as a productive engine, blended to produce a new concept of wealth as " resources and the productive power to harness them " in contrast to the mercantilist concept, centred on the accumulation of bullion.

Colonisation of the New World contributed powerfully to capital accumulation in Western Europe, but it also spurred Europe's philosophers to elaborate a racialised progress ideology . The question of what to make of the peoples encountered in the Americas, and what implications followed from their property arrangements, stimulated a new reading of the human story: a narrative of social progress. From the vantage point of the colonialists, if 'they' were at the primitive stage, had 'we' once occupied it too?

Centred on a mythical ladder that climbs up from barbarism to civilisation, the progress idea hammered the diversity of human populations into a single temporal-economic chain . By indexing the richer and higher-tech nations (and 'races') as history's vanguard, it justified their bossing of the rest. It was a manifesto that drummed out capital's rhythms, and later found new forms as ' modernisation theory ,' 'the development project,' and so forth, articulated through a grammar of 'growth.' Through its marriage to progress and development, in the belief that social advance requires a steady upward ratchet in national income, growth gained its ideological heft.

The Globalisation of an Ideology

In the nineteenth and twentieth centuries, the consolidation and globalisation of capitalist relations was accompanied by the growth paradigm. The first half of the twentieth century saw its definition sharpen. A pronounced shift occurred from a rather vague sense -- long prevalent -- that government should preside over economic 'improvement' and 'material progress' to an urgent conviction that promoting growth is a matter of national priority. Factors behind the shift included intensified geopolitical rivalry, and the increasing 'muscularity' of states, with their expanded bureaucratic apparatuses, surveillance systems and welfare provision, as well as the segue from the age of empires to that of nation states , a shift that helped consolidate the discourse of the 'national economy.' In many countries the expansion of suffrage was an additional factor: rights were extended and an infrastructure and ideology of national belonging was constructed with the aim of incorporating the lower orders as citizens into the body politic. With the Great Depression, restoring growth became an urgent project of states, and provided the context for the national income accounting that eventually led to GDP.

The acme of the growth paradigm was reached in the mid twentieth century. Growth was firmly established everywhere: in the state-capitalist economies of the 'Second World,' the market economies of the West, and the postcolonial world too. It became part of the economic-cultural furniture, and played a decisive part in binding 'civil society' into capitalist hegemonic structures -- with social democratic parties and trade unions crucial binding agents. It came to be seen as the key metric of national progress and as a magic wand to achieve all sorts of goals: to abolish the danger of returning to depression, to sweeten class antagonisms, to reduce the gap between 'developed' and 'developing' countries, to carve a path to international recognition, and so on. There was a military angle too. For the Cold War rivals, growth promised geopolitical success. "If we lack a first-rate growing economy," cautioned JFK on the campaign trail, " we cannot maintain a first-rate defense ." The greater the rate of growth, it was universally supposed, the lesser the economic, social and political challenges, and the more secure the regime.

The growth paradigm, I suggest, is a form of fetishistic consciousness. It functions as commodity fetishism at one remove. Growth, although the result of social relations among people, assumes the veneer of objective necessity. The growth paradigm elides the exploitative process of accumulation, portraying it instead as a process in the general interest. As Mike Kidron and Elana Gluckstein note, as a system of competition "capitalism depends on the growth of capital; as a class system it depends on obscuring the sources of that growth."

For a long time, GDP growth was widely assumed to be the route to prosperity. Since then, cracks have appeared. In the rich world, we are beginning to realise that continuous GDP growth leads not simply to wealth and wellbeing, but to environmental collapse and barbecued grandchildren. But growth is not its own cause. GDP mirrors the power structure and form of value of capitalist society, but it doesn't define the system's core goal. That goal is the competitive accumulation of capital, and the accounting principles that guide it are those at the level of the firm, not the state. Put differently, the relentless increase in global resource throughput and environmental despoliation is not principally the result of states aspiring to a metric – higher GDP – but of industrial and financial firms, driven by market competition to expand turnover, develop new products, and increase profits and interest.

If the above analysis is correct, insofar as critical debates on growth focus solely on GDP while being coy about capital, they are enacting a form of displacement .

Abi , June 15, 2019 at 3:24 am

In writing a dissertation in 2014 I read Alchian's theory of the firm where he said cooperation is what fosters a peaceful condition for growth to occur, where as competition does the opposite. I've lived by that idea since, at least for us here in Lagos we have a chance to build a more cooperative and less competitive society

Sound of the Suburbs , June 15, 2019 at 4:18 am

If we were actually pursuing growth things would be a lot better.

The current goal is making money (capital accumulation).

What is this GDP thing anyway?

In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised inflating asset prices doesn't create real wealth, they came up with the GDP measure to track real wealth creation in the economy.

The transfer of existing assets, like stocks and real estate, doesn't create real wealth and therefore does not add to GDP. The real wealth creation in the economy is measured by GDP.

Inflated asset prices aren't real wealth, and this can disappear almost over-night, as it did in 1929 and 2008.

The economics of globalisation precedes the GDP measure when they thought inflating asset prices created real wealth.

Real wealth creation involves real work, producing new goods and services in the economy.

We need an economics that focuses on GDP to grow GDP.

Neoclassical economics makes you think you are creating real wealth by inflating asset prices and we have been faffing about doing that.

The new scientific economics of globalisation = 1920's neoclassical economics with some complex maths on top.

skippy , June 15, 2019 at 4:30 am

Cambridge Controversy – ?????

Jos Oskam , June 15, 2019 at 4:57 am

" Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what "

This is not by me, but by the creator of the GDP formula, Simon Kuznets. GDP is a very poor indicator for many reasons, even apart from those mentioned above. Borrowing money and squandering it adds to GDP while the resulting debt is ignored. Extracting and burning fossil fuels adds to GDP while the future depletion is ignored. Stripmining and deforesting nature adds to GDP while you get my drift. To paraphrase Bastiat, the growth in GDP that is seen tends to mask decline in areas like nature and wellbeing that are not seen.

It is tragic to see politicians and pundits thoughtlessly raving about a few tenths of a percent change in GDP while never seeming to realize how poorly this represents things that are really important to humanity.

When will people stop worshipping at the GDP altar?

Steve Ruis , June 15, 2019 at 8:50 am

I might add that someone said back in the 60's that "growth for growth's sake is the philosophy of a cancer cell."

Ian Perkins , June 15, 2019 at 12:18 pm

Wonderful!
BrainyQuote attributes it ("Growth for the sake of growth is the ideology of the cancer cell.") to Edward Abbey, who also came out with "Society is like a stew. If you don't stir it up every once in a while then a layer of scum floats to the top."
Thank you.

John Wright , June 15, 2019 at 11:54 pm

A variation on the theme, from https://en.wikiquote.org/wiki/Kenneth_Boulding

"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."

"Attributed to Kenneth Boulding in: United States. Congress. House (1973) Energy reorganization act of 1973: Hearings, Ninety-third Congress, first session, on H.R. 11510. p. 248"

The Rev Kev , June 15, 2019 at 5:46 am

Where the author says 'For much of the human story, societies were nomadic or semi-nomadic, and organized in immediate-return systems.' that is not entirely true that. Here I am thinking of the early Bantu in their expansion in Africa. Their wealth for them were in their cattle herds which being mobile, made possible the expansion of the Bantu down eastern Africa and into Southern Africa. These were long-term investments and Bantu society evolved to take care of these herds as they expanded. Your wealth in that society was in how many cattle you had.
I suppose when you think about it, the paradigm of growth works – to an extent – when there are more lands to discover, more continents to be opened up, more frontiers to be discovered. But all of that ran out a century ago and so with no more new resources to be found to be exploited, we have now reached the point where where we have come up hard against the natural limits of this planet. And yet, our economies still use the same mode of operating when we lived in an ever-expanding world. We are far beyond the point where we should have evolved into a closed-loop economy.

skippy , June 15, 2019 at 5:54 am

Cattle = Status.

The Rev Kev , June 15, 2019 at 6:22 am

More than that. For example. A young man could only really use cattle to be the dowry that he would need to attract a bride so cattle was a sign of his wealth. The status came with it. Cattle shaped their society immensely. Their villages were huge rings where the cattle would be locked in of a night and were called kraals. The people were so familiar with their cattle that a herdsman at a glance of a herd of several hundred cattle would be able to tell straight away if one were missing. It was a fascinating society.

Off The Street , June 15, 2019 at 8:17 am

On Wall Street, people used to ask Where are the client's yachts ?

As a sign of the times, now they can ask Where are the client's cattle, or hats ?

Dan , June 15, 2019 at 9:15 pm

The statement "For much of the human story, societies were nomadic or semi-nomadic, and organized in immediate-return systems" is absolutely true. Please see the book "Limited Wants, Unlimited Means" for a good primer. It includes an excerpt from Marshall Sahlins' "The Original Affluent Society" – a great introduction to hunter-gatherer societies. There is also a wonderful comparison of immediate return and delayed return societies as exemplified in the Hadza people, and the problems that arise once an immediate return society begins to settle, even minimally.

The Bantu evolved later and are agro-pastoralists, not foragers. The Hadza have persisted as foragers even after contact with the Bantu and other groups. They have also repeatedly resisted government and missionary efforts to introduce farming and Christianity. The Hadza are perhaps the best example of how human beings lived on earth for over 99% of our existence, that being in a largely cooperative, egalitarian manner, devoid of concepts such as wealth.

http://web.mnstate.edu/robertsb/307/ANTH%20307/hadzahuntergatherers.pdf

Abi , June 16, 2019 at 2:17 pm

Bantu people were not cattle herders, west central and much of Southern Africa is basically forest, there's no way in this world anyone could move herds this way; it's our northern brothers and sisters that are cattle herders. That being said, culturally we (Bantu) generally moved to set up new families/villages that's how we spread not through some farming technique, that's false

Ignacio , June 15, 2019 at 5:53 am

When I comment with someone, my wife for instance, about the need to get rid of GDP growth as the main political objective and think of small well being objectives I tipically receive commiseration in their eyes: "Yes Nacho, you are right, go and rest for a while"

animalogic , June 15, 2019 at 7:43 am

"I tipically receive commiseration in their eyes"
Its the burden of being right in the world of wrong.

Steven B kurtz , June 15, 2019 at 6:53 am

As usual, scale is ignored. In my (still living) 94 year old mother's lifetime, human population quadrupled. In large mammals, this is sometimes called "plague phase." Add a (minimally) tenfold increase in technological leverage in converting finite resources into infrastructure, food, transportation, consumable goods and services, and the increasingly rapid decline of the ecosphere is hardly a surprise. Dematerialization of the economy is a myth! And don't expect money printing or cyber tokens as solutions. They are simply power tools to access real stuff.

Godfree Roberts , June 15, 2019 at 7:22 am

Except China. Just sayin'

Wukchumni , June 15, 2019 at 7:40 am

One of the drivers of growth in the UK in the late 18th century that was missing, was money. It reached a crisis stage in 1797.

A chronic shortage of coins, silver specie in particular.

Then, the freebooters came to the rescue!

Silver 8 Reales coins plundered from the Spanish were reworked into being coins of the British realm & many other outposts in the colonies.

The first effort was pretty weak, all that was done was they were counterstamped with a small portrait of King George III upon the countenance of King Charles IIII, which led to this ditty:

"In order to enable the Spanish Dollar to pass, the head of a fool was struck on the neck of an ass."

http://jpkoning.blogspot.com/2017/10/the-ubiquitous-spanish-dollara-photo.html

Wukchumni , June 15, 2019 at 7:53 am

A couple of drivers of growth showed up both around the same time, the Haber Bosch process that allowed for pretty much unlimited food resources, and worldwide fiat money, which also had no limits to production.

We've quadrupled the world's population since these 2 events.

Ian Perkins , June 15, 2019 at 12:28 pm

The Haber-Bosch process allowed for a vast, but in no way unlimited, expansion of production.
Fiat money can be produced in unlimited amounts, but, according to both common sense and MMT, actual production also has actual limits.

Wukchumni , June 15, 2019 at 12:38 pm

Setting the world free from first gold and then silver restraints (the last silver coins issued for circulation in the 1st world was in 1969) allowed for a as much as you'd like fiat economy, beyond limits and also risk. (for now, that is)

For what it's worth, there has never been an instance of hyperinflation in the cyber money age.

https://www.youtube.com/watch?v=oGOOF_QnhwQ

Wukchumni , June 15, 2019 at 12:47 pm

Whoops, my bad. Germany issued silver 5 Mark coins for use in circulation until 1974, forgot about that.

Ian Perkins , June 15, 2019 at 1:10 pm

As much wood, steel and cement, or as many doctors, teachers and entertainers as you'd like, without limits, just because money can be printed without limits?

Wukchumni , June 15, 2019 at 1:18 pm

Money is only the lubricant, the ball bearings if you will. It has no agency over where it goes, other than in a tight circle.

Ian Perkins , June 15, 2019 at 1:38 pm

In a tight circle, or into a tight circle – aka the 0.1%?

Oregoncharles , June 15, 2019 at 4:26 pm

It's a fundamental issue: money is an abstraction that can increase without limits; the real world, the real economy, is not. MMT does address that, but I think it's a root source of the persistent inflation that plagued the economy until rather recently. Apparently the Fed, or somebody, can stop it if they wish. However, I think that that history is one reason for the resistance to MMT – it sounds like a formula for more inflation. Since it hasn't actually been tried as a policy (the Pentagon's limitless funds are really just corruption), we won't know for sure until it's tried. There always seems to be a lot that the economists don't know or won't admit.

deplorado , June 16, 2019 at 3:26 pm

Great comment!
Second that.

Thuto , June 15, 2019 at 8:55 am

Politicians don't have the analytical tools to pick apart the "constant growth" argument so they default to trumpeting it as a cure for all social ills (no doubt with encouragement from mainstream economists). On the other end of the spectrum, the growth story seduces ordinary people because they're told their share of the spoils, courtesy of the trickling down effect, will lead them to a "better life". As such, nothing short of a massive ideological decolonization effort is needed to strip growth of the superhero status it enjoys in contemporary economic discourse.

Norb , June 15, 2019 at 1:27 pm

The only positive hope is that enough people take it upon themselves to rise to the occasion. People who have freed themselves from the tyranny of the current economic system need to be examples for others to follow. Those that can, must change their lifestyles. They indirectly become leaders by example.

There is a spiritual component in this transformation that has not really surfaced yet, but feels like it is stirring under the surface. There is so much denial going on that something will burst forth. What form that takes is anyones guess, but most people are just looking for leadership when pressed.

Instead of the neoliberal message of selfish pursuits lead to a better life, the message of self-sacrifice and service to something greater resonates with most people. Instead of being just lip-service or propaganda, this sentiment must be channeled into concrete policies and actions- beginning with oneself.

Underlying all this is the need for peace. The Big Lie of growth pales in comparison to the Big Lie of perpetual war. Both lies reinforce each other.

How to explain the conflict between capitalists and well, all the rest, other than a spiritual war. Where does one place ones faith? Violent and selfish Nationalism will not suffice.

Strength in humility instead of conquest is the dividing line. The decolonization of the human mind must be followed by an awareness and consciousness that the world is here to live in, not conquer. That is an enormous shift in human action and consciousness- those that live this ideal must be valued and emulated.

The attempt must be made- is being made.

Carolinian , June 15, 2019 at 8:59 am

The growth paradigm, I suggest, is a form of fetishistic consciousness.

Elsewhere today Lambert talks about religion as Marx's "opiate of the people" but there are many versions of that drug and our secular overlords seem to have replaced the Bible with other unquestioned assumptions, many of them economic. Perhaps at some point rationality has its limits and illusions of some kind of are necessary to make the engine go. The problem unfortunately is that the current engineers seem to believe those illusions themselves and follow them blindly. They are addicts too. Is it time to "just say no"?

lyman alpha blob , June 15, 2019 at 10:13 am

Good essay. The author gets the the heart of it with this –

The evolution of the growth paradigm was integrally connected to the capitalist system and its colonial thrusts. The basic link between the growth drive and capitalism is transparent. The latter is a system of competitive accumulation. The former, in suggesting that the system is natural and brings benefit also to the '99%', provides ideological cover in that growth serves as an idealised and democratised redescription of capital accumulation.

– where the theory of growth is an attempt to rationalize the greed of the few who really like playing capitalist at the expense of everyone else. How about they get their jollies playing Monopoly and leave the rest of us alone?

I'll just leave this here, a beautiful tune by one of my favorite bands, Old Crow Medicine Show. Four minutes that will make you feel better after reading of all the nastiness in the world, and very apropos to this article –

Ain't It Enough?

hemeantwell , June 15, 2019 at 12:52 pm

I agree with the thrust of your comment but

is an attempt to rationalize the greed of the few who really like playing capitalist at the expense of everyone else.

As noxious as their displays of wealth are, and as much as it's possible to make a case that pathological narcissism infuses the system, the motive to accumulate to compete with rivals, current and future, is central. It's politically useful to attack the way that this motive draws others into its van, i.e. to make them personally despicable. But it might be worthwhile to consider how much the accumulation motive is embodied as a kind of social contract in the firm's organization. I imagine that individual capitalists say to themselves "I've made my pile, time to sail away in my yacht," but the firm and those who will stay on want to keep things going.

rod , June 15, 2019 at 11:12 am

. The moral economy of sharing necessitates a muscular egalitarianism that is undermined by the accumulation of property.
this really stuck out to me.
and I can't really identify why, however I couldn't stop thinking about the growing proliferation of plastic while reading the article

David J. , June 15, 2019 at 12:01 pm

Back in the early 80s, the professor for whom I was a grad assistant frequently urged me to read Canetti's "Crowds and Power." It's a powerful and useful book. Well-written and accessible and full of thought-provoking ideas. I'd recommend it for anyone who wants to ponder social relations.

In this case, Dale seems to use Canetti's book as a kind of straw-man entry to his real topic:an intro to his discussion of growth/degrowth. I guess you gotta start somewhere? Maybe he should have simply directly referenced Canetti on his notion of "feast crowds" (pg 62 of my edition of Crowds and Power.)

The above comments by Sound of the Suburbs and Joe Oskam are incisive, imo. The essence of the matter boils down to developing a more rigorous distinction (and understanding) of the difference between productive economic activity and non-productive economic activity. Hudson is really good on this.

Wukchumni , June 15, 2019 at 12:17 pm

Go back further and Gustave Le Bon's The Crowd from 1896 ages well, because human motives don't change much

"The masses have never thirsted after truth. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim."

"A crowd thinks in images, and the image itself calls up a series of other images, having no logical connection with the first A crowd scarcely distinguishes between the subjective and the objective. It accepts as real the images invoked in its mind, though they most often have only a very distant relation with the observed facts .Crowds being only capable of thinking in images are only to be impressed by images."

"We see, then, that the disappearance of the conscious personality, the predominance of the unconscious personality, the turning by means of suggestion and contagion of feelings and ideas in an identical direction, the tendency to immediately transform the suggested ideas into acts; these, we see, are the principal characteristics of the individual forming part of a crowd. He is no longer himself, but has become an automaton who has ceased to be guided by his will."

JEHR , June 15, 2019 at 1:16 pm

As I read these quoted words it is hard not to think of the crowds that surround Trump on his so-called "rallies" for his base. One cannot but help ask, Why is anyone listening to this man? Ans: "He is no longer himself, but has become an automaton who has ceased to be guided by his will."

Norb , June 15, 2019 at 3:06 pm

What makes the masses the masses is that they are followers. This is a double edged sword the elite exploit relentlessly- that is what makes them the elite. They hold the power, and desire, to manipulate the masses through narrative and image. These stories and images make the world and human experience comprehensible. When corruption sinks in, that whole group is doomed to eventual failure if a self-correcting mechanism is not present. Leaders/elite and masses both fail.

It is very self-serving for the elite to blame the masses when the "illusions" stop working their magic. Have the elite ever "thirsted after truth" either? Truth meaning a universal truth applicable to all, or the Truth embodied in a personal view as apposed to a public view? Such Truths tend to obfuscate the drive for personal power, which doesn't sit well within groups of people let alone groups of differing cultural or ethnic experiences.

Manipulation of the masses is not the problem, it is manipulation to what end that is the issue. In that respect, the elite leadership should take more responsibility and bear a greater portion of blame for failure- for in fact, they are driving the whole process.

In a nutshell, this is the failure of the current human situation. A greedy elite incapable or unwilling to use the powers at hand to bring about a fair and equatable world. It is just too easy for them to continue their deceitful manipulations and blame hapless or trusting victims.

Another way is for the elite leadership to listen to the people/masses and take their needs and desires into account when molding public opinion. Such an elite will foster the population's wellbeing, not fear them or treat them as a mob. That process makes the elite leadership legitimate.

The most stupid leadership is one that fails to change course when the images and narratives moving its society are failing. The whole society becomes weak and ineffective on multiple levels.

At some point, the factional fighting must stop. It seems inevitable that human society will rebalance itself to manageable levels. The question becomes how violent that transition will be.

hemeantwell , June 15, 2019 at 6:31 pm

LeBon writes of crowds as though there is a complete discontinuity between a person's thought and behavior when they are in a crowd and when they are not. That's nonsense, a cocktail party generalization. I've been in plenty of political crowds and the remarkable transformation he purports was not evident. Le Bon was a rank conservative and his analysis reflected his detestation of the French left, fueled by his experience of the Commune. He's writing in a way that helps justify the massacres that concluded it.

Ian Perkins , June 15, 2019 at 12:04 pm

I often wondered about this fetishisation of growth in GDP (I'm in my sixties now), when in developed countries it seemed to have as many negatives as positives.
Then I realised that capital, in its most general sense, doesn't invest in the hope of getting its money back, but in the hope of its money back plus some more . The only way that can carry on for very long is through growth.
I'm not an economist, but that explanation really rang true for me.

notabanktoadie , June 15, 2019 at 12:59 pm

Usury based finance REQUIRES growth to pay the interest.

