During the late Soviet period, the form of ideological representations—documents, speeches, ritualized practices, slogans,
posters, monuments, and urban visual propaganda—became increasingly normalized, ubiquitous, and predictable. This standardization of
key elements of the ideology in
the form of religious symbols developed gradually after the death of Stalin, who was the only person who has the authority to change
those symbols at will, due to his "Cult of Personality" phenomenon.
With that shift, the form of the ideological representation of main ideas of Marxism became fixed and replicated — unchanged from one context to the next.
These representations no longer had to be read literally, at least in most contexts, but need to be taken for granted as symbols of
faith, the fixed elements of the
hegemonic ideology.
Formally the symbol of faith a strict external idea or dogma (whether religious, political, or otherwise)
and occupies a particular position within the discursive regime of a period. It has two main features.
First, because of a special
"script" in which it is coded, authoritative discourse is sharply demarcated from all other types of discourse that coexist with it,
which means that it does not depend on them, it precedes them, and it cannot be changed by them.
Second, all these other types of discourse are organized around it. Their existence depends on being positioned in relation to
it, having to refer to it, quote it, praise it, interpret it, apply it, and so forth, but they cannot, for example, interfere with
its code and change it.
Regardless of whether those symbols of faith are successful in persuading its authors and audiences,
everybody experience them as immutable and therefore unquestionable Similarly to late socialism in the USSR, late neoliberalism in
the USA also has symbols of faith. The key of which is " free market". This argument provides a fresh perspective on long-standing
comparisons between neoliberalism and religion. It has been commonly asserted—by academic scholars and journalists alike—that Soviet
communism was a secular religion with its own rituals, icons, and religious texts. Neoliberalism being Trotskyism for the rich is no
different.
The word hypernormalisation was coined by Alexei Yurchak, a professor of anthropology of Stanford University. He
introduced the word in his book Everything Was Forever, Until It Was No More: The Last Soviet Generation (2006), which describes
paradoxes of Soviet life during the 1970s and 1980s. He says that everyone in the Soviet Union knew the system was failing,
but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the
pretense of a functioning society. Over time, this delusion became a self-fulfilling prophecy and the fakeness was accepted by
everyone as real, an effect that Yurchak termed hypernormalisation. The same is true about neoliberalism and the term "free market"
after 2016 elections.
Collapse of neoliberal ideology desecrated most symbols of faith of neoliberalism including "free market";
Most neoliberals saint like Milton Friedman looks now like charlatans
In 2008 the global economy lied in tatters. While fiscal and monetary stimulus of unprecedented scale has prevented
the financial melt- down of 2008 from turning into a total collapse of the global economy, the 2008
global crash still remains the second-largest economic crisis in history, after the Great Depression. After 2008 the US economic
entered the state of "Secular stagnation"
In the absence of financial reforms, loose monetary and fiscal policies
have led to new financial bubbles, while the real economy is starved of money. If these bubbles burst,
the global economy could fall into another (‘double-dip’) recession. Even if the recovery is sustained,
the aftermath of the crisis will be felt for years. It may be several years before the corporate and
the household sectors rebuild their balance sheets. The huge budget deficits created by the crisis will
force governments to reduce public investments and welfare entitlements significantly, negatively affecting
economic growth, poverty and social stability - possibly for decades. Some of those who lost their jobs
and houses during the crisis may never join the economic mainstream again. These are frightening prospects of late neoliberalism.
This catastrophe has ultimately been created by the tree-market ideology that has ruled the world
since the 1980s. We have been told that, if left alone, markets will produce the most efficient and
just outcome. Efficient, because individuals know best how to utilize the resources they command, and
just, because the competitive market process ensures that individuals are rewarded according to their
productivity. We have been told that business should be given maximum freedom. Firms, being closest
to the market, know what is best for their businesses. If we let them do what they want, wealth creation
will be maximized, benefiting the rest of society as well. We were told that government intervention
in the markets would only reduce their efficiency.
Government intervention is often designed to limit the very scope of wealth creation for misguided
egalitarian reasons. Even when it is not, governments cannot improve on market outcomes, as they have
neither the necessary information nor the incentives to make good business decisions. In sum, we were
told to put all our trust in the market and get out of its way.
Following pressure from "Washington consensus" stalwarts such as IMF and World banks, most countries have introduced "free market"
(read neoliberal) policies over the last three decades
— privatization of state-owned industrial and financial firms, deregulation of finance and industry,
liberalization of international trade and investment, and reduction in income taxes and welfare payments.
These policies, their advocates admitted, may temporarily create some problems, such as rising inequality,
but ultimately they will make everyone better off by creating a more dynamic and wealthier society.
The rising tide lifts all boats together, was the metaphor. Which now looks like a cruel joke.
The result of these policies has been the polar opposite of what was promised. that's why Milton Freidman now viewed mostly as
evil political charlatan, not as a scholar. Forget for a moment
the financial meltdown of 2008, which will scar the world for decades to come. Prior to that, and unbeknown
to most people, free-market policies had resulted in slower growth, rising inequality and heightened
instability in most countries. In many rich countries, these problems were masked by huge credit expansion;
thus the fact that US wages had remained stagnant and working hours increased since the 1970s was conveniently
fogged over by the heady brew of credit-fuelled consumer boom. The problems were bad enough in the rich
countries, but they were even more serious for the developing world. Living standards in Sub-Saharan
Africa have stagnated for the last three decades, while Latin America seen its per capita growth
rate fall by two-thirds during the period. There were some developing countries that grew fast (although
with rapidly rising inequality) during this period, such as China and India, but these are precisely
the countries that, while partially liberalizing, have refused to introduce full-blown free-market policies. For example China
preserved strict capital controls.
Thus, what we were told by the free-marketeers — or, as they arc often called, neoliberal economists
- was at best only partially true and at worst plain wrong. As I will show throughout this book, the
‘truths’ peddled by free-market ideologues are based on lazy assumptions and blinkered visions, if not
necessarily self- serving notions. My aim in this book is to tell you some essential truths about capitalism
that the free-marketeers won’t. This book is not an anti-capitalist manifesto. Being critical of free-market
ideology is not the same as being against capitalism. Despite its problems and limitations, I believe
that capitalism is still the best economic system that humanity has invented. My criticism is of a particular
version of capitalism that has domi- nated the world in the last three decades, that is, free-market
capitalism. This is not the only way to run capitalism, and certainly not the best, as the record of
the last three decades shows. The book shows that there are ways in which capitalism should, and can,
be made better.
Even though the 2008 crisis has made us seriously question the way in which our economies are run,
most of us do not pursue such questions because we think that they are ones for the experts. Indeed
they are — at one level. The precise answers do require knowledge on many technical issues, many of
them so complicated that the experts themselves disagree on them. It is then natural that most of
us simply do not have the time or the necessary training to learn all the technical details before
we can pronounce our judgements on the effectiveness of TARP (Trou- bled Asset Relief Program), the
necessity of G20, the wisdom of bank nationalization or the appropriate levels of executive salaries.
And when it comes to things like poverty in Africa, the workings of the World Trade Organization, or
the capital adequacy rules of the Bank for International Settlements, most of us are frankly lost.
However, it is not necessary for us to understand all the technical details in order to understand
what is going on in the world and exercise what I call an ‘active economic citizenship’ to demand the
right courses of action from those in decision-making positions. After all, we make judgements about
all sorts of other issues despite lacking technical expertise. We don’t need to be expert epidemiologists
in order to know that there should be hygiene standards in food factories, butchers and restaurants.
Making judgments about economics is no different: once you know the key principles and basic facts,
you can make some robust judgements without knowing the technical details. The only prerequisite is
that you are willing to remove those rose- tinted glasses that neo-liberal ideologies like you to wear
every day. The glasses make the world look simple and pretty. But lift them off and stare at the clear
harsh light of reality.
There is no such thing as "free market"
Once you understand that there is really no such thing as a tree market, you won’t be deceived by people
who denounce a regulation on the grounds that it makes the market ‘unfree’. When you
learn that large and active governments can promote, rather than dampen, economic dynamism, you will
see that the widespread distrust of government is unwarranted. Knowing that we
do not live in a post-industrial knowledge economy will make you question the wisdom of neglecting,
or even implicitly welcoming, industrial decline of a country, as some governments have done. Once you realize that trickle-down economics
is myth that never works, you will see the excessive
tax cuts for the rich for what they are — a simple upward redistribution of income typical for neoliberalism , rather than a way to
make all of us richer, as we were told
Myth I : Neoliberals tell you Markets need to be free.