Why then government privileges for private credit creation?

nothing but the truth , June 16, 2019 at 10:36 am

exactly.

by infinite growth they actually mean infinite growth of debt, which is required for the current financial system to survive.

Oregoncharles , June 15, 2019 at 4:37 pm

One answer: CASSE, Center for the Advancement of the Steady State Economy, Herman Daly's legacy. https://steadystate.org/ .

Susan the other` , June 15, 2019 at 5:20 pm

Just Thank You. Thank You tons. I will remember the name Gareth Dale and The Ecologist. And the reference to the (unexplained) runaway condition of human economics as "Capitalist Time" v. (of course) real time. Because as we have learned here at NC "financial time goes much faster than real time." And etc. This essay was wonderful, and now we have an outline of why that is true.

John Wright , June 16, 2019 at 12:08 am

From the text:

"roughly speaking when per capita GDP exceeds $15,000. At higher levels, the translation of growth into improvements in health and well-being is tenuous."

The implications of this statement are large, for it multiplies out to a US GDP of 330E6 x 15E3 = 4.95 Trillion or about ONE FOURTH of the current USA economic output (19.39 trillion in 2017).

Forget the Green New Deal, shrink economic output by 3/4 in the USA while drastically lowering inequality to share the shrunken economic pie and one should observe a large positive effect on future climate change while having a reasonable USA citizen well-being,.

[Jun 14, 2019] Mean Girl Ayn Rand and the Culture of Greed by Lisa Duggan

Notable quotes:
"... From the 1980s to 2008, neoliberal politics and policies succeeded in expanding inequality around the world. The political climate Ayn Rand celebrated—the reign of brutal capitalism—intensified. Though Ayn Rand’s popularity took off in the 1940s, her reputation took a dive during the 1960s and ’70s. Then after her death in 1982, during the neoliberal administrations of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom, her star rose once more. (See chapter 4 for a full discussion of the rise of neoliberalism.) ..."
"... During the global economic crisis of 2008 it seemed that the neoliberal order might collapse. It lived on, however, in zombie form as discredited political policies and financial practices were restored. ..."
"... We are in the midst of a major global, political, economic, social, and cultural transition — but we don’t yet know which way we’re headed. The incoherence of the Trump administration is symptomatic of the confusion as politicians and business elites jockey with the Breitbart alt-right forces while conservative evangelical Christians pull strings. The unifying threads are meanness and greed, and the spirit of the whole hodgepodge is Ayn Rand. ..."
"... The current Trump administration is stuffed to the gills with Rand acolytes. Trump himself identifies with Fountainhead character Howard Roark; former secretary of state Rex Tillerson listed Adas Shrugged as his favorite book in a Scouting magazine feature; his replacement Mike Pompeo has been inspired by Rand since his youth. Ayn Rand’s influence is ascendant across broad swaths of our dominant political culture — including among public figures who see her as a key to the Zeitgeist, without having read a worth of her writing.’’ ..."
"... Rand biographer Jennifer Burns asserts simply that Ayn Rand's fiction is “the gateway drug” to right-wing politics in the United States — although her influence extends well beyond the right wing ..."
"... The resulting Randian sense of life might be called “optimistic cruelty.” Optimistic cruelty is the sense of life for the age of greed. ..."
"... The Fountainhead and especially Atlas Shrugged fabricate history and romanticize violence and domination in ways that reflect, reshape, and reproduce narratives of European superiority' and American virtue. ..."
"... It is not an accident that the novels’ fans, though gender mixed, are overwhelmingly white Americans of the professional, managerial, creative, and business classes." ..."
"... Does the pervasive cruelty of today's ruling classes shock you? Or, at least give you pause from time to time? Are you surprised by the fact that our elected leaders seem to despise people who struggle, people whose lives are not cushioned and shaped by inherited wealth, people who must work hard at many jobs in order to scrape by? If these or any of a number of other questions about the social proclivities of our contemporary ruling class detain you for just two seconds, this is the book for you. ..."
"... As Duggan makes clear, Rand's influence is not just that she offered a programmatic for unregulated capitalism, but that she offered an emotional template for "optimistic cruelty" that has extended far beyond its libertarian confines. Mean Girl is a fun, worthwhile read! ..."
"... Her work circulated endlessly in those circles of the Goldwater-ite right. I have changed over many years, and my own life experiences have led me to reject the casual cruelty and vicious supremacist bent of Rand's beliefs. ..."
"... In fact, though her views are deeply-seated, Rand is, at heart, a confidence artist, appealing only to narrow self-interest at the expense of the well-being of whole societies. ..."
Jun 14, 2019 | www.amazon.com

From the Introduction

... ... ...

Mean Girls, which was based on interviews with high school girls conducted by Rosalind Wiseman for her 2002 book Queen Bees and War/tubes, reflects the emotional atmosphere of the age of the Plastics (as the most popular girls at Actional North Shore High are called), as well as the era of Wall Street's Gordon Gekko, whose motto is “Greed is Good.”1 The culture of greed is the hallmark of the neoliberal era, the period beginning in the 1970s when the protections of the U.S. and European welfare states, and the autonomy of postcolonial states around the world, came under attack. Advocates of neoliberalism worked to reshape global capitalism by freeing transnational corporations from restrictive forms of state regulation, stripping away government efforts to redistribute wealth and provide public services, and emphasizing individual responsibility over social concern.

From the 1980s to 2008, neoliberal politics and policies succeeded in expanding inequality around the world. The political climate Ayn Rand celebrated—the reign of brutal capitalism—intensified. Though Ayn Rand’s popularity took off in the 1940s, her reputation took a dive during the 1960s and ’70s. Then after her death in 1982, during the neoliberal administrations of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom, her star rose once more. (See chapter 4 for a full discussion of the rise of neoliberalism.)

During the global economic crisis of 2008 it seemed that the neoliberal order might collapse. It lived on, however, in zombie form as discredited political policies and financial practices were restored. But neoliberal capitalism has always been contested, and competing and conflicting political ideas and organizations proliferated and intensified after 2008 as well.

Protest politics blossomed on the left with Occupy Wall Street, Black Lives Matter, and opposition to the Dakota Access oil pipeline at the Standing Rock Sioux reservation in the United States, and with the Arab Spring, and other mobilizations around the world. Anti-neoliberal electoral efforts, like the Bernie Sanders campaign for the U.S. presidency, generated excitement as well.

But protest and organizing also expanded on the political right, with reactionary populist, racial nationalist, and protofascist gains in such countries as India, the Philippines, Russia, Hungary, and the United States rapidly proliferating. Between these far-right formations on the one side and persistent zombie neoliberalism on the other, operating sometimes at odds and sometimes in cahoots, the Season of Mean is truly upon us.

We are in the midst of a major global, political, economic, social, and cultural transition — but we don’t yet know which way we’re headed. The incoherence of the Trump administration is symptomatic of the confusion as politicians and business elites jockey with the Breitbart alt-right forces while conservative evangelical Christians pull strings. The unifying threads are meanness and greed, and the spirit of the whole hodgepodge is Ayn Rand.

Rand’s ideas are not the key to her influence. Her writing does support the corrosive capitalism at the heart of neoliberalism, though few movers and shakers actually read any of her nonfiction. Her two blockbuster novels, 'The Fountainpen and Atlas Shrugged, are at the heart of her incalculable impact. Many politicians and government officials going back decades have cited Rand as a formative influence—particularly finance guru and former Federal Reserve chairman Alan Greenspan, who was a member of Rand's inner circle, and Ronald Reagan, the U.S. president most identified with the national embrace of neoliberal policies.

Major figures in business and finance are or have been Rand fans: Jimmy Wales (Wikipedia), Peter Thiel (Paypal), Steve Jobs (Apple), John Mackey (Whole Foods), Mark Cuban (NBA), John Allison (BB&T Banking Corporation), Travis Kalanik (Uber), Jelf Bezos (Amazon), ad infinitum.

There are also large clusters of enthusiasts for Rand’s novels in the entertainment industry, from the 1940s to the present—from Barbara Stanwyck, Joan Crawford, and Raquel Welch to Jerry Lewis, Brad Pitt, Angelina Jolie, Rob Lowe, Jim Carrey, Sandra Bullock, Sharon Stone, Ashley Judd, Eva Mendes, and many more.

The current Trump administration is stuffed to the gills with Rand acolytes. Trump himself identifies with Fountainhead character Howard Roark; former secretary of state Rex Tillerson listed Adas Shrugged as his favorite book in a Scouting magazine feature; his replacement Mike Pompeo has been inspired by Rand since his youth. Ayn Rand’s influence is ascendant across broad swaths of our dominant political culture — including among public figures who see her as a key to the Zeitgeist, without having read a worth of her writing.’’

But beyond the famous or powerful fans, the novels have had a wide popular impact as bestsellers since publication. Along with Rand’s nonfiction, they form the core texts for a political/ philosophical movement: Objectivism. There are several U.S.- based Objectivist organizations and innumerable clubs, reading groups, and social circles. A 1991 survey by the Library of Congress and the Book of the Month Club found that only the Bible had influenced readers more than Atlas Shrugged, while a 1998 Modern Library poll listed The Fountainhead and Atlas Shrugged as the two most revered novels in English.

Atlas Shrugged in particular skyrocketed in popularity in the wake of the 2008 financial crash. The U.S. Tea Party movement, founded in 2009, featured numerous Ayn Rand—based signs and slogans, especially the opening line of Atlas Shrugged: “Who is John Galt?” Republican pundit David Frum claimed that the Tea Party was reinventing the GOP as “the party of Ayn Rand.” During 2009 as well, sales of Atlas Shrugged tripled, and GQ_magazine called Rand the year’s most influential author. A 2010 Zogby poll found that 29 percent of respondents had read Atlas Shrugged, and half of those readers said it had affected their political and ethical thinking.

In 2018, a business school teacher writing in Forbes magazine recommended repeat readings: “Recent events — the bizarro circus that is the 2016 election, the disintegration of Venezuela, and so on make me wonder if a lot of this could have been avoided bad we taken Atlas Shrugged's message to heart. It is a book that is worth re-reading every few years.”3

Rand biographer Jennifer Burns asserts simply that Ayn Rand's fiction is “the gateway drug” to right-wing politics in the United States — although her influence extends well beyond the right wing.4

But how can the work of this one novelist (also an essayist, playwright, and philosopher), however influential, be a significant source of insight into the rise of a culture of greed? In a word: sex. Ayn Rand made acquisitive capitalists sexy. She launched thousands of teenage libidos into the world of reactionary politics on a wave of quivering excitement. This sexiness extends beyond romance to infuse the creative aspirations, inventiveness, and determination of her heroes with erotic energy, embedded in what Rand called her “sense of life.” Analogous to what Raymond Williams has called a “structure of feeling,” Rand’s sense of life combines the libido-infused desire for heroic individual achievement with contempt for social inferiors and indifference to their plight.5

Lauren Berlant has called the structure of feeling, or emotional situation, of those who struggle for a good life under neoliberal conditions “cruel optimism”—the complex of feelings necessary to keep plugging away hopefully despite setbacks and losses.'’ Rand's contrasting sense of life applies to those whose fantasies of success and domination include no doubt or guilt. The feelings of aspiration and glee that enliven Rand’s novels combine with contempt for and indifference to others. The resulting Randian sense of life might be called “optimistic cruelty.” Optimistic cruelty is the sense of life for the age of greed.

Ayn Rand’s optimistic cruelty appeals broadly and deeply through its circulation of familiar narratives: the story of “civilizational” progress, die belief in American exceptionalism, and a commitment to capitalist freedom.

Her novels engage fantasies of European imperial domination conceived as technological and cultural advancement, rather than as violent conquest. America is imagined as a clean slate for pure capitalist freedom, with no indigenous people, no slaves, no exploited immigrants or workers in sight. The Fountainhead and especially Atlas Shrugged fabricate history and romanticize violence and domination in ways that reflect, reshape, and reproduce narratives of European superiority' and American virtue.

Their logic also depends on a hierarchy of value based on radicalized beauty and physical capacity — perceived ugliness or disability' are equated with pronounced worthlessness and incompetence.

Through the forms of romance and melodrama, Rand novels extrapolate the story of racial capitalism as a story of righteous passion and noble virtue. They retell The Birth of a Ntation through the lens of industrial capitalism (see chapter 2). They solicit positive identification with winners, with dominant historical forces. It is not an accident that the novels’ fans, though gender mixed, are overwhelmingly white Americans of the professional, managerial, creative, and business classes."


aslan , June 1, 2019

devastating account of the ethos that shapes contemporary America

Ayn Rand is a singular influence on American political thought, and this book brilliantly unfolds how Rand gave voice to the ethos that shapes contemporary conservatism. Duggan -- whose equally insightful earlier book Twilight of Equality offered an analysis of neoliberalism and showed how it is both a distortion and continuation of classical liberalism -- here extends the analysis of American market mania by showing how an anti-welfare state ethos took root as a "structure of feeling" in American culture, elevating the individual over the collective and promoting a culture of inequality as itself a moral virtue.

Although reviled by the right-wing press (she should wear this as a badge of honor), Duggan is the most astute guide one could hope for through this devastating history of our recent past, and the book helps explain how we ended up where we are, where far-right, racist nationalism colludes (paradoxically) with libertarianism, an ideology of extreme individualism and (unlikely bed fellows, one might have thought) Silicon Valley entrepreneurship.

This short, accessible book is essential reading for everyone who wants to understand the contemporary United States.

Wreck2 , June 1, 2019
contemporary cruelty

Does the pervasive cruelty of today's ruling classes shock you? Or, at least give you pause from time to time? Are you surprised by the fact that our elected leaders seem to despise people who struggle, people whose lives are not cushioned and shaped by inherited wealth, people who must work hard at many jobs in order to scrape by? If these or any of a number of other questions about the social proclivities of our contemporary ruling class detain you for just two seconds, this is the book for you.

Writing with wit, rigor, and vigor, Lisa Duggan explains how Ayn Rand, the "mean girl," has captured the minds and snatched the bodies of so very many, and has rendered them immune to feelings of shared humanity with those whose fortunes are not as rosy as their own. An indispensable work, a short read that leaves a long memory.

kerwynk , June 2, 2019
Valuable and insightful commentary on Rand and Rand's influence on today's world

Mean Girl offers not only a biographical account of Rand (including the fact that she modeled one of her key heroes on a serial killer), but describes Rand's influence on neoliberal thinking more generally.

As Duggan makes clear, Rand's influence is not just that she offered a programmatic for unregulated capitalism, but that she offered an emotional template for "optimistic cruelty" that has extended far beyond its libertarian confines. Mean Girl is a fun, worthwhile read!

Sister, June 3, 2019

Superb poitical and cultural exploration of Rand's influence

Lisa Duggan's concise but substantive look at the political and cultural influence of Ayn Rand is stunning. I feel like I've been waiting most of a lifetime for a book that is as wonderfully readable as it is insightful. Many who write about Rand reduce her to a caricature hero or demon without taking her, and the history and choices that produced her seriously as a subject of cultural inquiry. I am one of those people who first encountered Rand's books - novels, but also some nonfiction and her play, "The Night of January 16th," in which audience members were selected as jurors – as a teenager.

Under the thrall of some right-wing locals, I was so drawn to Rand's larger-than-life themes, the crude polarization of "individualism" and "conformity," the admonition to selfishness as a moral virtue, her reductive dismissal of the public good as "collectivism."

Her work circulated endlessly in those circles of the Goldwater-ite right. I have changed over many years, and my own life experiences have led me to reject the casual cruelty and vicious supremacist bent of Rand's beliefs.

But over those many years, the coterie of Rand true believers has kept the faith and expanded. One of the things I value about Duggan's compelling account is her willingness to take seriously the far reach of Rand's indifference to human suffering even as she strips away the veneer that suggests Rand's beliefs were deep.

In fact, though her views are deeply-seated, Rand is, at heart, a confidence artist, appealing only to narrow self-interest at the expense of the well-being of whole societies.

I learned that the hard way, but I learned it. Now I am recommending Duggan's wise book to others who seek to understand today's cultural and political moment in the United States and the rise of an ethic of indifference to anybody but the already affluent. Duggan is comfortable with complexity; most Randian champions or detractors are not.

[Jun 11, 2019] Open borders and illegal immigration are NeoLiberal tactics to promote wage arbitrage.

Jun 11, 2019 | www.moonofalabama.org

MG , Jun 11, 2019 8:40:24 AM | 129

@donkeytale

You stated, "Let's also ignore the fact that the sons and grandsons of the unionised postwar generation for the most part subsequently rejected blue collar work no matter what the pay. This is a sign of decadence I will grant you, and I am guilty as charged. "

This canard doesn't hold up in the face of empirical evidence. One example: 20,000 waiting in line for lousy warehouse jobs at Amazon. The fact is, open borders and illegal immigration are NeoLiberal tactics to promote wage arbitrage. In California, those impacted the most by illegal immigration are African Americans. Whole sectors, such as hotel maintenance and janitorial service, had been unionized, and had principally employed black workers whose salaries enabled them to move into the middle class. The hotel industry welcomed the influx of illegal immigrants willing to work for drastically lower wages. Black workers were replaced and the union destroyed. Unfortunately, many in the US and globally have been so propagandized about illegal immigration that even mentioning illegal immigration gets one falsely labeled racist. in the US, Democrats use illegal immigration as a "demographic strategy," which enables Democrats to remain in power while remaining wholly loyal to Wall Street and doing nothing to ameliorate the misery of the bottom 90%.

[Jun 09, 2019] In America and also much of Europe, the current post-war baby boomer generation will be the first that cannot expect their children to get higher living standards than them

Jun 09, 2019 | www.moonofalabama.org

vk , Jun 9, 2019 4:04:26 PM | 27

Two important posts from Michael Roberts' Facebook.

About the USA:

The end of the American dream (if it ever existed)..

In America and also much of Europe, the current post-war baby boomer generation will be the first that cannot expect their children to get higher living standards than them. The percentage of 30-year olds earning more than their parents is at its lowest level ever recorded.

Inequality of income is at its highest in 100 years, when you compare the share of the top 1% to the bottom 90%.

The economic mobility rate in the US is now one of the worst in the developed world. In the US, people in the bottom income quartile have a 40% chance of having a father in the bottom quartile (in the father's prime earning years) and people in the top quartile have only about an 8% chance of having a father in the bottom quartile, suggesting half of the average probability of moving up and one of the worst probabilities of all the countries analyzed.

About Japan and Germany:

Two key G7 economies continue to show a significant slowdown in economic growth.

German industrial production plunged 1.9 percent from a month earlier in April 2019, much worse than market expectations of a 0.4 percent fall and after a 0.5 percent gain in the previous month.

That was the biggest drop in output since August 2015, amid falls in the production of capital goods (-3.3 percent), intermediate goods (-2.1 percent), energy (-1.1 percent) and consumer goods (-0.8 percent). Year-on-year, industrial production dropped 1.8 percent in April, following a 0.9 percent fall in March. Manufacturing output dropped 3.4% over the year. Both exports and imports fell.

The German Bundesbank cut its GDP growth forecast for this year to just 0.6%, down from 1.6% at the beginning of 2019.

Japanese wages fell for the fourth consecutive month and overall household spending slowed sharply. Unemployment, currently at record lows, is set to rise.

[Jun 05, 2019] A half-century ago, a top automobile executive named George Romney -- yes, Mitt s father -- turned down several big annual bonuses. He told his company s board he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today).

Notable quotes:
"... "A half-century ago, a top automobile executive named George Romney -- yes, Mitt's father -- turned down several big annual bonuses. He told his company's board he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today). ..."
"... "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." John Kenneth Galbraith ..."
"... It is worth remembering just how much the companies of the mega-rich depend on tax paid for services and infrastructure. Where would Amazon be with out the road and US postal service? ..."
"... AOC is a ground-breaker on taxing the rich. I hope she takes on raising the corporate tax, which Bernie has hinted at. ..."
"... Neoliberal capitalism has gutted the American middle and working classes, leaving only gig economy jobs, like Saturn eating his children. Tax 'em and put their money to use on health care, education, the Green New Deal and job creation, affordable daycare, and rebuilding communities. ..."
Jan 13, 2019 | www.nytimes.com

Meredith New York Jan. 6

NYT David Leonhardt "When the Rich Said No To Getting Richer". Quite a contrast. "A half-century ago, a top automobile executive named George Romney -- yes, Mitt's father -- turned down several big annual bonuses. He told his company's board he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today).

He worried that "the temptations of success" could distract people from more important matters. This belief seems to have stemmed from both Romney's Mormon faith and a culture of financial restraint that was once commonplace in this country. Romney didn't try to make every dollar he could, or anywhere close to it. The same was true among many of his corporate peers. In the early 1960s, the typical chief executive at a large U.S. company made only 20 times as much as the average worker, rather than the current 271-to-1 ratio. Today, some C.E.O.s make $2 million in a single month. The old culture of restraint had multiple causes. One was the tax code. When Romney was saying no to bonuses, the top marginal tax rate was 91%." That was under GOP Eisenhower. And jobs here, unions strong, state college tuition tax subsidized-- the middle/working class had upward mobility and faith in the future. Now, per the international GINI Index of middle class security and upward economic mobility, the USA ranks behind many other capitalist democracies. What would George Romney say about Trump as president?

Darsan54 Grand Rapids, MI Jan. 5

@Tom: Could it be possible too many loopholes and deductions are written into the system to make it effective? We have been defunding the IRS and building a tax system that favors creative returns for decades. Maybe it's time to go in another direction.

Len Charlap Princeton, NJ Jan. 5

@Ron Cohen "The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." John Kenneth Galbraith

Penningtonia princeton Jan. 5

@WPLMMT; You mistunderstand. The 70% applies only to income OVER the threshold. So theoretically, the first 50 thousand (above the standard deduction) could be taxed at ,say 10%, the next 50K at 20%, from 100K - 500K at 30%, from 500k to a million at 50%. So the takehome from a million would be 715K, enough for anyone to live on. The exact details don't matter. It is the idea that only income above a very high number would be taxed at the marginal rate.

Brinton Los Angeles Jan. 5

If the goal is to raise revenue by taxing high earners at a higher rate, it seems to me that a good place to begin would be to raise the effective tax rate on the rich to around 40% by eliminating the 50% discount on capital gains, and the depreciation allowances for real estate investments.

Andrew NY Jan. 6

Income tax rate increases at high income levels would help but they miss the point. The real wealth in this country is from those who own assets, not those who draw a paycheck. The real deal would be to raise taxes on passive income and estate taxes on an ever increasing scale where, say, anything over $1m in annual passive income and $50m in estate value is taxed at 50% or higher. America is the land of opportunity; if those of us lucky enough to make it just leave it all to our heirs, they will have little incentive to work and add value to their own lives as well as to society. Plus the velocity of capital that would occur from heirs being forced to sell companies, real estate and other assets to pay estate taxes will place those assets in the hands of those best able to maximize their value going forward. Paul and AOC, I hope you are reading this and plugging it into your thinking.

fatrexhadswag DC Jan. 6

I only wish the democrats would try to educate what the marginal tax means when they discuss policy in the public sphere. The media is going to go nuts with this 70% rate without taking the time to explain that it's only an additional bracket at the tippy top of the scale. This proposal wouldn't affect 99% of the country.

Jeffrey Bank Baltimore Maryland Jan. 6

Every day I see and hear more about this young woman, I am more impressed. Disclaimer: I am a 68 year old white guy (Jew). She is smart, articulate, talks truth to power, and is also very hot! A tough combination to beat.Her Twitter comebacks against old Republican men are witty and hilarious, and hit home. I say AOC has a great future. She will learn the political ropes quickly. In ten years, stand by to stand by.

LM Jersey Jan. 6

A high percentage of wealthy people inherited their money. There are many examples of highly successful men who marry beautiful, but not necessarily intelligent women. Their children's IQs are somewhere in between their parents IQ numbers. The end result is greed-driven wealth management and less than honorable decisions, including buying politicians. Narcissism runs rampant among this group with POTUS and some of his children as a prime example. Thomas Jefferson strongly felt that large inheritances should be heavily taxed to prevent the harmful activities of the very rich from destroying our democracy. He was right.

Thomas K. Ray Marquette, Michigan Jan. 6

We all benefit from living in this great nation of opportunity. Once you make more than 100K per month you should pay 70% tax. It is OFFENSIVE that our great nation does not provide free education through college, provide health insurance (especially, since there are people making millions ripping off the medical system), provide free daycare, housing and food for those who need support. TAX INCOME OVER 1 million....if this is a disinsentive then there is something seriously wrong with you.

Earl Philadelphia Jan. 7

The U.S. has had a long history of a graduated income tax. In the Reagan era, the tax rate was at 50 percent having come down from 70 percent. We are not funding government spending, and are instead running up substantial deficits. Moreover, as the baby-boom population retires, social security and medicare will become unsustainable. While we can certainly reduce government spending significantly (especially the sacred cow of military spending), we will need to increase tax revenues. Tax increases are inevitable, and the most fair way to distribute the burden of increased taxes is through a graduated income tax. Those with the ability to pay, should pay more. After all, they are certainly enjoying the benefits of a free and stable country more than those at the other end of the income spectrum. While we can argue what the top marginal rate should be, it certainly should be 50 percent or greater. We should also eliminate the special tax preference given to dividends and capital gains, which mainly inure to the wealthy. To those whom much is given, much is expected.

GG New Windsor Jan. 7

@Jason First, no one is talking about taxing businesses at 73%, only individuals who are at extreme high levels of income. Second, why do the rich always seem to think that the "unwashed masses" owe them something? Go to Canada where in addition to a higher tax rate on your business you will also be paying for single payer health care for employees and subject to common sense regulations that businesses here are no subject to. The grass is always greener.

hammond San Francisco Jan. 5

@NR Agreed and same here with our money. How much does anyone really need, beyond a certain point? Wherever that point is, I passed it decades ago. It's so disheartening to see how many people, often quite poor people, fully believe the mantra that taking money from rich people will reduce jobs and growth. Very little of my wealth goes towards growth. It's in index funds and T-bills and other instruments that mostly hold it until it's traded to some other wealthy person, hopefully at a profit to me. About the only way my money leads to growth is through the start-ups I have self-funded over the years. And even these were sold to large corporations (or they failed) by the time they had a few hundred employees. Most exits occurred with just a dozen or so employees. Mostly the wealthy barter and trade pieces of their portfolios with one another. It's just a game.

Andy House The Sane White North Jan. 6

The most obvious thought to share here is about the laughable efforts of people who don't know economics from shoe boxes to try and sound more knowledgeable than a Nobel prize winning economist quoting... Nobel prize winning economists. The second most obvious thought is that the threat/boogie man of all the "rich people" leaving the US for "greener pastures" is both ludicrous and historically refuted. They simply DID NOT LEAVE in the 20th century, despite the economy becoming more mixed. They DID NOT LEAVE when the top MARGINAL tax rates were above 75%. And they did not leave when their research (you know, there actually is a fairly high correlation between affuence and intelligence...) revealed the FACT that the best places in the world to live are almost universally even more "mixed" than the US, are almost universally further left than what passes for a "left" in the US, and almost universally have significantly higher taxes. Folks, they just aren't going to bag up their bucks and blow town.

Thomas Zaslavsky Binghamton, N.Y. Jan. 5

@hm1342 It goes for politicians, some of whom are notably stupid, but not economists, who tend to be quite smart, if not necessarily correct.

The Observer Pennsylvania Jan. 5

Before Ronald Reagan, the top marginal tax rate was 70%. The country was doing fine and the rich were doing well also. Reagan reduced it to 50% and the rate was further reduced in subsequent administrations. For the last 40 years, there has been a massive transfer of wealth from the middle and the bottom earners to the very top. A main reason for the income inequality that we see in the country today. The top marginal rate should be raised above 70%. Money made by labor and money made by money (investment) should be taxed at the same rate if we want to narrow the income inequality in the country and also find the money for investments in infrastructure etc. What AOC is saying is nothing radical but common sense.

Paul Phoenix, AZ Jan. 6

"You see, the mere thought of having a young, articulate, telegenic nonwhite woman serve is driving many on the right mad -- and in their madness they're inadvertently revealing their true selves." Actually, professor, the mere thought of having a young, articulate, telegenic nonwhite man as president for 8 years DROVE many on the right mad- and in their madness they're inadvertently revealing their true selves.

B NYC Jan. 5

But rich people also benefit from raising their taxes in that the society as a whole takes a huge leap forward. Investment in our society leads to lower crime rates and less incarceration lead to a bigger tax base. Improvements to infrastructure and health care reduce enormous drains on the economy. Investment in education increase the value of labor, and most of all eliminating the deficit makes us strong at home and abroad. Everyone wins.

sjs Bridgeport, CT Jan. 5

@Red Sox, '04, '07, '13, '18, It is worth remembering just how much the companies of the mega-rich depend on tax paid for services and infrastructure. Where would Amazon be with out the road and US postal service?

Pam Skan Jan. 7

@Billy Walker At less than $100k/year in income, you needn't worry. In income tax terminology, the term "marginal" means a rate that's applied only to income above a high threshold affecting the top percentile of earners. In your IRS Form 1040, you'll note that you are taxed at a certain percentage based on your adjusted gross income (AGI). Your AGI places you in a tax bracket, or income range. A marginal rate of 70% would apply to the highest tax bracket, because it would affect only those dollars that exceed a certain threshold (such as the $10 million mentioned by Ocasio-Cortez) - a threshold most of us will never even imagine earning, much less topping. Don't let the number scare you, Billy Walker - unless you hit the Powerball.

Blunt NY Jan. 5

Professor Krugman, I am delighted that you are back to writing what you know best and help the nation understand what is behind the noisy rhetoric. Ocasio-Cortez is an impressive politician. By getting good advice from experts, whether it is economists, sociologist, climate scientists and political philosophers, she will deliver to the congress a much needed intelligent and sunny feedback to propose and implement good policy. Please seek her out and offer her your advice. People like Saez, Piketty, Reich, Stiglitz and yourself are treasures (except for the second and perhaps the first national treasures) politicians should tap into. We need the GOP out of our lives. Rational taxation policy is one of the key elements of a successful Democratic government. It will help pay for all the good ideas: universal healthcare (you are lagging behind there), free public education from Kindergarten through College, environmental sanity. Regulation of Big Pharma, Wall Street (tax algorithmic trading for one, bring back G-S for another), Big Tech and of course Big Healthcare will all help getting back our country to sound governance of the FDR era, tax policies included. Thank you in advance.

Trippe Vancouver BC Jan. 5

@Charlie in NY I do get tired of this type of comment, 'outsourced their military defence to the US'. The cold reality is that US administrations have very much wanted to have the largest military and a stunning number of military bases around the world. Your governments have embraced the role of world's police force including covertly (and openly) pursuing regime change in many jurisdictions. Over the decades your country has very much wanted this role, at the expense of other important priorities and needs in your country. Don't blame the rest of us for wanting a more balanced approach to military and other spending. Your wars in the Middle East, which have nothing to do with Europe, have cost you tremendously.

Bruce Shigeura Berkeley, CA Jan. 6

AOC is a ground-breaker on taxing the rich. I hope she takes on raising the corporate tax, which Bernie has hinted at. Chris Rock once explained, "Shaq is rich, but the white man who signs his check is wealthy." Raise Bezos' income and capital gains taxes, sure, but go for the big money -- tax Amazon's profits, assets, stock trading, acquisitions, and end all tax break/corporate welfare. Apple spent its Trump tax break buying back stock to enrich stockholders and executives; Sheldon Adelson put his on Republicans in the '18 election. Hedge funds bought, dismembered and stripped, then bankrupted Toys R Us and Sears, and another is ripping off Puerto Rico.

Neoliberal capitalism has gutted the American middle and working classes, leaving only gig economy jobs, like Saturn eating his children. Tax 'em and put their money to use on health care, education, the Green New Deal and job creation, affordable daycare, and rebuilding communities.

Rob NYC Jan. 5

@Michael Evans-Layng, PhD Yes, I agree with this comment. It's not even possible to conclude that there is a correlation here; my guess is that a correlation would not hold up to statistical analysis. However, it is certainly clear that, "high taxes on the wealthy and solid economic performance can coexist just fine". And that's all one needs to know, as a higher marginal rate will bring many benefits without having to hold the burden of being a single-variable driver of growth.

Carole East Chatham, NY Jan. 5

If 20% of this country understands what marginal rates are, then I'd be surprised. I have been a financial professional for 30+ years, and I rarely have a client - no matter how sophisticated - that understands it. And somehow I wonder how much of Congress understands it. Our country experienced strong growth and a healthy economy when marginal rates were high. And the concentration of wealth did not exist back then. We are just rationalizing a greed is good mentality by using terms like 70% tax rate - to scare people - instead of just saying raise taxes on the top 5%.

Grove California Jan. 6

The Republicans are looting the country with no one stopping them. The rich control all three branches of our government, which explains our current fiscal policy. The rich obviously don't want to be part of America other than to own it.

SC Boston Jan. 5

@MV This reminds me of when, I believe it was towards the end of the last recession, I accidentally found myself on a Republican phone list. I got a call during which they were pitching tax breaks for the wealthy saying how it would create jobs. My response was to say that they wouldn't add jobs, just spend it on more Hermes scarves. (They go from several hundred to a couple thousand dollars.) I thought I was wise-cracking but sure enough I saw in the news a day or two later that Hermes stock was doing remarkably well.

William NY Jan. 7

@Jason, the rationale here is that society is better served with more equitable wealth distribution, as seen in Scandinavian countries, rather then the obscene wealth disparities seen here in the U.S. Your answer to this is, if you try and raise my taxes in order to benefit society as a whole, rather then just me I will run to anywhere that has the lowest tax rate. Well this is the mantra of every wealthy individual and business globally and as a result we have a tax base comprised of higher rates for middle income Americans who are squeezed financially in every direction and actually need the money, who carry the financial burden, while the wealthy use their money to buy political influence and over time further lower their tax rate for themselves and the business's they own, thus skirting their financial responsiblity to society which they benefit from. The rich have done plenty wrong, that is the point. We would not be in the horrible situation we are in now as a country without the sociopathic levels of greed seen in the upper echelons of wealth. Its time to take back the country from people like yourself who would rather run and preserve or hide their wealth then be willing to pay their fair share of taxes.

79 Recommend
Concernicus Hopeless, America Jan. 6

@Allan Reagan I doubt very seriously that you or just about anyone else regularly works 75 hours a week. That would very roughly translate into just under 11 hours a day seven days a week. Meaning you are at the office by 8:00 AM and leave around 8:00 PM seven days a week. I am being very conservative in allocating only one hour for eating, bathroom breaks, personal phone calls, etc... Your wealth would likely mean a mansion in the suburbs. Figure a minimum of 45 minutes each way drive time. Total round trip an hour and a half. An hour to shower, shave, have coffee and quickly check the daily newspaper. I have allocated zero time for dinner time, shopping for clothes or food, etc... Zero family time. The math just does not add up. If by some freak of nature you really do work 75 hours a week then you are an all-time terrible husband and/or father. No matter how big your bank account is or how many houses you own. Ask your family....would they rather have less things and you only working 45-50 hours a week or more things. If they even care anymore. Promoting absentee husbands and fathers is certainly not the way to craft a truly civil society.

79 Recommend
JimB NY Jan. 5

Zillionaires work harder by investing smarter. Investing smarter often means certainty in return on that investment. How better to insure that certainty than to invest in a "low tax" congressperson? Much easier and better expected return than say R&D or infrastructure.

79 Recommend
Keith Dow Folsom Jan. 6

@Barking Doggerel Intel is a prime example. The first Intel CEO who was a Republican, was a Bush supporter named Paul Otellini. He famously told Steve Jobs that Intel did not want to make the microprocessor for the iPhone. Intel then went from being the number one maker of microprocessors to being the number two. The second Intel CEO who was a Republican, was a Trump supporter named Brian Krzanich. He was an "expert" at manufacturing. Under his leadership Intel went for being the number one semiconductor company to being the number two. Apparently Republicans have a penchant for turning everything into number two.

78 Recommend
Pdxtran Minneapolis Jan. 5

@vulcanalex: As a frequent commenter here, you SHOULD know about marginal tax rates, namely, that even with a top tax rate of 90%, nobody would pay that on their entire income. In the days when that rate was in force, it kicked in at an income level that would be equal to about $4 million per year. In order to avoid that, rich people upped their charitable contributions and did other things that might benefit society. Best of all, none of them starved.

77 Recommend
Walter Toronto Jan. 6

@Andrew You are right - Warren Buffett stated that he pays less income tax than his secretary as his income derives from capital gains and dividends, and hers from employment.

75 Recommend
Tessa NYC Jan. 7

His article was about personal income tax, not business tax. Unless you relinquish your US citizenship, you will have to pay income tax regardless of where your business is located. The point of discussing an increase in income tax on the ultra rich is to be able to fund social security, Medicare and Medicaid, and the other federal programs and agencies. Why is this relevant? Because Republicans routinely cut taxes for the wealthy and then say they need to cut funding for all these programs to balance the federal budget. If we can generate sufficient revenue for the federal government then we don't need to cut funding for all these federal programs.

71 Recommend
John C MA Jan. 6

The Trump tax cut has added $2trillion to the national debt -- -an increase of 10%. The tax cut was supposed to pay for itself, because the increase in wages and profits would provide enough in tax revenue ( even at the lower tax rate). The deficits would shrink and eventually go away. None of these fantasies have ever been realized. Not under Reagan, W, or Trump. Its time to Ms. Cortez-Ocasio's "insane" ideas -- a 90% tax on income over $10 million per year is no crazier than these Republican tax schemes and the "suffering" only affects a tiny nunber of citizens. A return to Eisenhower-era tax rates hardly constitutes Bolshevism.

Reply 71 Recommend
Vesuviano Altadena, California Jan. 5

There are a lot of comments here criticizing AOC and Professor Krugman over the idea of such a high tax on the mega-wealthy. To them I simply say this: You can't get away from our country's history. We were collectively at our most prosperous as a nation for the twenty-five years after the Second World War, during which time our middle class was the envy of the world. During that time, taxes on the very rich were in line with what AOC is proposing. Corporate taxes were also high. Union membership was also high. Our country was much better off for all of those things. I'm already a fan of AOC. She's going to make a lot of right-wing heads explode.

Reply 70 Recommend
Ken L Atlanta Jan. 5

I'd be interested in knowing to what extent much higher tax rates on the wealthy drive severe tax avoidance behavior, like parking money overseas. Clearly higher rates would have to be accompanied by stricter enforcement and tighter rules to avoid losing the expected revenue windfall.

69 Recommend
TMSquared Santa Rosa CA Jan. 5

@hammond Good point about the postwar conditions that went along with high marginal rates. But even if we avoid the mistake of concluding that high rates caused growth, there is still no reason to conclude that high rates impede growth.

68 Recommend
azlib AZ Jan. 5

Maybe a higher marginal tax rate with stricter enforcement woudl have driven Trump out of the country and saved us the horror of the last two years. :-)

Reply 67 Recommend
hm1342 NC Jan. 5

@Barking Doggerel: "And the very wealthy I've known are not smarter, more creative or virtuous than the folks who work for them or for other wealthy executives." That goes for politicians and economists, too.

66 Recommend
Steve Berkeley CA Jan. 6

What is stupendous wealth good for? The marginal utility of wealth is quickly decreasing for ordinary survival goods like food and tents. But very expensive goods can only be had by the most wealthy. To get the most expensive and desirable things you must outbid other wealthy people. If you want to influence a key senator, for instance, you're going to have to come up with more than the opposition. If you want an original Van Gogh to impress others, you're going to have to outbid everybody else. If you need a kidney transplant quickly it won't be cheap. Wealth buys power. A mere millionaire nowadays only has leverage against common folk but is seen as a whiff by any billionaire. Power is roughly proportional to wealth, it's a relative thing. Those more wealthy can always kick sand in your face and that's still aggravating despite that you can kick sand in the faces of the myriads of the poor. The wealthy believe in the legitimacy of wealth and strive to purify this. There are always illegitimate jerks trying to beat the system, trying to circumvent the power of wealth. Jerks yammer about things like truth, science and justice. What they're really trying to do is get power without properly paying for it. It's necessary to put down those upstarts who whine about such things. This is another thing wealth is good for and another reason why you can never have enough.

Reply 66 Recommend
Dan Kravitz Harpswell, ME Jan. 6

You quote economists in defense of your argument, or as the Republicans would say 'pointy-headed intellectuals'. But if Ocasio-Cortez is crazy, what would the Republicans call Dwight David Eisenhower? He thought a marginal tax rate of 91% was just right. So he's obviously far crazier than Ocasio-Cortez. Dan Kravitz

Reply 65 Recommend
Fourteen Boston Jan. 5

@Rima Regas The Rich really do believe they're entitled to rob the poor, and they've created various laws that make it easy and legal, which further entitles them, or so they believe. It's all part of the Rich-person alt-reality - a perk of being rich.

65 Recommend
Lennerd Seattle Jan. 6

On the other hand, "...having a young, articulate, telegenic nonwhite woman serve . . . " in Congress is just exactly the ticket!

62 Recommend
Howard Stambor Seattle, WA Jan. 5

Just a reminder – and of course this is obvious to most readers – but neither the article nor many of the comments make it clear that the 73% or 80% is the last step of a progressive scale. Krugman and AOC are not proposing that ALL income be taxed at that rate. The maximum rate would apply only to that portion of a taxpayer's income above a certain dollar amount. The 73% or 80% rate could actually be set at a very high level of income, say $1 million or more. The benefits to all would be enormous. The detriment to high earners would be small.

61 Recommend
r a Toronto Jan. 6

How about fixing the tax code - created by and for racketeers.

Reply 61 Recommend
Penningtonia princeton Jan. 6

@Barking Doggerel; You neglected to mention golf, which was a major factor in getting promoted at the large corporation I worked at.

60 Recommend
Suzanne O'Neill Colorado Jan. 5

@vulcanalex And what is good for the country and your fellow citizens? I would hope that it is not all about you. If one's goal is to have a vibrant economy, good infrastructure and education are needed. I have two suggestions as to where to look for the needed funds: corporations (especially those paying employees less than a living wage and depending on taxpayers to provide food stamps and subsidize health care) and the very high income individuals. You may not be in the latter class. I believe a fact-based national conversation about tax rates (individual and corporate, earned and unearned income and capital gains) would benefit the nation. I am not optimistic this could occur without significant leadership.