When the government interferes to dictate what market participants can or cannot do, resources cannot
flow to their most efficient use. If people cannot do the things that they find most profitable, they
lose the incentive to invest and innovate. Thus, if the government puts a cap on house rents, landlords
lose the incentive to maintain their properties or build new ones. Or, if the government restricts the
kinds of financial products that can be sold, two contracting parties that may both have benefited
from innovative transactions that fulfil their idiosyncratic needs cannot reap the potential gains of
free contract. People must be left ‘free to choose’, as the title of free-market visionary Milton Friedman’s
famous book goes.
What they don’t tell you: The free market doesn’t exist. Every market has some rules and boundaries
that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying
restric- tions that we fail to see them. How ‘free’ a market is cannot be objectively defined. It is
a political definition. The usual claim by free-market economists that they are trying to defend the
market from politically motivated interference by the government is false. Government is always involved
and those free-marketeers are as politically motivated as anyone. Overcoming the myth that there is
such a thing as an objectively defined ‘free market’ is the first step towards understanding capitalism.
Myth II: Labor ought to be free
In 1819 new legislation to regulate child labour, the Cotton Factories Regulation Act, was tabled
in the British Parliament. The proposed regulation was incredibly ‘light touch’ by modern standards.
It would ban the employment of young children -- that is, those under the age of nine. Older children (aged between ten and sixteen)
would still be allowed to work, but with their working hours restricted to twelve per day (yes, they were really going soft on
those kids). The new rules applied only to cotton factories, which were recognized to be exceptionally hazardous to workers’ health.
The proposal caused huge controversy. Opponents saw it as undermining the sanctity of freedom of
contract and thus destroying the very foundation of the free market. In debating this legislation, some
members of the Flouse of Lords objected to it on the grounds that ‘labour ought to be free’. Their argu-
ment said: the children want (and need) to work, and the factory owners want to employ them; what is
the problem? Today, even the most ardent free-market proponents in Brit- ain or other rich countries
would not think of bringing child labour back as part of the market liberalization package that they
so want. However, until the late nineteenth or the early twenti- eth century, when the first serious
child labour regulations were introduced in Europe and North America, many respectable people judged
child labour regulation to be against the principles of the free market.
Thus seen, the ‘freedom’ of a market is, like beauty, in the eyes of the beholder. If you believe
that the right of children not to have to work is more important than the right of factory owners to
be able to hire whoever they find most profitable, you will not see a ban on child labour as an infringement
on the freedom of the labour market. If you believe the opposite, you will see an ‘unfree’ market, shackled
by a misguided government regulation. We don’t have to go back two centuries to see regulations we take
for granted (and accept as the ‘ambient noise’ within the free market) that were seriously challenged
as undermining the free market, when first introduced. When environmental regulations (e.g., regulations
on car and factory emissions) appeared a few decades ago, they were opposed by many as seri- ous infringements
on our freedom to choose. Their opponents asked: if people want to drive in more polluting cars or if
facto- ries find more polluting production methods more profitable, why should the government prevent
them from making such choices? Today, most people accept these regulations as ‘natural’. They believe
that actions that harm others, however unintention- ally (such as pollution), need to be restricted.
They also understand that it is sensible to make careful use of our energy resources, when many of them
are non-renewable. They may believe that reducing human impact on climate change makes sense too. If
the same market can be perceived to have varying degrees of freedom by different people, there is really
no objective way to define how free that market is. In other words, the free market is an illusion.
If some markets look free, it is only because we so totally accept the regulations that are propping
them up that they become invisible.
Piano wires and kungfu masters
Like many people, as a child I was fascinated by all those gravity-defying kungfu masters in
Hong Kong movies. Like many kids, I suspect, I was bitterly disappointed when I learned that those masters
were actually hanging on piano wires. The free market is a bit like that. We accept the legitimacy of
certain regulations so totally that we don’t see them. More carefully examined, markets are revealed
to be propped up by rules — and many of them.
To begin with, there is a huge range of restrictions on what can be traded; and not just bans on
‘obvious’ tilings such as narcotic drugs or human organs. Electoral votes, government jobs and legal
decisions are not for sale, at least openly, in modern economies, although they were in most countries
in the past. University places may not usually be sold, although in some nations money can buy them
— either through (illegally) paying the selectors or (legally) donating money to the university. Many
countries ban trading in firearms or alcohol. Usually medicines have to be explicitly licensed by the
government, upon the proof of their safety, before they can be marketed. All these regulations are potentially
controversial - just as the ban on selling human beings (the slave trade) was one and a half centuries
ago.
There are also restrictions on who can participate in markets. Child labour regulation now bans the
entry of children into the labour market. Licences are required for professions that have significant
impacts on human life, such as medical doctors or lawyers (which may sometimes be issued by professional
associa- tions rather than by the government). Many countries allow only companies with more than a
certain amount of capital to set up banks. Even the stock market, whose under-regulation has been a
cause of the 2008 global recession, has regulations on who can trade. You can’t just turn up in the
New York Stock Exchange (NYSE) with a bag of shares and sell them. Companies must fulfil listing requirements,
meeting stringent auditing standards over a certain number of years, before they can offer their shares
for trading. Trading of shares is only conducted by licensed brokers and traders.
Conditions of trade are specified too. One of the things that surprised me when I first moved to
Britain in the mid 1980s was that one could demand a full refund for a product one didn’t like, even
if it wasn’t faulty. At the time, you just couldn’t do that in Korea, except in the most exclusive department
stores. In Britain, the consumer’s right to change her mind was considered more important than the right
of the seller to avoid the cost involved in returning unwanted (yet functional) products to the manufac-
turer. There are many other rules regulating various aspects of the exchange process: product liability,
failure in delivery, loan default, and so on. In many countries, there are also necessary permissions
for the location of sales outlets - such as restrictions on street-vending or zoning laws that ban commercial
activities in residential areas.
Then there are price regulations. I am not talking here just about those highly visible phenomena
such as rent controls or minimum wages that free-market economists love to hate. Wages in rich countries
are determined more by immigration control than anything else, including any minimum wage legis- lation.
How is the immigration maximum determined? Not by the ‘free’ labour market, which, if left alone, will
end up replac- ing 80—90 per cent of native workers with cheaper, and often more productive, immigrants.
Immigration is largely settled by politics. So, if you have any residual doubt about the massive role
that the government plays in the economy’s free market, then pause to reflect that all our wages are,
at root, politically deter- mined (see Thing 3).
Following the 2008 financial crisis, the prices of loans (if you can get one or if you already have
a variable rate loan) have become a lot lower in many countries thanks to the continuous slashing of
interest rates. Was that because suddenly people didn’t want loans and the banks needed to lower their
prices to shift them? No, it was the result of political decisions to boost demand by cutting interest
rates. Even in normal times, interest rates are set in most countries by the central bank, which means
that political considerations creep in. In other words, interest rates are also determined by politics.
If wages and interest rates are (to a significant extent) politically determined, then all the other
prices are politically determined, as they affect all other prices.
Is free trade fair?
We see a regulation when we don’t endorse the moral values behind it. The nineteenth-century high-tariff
restriction on free trade by the U S federal government outraged slave-owners, who at the same time
saw nothing wrong with trading people in a free market. To those who believed that people can be owned,
banning trade in slaves was objectionable in the same wav as restricting trade in manufactured goods.
Korean shopkeepers of the 1980s would probably have thought the requirement for ‘unconditional return’
to be an unfairly burdensome government regulation restricting market freedom.
This clash of values also lies behind the contemporary debate on free trade vs. fair trade. Many
Americans believe that China is engaged in international trade that may be free but is not fair. In
their view, by paying workers unacceptably low wages and making them work in inhumane conditions, China
competes unfairly. The Chinese, in turn, can riposte that it is unacceptable that rich countries, while
advocating free trade, try to impose artificial barriers to China’s exports by attempting to restrict
the import of ‘sweatshop’ products. They find it unjust to be prevented from exploiting the only resource
they have in greatest abundance — cheap labour.