59 Recommend
Peter Ottawa, Ontario, Canada Jan. 6

Paul, I must plainly admit, not too often do a shed a tear when reading, your article today was such a moment. It was on a sidewalk in Paris or New York to celebrate my daughters birthday, that surfaced as I read on. Pretty sure it was Paris, as we walked along, I noticed a family. I looked only at the father - sitting on some cardboard, his two children and his wife beside him - I gave what i could and his eyes spoke thanks and my eyes spoke hope for his obviously wonderful family(and himself as well). Paul, as the good man said "the times they are a changin" and I believe with all my heart that Equality really needs to be spoken of at many dinner tables. Sincerely, Peter

Reply 59 Recommend
R. Law Texas Jan. 5

Very interesting how AOC understands economics in this country, and how many GOP'er bugaboos are about to get skewered :) Why, we might even find ourselves in a public discussion of democracy and unrestrained capitalism being polar opposites, with GOP'ers having to admit there was democracy in this country - which heavily restrained capitalism - long before the vaunted animal spirits of free marketeer piracy descended upon us. As in, democracy provided the environment for capitalism to succeed, not the other way 'round, and that democracy should take precedence over free marketeering piracy. After all, the original settlers and colonists only allowed corporations to exist with charters which had automatic expiration dates, corpoorations were only allowed to exist for the purpose of some public works project, and a corporation's charter was immediately revoked if it was found to be trying to influence a political campaign; in no sense of the word were corporations people, too, my friend (quoting a famous American). My, my, my, what an interesting history discussion is about to occur - could Elizabeth Warren please be the Professor, Professor Professeur K. ?

59 Recommend
Phillip Wynn Beer Sheva, Israel Jan. 6

Hate to disagree, but there's clear evidence AOC doesn't understand economics. For instance, she has argued it's impossible for her to find affordable housing in Washington DC. Whereas it's become plain that she is living rent-free in the heads of many Republicans.

Reply 59 Recommend
Richie by New Jersey Jan. 5

@Red Sox, '04, '07, '13, '18, The rich that benefit from profits of large companies, like Walmart for example, do not do the actual work themselves. Instead they rely on the working poor to create their profits and then they hoard it all, while the rest of us provide money for food stamps etc.

59 Recommend
Matthew Carnicelli Brooklyn, NY Jan. 5

@Kenneth Johnson The 73% rate would only be on income above a stipulated amount, say $10,000,000 a year. Are your yearly earnings above $10.000.000 a year? The problem with unregulated capitalism is that it leads to people eventually wanting to impose an unrealistic form of socialism. Experience strongly suggests that a mixed capitalist-socialist economy is as good as it gets.

58 Recommend
CitizenTM NYC Jan. 6

'... privilege combined with aggression ...' THANK YOU.

58 Recommend
Ellen San Diego Jan. 5

@MV "Those who get that little extra $1,000 will easily spend it on a necessity, like an appliance". Exactly. And, given the tax giveaway the Republicans gave to corporations and the 1% last year, there probably won't be that little extra $1,000 for the appliance buyers this year. They'll probably owe.

57 Recommend
TMSquared Santa Rosa CA Jan. 5

@SandraH. Exactly. Impose high marginal rates on capital gains at the same time. We could make them a bit lower than income tax rates to incentivize capital investment. But now, even with low income tax rates, the difference between capital gains and income tax rates is a scandal--basically a fat loophole for rich capitalists.

57 Recommend
Gator USA Jan. 7

@Billy Walker How much of Jeff Bezo's (for example, nothing against him specifically) billions in annual income would have been possible without the existence of the interstate highway system? How about without the existence of the US postal service? How about without the internet (it wouldn't exist without DARPA's pioneering research)? Seems to me the government and US taxpayers were equal partners (or greater) in his earnings.

57 Recommend
Chris philadelphia Jan. 6

I would be more inclined to not laugh at Ms. Ocasio-Cortez if she had articulate and well reasoned thoughts. Instead she spouts leftist talking points and when asked for detail or context she almost always struggle to provide it. But because leftists like what she is saying they give her credibility just like Mr. Krugman.

55 Recommend
AWG nyc Jan. 5

My father was a CPA during the years from 1947 to 1983. We had this discussion about tax rates early on when the highest rate (during the Eisenhower administration) was 90%. When I asked him about it as a child, he said simply that no one paid 90% of their income to the government. First of all the tax code had many more loopholes than later on, and secondly, he taught me the idea of a "graduated tax", which we still have on the books. All of us pay 10% on the first 15,000 or so that we earn, then 12% on the next 10,000 or so, then 15% on the next, and so to the top rate of 36%. The problem, as AOC and Prof. Krugman point out is that those at the very top of the income scale pay practically nothing compared to those below. The same is true when speaking about the Social Security tax (FICA) which is something like 6% of you pretax income and is capped, at I believe, around 128,000. Which simply means that if you make 100,000 a year your paying 6000 into the system, if you make 10 million, your still paying only around 6000 into the system (or about 0.0006%).

55 Recommend
Johnson Smith TN Jan. 6

So much greed by these socialists. No, you do not have a right to someone else's properties simply because they have more than you do. The rich already pays an oversized amount of taxes, while the bottom 50% pay zero in federal taxes. That does not sound fair. In America, everyone is free to start a business and make money, and most billionaires in this country are self made. They worked harder than anyone else. Bill Gates, for instance, started Microsoft at age 18, when most other guys his age were wasting their time at meaningless night clubs. He worked hard and long, and for ten years, did not take a single day off from work. Eventually, it began to pay off. The the greedy socialists came out of the woodwork, demanding to "tax the rich" to pay their "fair" share. Well, the rich already pay more than their fair share.

54 Recommend
Arturo Belano Austin Jan. 6

Paul Krugman clearly hit a nerve. The dubious right is out in force here in the comments section to defend the rights of the beleaguered rich.

Reply 54 Recommend
Rick Garber Minneapolis Jan. 5

The comments to this piece have reinforced my belief that a sizable portion of American taxpayers do not have a clue as to how the calculation of their federal tax bill is actually structured. At the very least, the term "marginal tax rate" is synonymous with "total tax rate" for most. To those who are trying to effect a sane change to our country's taxation policies, I say you need a structured PR campaign to raise awareness of just what the heck "marginal tax rate" actually means. You could start by showing how, even under current rates, it's possible for someone making an average income (Warren Buffett's secretary?) to pay a higher effective/total tax rate than someone (Warren Buffett?) whose income puts them in the top 0.1%. If you don't believe me, next time you're discussing taxes with friends, ask them the following math problem: John's adjusted gross income is $1M; The top marginal rate on that income is 37%; How much tax does John pay? If the answer you get is, $370k, well, that's my point. Most people won't say that there's too little information given to solve the problem. (This is, the current top rate on that income, by the way.) Once a sizable majority of Americans actually understand this, getting the support to enact a top MARGINAL rate of 70% shouldn't be too hard of a sell.

53 Recommend
cjl miami Jan. 5

@Charlie in NY The Scandinavian countries are facing a whole lot less difficulties than the US. The military spending argument is a red herring. The US deal with NATO is/was that the Europeans would provide the cannon fodder for WW3, while the US would provide the nukes and high tech systems. This allowed the US to funnel money into the defense industry, while not maintaining as large an army as would otherwise be required. Back out of NATO, and all those European countries will "go nuclear" as fast as they can buy the technology from Israel. Is this in the US's best interests? We didn't think so after WW2. The saying was: NATO was designed to Keep the US in, the Russians out, and the Germans down.

53 Recommend
Daniel USA Jan. 7

@Freda Pine the top rate 70% would not apply to you and if it did, the author of this opinion piece and most of its supporters would likely agree that you should not pay anywhere near 70% if you are making 300,000$

52 Recommend
rj1776 Seatte Jan. 5

"We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can`t have both." --Supreme Court Justice Louis D. Brandeis A fundamental reason for higher tax rates on the rich.

Reply 52 Recommend
GT NYC Jan. 6

We tried this ... it was called the 70's. Did not end well .....

Reply 52 Recommend
JD Smith Pittsburgh Jan. 5

I think it would serve progressives well to clarify their rhetoric and policy proposals and speak about raising taxes on the ULTRA RICH? I think there are many people who might be considered "rich", who already pay quite a bit in taxes, but aren't earning enough to engage in the complicated tax-dodging schemes that the ultra rich use. They bear the brunt of a tax code that allows ultra rich earners off the hook while they pay a lot in relation to their earnings. I know many upper-middle class people who might otherwise agree with Democratic policies, but when they hear "tax the rich" they vote Republican because they can't imagine paying more in taxes. It's the Jared Kushners of the world who should pay more, not the small business owner with a few million in a retirement portfolio.

52 Recommend
Peter G Brabeck Carmel CA Jan. 5

A more pedestrian way to view Prof. Krugman's argument is to compare social unease and income/wealth distribution during what many, including conservatives, regard as the nostalgic fifties (fifty years ago, they commonly were labeled the fabulous fifties) with those of today. The 1950s, while it certainly had its problems and the civil rights movement still was in its nascency of emerging from 150 years of overwhelming oppression, nevertheless marked a decade of arguably America's most prosperous period when the prosperity metric is distributed proportionately across all socio-economic classes. The wealthiest lived very well indeed. Private railroad cars still adorned rail lines before the advent of private jets. While extreme poverty existed, especially among urban blacks and other minorities, and some rural communities, for the most part, the vast middle class was progressing and living comfortably. Top-tier marginal tax rates for large corporations and the wealthiest hovered close to AOC's proffered 80%. Most importantly, large corporations still operated on the principle that they were accountable to their stakeholders, i.e., investors, employees, customers, suppliers and communities, not solely to shareholders. Companies offered retirement pension plans rather than 401ks and they honored them. Management was compensated reasonably for their services, not with get-ultra-rich schemes that were backed by ludicrous fail-safe parachutes for malperformance. AOC is right.

Reply 51 Recommend
Lisa Cabbage Portland, OR Jan. 5

@hammond Look at the dates on the graph, the high growth came AFTER 1960. Which war are you thinking "supercharged" the manufacturing sector? As far as causality and causation, gee wiz, this is a newspaper, not an academic journal, the man can only give so much evidence without losing readers. For a more complete presentation, read Jacob Hacker, "American Amnesia: How the War on Government Made Led Us to Forget What Made America Prosper." Government investment is critical for high growth rates, and the wealthy need to pay taxes for that to happen.

51 Recommend
Jason Dallas Jan. 7

@Jason The rich do something wrong every day. From the perspective of someone concerned with labor rights, which perhaps you aren't, they receive compensation vastly disproportional to the amount of labor they expend, and outrageously disproportional to the amount of labor expended by people who aren't rich who work equally long hours and make similar sacrifices. That is what is wrong with the notion of a free market. It is immoral and unethical, and you have to put an academic faith in the superiority of the free market system above your concern for what's right in order to participate in a system like that, and most of us either do or simply don't have any choice in the matter. Not everyone cares about that. From the perspective of someone who is just concerned with incentives and outputs, who has bought into the notion of a free market system, what is wrong is that, as Krugman points out, we don't operate within perfectly competitive markets, not even close. From that perspective, the rich profit from a system that naturally favors them completely independent of variables like labor, risk, demand, etc. I don't guess you have to go to confession for having done something wrong, but a little humility and perspective never hurt.

51 Recommend
White Buffalo SE PA Jan. 5

@Bruce Rozenblit " To top off the entire royalty thing, much of their wealth was most likely generated from tax breaks, tax giveaways, tax shelters and the like. Odds are that a substantial portion of their wealth was never taxed to begin with and with the loss of the estate tax, they get to will it to their heirs tax free." Example #1. Trump and his family. Example #2 Mitt Romney, whose Bain Capital wealth derived from tax breaks earned by bankrupting once solid corporations and raiding their pension funds, etc, then delivering the bill to the tax payers to pay through the Federal Pension Insurance agency and other tax payer funded sources like welfare, Medicaid and unemployment insurance for those who lost their jobs and benefits.

51 Recommend
T Ontario, Canada Jan. 5

Bravo, AOC. Hopefully this will mean growth in the middle class. Many of the very wealthy don't like to admit that their wealth was largely contingent upon economic and tax policies that drove many from the middle class down to have-not status. Hopefully this kind of policy will right that wrong.

51 Recommend
Appu Nair California Jan. 6

Squeezing the top 5% will not be enough to fill the Federal coffers. The super rich have superbly qualified accountants. In our borderless economy, tax havens and loopholes galore to attract and retain rich folks from all over the world. They exist right now but the incentives to hide from Uncle Sam are far less than the overtaxed, nanny states of Europe. Cortex the conquistador needs to earn money on her own by working first, pay taxes, meet payroll or know people who are not on the doll in order to understand taxes make the wealthy flee. And, investment will sink. Talks like this has already made her the East Coast counterpart of the elder stateswomen of stupidity, Rep. Maxine Waters. It is hard to recover from absurd public pronouncements that are etched in hard disks forever.

Reply 51 Recommend
Jim Davis California Jan. 6

A 90% tax rate on anybody doesn't seem to be a fair number. Nor 80% or 70%. Sorry but how about institute a luxury tax penalty on corporations who give out huge CEO payouts. Works for the NBA

Reply 50 Recommend
Brendon Carr Seoul, Korea Jan. 6

The unstated but glaringly obvious assumption in Paul Krugman's and Sandy Ocasio's worldview is that "The Rich" are not citizens and human individuals with their own rights and interests, and families for which to care, but rather livestock to be farmed, milked, and slaughtered for the sustenance of everyone else -- under the wise instruction of Paul Krugman and Sandy Ocasio, of course, who as the will not be required to make the same sacrifices they demand of their fellows amongst The Rich. It's appalling in its entitlement. No thanks, Comrades.

Reply 49 Recommend
Mark Thomason Clawson, MI Jan. 5

Diminished utility? How can they get that fourth mansion, complete with a set of cars and matching clothes in the closets of all houses? How can they get a second, bigger yacht? How can they get that private plane upgrade? That costs tens of millions. That is their utility. It just comes with much higher price tags. They need those things to be "part of the world" in which they live. That is how they can lend a plane or a yacht to a politician. It is how they show they are real people, not just those little tax payers. Readers may think I'm exaggerating here. I'm not. That really is their world. We are so far outside it we never see it, but it does leak into the press, only to be hushed up. Remember Mitt Romney's car elevator? That was paid for with the retirement funds of workers stripped out of closed companies wrecked by Bain Capital, a vulture capitalist firm. They have no retirement, but he's got a car elevator. Utility.

49 Recommend
Frank Colorado Jan. 6

Luke 12:48: "For unto whomsoever much is given, of him shall be much required." You'd think all those good Christians on the right, even if they are not that much into economics could find some direction from the New Testament. Trickle Down is a Big Con. The president is the Grifter in Chief. And the GOP knows it. They just don't want to kill the orange goose that laid their tax rates (among other things).

Reply 48 Recommend
Howard Boston Jan. 5

Assume the Republican congress had drastically cut taxes on everyone named Howard (either first or last name). Our extra spending would have stimulated the economy and created jobs. Could the reason that Republicans did not do this is that we Howards did not band together and give the Republicans massive campaign contributions? If we had, I am sure the Republicans would have claimed that the tax cuts to the Howards would have paid for themselves. This is the intellectual depth, or lack thereof, at which the Republican Congress operates.

Reply 48 Recommend
Gary Bernier Holiday, FL Jan. 6

The unfortunate truth is that there are really three kinds of Republicans when it comes to tax policy. The ignorant; those who have "faith" in the conservative shibboleth that low taxes drive growth and everyone benefits. Like most faithful, they deny facts and endorse lies that support their superstition. There are the brainwashed; people who might be capable of rational thought, but have been reciting the low tax mantra for so long they've stopped thinking about it and just repeat it from rote. Then are the cynics; people who actually know they are selling snake oil, but don't care because it is so lucrative to them and their financial supporters. These are the worst. They knowingly create misery and decimate the middle class for own economic advantage. It is time to put an end to Republican rule.

47 Recommend
Kagetora New York Jan. 6

Never-mind the validity of Alexandria Ocasio-Cortez's positions, which I totally support, but it's hard to understand the right's hysteria surrounding AOC, until we remember their similar hysteria surrounding Barack Obama. Let's not forget that he was a secret muslim who was born in Kenya and secretly wanted to take away our guns. What most irritated them was the fact that he was an articulate, charismatic, highly educated man who was BLACK, and try as they might, they were unable to make the lies and stereotypes stick. Now, we have an articulate, educated WOMAN who is HISPANIC, and they are breaking out the same tired bag of tricks. President Obama, both because of his character but also because he was highly conscious of the image he had to portray being the first black president, was always diplomatic and tended to ignore these racist attacks. AOC, however, grew up during the Obama years, and she saw what that battlefield looked like. I love the fact that she always fights back, quickly, intelligently, and bitingly. And each time she does, she shows up her critics as the hypocrites they are. Bravo.

Reply 47 Recommend
John Marshall New York Jan. 7

@Freda Pine I'm thinking you have absolutely no idea how taxation works. No one would pay 70% on their income. They'd pay 70% on income over $X, which in AOC's instance is $10 million. But... let's take your wrong approach and say it's a flat 70%. You wouldn't "get out of bed" for $3 million? You must be quite rich. Not only would I get out of bed for $3 million, I'd show up early and go home late. At $300,000, you would be paying about 30% as a GRADUATED tax, not flat. Please, if you're going to post on this stuff, at least familiarize yourself with the BASIC concepts in taxation, like marginal versus effect rates.

47 Recommend
Ed Watters San Francisco Jan. 6

Establishment Democrats are just as incensed by AOC's 70% proposal as Republicans, but can't say so, for PR purposes.

Reply 47 Recommend
Claudia New Hampshire Jan. 6

I don't give a hoot about female, of color or young. If she has solid ideas, that's all that counts. If taxing the billionaires works, I'm all for AOC. Personally, if you look at politicians for entertainment value, I much prefer her roof top steps to watching a mouth unconnected to brain standing in front of "that dump" the White House.

Reply 47 Recommend
heysus Mount Vernon Jan. 6

Atta woman AOC. Just what we needed. A women who knows something and speaks her mind. I'm all in. Tax em!

Reply 47 Recommend
Andrew Chapel Hill, NC Jan. 6

@Payton Some politician's pipe dream legacy project... you mean like a certain Border Wall? And everything you've talked about with wanting to keep track of money - X% in Education, Y% for Healthcare, Z% for Military Spending, is written down in the form of the Congressional Omnibus Spending Bill, passed every year. It dictates what money goes where as a combination of smaller appropriations bills. I suggest you read it. You might learn something. I would rather trust a (functioning) government with my money than a collection of wealthy private individuals or corporations, because I can participate in government. I can vote my President out of office.I cannot do anything to tell Tim Cook, or Jeff Bezos, or the Waltons to use my money more efficiently, or that I disagree with what they're doing. Conservatives love to whine about government inefficiency any say the private sector does it better, but that's simply because the private sector cuts corners to do it faster and cheaper. Those cut corners get people sick when water infrastructure breaks down prematurely due to mismanagement by a private utility company, or a large farm corp dumps its waste into the river system instead of going through proper disposal procedures. The government is not necessarily inefficient - it is Thorough.

47 Recommend
Old blue Chapel Hill, N.C. Jan. 7

@Billy Walker With all due respect, Mr. Walker, if taxation is theft, it is theft regardless of the percentage taken. Your notion that taxation becomes theft at a certain percentage is... just your notion.

46 Recommend
Jason Dallas Jan. 7

@Mjxs "When did we begin to believe that mega-millions to CEOs will magically transform into wealth for all...?" We don't believe that, but we've been told that we do. Additionally, some of our less useful democratic institutions--the Senate, the electoral college--guarantee ongoing, electorally unearned power to the side that propagates this falsehood.

46 Recommend
Charlie in NY New York, NY Jan. 5

@SJP. In fact the EU and Scandinavian countries are facing great difficulties bordering on stagnation or worse in some cases. It is also useful to recall that since the end of WWII, these Western countries mostly outsourced their military defense onto the US - that huge savings was what underpinned their growth.

46 Recommend
Ana Luisa Belgium Jan. 5

@George There's nothing like an anti-tax conservative who didn't even start fact-checking his own ideological prejudices ... The wealthiest 1% don't have a $200k income, but at least a $390k income, with an average of $1.5 million. Now can you please explain why asking billionaires to start paying back the debt (in part caused by massive tax cuts given to them, by the way) so that people who were never lucky enough to earn so much can at least have access to decent healthcare and education would be a bad idea ... ? How about putting America first, rather than the wealthiest 1%? Any objections?

46 Recommend
November 2018 has Come; 2020 is Coming Vallejo Jan. 6

It's great to see that the age-old competitive male trick of casting every smart, well-spoken, attractive, or youngish woman as a dumb "nit-wit" has lost its power. People who aren't unsuccessful right-wing males know that such men are simply frightened by ambitious, smart, up-and-coming women. And, at long last, today's ambitious, smart, up-and-coming women are not one bit intimidated by men who insist on taking absurd potshots at them. This is wonderful progress! Go Nancy, go AOC, go freshman House Democrats!

Reply 45 Recommend
Lew San Diego, CA Jan. 7

@Freda Pine: No, economists are not physiologists. They're not philologists or entomologists either. So what does physiology have to do with any of this???

45 Recommend
Luke NYC Jan. 5

@Kenneth Johnson You are missing lots of things, including the fact that under such a system there would be more tax brackets for higher incomes (rather than one bracket for all incomes over $500k.) And the tiered system would still apply, so the 73% rate would only affect income above a certain amount. Re: moving out of the country, if your income is being generated in the US, it would be subject to US taxes. Maybe use your affluence and tax savings in Texas to educate yourself?