"... 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. ..."
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."
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.
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.
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.
I said: Okay, I get it, if you lend them the money, then they can pay. This is like a
Ponzi scheme: you lend the investors enough to pay the interest and keep current. That
was my introduction to how the balance of payments worked between the United States and the
third world and how political the whole credit problem was.
Free markets are only free for parasites and usurers to run their schemes. Lolbertarianism
is an ideology of our (((friends))), and I think its adherents are dupes. I no longer think
they are well meaning dupes either, they have a personality defect, where they lack
empathy.
Those who have the most to say about the burdens of government regulation tend to be silent
about the enormous infrastructure supporting a very specific conception of corporate
personhood, limited liability, and intellectual property.
It's like an industrialist looking out upon a vast landscape of canals, dams, and levees, and
complaining at the "unnatural" construction of a bridge putting a ferryman out of a job.
It's still not clear exactly what the clinic's customers were being injected with...
My guess is that it's something less hazardous to your health than the real vaccine, but
still not what the greatest scientist of all time, Dr. Fauci, and our greatest president of
all time, His Excellency Joe Biden, have mandated that you take.
Mike Konczal has a new book, Freedom from the Market ( Bookshop.org locator , Amazon ). I've been wanting to write about this book for a while,
but first had to wait for it to come out, and then had my working life banjaxed by the madness
of the last few weeks. But it is a great book that looks to remake the American debate about
freedom and largely succeeds. Full disclosure: Mike is a friend of the 'see very occasionally
but like very strongly' variety; I also read an early version of the mss and commented on
it.
When I say that this book is about the American debate, I mean it. Non-Americans will learn
from the book, but they aren't the target audience. The examples that Konczal draws on to
inform modern Americans are drawn from their own, largely forgotten history. This could be seen
as a reflection of the American parochialism that Konczal mentions in passing, but it is, I
think, a deliberate political move. It also is in some ways refreshing – rather than
weaving fairytales about the wonders of Fantasy Sweden or Fantasy Germany, it tells stories
where the ambiguities are necessarily more visible to its readers.
Still, it provides measured hope. By drawing on what has happened in American history,
Konczal makes it easier for Americans to understand that things they might not believe are
possible in America must be, because they have been. He rescues moments such as the WWII
government run daycare centers that allowed women to work, or the use of the power of the
federal state to force through the integration of Southern hospitals, from the enormous
condescension of posterity. Notably, although he doesn't dwell on this point, many of these
changes began at moments that seem shittier and more despairing than our own.
Konczal neither provides a standard linear history, nor a policy textbook. Instead, he is
claiming an alternative American tradition, which has not looked to the market as its
apotheosis, but instead has sought to free Americans from its random vagaries. His history
explains how America has responded collectively to the real and expressed needs of publics, who
have organized to fight for them. And it does so in the plain language that he mentions in
passing was necessary to allow ordinary people to organize and understand who was trying to
stop them.
Konczal's fundamental claim is that people who attribute freedom to markets miss out on much
of the story. Equally important is a notion of freedom from markets, "rooted in public
programs that genuinely serve people and checking market dependency." This notion goes back
much further in time than the New Deal. The nineteenth century is sometimes depicted as a reign
of laissez-faire, both by those who admired it and deplored it. Konczal argues instead that
there was an emerging sense of public needs – and imperfect ways in which the government
provided for them. This helps us understand, for example, the provision of public land through
the Homestead Act and the land grant universities.
The nineteenth century notion of the public was clearly horribly flawed and contradictory
– it did not include slaves or Native Americans. Some, like Horace Greeley ended up
fleeing these contradictions into the welcoming arms of free market absolutism. But within
these contradictions lay possibilities that opened up in the twentieth century. Konczal builds,
for example on Eric Schickler's work to argue that as the New Deal began to provide concrete
benefits to African Americans, it created a new relationship between them and the Democratic
Party, breaking up the old coalition that had held Jim Crow together.
The organizing ideas in this book are Polanyian – the stresses of the market lead to
social rupture, which may in turn create the conditions for political mobilization. But Konczal
doesn't depict this as necessary or inevitable – people's choices have consequences. He
is also more precise than Polanyi in his understanding of how change happens – through
social movements and the state:
While the Supreme Court can be effective at holding back change and enforcing already
existing power structures, it is actually very weak at creating new reform itself. It
controls no funding and is dependent on elite power structures to carry out its decisions.
What really creates change is popular mobilization and legislative changes.
Finally, Konczal not only employs Polanyi's ideas, but the ideas of Polanyi's friendly
critics like Quinn Slobodian, to describe how modern Hayekians have sought to "encase" the
market order in institutions and practices that are hard to overturn. Property rights aren't
the foundation of liberty, as both nineteenth century jurists and twentieth century economists
would have it. They are a product of the choices of the state, and as such intensely
political.
This allows Konczal to turn pragmatism against the Hayekians. Hayek's notion of spontaneous
order is supposed to be evolutionary, to provide a more supple response to what people (thought
of as individuals want). But if there is a need to provide collective goods for people that
cannot be fulfilled through voluntarism, the Hayekian logic becomes a brutal constraint on
adaptation.
The efforts of Hayekians to enforce binding legal constraints, to cripple the gathering of
the collective knowledge that can guide collective action, to wink at legal doctrines intended
to subvert social protections against the market; all these prevent the kinds of evolutionary
change that are necessary to respond to changing circumstances. Konczal makes it clear that
Oliver Wendell Holmes was no left-winger – but his pragmatist criticisms of the rigid and
doctrinaire laissez-faire precepts of his colleagues rings true. Their "willingness to use a
very specific understanding of economics to override law writes a preferential understanding of
economics into the constitution itself." Although Konczal wrote this book before the current
crisis, he describes Holmes as mentioning compulsory vaccination laws as one of the ways in
which government interference in private decisions can have general social benefits. The
wretched contortions of libertarians and market conservatives over anti-pandemic measures
during the last several months, and the consequences of their intellectual rigidity for human
welfare in states such as North Dakota illustrate the point, quite brutally.
What Konczal presses for is a very different notion of freedom. This doesn't deny the
benefits of markets, but it qualifies them. In Konczal's words, "markets are great at
distributing things based on people's willingness to pay. But there are some goods that should
be distributed by need." Accepting this point entails the necessity of keeping some important
areas of life outside the determining scope of markets. Furthermore, people's needs change over
time, as societies and markets change. Konczal's framework suggests the need for collective
choice to figure out the best responses to these changes, and a vibrant democratic politics, in
which the state responds to the expressed needs of mobilized publics as the best way to carry
out these choices.
All this makes the book sound more like an exercise in political theory than it is. That's
because of my own professional deformities, and because I want you to read the book itself, if
you really to get the good stuff – the stories, the examples, and the overall narrative
that Konczal weaves together. Freedom from the Market has the potential to be a very
important book, focusing attention on the contested, messy but crucially important intersection
between social movements and the state. It provides a set of ideas that people on both sides of
that divide can learn from, and a lively alternative foundation to the deracinated technocratic
notions of politics, in which good policy would somehow, magically, be politically self
supporting, that has prevailed up until quite recently. Strongly recommended.
I'll second this recommendation – it was a great read. I would especially recommend
reading it for the section on Medicare integration, since that's a story that rarely gets
told but is genuinely quite fascinating. It gives me greater respect for LBJ, given that he
was giving them full-support despite a difficult, treacherous political battle to integrate
hospitals in the South despite immense resistance.
He also made a very interesting point after the Homestead section when he got to the
section on work-hour labor movements, about how they needed to specifically make it so that
certain rights couldn't be contracted away, because otherwise even laws establishing
such-and-such rules would get end-runned by businesses requiring their employees to give them
up in contracts.
Henry, you write, "if there is a need to provide collective goods for people that cannot
be fulfilled through voluntarism, the Hayekian logic becomes a brutal constraint on
adaptation." That seems like a big "if." Other than the classic examples of national defense
and perhaps police and courts, what goods cannot be provided through voluntarism?
There's a nice line in Slobodian's book about Americans not knowing much about the rest of
the world but imagining that the US is a scale-model of it. Isn't the worry about the general
claim here that it is more plausible to see property rights as merely the creature of the
state when you have a vast internal market with many needs catered for by domestic production
than it is when you have small states with relatively specialized domestic production that
need to trade across borders to satisfy their needs. In such a case, where the real economy
transcends borders and where trade barriers at those borders just make everyone poorer, you
need transnational guarantees (or at least a very strong degree of confidence) for property
rights and investment against the potential interference of local governments. So even if
Konczal is right for the US, the question of how to do social democracy transnationally
remains for the rest of us. The EU is one possible answer to that, but the continuation of
national political narratives, blaming other nations within the structure for their own
problems (Germany > Greece, Italy) etc remains a big obstacle to anti-market pushback at
that level.
reason 01.27.21 at 11:20 am (no link)
Just a short aside, this sentence struck me:
" Property rights aren't the foundation of liberty, as both nineteenth century jurists and
twentieth century economists would have it."
Property rights are inherently a restriction of liberty. They restrict the rights of
everybody but the designated owner. It may be that in some circumstances they are net a
positive, that this is clearly not something one can expect from the nature of the thing.
That this point isn't made more often and more strongly puzzles me.
Jake Gibson 01.27.21 at 1:22 pm (no link)
I think it can be illuminating to think of "property rights" in the context that at some
point all property was taken (stolen) from The Commons.
And that property laws are enshrinement of common law on possession (nine tenths).
The "twentieth century economists" like the "nineteenth century jurists" refer just to
those discussed in the book (basically Friedman, Chicago School, market for corporate control
people etc etc). So they're not claims about the general class of economists in the twentieth
century, where there is tons of disagreement on lots of stuff obviously, but a particular
strain of economic thought that Konczal writes about.
There is no "the" market. All markets are not the same.
The Hayekians first insistence is that in fact all markets are the same. They then have
designed the 'markets' they want, and if you design a market you win.
Mike Huben 01.27.21 at 4:11 pm (no link)
Kurt Schuler @ 3 asks: "what goods cannot be provided through voluntarism?"
The glib answer is "none" because you can always find an exceptional case of private
production.
But the problem is "provided" is underspecified: it could mean provision to only one
person, or (better) provision of ENOUGH. And even enough is underspecified.
Look at something like water. Public provision of vast volumes of clean, safe, cheap
drinking water is an alternative to voluntarism's answer: expensive bottled water which must
be used frugally by the poor, consumes much energy in transportation and waste in plastic:
which is enough? Which is proper provision? Should there be only one type of provision?
And of course that question implies another; what goods should not be provided through
voluntarism? Maybe pollution, addiction, crime, and a host of others.
"Voluntarism" is an example of framing, trying to focus the world through an ideological
lens. If you accidentally accept this narrow peephole on the world, your thinking is greatly
constrained because of the things is has misdirected you from. The same kind of framing as
"markets are freedom", which Konczal is apparently decrying. (I have not yet read the
book.)
Given the tenor of most responses, it doesn't seem likely Konczal's book is going to
change the narrative in any significant way.
Bob@2 seems a good example of the pro-market reasoning. For one thing, "economics" says
that if a person with a scarce talent can earn more money than is necessary to induce them to
exercise that talent, the income can be taxed away without affecting the market outcome.
Considering the real life examples of professional athletes, movie stars and artists, the
sage advice to tax the athletes, stars and artists, precisely because it won't endanger the
market outcomes of professional athletics, Hollywood and the art world presupposes the market
outcomes of pro sports, Hollywood and the museum/art gallery circuit are just and wise.
Bob@2 wrote "Economics is wisely silent on people's preferences and needs. The point
surely is not that there is something inherent in certain goods that means they should be
distributed by need–who decides what those "good" goods are that everyone (ought to?)
need?; the point is that income should be redistributed so that everyone can buy whatever
they see fit to buy based on their own understanding of their needs."
Yes, I recall reading a short article by von Hayek explaining there was no scientific way
to distinguish between wants and needs, thus there was no way ever, even in principle, to
deny there was such a thing as scarcity. Like von Hayek, the assumption that, given the
impossibility of pronouncing a difference between needs and wants (nor apparently even a way
of merely satisficing any such distinction,) the only valid way of deciding what must be
produced is by consumer sovereignty. The "votes" by rational consumers are the only possible
means of justice. Like distinguishing between productive and unproductive labor, anything
less than the market is tyranny.
I have no idea why Bob says Konczal's book as presented doesn't pose a problem, given two
market refutations of it are endorsed in the comment. It may be something like compatibilism,
the philosophical position that people have free will in the religious sense despite the
myriad of facts and millennia of experience showing that the religious notion of moral
responsibility is, to say the least, flawed. In words, compatibilists will say they accept
things like mental illness leave old notions of moral responsibility -- which is to say, old
notions about retribution and punishment -- then in practice, they will do things like try
adolescents as adult or arbitrarily limit the definition of mental illness or simply ignore
such fiddling objections to honor time-honored customs. Similarly, market proponents will
give lip service to the notion of market failure, then inexplicably (?) fail to see it.
Chris Bertram@5 writes " the continuation of national political narratives, blaming other
nations within the structure for their own problems (Germany > Greece, Italy) etc remains
a big obstacle " to social democracy. Is the illustrative example meant to condemn Germany
blaming Greece and Italy for creating their own problems and leeching (or trying to) off of
Germany? Or, is it Greece and Italy blaming of Germany for not curing their own failures for
them? Is it somehow both? Also, the definition of the EU as a consortium of states premised
on fiscal integrity may be more of an obstacle to social democracy than political narratives,
however construed?
Well, insulin clearly (see above). But also: schools that make everybody literate and
promote basic social solidarity. Colleges that are cheap enough to educate all of the
talents. Hospitals that treat illnesses irrespective of ability to pay. Universal
vaccinations. Flood defences. Disaster relief. Food inspectors. Drug safety testers.
Buildings inspectors. Fire inspectors. Transport safety inspectors. Highways. Mending
potholes in highways. Keeping bridges safe. Last-mile rural electrification. Universal mail
coverage at a single price. Legal advice to even access to justice by rich and poor.
Excellent daycare at prices poor people can afford. Basic research in particle physics and
astronomy. R & D in far-from-market areas society needs. Drug discovery for diseases poor
people get. Training of specialists in non-profitable yet essential professions. Landscape
conservation. Pollution control. Tech regulation. Setting a carbon price/tax. Railways that
move people fast enough and cheaply enough to take custom away from ecocidal airlines. Mass
transit in cities. Space programmes. A welfare safety net permitting risky careers in the
arts. A welfare safety net to equalise the chances of children. A welfare safety net allowing
every member of a society to go to sleep every night in a state of delicious moral luxury,
knowing that no-one is hungry. Lighthouses. Earthquake detection. Censuses. Diplomacy.
Peacemaking. Peacekeeping. Public broadcasters with editorial independence. Et cetera et
cetera et cetera, in every flavour from civilisational basic to utopian flight of fancy.
Collective action! Getting the job done everywhere on the planet where libertarians
aren't.
" In such a case, where the real economy transcends borders and where trade barriers at
those borders just make everyone poorer, you need transnational guarantees (or at least a
very strong degree of confidence) for property rights and investment against the potential
interference of local governments."
Much of the world did social democracy pretty well last century, without transnational
guarantees. Conversely, the creation of investor guarantees like ISDS has been a gift to
predatory corporations like Philip Morris.
Insulin (and Epi pens) become unaffordable in the U.S. because the government massively
screwed up the regulations. These are off-patent drugs, so in theory anybody can make them.
BUT, getting production facilities FDA-approved is a long, expensive process. So when there's
an effective monopoly on a drug, no other company will enter the market to compete -- even
after huge price hikes. Why not? Because after the new company had invested the time and
money to get its production line built and approved, the original monopolist would drop its
prices back down, and the new entrant would make no money. And everybody knows this, so
potential new entrants don't bother. An obvious solution is reciprocity to allow importation
of drugs already approved in the EU. But there's no way the FDA is going to allow that
to happen and lose its regulatory monopoly.
The bottom line is that these are not failures of unregulated markets, they are cases of
government failure in the most heavily regulated market in the U.S. (and where, in fact, the
strict regulation is the key enabler of the bad outcome and where the obvious fix is blocked
by the regulatory agency defending its turf).