45 Recommend
Len Charlap Princeton, NJ Jan. 6

Let's see if we can understand why tax cuts for the Rich or more generally, income and wealth inequality, is bad for the economy. Economists have a concept called the velocity of money. It is the frequency, how often, that money changes hands in domestic commerce. Here's an example. Suppose the government gives Scrooge McDuck a Billion for advice on the comic book market, If Scrooge puts the bucks in his basement, and forgets about it, that doesn't help the economy at all. That Billion has a velocity of 0. Also, if Scrooge loses a financial bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the velocity does not change because it is not a useful change. It doesn't affect commerce. Money going to the Rich has a lower velocity than money going to the non-rich. The Rich spend a lower percentage of their money. What's a guy or gal who already has so many houses he can't remember how many & an elevator for his horse gonna spend his money on? The answer is he is going to use it to speculate.There is a correlation between inequality & financial speculation. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1661746 Speculation is bad for the economy. That money has a very low velocity. AND it increases risk which we have seen in 2008 ain't a good thing. Since 2007, the velocity of money has plunged. https://fredblog.stlouisfed.org/2016/04/a-plodding-dollar-the-recent-decrease-in-the-velocity-of-money /

45 Recommend
Jdavid Jax fl Jan. 6

I own three businesses and I as I write this on a Saturday night in a hotel away from my business trying to expand it I can assure the professor I would not be doing this at a 70 percent tax rate!the ivory elite economists who write this drivel has never owned a business created one job or made one payroll. Did you just see the last jobs report the growth rate after trump cut taxes .

44 Recommend
M.R. Khan Chicago Jan. 6

These frauds who claim economic expertise without any real academic qualifications include Larry Kudlow.

Reply 44 Recommend
Rima Regas Southern California Jan. 5

@Fourteen This sense of entitlement by the white patriarchy is rooted in America's original sin. From an essay I wrote in 2016: "Now, there are three things that we must deal with and we're going to transform this neighborhood into a brotherhood. We've got to deal with the problem of racism. We've got to deal with the problem of economic injustice or poverty. And we've got to deal with the problem of war."" The issues King delineated for his audiences in the months leading up to his assassination are the very same issues present day candidates are grappling with – the only difference is that in the intervening fifty plus years, the three fundamental problems identified by King have grown exponentially. Inequality is far wider today. Today's poverty is far deeper and encompasses a much wider segment of America's population. https://wp.me/p2KJ3H-1Tb Nothing can change until we have truth, reconciliation, and reparations because if it is OK to go on without apologizing as a nation, then it is OK to go on exploiting the classes in cycle after cycle of economic ups and downs and cycle after cycle of racial divide and conquer.

44 Recommend
Jessa Forthofer Maui Jan. 6

I read this article as I sit on a patio at my Airbnb in Maui, looking out across the ocean. My girlfriend and I worked hard and tucked away any extra pennies we had for this vacation - doing so for a couple years. We are here to celebrate her 30th birthday, and it feels rich and lovely because this trip was hard-earned and marks a goal accomplished. It is unlikely we'll take another vacation like this for quite some time. The thing that strikes me the most as I read this article is that I sit here looking across the water toward the island of Lanai. Larry Ellison of Oracle owns 98% of that Hawaiian island (where the Dole pineapple plantation used to be). It is not a small island. Why do the rich need such things? Why is it reasonable to say that an individual man should even be able to purchase such a lavish, absurd amount of this beautiful paradise (and then only really allow the extremely wealthy to visit at the Four Seasons there, where a "bad" room runs over $1000 per night)? Why? The rich are not taxed enough.

44 Recommend
Another Joe Maine Jan. 5

I'm not sure if this is still strictly true, but as of a couple of years ago the richest woman in the USA was the widow of one of Sam Walton's (i.e., Walmart) sons. In other words, the wealthiest woman in America was the heiress of an heir of someone who actually created a business. In case that isn't quite clear, the richest woman in America is someone who never, as far as is known, never did a lick of actual labor in her life. What is utterly astonishing is how many people have been brainwashed to believe our system is actually a meritocracy, and taxes on the wealthy are taxes on people who earned their wealth by the sweat of their brow. . .

Reply 43 Recommend
Fourteen Boston Jan. 6

@Socrates The Rich have rigged the system to favor themselves against us. They don't know how to make money the old-fashioned way. They'd be lost in a competitive market. Instead, these Takers live in an alt-reality echo-chamber slapping each other on their backs for being "Makers." The Progressives see them clearly as parasites.

43 Recommend
Miriam Chua Long Island Jan. 6

"...Republicans almost universally advocate low taxes on the wealthy, based on the claim that tax cuts at the top will have huge beneficial effects on the economy." Trickle-down economics, voodoo economics; when will people stop accepting this drivel, which was disproven by Reagan? As for the average middle-class American, what I find remarkable is that most people want lower taxes AND more services; I read letters in Newsday about it all the time. Totally illogical.

Reply 43 Recommend
James Thornburgh San Diego Jan. 7

@romanette Well said.

43 Recommend
Suzanne O'Neill Colorado Jan. 5

@Andy The quote that comes to mind is, "It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair

42 Recommend
Fourteen Boston Jan. 5

@Bruce Rozenblit I would add another prime motivation beyond wealth and power and control. For those with wealth and power in excess of what they could ever need, why do they continue to arrogantly pile it up regardless of the cost to others? I believe it is fear - the fear that people will object to the imbalance and try to right it. Great wealth and power engender insecurity. The Rich are afraid of us.

42 Recommend
SandraH. California Jan. 5

@Plennie Wingo, true. Our first tax reform should be to tax all income at the same rates. We should also eliminate different tax schedules for tax payers, depending on their marital status.

42 Recommend
Gwe Ny Jan. 5

@Barking Doggerel Yes and no. In today's world, male privilege has given you that view. However, and this is not a small point, that is YOUR view. In reality, MOST people at the top marginal rate that *I* know are not merely CEOs. The people that I know, peeps that would qualify for this tax hike, are the upper managers, high wage earners, typically at the height of their career. They tend to be first generation high earners...otherwise they would not need to work in this manner because their investments would otherwise feed them. They do not have independent wealth but they are trying desperately to accumulate it. Because they typically live in one of the two coasts, they tend to have high property taxes and a high cost of living. They have the means to pay for their kids education, but they worry about their children ability to build on their current success. In my experience, the high earners I know come in different flavors and nationalities. They only thing they all have in common is achievement: academic and economic. But I will tell you something I do know about the CEO types and they don't grow on trees. Try and recruit talent and not pay them. You won't be able to.... and it will make a difference to the bottom line, because I have seen it. This plan will push down the upper middle class down the way that the GOP already decimated the other middle class. To combat income inequality, close the "Mitt Romney" loopholes.

42 Recommend
ch Indiana Jan. 5

The wealthy CEO's don't even work an extra hour for that extra $1,000. They just negotiate for obscene amounts of compensation that they cannot in any way spend. There was a study awhile ago - I think I read about it in the NYT - that suggested that a higher marginal tax rate might reduce the incentive for CEO's to negotiate for higher and higher compensation, because that would bump them up to a higher marginal tax rate. If that is correct, then corporations would have more to pay ordinary workers, and income inequality would be reduced.

Reply 39 Recommend
Larry L Dallas, TX Jan. 6

@Gwe, frankly, I think the executive management of American companies back in the 1950s and 1960s were more competent because they were better at balancing the needs across a number of constituencies. Even after adjusting for inflation, they made much, much less. Now THAT'S value! What has changed is an attitude of me-ism that an older generation that had to survive WWII and the Great Depression did NOT have. Unfortunately, that sort of zeitgeist died with them and the country is poorer as a society for it.

39 Recommend
David Andrew Henry Chicxulub Puerto Yucatan Mexico Jan. 5

Paul, in your previous column you noted that corporations were sitting on a mountain of savings. The money is mostly in foreign banks, because the corporations don't want to bring it home, because they can't find good investments. I recently visited with a retired Canadian banker who said his best years were when he was working with young entrepreneurs...contractors, builders, small business owners. He watched them grow and helped through some of the rough parts. Is there something wrong with today's bankers? (Everyone please revisit The Big Short) Back to today's tax story. About forty years a go I needed three American engineers with experience we couldn't find in Canada. They didn't want to come..."taxes are too high." I explained that their private health insurance was a tax. When we factored in the cost of US health insurance they would have more after tax income in Canada. They came to Canada. Please continue to write about taxes. Thank you. Ancient Canadian economist In a Mayan fishing village

Reply 39 Recommend
Marjorie Riverhead Jan. 5

My dad owned a small business on the Gold Coast of L.I. during the 60's which catered to old money WASPS whose wealth was taxed at upwards of 90%. However, they all "summered" on L.I. or Cape Cod, had homes in Manhattan, Paris, London and yachts in the Caribbean. And, as a middle class young adult, I was able to attend community college for $50 per semester. That's when we had real upward mobility, a dynamic economy and a strong middle class.

38 Recommend
Ignatius J. Reilly N.C. Jan. 6

Who is this "The Rich"? Let's face it, it's sort of a Boogeyman. The REAL tax amounts come from BUSINESSES. BIG BUSINESSES. And that's who should be taxed and taxed well. There shouldn't even be an individual income tax. Everyone's income comes from a BUSINESS one way or another and should be taken out and adjusted for on the Business end. And as we know Business just got a HUGE break under Trump and the Republicans.

Reply 37 Recommend
Dave Lafayette, CO Jan. 6

As Mr. Krugman is often fond of saying: "Your spending is my income, and my spending is your income." Or, to quote Barack Obama in 2008: "When you spread the wealth around a bit, it's good for everyone." For his quote above, Obama was eviscerated by the Right for "advocating socialism". Of course for those who believed Saint Ronnie when he said, "It's all YOUR money" - ALL taxation is "socialism". That would be the GOP's mantra if it wasn't for the military-industrial complex (socialism for defense contractors). But I digress. The message behind both the Krugman and Obama quotes above is simply that we are currently on a political and economic path to neo-feudalism (where the Lords own 90% of the wealth and we Serfs squabble over the remaining crumbs). By contrast, "everyone" benefits from a European-style "social democracy" - where government actually "provides for the General Welfare" so the average citizen doesn't have to worry much about food, clothing, shelter, education and health care. These basics are the foundation of Maslow's "hierarchy of needs". Once these basic needs are met, citizens are free to concentrate their energies on "productive pursuits" (whether that's earning more money or writing a symphony). And everyone (even the wealthy) suffers from far less stress than in our current jungle system where most Americans literally struggle from paycheck-to-paycheck - just one illness or job loss from total destitution. Yet we continue to vote for serfdom.

37 Recommend
Ed L. Syracuse Jan. 6

Never in the field of human conflict has so much been written about one who has accomplished so little.

37 Recommend
Mytake North Carolina Jan. 7

@Jason Let the wealthy flee and see if living outside of the USA on a daily basis holds much of a candle to living every day in the USA (e.g., Seattle, LA, or NYC) to name a few. Good luck.

37 Recommend
Rich Fairbanks Jacksonville Oregon Jan. 6

I own a small forestry company. Despite a competent tax preparer I pay well over 20% in federal income taxes. A large forestry company (Weyerhauser) with billions in revenue pays 0% federal tax. AOC knows exactly what she is talking about.

37 Recommend
Rudy Berkeley, CA Jan. 6

@Thomas Zaslavsky There no way to create wealth other than inventions and discoveries that 20-21st century science has shown us. All the other money making schemes are either rent seeking or exploitational. So the way we compensate scientists and scientist makers (teachers, aides etc) is so flawed that our sustainable scientific growth is in jeopardy (check the time it takes a PhD in biology to get a permanent job!). I don't see CEO any better than the scientists I've met in my life. The only difference is that CEOs are uber competitive whereas great scientists are excellent collaborators. There will be no capitalism, only feudalism without scientific discovery and inventions ... stop lionizing the CEOs.

36 Recommend
John Mardinly Chandler, AZ Jan. 5

It's time to end the salary limit for Social Security taxes. Also, people like Warren Buffet, who don't get a salary but make their income from dividends, should pay into Social Security by a 'Payroll Tax' on dividends.

36 Recommend
Kim Terre Haute Jan. 7

@Jason People and capital are not more mobile than they have ever been. The median income in the US has been stagnant for decades, and the buying power of that income declines every year. This is happening as the ultra-rich see tax breaks and hundred-percent increases in their income.

36 Recommend
Rudy Berkeley, CA Jan. 6

@Allan Reagan I've seen 100s of scientists who forego consumption, risk their life on finding truth (less than 1 in 10 PhDs land permanent jobs in Academia presently) that in turn help move the 20-21st century machine into creating wealth for all. I don't see them asking for 10 million plus to get rewarded. Einstein refused a pay hike at Princeton to $8K (present value $40) but without him there'll be no internet, mobile phones etc for supposedly "self-made" men (yes men) like you to make money from! We're all incredibly hard working like you (mothers, teachers, drivers, painters etc). You're incredibly lucky to make 10 million plus! Modesty would be a nice gesture ...

36 Recommend
Mike Tucson Jan. 5

I wonder what our country would be like if we had the same distribution of income by deciles as we had in, say, 1980 before the Regan tax cuts and subsequent cuts. How much more money would people in the bottom three quartiles have in their pockets? With more money to enjoy life, could productivity have continued to increase rather than decrease. I suspect with all of that money in their pockets they would have consumed more, GDP growth would have been higher, there would have been less impetus to drive work to cheaper labor markets in Asia because people could afford things from higher labor markets like the good old USA. We would have more money to invest in infrastructure. We would have enough money for universal health care. So in turns out, I believe, the Republican tax policy is just one big scam to create a landed gentry in this country, something I doubt the founding fathers would be ok with having just gotten out of a country where the landed gentry were everything. And my having a universal health care growing at GDP rather than 2x GDP, would would have a low cost and better health care system.

36 Recommend
From Where I Sit Gotham Jan. 5

Please don't repeat what you wrote here. It is tragically WRONG though it is widely repeated! No one pays 70% on ALL their income. Each tax rate applies ONLY to monies in that bracket. If a theoretical 70% applied to income above $10,000,000, and someone made $11,000,000, then they would pay the rate of 70% on $1,000,000. Furthermore, if there is an exemption for the first $12,000 of income, and a rate of 5% from $12,001-$20,000, then you, me and our millionaire example would all pay no tax on the first $12k, $399.95 on the next bracket and so on. The end result is what's known as the effective tax rate and that's the progressive part of it.

36 Recommend
Gary Monterey, California Jan. 7

@Billy Walker Sigh .... another failure to understand the meaning of marginal tax rate.

36 Recommend
Ellen San Diego Jan. 5

@Red Sox, '04, '07, '13, '18, I think if you scratch them deep, many very wealthy people in the U.S. would like to see better infrastructure, universal healthcare, more people in homes than on the street, etc., plus a progressive program to deal with climate change. And if a logical, sensible tax proposal could be put forth, they would vote and help pay for it, slowing our nation's slide toward becoming a third world country.

36 Recommend
John Quinn Virginia Beach Jan. 6

Progressive taxation is a fraud and unfair. Everyone should pay a flat rate; around 20%. There is no reason not to tax all taxpayers with the same rate.

Reply 36 Recommend
Yuri Asian Bay Area Jan. 5

Jesse "Big Daddy" Unruh -- when he was California State Assembly Speaker ran against incumbent Gov. Ronald Reagan in 1970 promising a confiscatory tax of 100% on income above $1 million a year. Unruh, known for his quip "Money is the Mother's Milk of Politics" ran as a progressive populist against Reagan, who was re-elected with a decisive margin of 52.8% to 45.1%. Post-election Analysts were surprised that working class Democrats rejected Unruh because they said they strongly opposed his 100% tax on all income above $1 million annually. After Unruh lost there was an apocryphal interview with a taxi driver who said "if I make more than a million a year I don't want the state taking it away." When the reporter asked the cab driver if he really thought he'd ever make that much, the cab driver said "who knows, I might get lucky." Stamped on the politically modified DNA of too many working Americans is the fable that everyone is just a sliver of luck away from tycoon wealth. It's a fantasy of American Exceptionalism that explains the celebrity and allure of privatized wealth trumping common good and common sense. To paraphrase Marx: Money lust is the sigh of the oppressed creature, the heart of a heartless world, and the soul of soulless conditions. It is the opium of the people". To misquote the late Carter Ag Secretary Bob Bergland, "the rich know the cost of everything but the value of nothing." Amen to that.

36 Recommend
John D. Out West Jan. 6

@Ron Cohen, exactly right. A reduction in incentive for the ultra-wealthy to make an extra million or two also can help reduce the cutthroat nature of this economy & society. What would the rich guy have to do to add that extra couple of million? Lie about the asbestos in his company's talcum powder? Ignore product safety standards to save on manufacturing cost? Fire a wad of people and drive the remaining skeleton crew over the edge into stress-induced disease? Find a way to get that toxic waste off your hands, say as an ineffective, downright toxic fire retardant for furniture and baby clothes? Anything society can do to lower the probability of outcomes like those is a significant benefit for all.

36 Recommend
Tony Long San Francisco Jan. 5

"So why not tax them at 100 percent? The answer is that this would eliminate any incentive to do whatever it is they do to earn that much money, which would hurt the economy." And yet, as both you and Thomas Piketty have pointed out, most of the wealth being generated now is through investment, in other words making money from money. So nothing useful is being produced and these people are not "job creators." Go ahead. Tax them at 100 percent.

35 Recommend
Andrew Zuckerman Port Washington, NY Jan. 5

@Matthew Carnicelli America isn't happier but rich Republican donors are. Republicans work for their rich donors, not for America so the party is just doing its job.

35 Recommend
Ellen San Diego Jan. 7

@Mjxs Rather than restore the draft, have a national conversation on our outsized military, and its (our?) goals. Perhaps reducing its budget significantly, instigating universal community domestic service for all our youth, and giving some of the savings to repair our tattered safety net would get us to where we would like to be.

35 Recommend
Nelson Austin Jan. 5

@Geoffrey Please read the comment from "Barking Doggeral," I think it answers your question. Basically, "super compensated" does not equal super productive by a long shot.

35 Recommend
Ryan GA Jan. 5

I'll tell you how Ocasio-Cortez will perform as a member of Congress: She won't. She is too intelligent and her policies are too sane and sensible to mesh with the crooks and corporate shills who control our modern political system. The people want wild, outlandish, showbiz personalities, not a return to the stable social democracy that made us the greatest country in the world during the 1950s. AOC may know how to use Twitter, but unlike Trump she doesn't know how to use fear and deceit to influence an entrenched profit-driven plutocracy, and unlike Trump her ideas won't allow global megacorporations to consolidate their money and control over us so any hope of financial support is out of the question. And her ideas concerning policy would promote America's strength and stability, something that our foreign enemies will fight tooth and nail to prevent. With no corporate cash and an army of foreign agents and their Republican employees undermining her, AOC's agenda will go nowhere. Furthermore, she will accomplish nothing in Congress because there is no Congress. Trump has eliminated it. The shutdown is not a means to the end of building the wall. The Wall fight is just a means to an end: Trump and his followers want the government to remain shut down. They want to undermine our government and punish Federal employees by putting them out of work. Their motivations are resentment, spite, and the driving need to hurt Americans. Trump's goal is two branches of government.

35 Recommend
Jim California Jan. 5

Facts are always disconcerting because they challenge beliefs and in this situation sense of personal self worth amongst the highly compensated.

Reply 35 Recommend
Doug Brockman springfield, mo Jan. 6

Imagine yourself a cardiologist making 900K a year. Now imagine taxing his income at 90% inclding state taxes. How likely is he to get out of bed at 3 AM to do y our emergency angioplasty, since his income depends on aperformance based compensation model and his sleepless night, before working the next day as well, isnt going to earn him beans a fter taxes?

35 Recommend
Jim Muncy Florida Jan. 6

Yes, but 80% -- holy cow! That just sounds outrageous. It's very bad optics if nothing else. How can the IRS agent, with a straight face anyway, demand, "Okay, buddy, for the privilege of living here, you owe us eight out of every ten dollars you earn." Really? Isn't that absurd overreach? No? It's fine with me personally: I'm poor, living on a modest Social Security check. It's also fine with me if you outlaw booze and cigarettes, too, because I'm not a patron. I've no skin in these games. And I do love the idea of financing our deeply in debt, democratic government and helping the poor, I'm one of them, but, yeow, 80%? That's going to be a hard-sell just on the face of it, although I concede to the wisdom of my superiors -- the Ph.d. economists, especially the Nobel-Prize winners. Just as I did when called upon to fight the noble Vietnam War. They know more than me, right? So, AO-C, carry on, girl. You have the money gurus behind you, while this layman remains bemused, stymied, and not a little red-faced by the paradox, appropriateness, and effectiveness of an 80% tax rate. Holy cow! Good morning, Vietnam.

Reply 34 Recommend
mpound USA Jan. 6

"The controversy of the moment involves AOC's advocacy of a tax rate of 70-80 percent on very high incomes, which is obviously crazy, right? I mean, who thinks that makes sense? Naturally, Krugman and the cocktail waitress/tax policy savant known as "AOC" don't even bother to define what constitutes "very high incomes", which demonstrates just how poorly thought out their magical thinking really is. Try again, Paul.

Reply 34 Recommend
Van Owen Lancaster PA Jan. 5

Great article. No need to argue the point. Raise tax rates on those earning north of one million to 73%. Just do it. Now.

34 Recommend
Joe Public Merrimack, NH Jan. 6

Taxation is theft. It is wrong to tax people at 70%, because you are stealing from them.

Reply 34 Recommend
Anatomically modern human At large Jan. 7

". . . a tax rate of 70-80 percent on very high incomes . . . is a policy nobody has ever implemented, aside from the United States, for 35 years after World War II -- including the most successful period of economic growth in our history." I've been waiting for decades now for someone to notice this. For several years during world war II, the top tax rate was 95%. It dropped a bit at the end of the war, but by 1950 it was back above 90%, and there it remained until 1963. When vast amounts of public money flow into private pockets in the form of defense spending, which has been the case since the 1940s, high marginal tax rates are what keep public money public. Anything less amounts to a huge transfer of wealth from the poor to the rich. Which is exactly what's been happening since the Reagan-Thatcher years. Call it "socialism for the rich". It's time to get back to the common sense policies of working for the common good, and that means progressive taxation.

34 Recommend
Peter Z Los Angeles Jan. 5

Paul.....Taxing the wealthy is the ONLY way to provide income equality to all Americans. The rich never, ever, make their money without the Democratic Capitalistic system for them to operate within. The US infrastructure, the laws, the labor of the many, and other common benefits to all businesses provide Americans the opportunity to build personal wealth. If the wealth Gap gets too big, the many "have nots" will revolt. It's in the interest of the 1% to make sure the 99% is taken care of. It's a matter of survival.

Reply 34 Recommend
Steve California Jan. 5

Currently the 1% own 50% of global wealth, they will own 66% by 2030. Left unchecked, they will eventually own virtually all wealth, which reduces you and I to serfs, and is intrinsically unstable. The reason for this is simple: the return on capital is about 6-10% while GDP growth is 2-4% which means that wealth will accumulate with those who own capital: aka: the rich get richer. That is a systemic outcome. The solution is simple: tax at the top, invest at the bottom.

34 Recommend
hikenandclimbin MV, WA Jan. 7

@Jason You clearly didn't read the editorial: Why is it that the Conservatives never articulate a policy proposal based on factual analysis ? Because, much like Jason's suggestion that he would move his business out of the country & Jason's criticism that the left's answer is soak the rich, has no basis in reality. Jason may or may not move his business but this of little consequence as his 'income' would be distinct from business profit. & the notion that the rich are soaked is difficult to reconcile with our current economic situation. The Far-Right seems to misunderstand how tax structure works & how tax income is used. Jason's suggestion that the private sector applies superior critical thinking skills is belied by his comments & this is driven home by the mere fact of his comment being an 'Times Pick'

33 Recommend
Tom New Jersey Jan. 5

@SJP The only country that has tried a marginal income tax rate above 55% recently (France, 70%) abandoned it as unproductive, i.e. it wasn't collecting much because people successfully avoided paying it. That speaks more to me than what may be optimal in theory. With state and local taxes added in, marginal tax in US blue states is already about 50%. An 80% tax rate is a political fantasy, even in Sweden (total top marginal rate 56%)

33 Recommend
Geoffrey Dallas Jan. 6

It sounds like a strategy to discriminate against a minority group based solely upon the one characteristic that defines their minority status - their income. No law-abiding group should be targeted for disproportionate, punitive taxation based upon their income. The ultra wealthy, who broke no laws while attaining their wealth, should not be financially exploited after the fact simply because the majority would like to siphon off their wealth rather than innovate and work for their own. Who are you, or anyone else to say how much of a person's hard earned income is "enough for them" or to decide how "bothered" they will be if you forcibly take the portion of their money you've deemed to be excessive. What have you done that entitles you to deserve any portion of another person's earnings? I could find a large group of impoverished, homeless people who would feel that the middle-class income you earn is too much for you and that you should be forced to distribute any amount over a subsistence income to them since they are less fortunate than you. I doubt you'd be as quick to advocate for their claim to your money as you are for your own claim to the money of the wealthy.

33 Recommend
Laurie USA Jan. 6

@Annie. "What if we stopped believing that government could fix all of our problems?" The US Constitution is written so that the Federal Government provides for the common good. If we stop believing that, we might as well move to Russia.

32 Recommend
Rudy Berkeley, CA Jan. 6

@dmckj So Denmark is Cuba?

32 Recommend
Meredith New York Jan. 6

Of course Repubs say tax cuts for the rich will benefit the whole economy---that's you and me. What else can they say---the truth? That they want to confiscate our national productivity---meaning what you and me produce at work? Because it's their due, as superior beings who call the shots? Then decide how little to pay you and me in return? Or that it's perfectly ok to send our jobs away to low wage countries, and leave us to scramble? Can they say that they should dominate our govt like the aristocrats of olden days? Those ones we overthrew way back when? No, would sound awful. So they and well paid consultants make up these economic slogans---and millions believe them! And many go along with it to be in with the influential and powerful. The politicians taking donor money spread the lie. The big con is to equate corporate wealth with Americanism and Freedom. They manipulate us with the implied threat and contrast of a true Communist dictatorship where the govt owns everything. But as Krugman's favorite 2016 candidate Bernie Sanders said---Yes, of course we want capitalism, but regulated capitalism! If elected govt doesn't regulate corporations then the corporations will regulate the govt. That's what we have now, disguised. Btw-- PK says, " if a rich man works..." How about if a rich woman works? Or rich person, Or rich people. Times have changed. Hard habit to break. Man is not synonomous with humanity.

Reply 32 Recommend
Benjamin ben-baruch Ashland OR Jan. 6

Wow! A congressperson who understands economics and who can dance too!

Reply 31 Recommend
Blank Venice Jan. 7

@Allan Reagan I had an accountant in my early days of entrepreneurship who wisely explained to me that paying taxes was far better than not paying them. He was right, as I earned more income, I paid more taxes and became more successful so I could earn more income and pay more taxes. Paying the 70% rate on your earnings over $10m means you already earned $10m. In a year. Now stop complaining already.

31 Recommend
JW New York Jan. 7

@Billy Walker Regardless of whether we are talking about marginal rates, the idea that taxation is "theft" is something that the wealthy have been pounding into the heads of the population for decades now. If that were true, then those that don't want to pay taxes should not be permitted to use OUR roadways, or seek protection from OUR police force, or expect their trash to be picked up by OUR sanitation workers. If and when a natural disaster strikes and your home is destroyed, please don't look to US for relief. If you are in trouble in a foreign country do not look to OUR embassy. When you want to sue your business partners or you get into an accident and need to sue the negligent party or even when you are arrested and accused of a crime, please don't look to OUR courts for redress. If you have not paid for these services, please don't steal them from those that have paid. Also, if you have a business, please do not steal the use of OUR railways, roadways, bridges and tunnels, postal system, shipping ports, waterways, rivers, lakes, airports, airways, traffic controllers, etc. Because the more you are making, the more you will be using OUR infrastructure and services. Get your own and stop putting such heavy demands on what is OURS. Freeloading rich people will not be tolerated despite the fact that they are and always have been amongst the most self entitled people to grace this country. Pay your taxes or stop stealing.

30 Recommend
Marc Herlands San Diego, CA Jan. 6

Eisenhower said that high marginal income tax rates on wealthy people and corporations was not socialism but sound economic policy. He said corporations would pay a greater portion of their profits from increased worker productivity to workers rather than pay an increased amount in taxes to government. For decades workers received annual increases in wages and benefits when marginal income tax rates were high. Then Reaganomics was introduced which lowered greatly those marginal income tax rates on wealthy people and corporations while raising payroll taxes on workers and businesses. The result has been no growth or loss of real income for 90% of the country, a small to moderate gain for the top 9%, and a huge gain in real income for the top 1% of income earners. Businesses gave bonuses to management for increasing before tax profits. They did this by reducing the growth rate of wages and benefits and moving production to Mexico and China where wages and benefits and regulations are much less than in the US. It has been goodbye good industrial jobs and hello to bad service jobs for the past 35 years. It's time to go back to that which helps most people and not the top 1%. Goodbye to trickle down economics which has never worked to help the bottom 99%.

Reply 30 Recommend
Steve Crouse CT Jan. 5

@Ellen All correct, our infrastructure has already become third world. Next time you're stuck in traffic under a bridge, look up at the rusted steel and spalled concrete. I do this often because I've been involved with road construction all my life and I'm aware of the collapse of our infrastructure. However, few people ever look up at a bridge when below it, and don't recognize what they see. The politicians don't look either, but the engineers do.

30 Recommend
AlexanderTheGoodEnough Pennsylvania Jan. 6

What's good for the USA is good for General Bullmoose!! https://youtu.be/Kj65AcbekIE I've been saying this for years. The wealth of the wealthy is founded upon and maintained by the prosperity of America's working people. Those among the ±1%, and most especially the 0.1%, who are not sociopaths ("It is not enough to succeed. Others must fail." ~ Gore Vidal et al.) must realize that the best investment that the well-to-do have ever made in all of human history was in America's infrastructure and its middle class during the 3+ decades following WW II. Even though at the time the taxes on the wealthy were overly confiscatory, not only did it result in remarkable economic prosperity for all, including the wealthy, it also meant that the wealthy could sleep safely in their beds and not have to cower behind walls and private armies for fear that their heads might end up on a pike. Sadly, those days seem to be passing. A person with no hope can be deadly, so, as the people lose more and more, the rich must, perforce, fear more and more. Some of them know that, and know better, but... "We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both." ~ Justice Louis D. Brandeis When John D. Rockefeller was asked once, "How much money is enough money?" He replied, "Just a little bit more."

Reply 30 Recommend
Jack SF Bay Area Jan. 6

It's not just higher tax brackets for the wealthy. It's also tax breaks on dividends as opposed to dividends as well as all of the other tax breaks that rich people receive. It's also unaudited and untracked overspending on the military, subsidies for fossil fuel companies, and all of that stuff. The result is that young people pay for their education for the rest of their lives; roads, bridges, railroads, airports, water systems, etc., are in a state of advanced decay and our society as a whole is suffering from structural deterioration. So good for Krugman and Ocasio-Cortez. It's about time.

30 Recommend
Molesh NY Jan. 6

Taxing the rich at 75% is a fools errand. President Holland tried only to see rich leave France. In a global economy, the rich move, when taxed too much, (in their opinion) to where taxes are lower. It is just as lovely to live in London - with the source of your income conveniently located in the Channel Island) then in NYC

30 Recommend
sjs Bridgeport, CT Jan. 5

@WPLMMT I am a liberal and a progressive and what I want is for the ultra rich to stop grabbing everything for themselves aided by unfair tax laws and bought politicians. Write back in 2.5 years, WPLMMT, and see if your prediction about her longevity comes true. I wouldn't take the bet, if I were you.

30 Recommend
Thomas Zaslavsky Binghamton, N.Y. Jan. 5

@Robert Orban Reagan did not do it. Volcker did it, with the approval of Carter, before Reagan became president, and continued the same policy under Reagan.

30 Recommend
JMM Worcester, MA Jan. 5

@Ron Cohen A bigger contribution to the "why" is the changes in accounting rules on options and stock compensation. This plus the SEC rule changes regarding advanced advice (forecasting company performance) have allowed executives to play the expectations game and manage their payout.

29 Recommend
bud mckinney Jan. 6

Krugman,as usual,you are wrong.When you pay 70% or more in taxes;what is your incentive to work.The people taxed at the 70% rate will leave,just like France.Then France reduced the tax rate.Cortez is an individual with scant knowledge of economics/taxation.I find it amazing she grew up in affluent Yorktown Heights in Westchester County yet wants us to believe she's a poor hispanic from the Bronx.

Reply 29 Recommend
Katy NYC Jan. 7

@Billy Walker Under Dwight D Eisenhower, taxes on the wealthy were much higher percentage. Ocasio regurgitated a Republican's tax plan and called it her own. During Ike's tenure, those monies were used to build the greatest infrastructure America ever built, and the last time America made any meaningful investment in our infrastructure - because Reganonomics paved the way to decrease taxes on the wealthy and there went America's infrastructure monies. Why are you so determined to make sure the rich get richer?

29 Recommend
Charles New York Jan. 5

@Geoffrey "Why not punish the unproductive with high taxes as an incentive for them to become more productive".... It's rich to imply someone making $20 an hour is unproductive as opposed to one born to the investor or heir class who may have never lifted a finger or even earned their original wealth in the first place.

29 Recommend
lester ostroy Redondo Beach, CA Jan. 5

@Plennie Wingo When considering tax rates, the so called payroll tax should be folded in. Most observers of our tax rates seem to forget that part of the deal. Since the government uses the payroll taxes collected no differently than it uses any other funds collected, I think it would be smart to get rid of it altogether. Right now, the payroll tax, which is supposedly funding Social Security and Medicare has a surplus every year and is added ludicrously to the national "debt." Let's get rid of all of these fictions and start over so that the actual taxes everyone pays will be more equitable.

29 Recommend
Denise Johnson Claremont, CA Jan. 7

@Billy Walker So who cares about the data, history, experts- you know what you know. Our current tax laws have been written by the rich & corporations. Do you think that is why they favor the rich & corporations with little regard to what is best for our country? I do.

28 Recommend
Mark Portland, ME Jan. 6

I think this quote by Mr. Krugman is a dangerous mentality to have for us citizens. "Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise." Boy could this logic justify some madness down the road.

28 Recommend
ed connor camp springs, md Jan. 5

Capital, and capitalists, can flee. It's why the Beatles left the U.K. in their prime. Remember "Tax Man"? Paul, you more than anyone have spoken about the fact that capital knows no borders; it just seeks the highest return.

28 Recommend
Ellen San Diego Jan. 5

Isn't a major elephant in the room the amount of our taxes that goes to (Eisenhower's famous phrase) the Military Industrial Complex? As Martin Luther King said :" A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom."

Reply 28 Recommend
jas2200 Carlsbad, CA Jan. 7

@Allan Reagan: If you are making under $100,000, you won't be hurt by the higher tax rates Democrats, including AOC, are talking about. AOC floated higher rates on income over $10,000,000. I think you are safe.

28 Recommend
Midnight Scribe Chinatown, New York City Jan. 6

The future has arrived and we'll do anything to stop it dead in its tracks. AOC is a symptom of the future, not the full-blown terminal illness lying in wait for the oligarchy. Beto O'Rourke may also be a symptom of this new dreaded epidemic. The GOP has been doing this smoke-and-mirrors act with the economy for decades: the "job creators" who can't be taxed, the efficient markets which result in a major financial catastrophe every ten years, the "competition" which only results in the consolidation of economic control and power in the hands of a few big corporations (monopolists) and big banks. And the whole thing runs on free money - zero interest rate policy - or effectively zero when inflation is factored in. We have a cult. A cult of "conservatism" which is profligate, wasteful, irresponsible, fatuous, anti-scientific, anti-fact, and anti-intellectual. Cults work better without facts. They're hostile to fact. And cults are dangerous like ignorance, and greed, and chicanery. Conservative = Insurgent. Up = Down. Donkey = Aristotle. And doesn't it sell like hotcakes along with those $40 red hats...

Reply 28 Recommend
AKJ Pennsylvania Jan. 6

@sharon Not to mention how Mitt shoveled a bunch of options into his retirement account without having to pay taxes on their full value.

28 Recommend
Mij Sirron California Jan. 6

Great idea, let's raise more tax money so that we can do truly productive activities such as flying dead ex-presidents and senators across the country (several times) in 747's. Maybe they needed the security or were in a hurry to be buried. Then, of course, look at the great value-for-dollar we get from military spending.

Reply 27 Recommend
Scott Texas Jan. 6

I don't need some 29 year-old who has never started a business, made payroll, created something that didn't exist before, took the chance, made the investment, and suffered the many setbacks before the idea was a success to tell me how I should or shouldn't spend my money. Taxing it is the same as saying how I should spend it. I also do not need an academic who has never started a business, made payroll, created something that didn't exist before, took the chance, made the investment, and suffered the many setbacks before the idea was a success to tell me how I should or shouldn't spend my money. Taxing it is the same as saying how I should spend it. Both of these folks are sad examples of the "let me tell you what is best for you" paternalistic, liberal ideology that we should all be very afraid of.

27 Recommend
Wizarat Moorestown, NJ Jan. 6

Professor Krugman, AOC is no flake and the Republicans know that. Trumpian Republicans are running scared of the new freshman class of 116th Congress as it is the most diverse and educated ever. They are looking for ways to discredit these young, energetic, and educated Representatives of the People who came/got elected to take back the Government from the Corporations. They promised to make it work for all the people. Just to add one more item in your list of why we should tax the top 1% with a 70%-75% tax rate is the fact that the utility of extra money to people with middle and low income is certainly very high as compared to higher income folks/corporations. The marginal propensity to save is almost zero for extra money received as a result of tax cuts/reductions in the lower income individuals, essentially they are going to spend all of it in the local economy to obtain the necessities of life. This extra money spent in the economy would have a major multiplier effect in the economy. We do live in a consumer based economy. The revenue generated by taxing the extremely wealthy individuals/corporations would go a long way to fund a lot of Progressive ideas/values for our citizen. The freshman class of 116th Congress gives me a lot of hope for the future of our country.

27 Recommend
WorldPeace2017 US Expat in SE Asia Jan. 6

@paulkrugman You have stated things I learned 65 years ago in my first economics class when good teachers were proud to say the names like Samuel Gompers and the like. Thank you. You were right about the timing and prosperity that the US had in the period after WW II. The US growth rate was doubling every 11years, as shown in graphs on The Guardian on 5 January. Only after Reagan did the US begin a real spiral down in growth, but still ahead of all others except China. Real productivity increases are hindered by some almost immovable obstacles; Greed by the rich, over weight among all groups and failures in educating/inspiring the masses. The three are global phenomenons but only addressing the first can lead to having the wherewithal's to address the other 2. I look forward to reading and following @AOC in her work in the future, she has great guts. I'm with her.

Reply 27 Recommend
notBillWalker New Britain, CT Jan. 7

@Billy Walker It's a marginal tax rate, Billy. You're not going to be paying anywhere close to 70%.

27 Recommend
Prede New Jersey Jan. 7

@Jason Capital controls, high tariff walls, and high interest rates fix this. You know what the united states had from 1947-1970ish

26 Recommend
Joel Sanders New Jersey Jan. 6

Mr. Krugman's citation of a utility analysis lacks a grounding in property rights, which arguably define and distinguish the US from all other political economies. That said, if we want to use utility as the standard of value, then let's use rule-based utility vs. act-based utility. On that standard, how have the socialist / communist / so-called "progressive" / fascist / generally collectivist countries performed over the last 100 years in relation to the US? Who has flourished? Who has perished? If you are in doubt, take a drive through a typical Pyongyang or Naypyidaw suburb and compare it to a typical US suburb. Also consider Moscow and Havana; they love collectivist thought almost as much as the US academy. Earth to Mr. Krugman: human beings are more than widgets in your economic toolbox. [No, not a Republican.]

Reply 26 Recommend
Dave From Auckland Auckland Jan. 5

If 'everyday' people had guaranteed healthcare, education for their kids and food on the table, they would not be so overwhelmed with making and saving money. Whatever tax rate that requires on whomever could pay would be worth it

Reply 26 Recommend
Tim Kane Mesa, Arizona Jan. 6

According to the late Nobel Laureate & Econ Historian Douglas C. North's "Structure & Change in Economic History" @ the time of the collapse of the Roman Empire wealth was so concentrated that 6 senators owned half of North Africa, specie so concentrated that trade was reduced to barter & the commercial economy collapsed. Serfdom was created to tie workers to the land. The Roman legion still held a tactical advantage over their adversaries, but it had thinned, as a result the empire needed a bigger army however the wealthy & powerful used their influence to avoid paying taxes; as a result the empire lacked the funds & the political will to defend its borders @ a time when it controlled all the resources of Western Civilization @ a time when that included Turkey, Syria, Egypt & North Africa as well as the best part of Europe against barbarians. Similar events lead to the collapse of Ancient Egypt's New Kingdom, Byzantium, Mideavel Japan, Hapsburg Spain, Bourbon France, Romanov Russia, Coolege-Hoover America (triggering the Great Depression, Hitler, WWII, the Holoust), oh, & BushJr America. Concentrated wealth destroys great empires, civilizations & nations. Marx got in trouble for pointing out that industrial capitalism grows slower than the rate of wealth concentration. The right likes to shoot the messenger. He was doing them a favor. High taxes & redistribution of bargaining power is needed to stave off instability & collapse & hardship so vast you can't conceive it.

26 Recommend
Michael London UK Jan. 7

Really fascinating article and very informative. More please. What's the lowest rate in the US? When I started work in 1981 in the U.K. I paid 30%. Now down to 20%. Plus about 3% for national insurance which is income tax really but is meant to be hypothecated to the NHS. I'm happy to pay some more to ensure the continued cohesion of our society. I don't know why some people find that such a problem.

Reply 26 Recommend
Mike NY Jan. 5

This ignores the fact that most people with a lot of money don't make their income in the form of a paycheck. What we really need to do is return the tax rate on investment income, not earned income. That would also help end these wild swings and speculation we see on Wall Street.

Reply 26 Recommend
NextGeneration Portland Jan. 6

Appreciate the reporting, but NYT why not report on what Nancy Pelosi is saying or doing vs. a freshman in Congress? The Speaker of the House has years and years of experience; is one of the few members of the government who has been recorded effectively talking "back" to Trump; and as her daughter says, is someone who clearly knows what she is doing, so people (in America) can sleep at night.

Reply 26 Recommend
JS Seattle Jan. 7

@Jason, you wouldn't move to CA or Ireland, you'd move to countries like Saudi Arabia, Bahrain, Kuwait, or Macedonia. Go ahead, be my guest!

26 Recommend
Paul Wortman Providence Jan. 5

It's been clear since Ronald Reagan that tax cuts don't trickle down while workers wages stagnate. It's time to reverse course, especially when Trump has nearly bankrupted the Treasury and Republicans have been shown to be hypocrites on deficit reduction. It's time to address income inequality and provide funds for Medicare-for-All; an infrastructure program that will bring the nation into the 21st century with high-speed rail and a modern energy grid that includes solar and wind; and prods states to return to tuition-free higher education at state colleges and universities. A.O.C. is "right on the money" with a top bracket of 70 percent. It's time to end the Trump kleptocracy and fully restore the graduated income tax.