MPAVictoria 01.29.21 at 1:39 am (no link)
"Insulin (and Epi pens) become unaffordable in the U.S. because the government massively
screwed up the regulations."
Just need to point out that this is completely false. Insulin prices are high in the US
because of a lack of price controls. Canada has very similar patent rules and our insulin is
made by the same companies but guess what? We set a maximum price for pharmaceuticals. The US
should do the same.
mw 01.29.21 at 1:23 pm (no link)
MPAVictoria @ 23 Just need to point out that this is completely false. Insulin prices
are high in the US because of a lack of price controls. Canada has very similar patent rules
and our insulin is made by the same companies but guess what? We set a maximum price for
pharmaceuticals. The US should do the same.
Yes, you could layer on additional price-control regulations to fix the problems caused by
the existing regulations. Of course it's one thing for Canada to adopt such rules where the
U.S. has not (and remains a source of profits and R&D incentives) and another when the
U.S. is also controlling prices. Incidentally, if price controls were to be adopted in the
U.S., my suggested approach is that the U.S. should require all pharma companies within, say,
two years to sell drugs here for the lowest price they have negotiated in any industrialized
country with a comparable per-Capita GDP. Then we can all be in it together.
But that's all a discussion for another thread -- the point remains that insulin and epi
pens are not examples of a free, unregulated market failing, they're an example of a very
heavily (but badly) regulated market failing. Yes bad U.S. regulations are responsible --
they create barriers to entry (specifically high costs of setting up a production facility
combined with an FDA regulatory monopoly and a ban on imports) that enable monopoly
pricing.
notGoodenough 01.29.21 at 8:01 am (no link)
mw @ 19, MPAVictoria @ 23
Not to side-track the thread, but I think there was an attempt to explore this on a
previous thread (particularly with respect to Daraprim, though I believe many of the points
are applicable in a general sense) [1]. While I´ll freely admit I am not an economist,
I didn´t find the responses to my queries and concerns from those advocating
"regulations are the issue" sufficiently satisfactory [2, 3] to warrant changing my position
– in short, I see little evidence to support the notion that it is US regulations
responsible for the high price of pharmaceuticals (particularly as it appears that R&D
spending is frequently less than that of marketing and administration). I hope the discussion
at the links provided is of interest.
Apologies to everyone for the interjection, but Pharma is a topic of keen interest and
concern to me.
mw @ 30: I forgot to respond to your by-the-by argument that the pharmas' US profits fund
their R&D. This is, as with the rest of your arguments, untrue.
(1) the US taxpayer funds most pharma research
(2) Last I checked, pharmas spend more on advertising and lobbying than they do on
R&D.
'nuff said.
MPAVictoria 01.30.21 at 1:29 am (no link)
@ NotGoodenough – Interesting links thank you! And I completely agree that I am
unconvinced that over regulation in it the reason the US has uniquely high drug prices.
@ me – Drug approval and manufacturing requirements in the US are not that different
from any other developed country. Neither is it's Drug IP regime. So the argument that these
features are what cause these outrageous pharmaceutical prices doesn't make much sense. In
fact the US had a bit of a reputation of being too ready to approve drugs with limited
effectiveness. The reason that Americans pay more than anyone else in the world is simple
– no price controls.
@vig #85
Sorry: PMC refers to the Professional, Managerial class.
It could be considered the Petit Bourgeoisie in the Marxist sense except these aren't
shopkeepers. They're the middle managers, doctors, lawyers, MBAs, tenured professors, finance
types and what not who are divorced from the actual hands-on labor.
They mostly work for large corporations and government/non-government institutions like state
governments (at the higher levels), think tanks and nonprofits.
@vig #85
And to clarify further: there is a professor at Stanford University named Victor Davis
Hanson. He is both a tenured professor in early Western history (Greek) and also a farmer -
4th or 5th generation in the San Joaquin valley in California.
What Hanson has talked about at length was that the urban elite - the people in the cities
and along the East and West Coasts of America - have been enjoying a different reality than
the rest of the country.
In particular, the opening up of the American economy to China, India and the rest of the
world has created new markets for companies like Boeing, Facebook, GE and the like - which
benefits these areas and demographics.
However, this same action has also exposed American farmers, manufacturers,
non-MBA/PhD/Master's/etc to low priced labor and mercantilist economic policies in these
other countries.
The example Hanson uses is his own farm. In the 1980s, the price for raisins was $1200/ton
and the market was largely in Europe.
With the advent of the EU, Greek farmers got subsidies from the EU such that they took over
the EU market for raisins. The price for raisins fell to $400/ton.
Hanson doesn't say that this could/should be prevented; what he says is that it is a travesty
that there were no voices in the US at least pushing back against these obviously
anti-competitive economic policies. The lack of such voices meant that the forces of
globalism could run rampant and destroy entire sectors of the American economy at amazing
speed. In particular, the US leadership = oligarchs plus PMC class chose to sell out the rest
of the country in order to enrich itself.
This is 100% obvious to anyone who looks at the details of what has happened in the last 30+
years: China went from 6% of the US GDP in 1984 to near parity (or beyond) in purchasing
power terms today.
People living in the western world are in the greatest fight for the future of pluralist and
republican forms of governance since the rise and fall of fascism 75 years ago. As then,
society had to be built up from a war. Today's war has been an economic war of the oligarchs
against the republic, and it increasingly appears that the coronavirus pandemic is being used,
on the political end, as a massive coup against pluralist society. We are being confronted with
this 'great reset', alluding to post-war construction. But for a whole generation people have
already been living under an ever-increasing austerity regimen. This is a regimen that can only
be explained as some toxic combination of the systemic inevitabilities of a consumer-driven
society on the foundation of planned obsolescence, and the never-ending greed and lust for
power which defines whole sections of the sociopathic oligarchy.
Recently we saw UK PM Boris Johnson stand in front of a 'Build Back Better' sign, speaking to the
need for a 'great reset'. 'Build Back Better' happens to be Joe Biden's campaign slogan,
which raises many other questions for another time. But, to what extent are the handlers who
manage 'Joe Biden', and those managing 'Boris Johnson' working the same script?
The more pertinent question is to ask: in whose interest is this 'great reset' being carried
out ?
Certainly it cannot be left to those who have built their careers upon the theory and
practice of austerity. Certainly it cannot be left to those who have built their careers as
puppets of a morally decaying oligarchy.
What Johnson calls the 'Great Reset', Biden calls the 'Biden Plan for a Clean Energy
Revolution & Environmental Justice'. Certainly the coming economy cannot be left to Boris
Johnson or Joe Biden.
How is it that now Boris Johnson speaks publicly of a 'great reset', whereas just months ago
when those outside the ruling media paradigm used this phrase, it was censured by corporate
Atlanticist media as being conspiratorial in nature? This is an excellent question posed by
Neil Clark.
And so we have by now all read numerous articles in the official press talking about how
economic life after coronavirus will never be the same as it was before. Atlanticist press has
even run numerous opinion articles talking about how this may cut against globalization –
a fair point, and one which many thinking people by and large agree with.
Yet they have set aside any substantive discussion about what exists in lieu of
globalization, and what the economy looks like in various parts of the world if it is not
globalized. We have consistently spoken of multipolarity, a term that in decades past was
utilized frequently in western vectors, in the sphere of geopolitics and international
relations. Now there is some strange ban on the term, and so we are now bereft of a language
with which to have an honest discussion about the post-globalization paradigm.
https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890
Technocracy or Pluralism? A Fight Against the Newspeak
Until now, we have only been given a steady diet of distancing, of lockdown provisions,
quarantining, track and trace, and we have forgotten entirely about the fact that all of this
was only supposed to be a two or three-week long exercise to flatten the curve. And now the
truth is emerging that what is being planned is a new proposal being disguised as a 'great
reset'.
One of the large problems in discussing the 'great reset' is that a false dichotomy has
arisen around it. Either one wants things to be how they were before and without changes to the
status quo, or they promote this 'great reset'. Unfortunately, Clark in his RT article falls
into this false dichotomy, and perhaps only for expedience sake in discussing some other point,
he does not challenge the inherent problems in 'how things were before'. In truth, we would be
surprised if Clark did not appreciate what we are going to propose.