Reply 25 Recommend
Gary Durst Boston Jan. 6

Fascinating...an oversimplified correlation of two variables (tax rates and growth) to justify redistribution of wealth. "Hey, Mr/Ms X, I know you earned your income based on the value of what you do in a competitive marketplace, but you don't really need all of what you earned...so we the government, arbiters of wise decisions about how to spend money, are going to take most of what you earned and give it to someone else." Poppycock.... Rep Ocasio-Cortez seems both nice and sincere; I'd venture to say she's a very good person based upon her concern and empathy, and I don't understand the flawed tactics of the right in picking on her extra-legislative habits (dancing, clothing choices, etc.) Her empathy and personality don't balance her terrible politics regarding redistribution of wealth. As for economists -- Nobel Prizes notwithstanding -- the good ones are driving gorwth today and not publishing opinion pieces based on poor economic theory

Reply 25 Recommend
Max Dither Ilium, NY Jan. 7

The point AOC (and, surprisingly, you) miss is that the kinds of wealthy people she wants to target with a 70 percent marginal tax rate don't make their income from wages. They make it from capital gains instead. So, if she wants to create a more sustainable revenue flow to the government, she needs to work on getting those rates up to reasonable levels. But capital gains have different forms. The part that she needs to focus is on speculative capital gains, not investment gains. Short term gains resulting from just flipping securities is gambling writ large, and there's no reason why the taxpayers should have to subsidize that risk-taking with low tax rates for the flippers. Treating these gains as ordinary income is goodness, but only if that rate matches the higher rate AOC wants. In fact, those should be higher than the top marginal rate, and expenses related to them should not be deductible. (This should include carried interest, too.) Long term capital gains tend to create jobs, infrastructure, and retirement savings, so those need to be encouraged with deductions of related expenses, and lower tax rates, too. In any event, I encourage AOC in her thinking. We need to readjust our tax system to make it more fair to the taxpayers, and to stop the robber barons on Wall Street from ripping us off.

Reply 25 Recommend
mrfreeze6 Seattle, WA Jan. 5

@Prof Forgive me for not feeling sorry for the wealthy. They have benefited greatly under the system of government we call the U.S., a system we all pay for. There are plenty of other taxes people pay besides federal taxes (excise, state, city, local, property, etc.). They don't have armies of lobbyists, attorneys and loopholes to protect their capital. As for moving all of their money offshore, good riddance.

25 Recommend
A Populist Wisconsin Jan. 5

@hammond Paul Krugman has written about the "Europe was Rubble" myth - the idea that the unprecedented creation of a large and prosperous U.S. middle class, was only possible because of those special conditions. https://krugman.blogs.nytimes.com/2012/11/19/the-europe-in-rubble-excuse / Here it is about tax policy, but it is also brought up as an excuse not to try policy responses to high unemployment, low wages, etc. In addition to PK's arguments: First, the whole idea that we had faster growth due to having had trade *surpluses*, doesn't make sense. Those surpluses actually required *more* output - not less. So, in theory, if Europe had *not* been rubble (dubious, as PK points out), US growth should have been *higher*. OK, that is all based on theoretical supply side constraints. But what about Demand? OK, now you have something. The trade surpluses increased demand (AD = C+I+G+(X-M). It is long past time to start talking about aggregate demand, and how that has been creating a dysfunctional economy. Also, how destruction of the New Deal, has allowed wages to stagnate, which has given us lots of low productivity jobs at low pay, reducing productivity growth through compositional effects - but more importantly, making US poorer, less efficient, and with less job satisfaction. Workers can tell when their job is really not valued. Finally, if indeed making low skilled US workers compete with foreign starvation wages is a problem, we need to acknowledge and fix that.

25 Recommend
ART Boston Jan. 6

One of the biggest myths out there is the one in which an individual says "I did it all on my own". The truth is, no you did not. You had an education, passed down from other generations that made discoveries, you had paved roads, police and fireman, an educated workforce, safe food to eat, clean water to drink. All things paid for by everyone. We should have high taxes that are progressive. People use the misnomer, "The Government" to try and discredit as others the people charging the taxes. But come on people, stop being stupid. Our constitution says "Government by the people for the people". We are our government. Anyone of you, or I, can run for office. Enough of this fake individualism conservative fairy tale. We need to work together in order to build a more just and perfect society.

25 Recommend
Citizen RI Jan. 5

You can put all the charts and graphs you want in front of people, provide all the historical evidence available, and provide evidence of how things have never and are not now working the way Republicans say it has or will, and they still will refuse to believe their lying eyes. The Republican experiment to fleece the middle and lower classes is ongoing and successful, in part supported by the middle and lower classes' willful blind ignorance and devotion to self flagellation.

Reply 25 Recommend
Rational not Rationalize Milwaukee, WI Jan. 7

Please don't forget we are talking about the highest MARGINAL tax rate, e. g., the tax due on the income over $600,000 for a couple filing jointly was 37% in 2018 and the same couple paid 35% on $400,001 to $600,00, and 32% on $315,000 to $400,000, and 24% on $165,001 to ¥315,000, and 22% on $77,401 $165,000, and 12% on $19,051 to $77,400, and 10% on income up to $19,050. What we need are more margins on the high end; to equate a $600,000 earner with a $10,000,000 earner is absurd. Nearly half the top %1 of earners make $10,000,000 or more! Why should they be taxed at the same rate as someone making 6% as much??? A family making $36,000 (6% of $600,000) pays a highest marginal rate of 12%, while the family making $600,001 pays a highest marginal rate of 37% and a family making $10,000,000 pays at the same highest marginal rate of 37%! The incentive for the top .1% in this set up is not to put money back into their businesses or employ more people, but rather, it's to buy off politicians dedicated to keeping their tax rate on the bulk of their income ridiculously low! When the Koch brothers thanked Paul Ryan for passing Trump's tax cuts it cost them $500,000 (in donations to Ryan), but gained them $1,000,000,000 to $1,400,000,000 in reduced taxes. See how it works? Forget about the 1%! Go after the .1%!!!

Reply 25 Recommend
Kenneth Johnson Pennsylvania Jan. 5

As an affluent retired person, I left New Jersey for Texas, where I'm originally from. With 'an optimal tax rate of 73%', I'll be leaving the USA. I can still spend 182 days a year here. Let them tax those affluent people who must remain behind. As Margaret Thatcher said: 'The problem with socialism is you eventually run out of other people's money'. Or am I missing something here?

25 Recommend
YW New York, NY Jan. 6

Love the fact that the article is punctuated by a slick advertisement pushing sales of $13 million co-ops. Does Krugman think that high-earning W-2 taxpayers will continue living in New York City, or even the US, when rates are 70-80%? France tried this just a few years ago; it was an instant failure resulting in a quick exodus of the country's largest taxpayers. Krugman is living in the fifties. We are now a globalized economy where capital and human resources are far more mobile.

24 Recommend
Marvant Duhon Bloomington Indiana Jan. 5

I will quibble with one small and tangential claim in this article. Krugman writes that additional taxes on the very rich will not affect their life satisfaction, since they can still buy what they want. This is not always the case. Many of the very wealthy want to buy more things than they can afford. And some, not just the Koch family, want to buy the government. They pour billions into the attempt. And as it happens, that's another reason for increasing the marginal tax rate on the very rich.

Reply 24 Recommend
BBB Australia Jan. 7

Why not tax labor lower than capital gains? Labor will have more incentive to work because they can keep more of what they earn. People who live off capital will just keep doing what they are doing. I doubt they'll rush out to get W-2 jobs. We're tried the reverse for long enough, let's flip it around and give the majority their turn.

Reply 24 Recommend
Lisa NC Jan. 6

As a recent retiree, I was surprised to learn that my husband and I wouldn't be paying any taxes on our substantial capital gains, dividends, and interest, as long as we kept below the ~ 77,000 income level. We're living on current cash and taxable accounts, and are fortunate not to need to sign up for SS until 70 1/2 nor pull from our retirement accounts (except to fill up the bracket). This is basically ridiculous. We're affluent, not Uber-wealthy, but certainly can afford to pay more than the piddling amount that we've paid the last couple of years.

24 Recommend
joyce santa fe Jan. 5

A country where taxes are basically fair and social programs give people, all of them, basic security, is a calm and efficiently working society that does not have regular massacres in schools and churches, and does not have a restless and frustrated public. and so on. there is a country like this next door. The contrast with the disfunctional US today is striking.

Reply 24 Recommend
mt Portland OR Jan. 6

@Barking Doggerel Excellent comment. A keeper.

24 Recommend
ttrumbo Fayetteville, Ark. Jan. 5

Equality. That is a necessary component of civilized society and democracy. You have to have a certain level of equality. Freedom to become a billionaire is not good for America or any country. Community, compassion, belonging, love, equality. Not selfish riches.

24 Recommend
Socrates Downtown Verona. NJ Jan. 6

@Jay For the full context, the 1999 Gramm–Leach–Bliley Act was authored by three Randian Republicans from Republican-majority Senate and House. While Bill Clinton should not have signed it, Republicans authored it. In April 2003 - under the Bush Reign of Error - the attorneys general of two states went to Washington with a stern warning for the nation's top bank regulator. In the Office of the Comptroller of the Currency in Wash DC, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John Hawke, expressed skepticism. Roy Cooper of North Carolina and Tom Miller of Iowa headed a committee of state officials concerned about new forms of "predatory" lending. They urged Hawke to give states more latitude to limit exorbitant interest rates and fine-print fees. "People out there are struggling with oppressive loans," Cooper recalls saying. Hawke, a veteran banking industry lawyer appointed to head the OCC by Bill Clinton in 1998, wouldn't budge. He said he would reinforce federal policies that hindered states from reining in lenders. The AGs left the tense hour-long meeting realizing that Bush-Cheney's Washington had become a foe in the fight against reckless real estate finance. The OCC "took 50 sheriffs off the job during the time the mortgage lending industry was becoming the Wild West," Cooper says. http://www.nbcnews.com/id/27121535/ns/business-us_business/t/states-warned-about-impending-mortgage-crisis /

24 Recommend
Thomas Zaslavsky Binghamton, N.Y. Jan. 5

@Red Sox, '04, '07, '13, '18, The rich never work for the poor. The relatively poor work for the rich, after which the rich complain that they are being asked to pay taxes for services for the people they underpay.

24 Recommend
Deb Blue Ridge Mtns. Jan. 6

@vulcanalex - Did it ever occur to you that if Charles and David Koch, together worth upwards of 90 BILLION, paid taxes proportionally the same as you do now, your taxes might be lower? The middle class has been footing the bill for 50 yrs. and needs actual relief. No one, no one, no one needs 90 Billion $$. That's pure greed and it's economically stupid as well.

23 Recommend
alan san francisco, ca Jan. 5

One should tax every source of income at the same rates. Thus, incomve from dividends, capital gains, and inheritances should all be taxed at the higher rates. The distinction between earned and passive income is false and makes no difference to the recipient.

23 Recommend
John McCoy Washington, DC Jan. 7

@Gwe A true win-win. Pay the CEO's excessively to satisfy their egos and tax them appropriately to foster equality.

23 Recommend
Jack Irvine, CA Jan. 5

The Tax Cuts and Jobs Act of 2017 took away: SALT deductions (limited $10,000 fout of $19,883)) Personal exemptions ($12,150) Unreimbursed business expenses ($9,906). This increased my TAXABLE INCOME by + $32,209. Sure, marginal rate dropped from 24% to 22%, but my Federal tax INCREASE this year was $7,085 or 71%. MAGA!

23 Recommend
Susan Fitzwater Ambler, PA Jan. 6

Some scattered thoughts. Bear with me. I just got back from an Orthodox Jewish wedding (a lovely experience!). While there, I fell into conversation with a good friend--a conservative. A moderate conservative--but conservative nonetheless. A dichotomy struck me--which I kept to myself. My friend's view of "classical liberalism" was "limited government." Enable people to rise as far as their talents and determination take them. And get out of the way. Such (he declared) was the philosophy of our sixteenth President--the sainted Lincoln. The Civil War (he said) garnished him with a bright shining halo he might never have achieved otherwise. Okay--maybe so. Maybe not. Who knows? So what's my own philosophy? Which I never got around to articulating. Protection, Mr. Krugman. Protection. Protection of an oppressed minority from an oppressive majority. OR-- --of an oppressed majority from an oppressive minority. Protection of the weak from the strong. Of the poor from the rich. Of the honorably striving working people that never won a place in the heart--or the books--of that conservative icon, Ayn Rand. So, Mr. Krugman-- --I read your piece with considerable sympathy. Tax the rich? Sounds good to me. Even out the horrendous inequality now plaguing and poisoning American life. But part of this feeling, Mr. Krugman, is old-fashioned SPITE. Sorry! I'd love to hear the Koch brothers howl. Someday. Soon.

Reply 23 Recommend
Erik Nordheim Seattle Jan. 6

@Gwe AOC's 70% tax rate proposal applies to dollars earns $10,000,001 and above. E.g. 70¢ on that one dollar instead of today's 37¢.

23 Recommend
james jordan Falls church, Va Jan. 5

AOC has her work cut out for her. She will need your help. In reality, she will need all the support she can get to persuade the Democratic Caucus that a tax rate of 70-80 percent on very high incomes makes sense. Clearly, she and many noted highly respected economists have found that the trend in inequality has not been beneficial to the performance of the larger U.S. economy. She appears to have the energy and intelligence to develop a narrative that the Caucus could use but ultimately she and the proponents of the 70-80% will not hurt their chances for re-election in 2020. Equally important in making our society more egalitarian are the issue of tax shelters and the definition of income in the tax code, e.g. the treatment of income from capital gains vs. income from salaries and wages. My very rich friends seem to load a large portion of the "winnings" in offshore shelters. A big difference that needs to be addressed is the "cap" on payroll tax rates that are clearly unfair to the average wage-earning employee, and the self-employed "gig" economy worker. I hope someone will take up this very unfair provision. I suggest that requiring ALL income be treated equally with NO CAP for the FICA-HI payroll deduction would make the Social Security Trust Fund flush and possibly the funds required for Medicare for All a reality. With this kind of payroll tax package, there is a possibility that the payroll tax rate could be reduced or payments to recipients increased.

23 Recommend
SN Los Angeles Jan. 7

@Joe, it appears you're confusing the marginal tax rate (the rate at which your highest additional dollar of income is taxed) with the overall rate at which your income is taxed. They're not the same. People won't be paying the highest rates except on their highest additional dollars of income -- those last several million dollars, for example.

23 Recommend
Julie Carter Maine Jan. 7

What needs to be pointed out in every article on tax rates is that the 70% or 35% or whatever rate is in force is not on ones entire income, but only on the topmost part. It might only be on the top 10% of an individuals income, not on the entire amount. That is where people who oppose these rates don't get it. And when the "alternative minimum tax" was passed, it was meant to make sure everyone paid some tax because they weren't allowed to use all of they deductions. But somehow, some are more privileged than others and get to pay nothing, like the Trumps and Kushner's. In the meantime, some of us retirees who saved like crazy for retirement and had some decent investments have to pay through the nose every year when the law requires us to sell a certain portion of our retirement funds and pay capital gains rates. We have paid alternative minimum tax for years with far less annual income per year than Ivanka has per month.

23 Recommend
Bewley5 Austin Jan. 7

The decline of the American middle class started with the election of Reagan and his voodoo economics. The investments we made say in college education could no longer be sustained at the lower tax rate and the result? No one but the upper ten percent can afford college.

23 Recommend
Roscoe Fort Myers, FL Jan. 7

The other intended consequence of low taxes for the rich has been the accumulation of money that can be used to buy political power. I think that's the real purpose of the right, to have the power to take over our country. To counter that we need to look at wealth taxes and taxing more capital gains. We don't need more Donald Trumps and Koch brothers.

23 Recommend
Jeremy Kaplan Brooklyn Jan. 7

@Billy Walker Just because 70% sounds "insane" to you does not mean it isn't the best policy. Are you an economist?

23 Recommend
Ellen San Diego Jan. 5

Bravo to Ocasio-Cortez, and to Krugman. But what I'd like to know is why is it that such sensible and fair taxing policies have not been promoted by current Democratic members of Congress? To answer my own question - they've been "bought" by corporate/1% campaign contributions. This said, how will Ms. Ocasio-Cortez fare in the House? Conversely, how will the House fare with her in it? Should be interesting to watch.

Reply 23 Recommend
BBB Australia Jan. 6

We need a "Jobs Created" form in the 1040 stack. In exchange for the tax cut, the very wealthy should be required to file it for the same reason that the very poor are required to prove they qualify for the Earned Income Credit. How many jobs did you create? How much were they worth? Write it down. Some ridiculously rich American volunteer should step forward with the last 10 years of their tax returns and corespondingly matched annual budgets to confirm 2 things that the GOP refuses to admit but uses to underpin tax cuts for people who do not need one: 1-The Uber Wealthy aren't big job creators. 2-The impact they have on the economy is far less than the average person who spends all their tax cut on goods and services. A higher tax rate, better matched with uber high personal income generated by the global multiplier effect, will have a greater impact on the economy in one year that one person can achieve in a lifetime. Kill the Trickle Down Theory before the GOP recycles it again.

22 Recommend
Bill B Fulton, MD Jan. 7

@romanette I suspect that for every Jason who actually makes enough to pay the 73% marginal rate there are 50 Jason's that don't.

22 Recommend
SandraH. California Jan. 6

@Geoffrey, you're mythologizing wealth. Most annual income over $10 million has nothing to do with being "super productive." That's only true in an Ayn Rand novel.

22 Recommend
Vizitei Missouri Jan. 6

I am fully aligned with Mr. Krugman when he bashes the idiocy of Trump's economic "policies". I part ways with him over his advocacy of super high tax rates. He makes a case that we did so well when we had it but he, of all people, knows the difference between correlation and causation. In the years without internet and with international movement by people and companies was full of friction, this kind of extortion and "not caring" about what the "rich" thought held up. In today's world, you would massive exodus of the most productive and economically active members of our society. It failed. In Europe and in the US, countries had to contend with real competition from other geographies who were only too happy to welcome these folks. Another point, which Mr. Krugman fails to address is this: who will put the capital in question to a more productive use - the government which collected it as a tax or the businessman who has an opportunity to invest in the improvement he finds most efficient and effective? This does argue for policies that encourage the 'right choice", but overall, the answer is known. This is why every true socialist system has failed economically, and will continue to do so. 70% tax bracket is not the answer. It never was.

Reply 22 Recommend
Chris Toronto Jan. 7

Many of the comments here are dismaying. The point here is that both the US economy and society are not sustainable in the long-term with a tax system that creates massive inequality, public debt and disproportionately supports the enrichment of the already-wealthy. There is a self-centred, growing (mostly Republican) billionaires club buying the political system, defining public policy and not surprisingly they are the primary beneficiaries. US democracy is very broken and the rest of the world no longer views it as the example it once was. The US needs more voices like OAC's.

Reply 22 Recommend
linearspace Italy Jan. 7

I thought I already liked AOC a lot; now I like her even more, especially after her political platform about a free universal health care reform proper of one of the major powers in the world.

22 Recommend
pendragn52 South Florida Jan. 7

@Jason "apply some creativity and critical thinking (you know - the kind that happens in the private sector)." Worked in the private sector for 30 years. Never saw much of that.

22 Recommend
Jacob Sommer Medford, MA Jan. 6

So often, it seems like the Republicn tax plan is, "We need to lower taxes on the rich because eventually it will be good for the middle class! Pay no attention to that sliver of middle class tax hike behind the curtain..." Why anybody takes their economic rhetoric seriously when there are no credible cases that their plans have worked lo these past 40 years remains a mystery to me.

22 Recommend
Kurt Chicago Jan. 7

The real crime is how much of the pie so few take home in the first place and how little the great bulk of Americans see. If there were a small village, and one powerful man making the rules on wealth distribution decided to give himself a ninety percent cut of the wealth and leave the remaining ten percent to the rest of the townsfolk, they'd go after him with torches and pitchforks. But we have a giant complicated impersonal economy, and this simple economic injustice gets lost and confused in the mix. But the fact remains, the people with power - the stewards of our government and our economy - are abusing their power, and we as individuals, and all of us as a society suffer greatly.

22 Recommend
D I Francis London Jan. 7

@Joe Hi, It would be progressive and banded, so you would only pay 70% on the very highest part of your earnings. So you would be paying 30% on earnings up to say 100K, then 40% on earnings between 100K and 250K, and so on. Hope this helps.

22 Recommend
markymark Lafayette, CA Jan. 5

If this country ever aspires to greatness again, it will take campaign finance reform and the end to vulture capitalism, including raising tax rates on wealthy individuals and corporations. The supreme court has given corporations way too much power and it's past time to take it back.

22 Recommend
Quinn New Providence, NJ Jan. 5

@Brinton I agree - a fair tax system would look at all income equally. A dollar of income would be treated the same regardless of its source. The discount on capital gains makes no economic sense - this is "picking winners and losers", something the GOP hates. Think of this: why is interest income taken at a higher rate than capital gains? The wrong answer is that the capital gain came from taking a higher risk. Why does the tax law reward risk taking and by contrast punish safer investing with a higher tax rate?

22 Recommend
Mary M Raleigh Jan. 6

Thomas Picketty studied centuries of income inequality and found that without progressive government intervention, wealth disparities tend to worsen. The single most effective way to shrink wealth disparities and grow the middle class is through progressive taxation, aka, soak the rich. This is how Denmark does it. Funny thing, growing the middle class increases national happiness and strengthens a sense of community. Big difference from the uber rich who buy islands just to live without neighbors. Living in a more equitable society makes everyone happier.

22 Recommend
dcf nyc Jan. 5

@Tom Dr. K is all in on the taxing of wealth and cap gains at higher rates, and while I haven't read AOC's particular proposals yet, no doubt she would agree.

21 Recommend
617to416 Ontario via Massachusetts Jan. 6

@Annie I'm not sure a small local community group would effectively or efficiently provide some of the things we rely on the government to provide -- healthcare coverage for instance (at least here in Canada) or a police force. Those skeptical of what government does should try living in a country without musth government: Somalia, maybe.