What we propose is that we must oppose their ' new normal ' 'great reset', while also
understanding the inherent problems of what had been normalized up until Covid.
The way things were before was also a tremendous problem, and yet now it only seems better
in comparison to the police state-like provisions we've encountered throughout the course of
politicizing the spectre of this 'pandemic'.
Oddly this politicization is based in positive cases (and not hospitalizations) ostensibly
linked to the novel coronavirus. Strangely, we are told to 'listen to the consensus science'
even as these very institutions consist of politically arrived at appointments. Certainly
science is not about consensus, but about challenging assumptions, repeatability and a lively
debate between disagreeing scientists with relatively equal qualifications. As Kuhn explains in
The Structure of Scientific Revolutions , science is always evolving, and by definition
potentially overturns consensus paradigms. This is a debate we have not seen, and this fact by
itself represents an illiberal cancer growing on an already defective pluralist society –
ironically, all flying under the banner of liberalism.
Decisions that a society decides to take should be driven by reason, prudence, and justice.
What is or isn't scientific plays a role, but cannot be the deciding factor. Science clearly
says that we may eliminate cross-walk injuries by banning street-crossing or by banning
driving, but what policy makers must do is account for the need to have both cars and crossing
the street, in deciding how – if it's even possible – to reduce or eliminate such
injuries. Science is only one part of this equation.
But isn't economics also a science? Is sociology not a science? What about psychology and
psychiatry – as in the known effects of social isolation and, say, suicide prevention?
What about housing and urban planning? The great sociologist Emile Durkheim explains how these
are sciences – they adopt and apply the scientific method in their work. Universities
have been awarding doctoral degrees in these sciences for a century or more, do these expert
opinions not count when managing a public catastrophe?
It is, and always has been, a political and politicized position to listen to some
scientists, and not others.
And so what of our term 'reset'? Indeed, it is itself misleading, and we would propose it is
intentionally so if we understand Orwell's critique of the use of language – newspeak
– in technocratic oligarchies.
A 'reset' textually refers to going back to something once known, erasing defects or
contradictions which arose along the way, which carries with it the familiar, and something we
had previously all agreed to. A 'reset' by definition means going back to how things were
before – not just recently, but before at some point farther back. Its definition is
literally contrary to how Boris Johnson means it in his shocking public statement at the start
of October.
The term 'reset' was therefore arrived with extraordinary planning and thoughtfulness, with
the intent to persuade [manipulate] the public. It simultaneously straddles two unique
concepts, and bundles them together at once into a single term in a manner that reduces nuance
and complexity and therefore also reduces thinking. It does so while appealing to the implicit
notion of the term that it relates to a past consensus agreement.
If understood as we are told to understand it, we must hold two mutually contradictory
notions at the same time – we are incongruously told that this reset must effectively
restore society to how it was at some point before because things can never be how they were at
any time before. Only within the paradigm of this vicious newspeak could anything ever have the
public thinking that such a textual construction makes any bit of sense.
What are Our
Real Options? Whose Reset?
Those who understand that this 'reset' is not a reset but rather a whole new proposal on the
entire organization of society, but being done through oligarchical methods and without the
sort of mandate required in a society governed by laws and not men, are – as we have said
– reluctant to admit that a great change is indeed necessary.
Rather, we must understand that the underlying catastrophic economic mechanisms which are
forcing this great change exist independently of the coronavirus, and exist independently of
the particular changes which the oligarchs promoting their version of a 'reset' (read: new
proposals ) would like to see.
You see, the people and the oligarchs are locked into a single system together. In the
long-term, it seems as if the oligarchs are looking for solutions to change that fact, and
effect a final solution that grants them an entirely break-away civilization. But at this
moment, that is not the case. Yet this system cannot carry forward as it has been, and the
Coronavirus presents a reason at once both mysterious in its timing and also profound in its
implications, to push forward a new proposal.
We believe that technology is quickly arriving at a point where the vast majority of human
beings will be considered redundant. If the technocracy wants to create a walled civilization,
and leave the rest of humanity to manage their own lives along some agrarian, mediaeval mode of
production, there may indeed be benefits to those who live along agrarian lines. But based in
what we know about psychopathy, and the tendency of that among those who govern, such an
amicable solution is likely not in the cards.
That is why the anti-lockdown protests are so critically important to endorse. This is
precisely because the lockdown measures are used to ban mass public demonstrations, a critical
part of pushing public policy in the direction of the interests of the general public. A whole
part of the left has been compromised, and rolled out to fight imaginary fascists, by which
they mean anyone with conventional social views which predate May of 1968. All the while the
actual plutocrats unleash a new system of oligarchical control which, for most, has not been
hitherto contemplated except by relatively obscure political scientists, futurists, and science
fiction authors.
Certainly the consumerist economic system (sometimes called 'capitalism' by the left), which
is based in both globalized supply chains but also planned obsolescence, is no longer feasible.
In truth, this relied upon a third-world to be a source of both raw materials and cheaper
labor. The plus here is that this 'developing world' has largely now developed. But that means
they will be needing their own raw materials, and their own middle-classes have driven up their
own cost of labor. Globalization was based in some world before development, where the real
dynamic is best explained as imperialism , and so it makes sense that this system is a relic of
the past, and indeed ought to be.
It increasingly appears that the 'Coronavirus pandemic', was secondary to the foregone
economic crisis which we were told accompanied it. Rather, it seems that the former came into
being to explain-away the latter.
Another world is possible, but it is one which citizens fight for. In the U.S., England,
Scotland, Ireland, and Germany, there have already been rather large anti-lockdown
demonstrations. These, as we have explained, are not just against lockdown but are positively
pushing to assert the right to public and political association, to public and political
speech, and the redressing of grievances. This is a fundamental right for citizens in any
republic where there is any sort of check on the oligarchy.
We have written on the kind of world that is possible, in our piece from April 2020 titled:
"
Coronavirus Shutdown: The End of Globalization and Planned Obsolescence – Enter
Multipolarity ". That lays out what is possible, and what the problems of pre-corona system
were, in economic terms more than political. Here we discuss the problems of
globalization-based supply chain security in a multipolar world, and the larger problem of
planned obsolescence, especially in light of 3D printing, automation, and the internet of
things.
We posed the philosophical question as to whether it is justified to have a goods-production
system based upon both the guaranteed re-sale of the same type of goods due to planned
obsolescence and the 'work guarantees' that came with it. In short, do we live to work or to we
work to live? And with the 4th industrial revolution looming, we posed the question of what
will happen after human workers are no longer required.
Pluralist society is the compromise outcome of a ceasefire in the class war between the
oligarchy and the various other classes that compromise the people, at large. Largely idealized
and romantic ideas that form the basis of the liberal-democratic ideology (as well as classical
fascism) are used to explain how it is the oligarchy that is so very committed to that
arrangement of pluralism, and that this very arrangement is the product of their benevolence,
and not the truth: that it was the fight put up by common people to fight for a more just
future. No doubt there have been benevolent oligarchs who really believed in the liberal
ideology, of which fascism is one of its more radical products. But the view that the class
struggle can be acculturated or legislated into non-existence is similar to believing that the
law of gravity can be ruled unlawful in a court.
Perhaps we have forgotten what it takes, and perhaps things just have not gotten bad enough.
Decreases in testosterone levels in the population may be leading to a dangerous moment where
vigorous defiance to injustice is much less possible. Critical now is to avoid any artificial
means to opiate ourselves into thinking things are better than they are, whether by way of
anti-depressants or other self-medication. Only with a clear assessment of the real situation
on the ground can we forge the necessary strategy.
The great political crisis now is that a pandemic is being used to justify an end-run around
constitutional rights, an end-run around pluralist society, and so the vehicle – the
mechanism – that the general public might use to fight for their version of a 'reset' is
on the verge of disappearing.
In many ways this means that now is the final moment. We ask – whose great reset, ours
or theirs?
If it is about ' surplus populations ' – and I agree that is a strong
motivation for the elites – why are they super-charging import of the additional surplus
population from the Third World?
The corona panic is not helping, unless this is only Phase 1. Tanking the economy will most
likely result in a much weaker control of the population – the draconian new rules won't
make much difference because they can never be draconian enough. Tens of millions without work
is a prescription for chaos – it has always been.