21 Recommend
M. Ng New York, NY Jan. 7

We only need to look as far back as Kansas in 2012 to see a real life case study of republican tax policy in all its theoretical glory. Governor Brownback and the republican legislature passed into law a low individual income tax rate and eliminated state income taxes entirely for pass-through entities (ie small businesses) to spur job creation and investment in businesses. Not only did it not create said jobs nor spur investment in businesses, the state collected $750mm less in income tax ($2.2b vs. $2.9b) over 2014-16 and the state began FY 2017 with a $350mm deficit. Sadly the people who suffered disproportionately were residents of small towns and districts whose districts didn't have strong enough balance sheets to weather unusually low levels of tax revenue, where public services such as safety and schools struggled (many of which had to consider closing or consolidating). In addition, the state diverted funds from infrastructure spending and universities to the general fund and spend down the state's cash reserves. That is the result of a republican tax plan enacted.

Reply 21 Recommend
Ana Luisa Belgium Jan. 5

@bcw And the exact same also goes for Trump himself, of course. Compare that to what Obama and the Democrats did: they increased taxes for people like themselves multiple times, and then used that money to cover 20 million more Americans all while curbing federal healthcare cost increases, AND by doing so saving an additional half a million American lives a decade. THAT is "putting America first", outside of the GOP "alternative facts" world.

21 Recommend
Jenna X. Gadflye Atlanta, GA Jan. 6

Another reason to tax the 1% at the highest rate possible: they would have considerably less money to spend on buying politicians who will rig the system to benefit the wealthy at the expense of everyone else. I'm sure NYT's conservative commenters will say "but...job creators!" Right. "Job creators" who are rapidly automating the means of production because robots don't need to be paid a living wage. They never get sick or need vacations, either. Robots can work 24/7 without lunch or or bathroom breaks, too. Unlike us pesky peasants with our quaint notions about Constitutional and civil rights, including "life, liberty and the pursuit of happiness." The misanthropic rich deserve a good soaking, every now and then, to remind them that they're no better than us and just as human as we are.

Reply 21 Recommend
CO fan Boulder Jan. 6

What Paul Krugman does not say (but knows all too well) is that due to various deductions and tax shelters, the effective (as opposed to nominal) % of income paid in the 50's, 60's and 70's was not much more than now. For example, until 1986 taxpayers were allowed to exclude 1/2 of their capital gains. So, if you were in a 70% tax bracket, the capital gains tax was 35%, in the 50% bracket you paid 25% and so on. Krugman knows this, but obviously does not mention it. He has to do his part to bamboozle the rubes. Remember, this is the same guy who predicted on election night 2016, that the stock market would "never recover".

21 Recommend
J San Diego Jan. 6

AOC should run for president in 2028, the first year she is eligible. She's smart and super-attractive, which will turn R's into even crazier people than they are now, because people will always vote for someone who looks great. Would've worked for Beto in Texas if not for the massive voter suppression they have there.

Reply 21 Recommend
MV CC Jan. 5

What we have going on right now here in the US is representation WITHOUT taxation.

Reply 21 Recommend
Andrew Connecticut Jan. 7

@Billy Walker - "What policy on Planet Earth could possibly justify the government becoming an equal partner, or better, with someone's earnings?" Because there isn't a single person on the planet that works hard enough to "earn" $10 million per year, let alone those who actually have that as an income. There's comes a point at which a person's "earnings" are nothing more than benefits of position - which in and of itself isn't a problem. But it's important to acknowledge that this extra income is earned solely because of the individuals below them, as well as the advantages the state/government has provided to allow those earnings (typically through infrastructure, policies, protections, other indirect features, etc.), becoming an equal partner in redistributing that extra income to those that actually worked to make it happen, or paid for the ability to earn it, is reasonable.

21 Recommend
Dave Westwood Jan. 6

@Jose "aren't rich people part of our democracy? Don't they get a say as to whether they have to work and give away their earnings?" They do ... they get one vote person just like everyone else. They do not get one vote per dollar of income, although some of them act as if they should.

21 Recommend
John Miami, FL Jan. 7

@Billy Walker "As someone who earns well less than $100k a year I simply cannot believe this nonsense of 70 or 80% tax rates. Just because I am not smart enough to earn $5 or $10 million or more a year does not give the government the right to take most of it. This tax concept is pure insanity. Even if it applies to earnings that only exceed the $10 mil number. Insane." You start out with the wrong premise right out of the gate. Many in the top 1-2% have done nothing especially noteworthy to achieve their wealth. They neither earned nor were particularly inventive. Some like Elon Musk definitely earned it. Others like the presidents children just inherited the fruits of a lifetime of cons and scams against ordinary working Americans. In either case there is a such a thing as an inflection point beyond which amassing further wealth means nothing. I see nothing wrong with taxing wealth beyond that critical maximum at those higher rates. After all many of those people enjoy the fruits and stability of a society made possible by the collective sacrifices of generations of Americans in wars past, present, and future. Much of the infrastructure (bridges, highways, waterways, court systems, property rights etc) that exists today (such as it is) that makes the current economic engine possible was bought and paid for by the millions upon millions of ordinary working Americans. The rich should pay more because they benefit the most from this sacrifices others have made!

21 Recommend
Steve California Jan. 5

@George No one is suggesting people who make $200k pay 70% tax, these are rates for those making $10 million or more.

21 Recommend
m.waterbury Seattle Washington Jan. 5

@Georgia M If you believe that the obscenely high and ever-rising incomes of the extremely rich are "their property" and that their rigging of our economy, our taxation rules, and our political process played no role in their good fortune, you have not been paying attention. A "young brilliant doctor" isn't even remotely in the class of the ultra-rich and is exactly the kind of misleading example they love to point at, like "small businessmen." We are talking billionaires and close to it.

21 Recommend
Robert Out West Jan. 6

I can see why the righties are angry, and demanding that the corporate and the wealthy pay less. After all, worked great in Kansas.

Reply 21 Recommend
Rich Berkeley CA Jan. 5

@Peter, that's a marginal tax rate, not the rate on all your income. Only income above, say, $1M per year would be taxed that high. I assume most people can survive quite well on $1M per year, plus 30% of amounts above that.

21 Recommend
bcw Yorktown Jan. 5

The rich have figured out how to maximize their returns on investment - the most productive dollars the rich spend is to buy Republican (and some Democratic) politicians. The Koch brothers invested a mere few hundred million to buy some elections and have so far made about 1.4 billion dollars from the Republican tax cut, a return of a few hundred percent in one year; which will continue every year going forward.

21 Recommend
David St Louis Jan. 6

Hey, Prof Paul. I think we as a body politic need a refresher on what a marginal tax rate is? A 70% top marginal tax rate does not mean that the people 'earning' a million only take home 300K. It just means that after some other threshold has been crossed in terms of income after deductions, income above that level is taxed at increasingly higher levels. So that, say, the first 100k is taxed at a certain level (n), but the last 100k is taxed at a level that equals 'n minus 100K' and minus the other increments in income that kick in the higher marginal rates on the scale? Not elegantly stated, I know, but I find, over and over again, that people seem to not have been taught the difference between a tax rate and marginal tax rate.

Reply 20 Recommend
ABC123 USA Jan. 5

From the article: "AOC's advocacy of a tax rate of 70-80 percent on very high incomes." This shows her naivete as a young person with limited years of working for a paycheck. At a certain point, if I'm only going to keep 20-30-cents of each additional dollar I'm making no thanks time to pack up for the day, go home, relax and enjoy time with my family. I think at least 95% of people would say the same thing. It's just not worth it especially to be paying for people who are staying home and people who are staying home and pumping out more and more babies, while I responsibly only brought two children into the world and pay for them myself.

20 Recommend
Susan Cambridge Jan. 7

The Swiss have a wealth tax. People are taxed approximately 1% for money lying around in bank accounts and other assets. This means taxes aren't focused on income per se, but accumulated wealth. I think it's an interesting idea for taxing the super wealthy. The tax could be prorated, higher for those with more money and very low for those with just a little savings.

20 Recommend
Kevin Shoemaker Seattle, WA Jan. 7

What this incredibly focused and accurate opinion piece does not mention is the uses that marginal taxes were put to or the incentives people and companies had to lower their marginal taxes through reinvestment. Infrastructure was created, low cost higher public education was expanded, basic research in those institutions was greater, and entire new industries were created, employees were invested in. Now, we have the rich playing the W.S. casino, mostly controlled by bots, employees are commodities or apprenticed and indebted, wages are supressed, there is not a strong infrastucture plan, I could go on. I say Make America Great Again, and tax the rich.

Reply 20 Recommend
Guy Sajer Boston, MA Jan. 5

@wes evans - I don't think that that is actually true. Furthermore, I'm not sure that the folks who do that work and are in that tax bracket are working because of the money. Jeff Bezos? Bill Gates? Warren Buffett? (the list could be quite long). If you taxed them at a higher rate, they wouldn't quit. In addition, many of those folks are no longer actually working, but simply accruing wealth though investments. They won't suddenly uninvest because of higher taxes. Instead, we'd have better schools, better healthcare, better transportation for everyone, and the economy would benefit much more as a result.

20 Recommend
cdearman Santa Fe, NM Jan. 5

Obviously, the public is unaware that the tax rate during the Eisenhower Administration, for people making above $400,000, was 90%. So, the idea that a 75% rate on the 0.1% is excessive is laughable. People in the 0.1% have many legal ways to reduce their tax liability. As Warren Buffet had stated many time, he pays less taxes that his secretary and Buffet is one of the four richest people in the world. The tax rate for people in his income bracket is not more than 39%. He, obviously, does not pay taxes at that level. Go figure.

20 Recommend
A. Stanton Dallas, TX Jan. 6

Ms. AOC comes off to me as a non-threatening American Congresswoman of Puerto-Rican descent. What is it about her that makes her appear so dangerous to Trump's crazed male supporters? I blame most of it on her bright red lipstick, which for some reason is always threatening to insecure men.

20 Recommend
William LeGro Oregon Jan. 7

@Freda Pine Here's an early commenter who already detailed this out and should have gotten NYT Picked since a lot of readers needed to read it in order to help shake loose a stuck wrong notion about what marginal rate means: Rational not Rationalize Milwaukee, WI Please don't forget we are talking about the highest MARGINAL tax rate, e. g., the tax due on the income over $600,000 for a couple filing jointly was 37% in 2018 and the same couple paid 35% on $400,001 to $600,00, and 32% on $315,000 to $400,000, and 24% on $165,001 to $315,000, and 22% on $77,401 $165,000, and 12% on $19,051 to $77,400, and 10% on income up to $19,050. What we need are more margins on the high end; to equate a $600,000 earner with a $10,000,000 earner is absurd. Nearly half the top %1 of earners make over $10M. Why should they be taxed at the same rate as someone making 6% as much? A family making $36,000 (6% of $600,000) pays a highest marginal rate of 12%, while the family making $600,001 pays a highest marginal rate of 37% and a family making $10M pays at the same highest marginal rate of 37%! The incentive for the top .1% in this set up is not to put money back into their businesses or employ more people, but rather, it's to buy off politicians dedicated to keeping their tax rate on the bulk of their income ridiculously low! When the Koch brothers thanked Paul Ryan for passing Trump's tax cuts it cost them $500,000 (in donations to Ryan), but gained them $1 - $1.4 Billion in reduced taxes.

20 Recommend
White Buffalo SE PA Jan. 6

@Red Sox, '04, '07, '13, '18, How many uber rich like Romney or wealthy CEOs or golf club developers actually worked for poor people? Gee, that's a tough one. Let me make it easy for you. Try zero. I am not wealthy and yet I never worked for a poor person in my life either, because a poor person would not have had sufficient money to pay even my meager earnings. When you work and pay taxes, you are not working for the poor, you are working taxes to support this country, and the many things it does for you. Remind me again how many of Romney's many sons enlisted. Another toughie. Again, let me make it easy for you. The answer is zero. Oh, that's right. Their "service to their country" consisted of helping Romney get elected. Kind of like Trump's sons service to their country. Or Trump's purple heart.

20 Recommend
Tony B NY, NY Jan. 6

We're allowed to call people articulate?!? I thought that was a hate crime.

Reply 20 Recommend
Ned Roberts Truckee Jan. 6

@talesofgenji Americans abroad are still required to file US tax statements. Of course, if they want to get rid of their US citizenship, they can. My guess is there is a way to capture that tax revenue. Perhaps starting with reminding the rich that they live in a society, and their wealth is tied to the health of the society.

20 Recommend
Michael Rochester, NY Jan. 5

Paul, One of your best analyzes ever, and, your timing is impeccable. Thank you.

Reply 20 Recommend
Gaff New York Jan. 6

Why are so many dead set against paying taxes? To use an old cliche "there is no such thing as a free lunch". This is how government services are paid for. Where would we be without government services? Are you willing to do without police, firemen, road crews, sanitation, the armed forces, aviation regulators, stop signs, parks and countless other things that government provides. Tax rates need to take into account income. The poor and the middle class should be taxed at a much lower rate than the wealthy. The wealthy can afford to have more taken in taxes. Do you really think they would notice? Greed is not an exemption. We should all be proud to pay our fair share of taxes. We live in a great country. Taxes are the levy we pay to keep it great.

20 Recommend
Daycd San diego Jan. 7

@Gwe the proposed 70% tax rate only kicks in after the executives are already earning 180X more than the average earner. Note that no other country comes closes to those inflated incomes! So your argument that they'll not get quality CEO's for less is nonsensical. https://www.statista.com/statistics/424159/pay-gap-between-ceos-and-average-workers-in-world-by-country /

20 Recommend
Josh Los Angeles Jan. 5

Hey Paul why don't we just tax everyone at 100% and then redistribute to everyone perfectly equally? That would minimize the effect of diminishing marginal utility!! Hey Paul when are you going to wake up? Stagflation happened your position has been losing the argument for 40 years now, I am surprised you aren't used to it by now. Free movement of capital, free movement of labor, free trade. And no redistribution, that is where we are heading.

19 Recommend
White Buffalo SE PA Jan. 6

@jrinsc Too right. Let's make American marginal income tax rates great again! Bring back Eisenhower Republican tax rates!

19 Recommend
Jeong Yeob Kim Los Angeles Jan. 5

When I first saw AOC's tax proposal as a headline (and not reading the article), I did think, "Wow, that's too high!" But after thinking through the issue with Krugman's help, I've come around and now agree with AOC. I do think it'll be a tough sell to a sceptical public (surely made worse by conservative lobbying), but if Democrats can tune the public with what prosperity was like in the '50 with progressive taxes in place, I think there's a good chance that a majority of Americans will back this vision. But the work had to start now and with urgency (and without the shutdown of our government!).

Reply 19 Recommend
Eddie Lew NYC Jan. 6

George Bernard Shaw: "The more I see of the moneyed class, the more I understand the guillotine. "

19 Recommend
true patriot earth Jan. 6

1. end the carry exemption for VC money 2. see 1

Reply 19 Recommend
Jon Washington DC Jan. 6

There's this popular myth that supposedly tons of conservatives went "hysterical" over a perfectly innocent video of Ocasio-Cortez dancing around with friends. How many people exactly were "hysterical"? I keep reading this, and as far as I can tell it's just a myth. Was there maybe one fool who posted the video in a misguided attempt to somehow embarrass her? I guess, probably. But please just face reality and recognize that beyond a few negligible cranks, nobody cares.

Reply 19 Recommend
Bascom Hill Bay Area Jan. 5

Please make a list of productive Americans by job title. Or is your list by income level? Are public school teachers productive? If so, why have their incomes been nearly flat for decades? Why has the median income of Americans not kept pace with inflation for over 25 years? They haven't been productive? They have been. Big Business hasn't shared those gains in productivity via $wages. The IBT of those businesses has soared.

19 Recommend
Mark Koerner wisconsin Jan. 6

We hear a lot about "hard-earned" income and "hard-earned" dollars. Very well. It IS hard to earn money, at least for most people, so perhaps the government shouldn't tax income from wages, salaries and professional fees--and even from gambling--at such a high rate. Maybe we should change the system by pushing the top income tax rate downward and then raising the estate tax (often called the "inheritance tax"). That way, more "hard-earned" money will stay with the taxpayers who earned it, and the government would take a little more of the genuinely unearned money. An old saying about the people who were born on third base and thought they hit a triple comes to mind

Reply 19 Recommend
Nelson Alexander New York Jan. 5

First, I believe Picketty also recommends similar highly progressive rates. Second, I'd be curious know what effect such rates would have on top-tier inflation? It seems clear that "inflation" is relatively low and stable because it no longer enters into wages. At the upper income level, meanwhile, inflation appears rampant. Everything in top-tier consumption, from art and high-end property to financial advice, bespoke suits, opera tickets, luxury hotels, political leverage, and legal fees, seems to be almost hyperinflating. This in turn drives the rivalrous demand for even more concentrated wealth at the top, a keep-up-with-the-Jones among billionaires . We might be doing the rich a favor by putting a tax chill on their metastasizing lifestyles.

19 Recommend
R Biggs Boston Jan. 7

I assume that you work hard to make a living. Do you think that investment bankers and tech CEOs work 5000 times harder than you? I know a guy who wrote a computer program to trade stocks. He doesn't work at all, but makes more in a week than you make all year. Does that seem fair? The super-rich are able to buy influence, subjugate our democratic system, and push through laws that make them even richer - while making it harder for folks like you to get ahead. Does that seem fair? And you are worried about billionaires only bringing home $2 million / year?

19 Recommend
Jack Nargundkar Germantown, Maryland Jan. 5

But this entire column presumes that the Republicans believe in science, data and facts. Despite 70+ years of evidence, knowledge and truth has not "trickled down" into the average Republican's mind. In fact, in the Trump era, it's gotten worse -- Republicans now believe in "alternative facts," which they make up to match whatever it is that they want to justify, and they assert that "truth isn't the truth." So good luck to OAC as she tries to convince Republicans about the efficacy of "a tax rate of 70-80 percent on very high incomes." Republicans, including the Trump administration, do believe that the 1950s was the best decade ever in the post-WWII era – not because of its 91% top tax rate on income, but for entirely different reasons that have nothing to do with fiscal policy.

Reply 19 Recommend
Georgia M Canada Jan. 5

I'm your average democratic socialist living north of your country and, yet I confess this article doesn't sit right with me. I enjoy reading Mr Krugman and I will read him first in your paper. What irks me though is his yup yup it's okay to soak the rich because it makes economic sense. Even if you could prove that taxing the rich at 75% won't harm economy, should you do it? That is to say, the wealth of the rich is their property. Just like my meagre possessions are my property. As a Canadian I pay around 29% income taxes (even working class Canadians pay a fair amount of tax). Wealthier Canadians pay around 55% of their income. We are fortunate that wealthy people feel invested in the community here and tolerate the higher taxes. The well-being of our public services is dependent on all people feeling they get something in return for their tax dollars. I guess what I am getting at is that there is a sort of social contract that all citizens are invested in-poor and rich. I recently spoke to a young brilliant doctor and asked if he wanted to move to the US (he has had some great offers). He said no, he wants to use his skills in the community. I am grateful this young man will work and contribute here. So, why increase his tax level even further? Saying that he has the money for the taking is not acceptable. I wish Ms Ocasio Cortez luck, but I hope these young socialists reign in the glee at the prospect of fleecing their fellow citizens.

19 Recommend
Joe Rockbottom califonria Jan. 7

@Billy Walker they don't take "most of it." they only take that rate in the highest income percentile. So only the last marginal dollars earned. It is doubtful ANY CEO is worth the pay they get. and most of it is in stock options, the proceeds of which are not even discussed here because they are capital gains, not income. So, most CEO's only make a few hundred thousand in "income" and the rest is in stock options for which they are taxed at a much, much lower rate. That is how skewed our idiotic tax system is. They game it and don't even have to count their obvious income as actual income. Totally corrupt.

19 Recommend
617to416 Ontario via Massachusetts Jan. 6

While there's no denying that many of the wealthy achieve success by their talent and hard work, no one becomes wealthy solely on his or her own. Chance always plays a role in anyone's success, and no one's success is achieved without extensive support from our society's institutions and from others. The success of any individual is therefore always a collective success -- created by a combination of the individual's own talents, the support of others, the advantages provided by our society, and the vagaries of chance. Because of this it is completely justified to expect -- and to demand if necessary -- that the wealthy give back some portion of their wealth to the community that contributes so much to their ability to become wealthy. Whether the share given back is 20%, 50%, or 80% should be determined based on two factors: first, how much does society need from the wealthy to continue to provide an environment in which as many as possible can succeed and, second, how important is it to maintain individually-held concentrations of wealth either to provide incentives for success or to allow for significant private expenditures and investment to complement our public expenditures and investment. While a 70% marginal tax rate on the wealthy sounds high given recent policy, the crumbling state of our public infrastructure, our fraying social safety net, and the growing inequities in access to the benefits of our society suggest a need for higher tax rates.

19 Recommend
Tom Philadelphia Jan. 5

In 1960 when Eisenhower was president, the top marginal tax rate in the US was 93 percent, we were building interstate highways and quadrupling our higher education system via the GI bill, and the American economy was the envy of the world. So this notion that the country is better off if the rich don't pay taxes utterly ludicrous -- it is simply the invention of rich people who think they deserve to live tax-free. Since our democracy is broken and the rich basically own Congress, we will probably keep cutting taxes on rich people until they go negative, at which point American taxpayers will be paying the rich just for their overwhelming wonderfulness.

19 Recommend
JH NY Jan. 5

As a small retail business owner I am continuously flabbergasted by chamber of commerce t