One explanation that I find possible is ' inertia ' – the rulers are stuck, the
hired managerial class is both very stupid and very self-serving. What we see is helpless
inertia and a slow slide, but no plan or even coherent thought.
The members of the ruling class seem lost and helpless (' tear it down so we can rebuilt
it better ' is a weird refrain used by Macron, Trudeau and now Biden). The real story could
be that there is nobody behind the curtain, no ideas, and inertia rules.
@The
Alarmist hat we need to get the global population back below one billion, because every
action they have taken lately seems designed to lead to means to achieve that end.
To keep with the Saker, "the elites have gone mad", at government level, the public puppets
mostly do not know what they are doing. A level deeper, the few bet on chaos, improvise, but at
the least have some sort of quality goal: induce chaos to mask the causes of the necessary
culling of the surplus populations. At the level of the middle class, and populus, the former
are suicidal, the latter as always in the history of mankind, do not even grasp the situation
they are in.
@Beckow
much difference because they can never be draconian enough."
Corona panic leads to mandatory vaccinations.
Mandatory vaccinations leads to implantation of biochip.
Biochip sends and receives signals to/from 5G network.
Signals between biochips and AI through 5G network track everyone who has the chip, does not
allow troublemakers to buy/sell thereby starving them, and in extreme cases, signals from 5G
network to biochips kills/disables troublemakers.
The rules do not need to be draconian. In fact, no overt 'rules' are needed at all because
people will learn through pain what they are allowed to do.
"... The notion that socioeconomic status is the difference between working and middle classes strikes me as more convenient to obscurantists than useful to serious analysis. Even worse, true SES is better defined by the acceptability of marriage partners. (This brings up religion, by the way, meaning Sunday segregation is an overlooked phenomenon in discussions of systemic racism.) In particular, in dealing with so-called working class people, the issue of property, particularly home ownership, seems to be sharply pertinent. This is true in the form of privilege, such as interest mortgage deduction and property tax rates. (Yes, I know this is not an acceptable use of the term "privilege" but this actually means something, so there.) ..."
"... Most of all, many people live in de facto one party systems, where elections don't make much difference. Much of this country would be more usefully understood I think as more like Mexico or the Philippines, where caciques and landed families tend to run things. The factional struggles play out in the struggles for nominations of the ruling party, while the Outs play catchup in the Out Party, whatever it may be called. The larger part of the people have no political vehicle at all, therefore are largely disengaged. ..."
"... Lastly, on the OP, I'm not at all convinced the near collapse of the stock market and the international credit system last winter, which prompted the reversal of all efforts by the Fed to "normalize" the financial system, wasn't the beginning of the economic consequences we face. And that the pandemic is simply the gust of wind that toppled the house of cards. ..."
A note on the "professional-managerial class," if you don't mind?
Generally a professional is a small businessman. A clergyman may not be able to sell his
practice but a doctor or a lawyer can. But clergy have even greater powers over who gets to
compete than the AMA or the Bar do.
As for managers, those with an individually negotiated contract, especially those that
include things like stock options, golden parachutes, etc. seem to me to be in an entirely
different, well, class, than most others.
Academics who have an agent have a different situation than those who don't. Even
so-called police unions have enough influence over policies and budgets (as near as I can
tell) that the Fraternal Order of Police, or the Police Benevolent Association are more like
the Bar than a trade union. I suggest "professional-managerial class" is not enough a genuine
thing to be useful at all.
The notion that socioeconomic status is the difference between working and middle
classes strikes me as more convenient to obscurantists than useful to serious analysis. Even
worse, true SES is better defined by the acceptability of marriage partners. (This brings up
religion, by the way, meaning Sunday segregation is an overlooked phenomenon in discussions
of systemic racism.) In particular, in dealing with so-called working class people, the issue
of property, particularly home ownership, seems to be sharply pertinent. This is true in the
form of privilege, such as interest mortgage deduction and property tax rates. (Yes, I know
this is not an acceptable use of the term "privilege" but this actually means something, so
there.)
And other issues such as decline in property values, tax rates, school districts, are
pertinent to individuals deciding what their "wallets" are doing. The question for many is,
what's going to happen for their families in the long run, not just this quarter's profits.
The fact that most people don't make profits is even more relevant in my opinion. (Yes,
Obamacare was something of a redistribution the biggest since Shrub added prescription
benefits. This kind of reasoning tells us Nixon was a liberal president!)
Most of all, many people live in de facto one party systems, where elections don't
make much difference. Much of this country would be more usefully understood I think as more
like Mexico or the Philippines, where caciques and landed families tend to run things. The
factional struggles play out in the struggles for nominations of the ruling party, while the
Outs play catchup in the Out Party, whatever it may be called. The larger part of the people
have no political vehicle at all, therefore are largely disengaged.
On the subject of change, change from time is remorseless, invincible but usually
invisible. It is always today, which is pretty much like yesterday, and tomorrow is pretty
much like today, but the changes still come, despite the plans of a changer. This is true
despite the seeming invulnerability to time of all manner of habits, from the imperial
measures to the QWERTY keyboard. The idea that all sorts of things may be so simply because
they were and there hasn't been enough of a conscious decision by the majority to re-arrange
such things may deflate exaggerated ideas of agency. But it's so.
Lastly, on the OP, I'm not at all convinced the near collapse of the stock market and
the international credit system last winter, which prompted the reversal of all efforts by
the Fed to "normalize" the financial system, wasn't the beginning of the economic
consequences we face. And that the pandemic is simply the gust of wind that toppled the house
of cards.
"... From wiping out the ability of regular folks to declare bankruptcy (something supported by our founding fathers who were NOT socialists), to shipping our industrial base to communist China (which in less enlightened days would have been termed treason), to spending tens of trillions of dollars bailing out and subsiding the big banks (that's not a misprint), to supporting "surprise medical billing," to opening the borders to massive third-world immigration so that wages can be driven down and reset and profits up (As 2015 Bernie Sanders pointed out), Backstabbing Joe Biden is neoliberal scum pure and simple. ..."
"... It's astonishing that so many people will just blindly accept what they are told, that Biden is. "moderate." Biden is so far to the right, he makes Nixon look like Trotsky. ..."
"... Joe Biden is a crook and a con man. He has been lying his whole life. Claimed in his 1988 Campaign to have got 3 degrees at college and finished in top half of his class. Actually only got 1 degree & finished 76th out of 85 in his class. ..."
Yet another circus. The proles get to scream and holler, and when all is done, the oligarchy gets the policies it wants, the public
be damned. Our sham 'democracy' is a con to privatize power and socialize responsibility.
Although it is shocking to see such a disgusting piece of human garbage like Joe Biden get substantial numbers of people to
vote for him. Biden has never missed a chance to stab the working class in the back in service to his wealthy patrons.
The issue is not (for me) his creepiness (I wouldn't much mind if he was on my side), nor even his Alzheimer's, but his established
track record of betrayal and corruption.
From wiping out the ability of regular folks to declare bankruptcy (something supported by our founding fathers who were NOT
socialists), to shipping our industrial base to communist China (which in less enlightened days would have been termed treason),
to spending tens of trillions of dollars bailing out and subsiding the big banks (that's not a misprint), to supporting "surprise
medical billing," to opening the borders to massive third-world immigration so that wages can be driven down and reset and profits
up (As 2015 Bernie Sanders pointed out), Backstabbing Joe Biden is neoliberal scum pure and simple.
It's astonishing that so many people will just blindly accept what they are told, that Biden is. "moderate." Biden is so
far to the right, he makes Nixon look like Trotsky. Heck, he makes Calvin Coolidge look like Trotsky.
Joe Biden is a crook and a con man. He has been lying his whole life. Claimed in his 1988 Campaign to have got 3 degrees at college and finished in top half of his class. Actually only got 1 degree & finished 76th out of 85 in his class.
"... Mass unemployment will bring the United States closer to less-developed economies. Very large regions of the poor will surround small enclaves of the rich. Narrow bands of "middle-income professionals," etc., will separate rich from poor. Ever-more rigid social divisions enforced by strong police and military apparatuses are becoming the norm. Their outlines are already visible across the United States. ..."
"... In this context, U.S. capitalism strode confidently toward the 21st century. The Soviet threat had imploded. A divided Europe threatened no U.S. interests. Its individual nations competed for U.S. favor (especially the UK). China's poverty blocked its becoming an economic competitor. U.S. military and technological supremacy seemed insurmountable. ..."
"... Amid success, internal contradictions surfaced. U.S. capitalism crashed three times. The first happened early in 2000 (triggered by dot-com share-price inflation); next came the big crash of 2008 (triggered by defaulting subprime mortgages); and the hugest crash hit in 2020 (triggered by COVID-19). ..."
"... Second, we must face a major obstacle. Since 1945, capitalists and their supporters developed arguments and institutions to undo the New Deal and its leftist legacies. They silenced, deflected, co-opted, and/or demonized criticisms of capitalism. ..."
"... Third, to newly organized versions of a New Deal coalition or of social democracy, we must add a new element. We cannot again leave capitalists in the exclusive positions to receive enterprise profits and make major enterprise decisions. ..."
Organized labor led no mass opposition to Trump's presidency or the December 2017 tax cut or
the failed U.S. preparation for and management of COVID-19. Nor do we yet see a labor-led
national protest against the worst mass firing since the 1930s Great Depression. All of these
events, but especially the unemployment, mark an employers' class war against employees. The
U.S. government directs it, but the employers as a class inspire and benefit the most from
it.
Before the 2020 crash, class war had been redistributing wealth for decades from
middle-income people and the poor to the top 1 percent. That upward redistribution was U.S.
employers' response to the legacy of the New Deal. During the Great Depression and afterward,
wealth had been redistributed downward. By the 1970s, that was reversed. The 2020 crash will
accelerate upward wealth redistribution sharply.
With tens of millions now a "reserve army" of the unemployed, nearly every U.S. employer can
cut wages, benefits, etc. Employees dissatisfied with these cuts are easily replaced. Vast
numbers of unemployed, stressed by uncertain job prospects and unemployment benefits,
disappearing savings, and rising household tensions, will take jobs despite reduced wages,
benefits, and working conditions. As the unemployed return to work, most employees' standards
of consumption and living will drop.
Germany, France, and other European nations could not fire workers as the United States did.
Strong labor movements and socialist parties with deep social influences preclude governments
risking comparable mass unemployment; it would risk deposing them from office. Thus their
antiviral lockdowns keep most at work with governments paying 70 percent or more of pre-virus
wages and salaries.
Mass unemployment will bring the United States closer to less-developed economies. Very
large regions of the poor will surround small enclaves of the rich. Narrow bands of
"middle-income professionals," etc., will separate rich from poor. Ever-more rigid social
divisions enforced by strong police and military apparatuses are becoming the norm. Their
outlines are already visible across the United States.
Only if workers understand and mobilize to fight this class war can the trends sketched
above be stopped or reversed. U.S. workers did exactly that in the 1930s. They fought -- in
highly organized ways -- the class war waged against them then. Millions joined labor unions,
and many tens of thousands joined two socialist parties and one communist party. All four
organizations worked together, in coalition, to mobilize and activate the U.S. working
class.
Weekly, and sometimes daily, workers marched across the United States. They criticized
President Franklin D. Roosevelt's policies and capitalism itself by intermingling reformist and
revolutionary demands. The coalition's size and political reach forced politicians, including
FDR, to listen and respond, often positively. An initially "centrist" FDR adapted to become a
champion of Social Security, unemployment insurance, a minimum wage, and a huge federal jobs
program. The coalition achieved those moderate socialist reforms -- the New Deal -- and paid
for them by setting aside revolutionary change.
It proved to be a good deal, but only in the short run. Its benefits to workers included a
downward redistribution of income and wealth (especially via homeownership), and thereby the
emergence of a new "middle class." Relatively well-paid employees were sufficient in number to
sustain widespread notions of American exceptionalism, beliefs in ever-rising standards of
working-class living across generations, and celebrations of capitalism as guaranteeing these
social benefits. The reality was quite different. Not capitalists but rather their critics and
victims had forced the New Deal against capitalists' resistance. And those middle-class
benefits bypassed most African Americans.
The good deal did not last because U.S. capitalists largely resented the New Deal and sought
to undo it. With World War II's end and FDR's death in 1945, the undoing accelerated. An
anti-Soviet Cold War plus anti-communist/socialist crusades at home gave patriotic cover for
destroying the New Deal coalition. The 1947 Taft-Hartley Act targeted organized labor. Senate
and House committees spearheaded a unified effort (government, mass media, and academia) to
demonize, silence, and socially exclude communists, socialists, leftists, etc. For decades
after 1945 -- and still now in parts of the United States -- a sustained hysteria defined all
left-wing thought, policy, or movement as always and necessarily the worst imaginable social
evil.
Over time, the New Deal coalition was destroyed and left-wing thinking was labeled
"disloyal." Even barely left-of-center labor and political organizations repeatedly denounced
and distanced themselves from any sort of anti-capitalist impulse, any connection to socialism.
Many New Deal reforms were evaded, amended, or repealed. Some simply vanished from politicians'
knowledge and vocabulary and then journalists' too. Having witnessed the purges of leftist
colleagues from 1945 through the 1950s, a largely docile academic community celebrated
capitalism in general and U.S. capitalism in particular. The good in U.S. society was
capitalism's gift. The rest resulted from government or foreign or ideological interferences in
capitalism's wonderful invisible hand. Any person or group excluded from this American Dream
had only themselves to blame for inadequate ability, insufficient effort, or ideological
deviancy.
In this context, U.S. capitalism strode confidently toward the 21st century. The Soviet
threat had imploded. A divided Europe threatened no U.S. interests. Its individual nations
competed for U.S. favor (especially the UK). China's poverty blocked its becoming an economic
competitor. U.S. military and technological supremacy seemed insurmountable.
Amid success, internal contradictions surfaced. U.S. capitalism crashed three times. The
first happened early in 2000 (triggered by dot-com share-price inflation); next came the big
crash of 2008 (triggered by defaulting subprime mortgages); and the hugest crash hit in 2020
(triggered by COVID-19). Unprepared economically, politically, and ideologically for any of
them, the Federal Reserve responded by creating vast sums of new money that it threw at/lent to
(at historically low interest rates) banks, large corporations, etc. Three successive exercises
in trickle-down economic policy saw little trickle down. No underlying economic problems
(inequality, excess systemic debts, cyclical instability, etc.) have been solved. On the
contrary, all worsened. In other words, class war has been intensified.
What then is to be done? First, we need to recognize the class war that is underway and
commit to fighting it. On that basis, we must organize a mass base to put real political force
behind social democratic policies, parties, and politicians. We need something like the New
Deal coalition. The pandemic, economic crash, and gross official policy failures (including
violent official scapegoating) draw many toward classical social democracy. The successes of
the Democratic Socialists of America show this.
Second, we must face a major obstacle. Since 1945, capitalists and their supporters
developed arguments and institutions to undo the New Deal and its leftist legacies. They
silenced, deflected, co-opted, and/or demonized criticisms of capitalism. Strategic decisions
made by both the U.S. New Deal and European social democracy contributed to their defeats. Both
always left and still leave employers exclusively in positions to (1) receive and dispense
their enterprises' profits and (2) decide and direct what, how, and where their enterprises
produce. Those positions gave capitalists the financial resources and power -- politically,
economically, and culturally -- repeatedly to outmaneuver and repress labor and the left.
Third, to newly organized versions of a New Deal coalition or of social democracy, we must add a new element. We cannot
again leave capitalists in the exclusive positions to receive enterprise profits and make major enterprise decisions. The
new element is thus the demand to change enterprises producing goods and services. From hierarchical, capitalist organizations
(where owners, boards of directors, etc., occupy the employer position) we need to transition to the altogether different
democratic, worker co-op organizations. In the latter, no employer/employee split occurs. All workers have equal voice in
deciding what gets produced, how, and where and how any profits get used. The collective of all employees is their own employer.
As such an employer, the employees will finally protect and thus secure the reforms associated with the New Deal and social
democracy.
We could describe the transition from capitalist to worker co-op enterprise organizations as
a revolution. That would resolve the old debate of reform versus revolution. Revolution becomes
the only way finally to secure progressive reforms. Capitalism's reforms were generated by the
system's impacts on people and their resulting demands for change. Capitalism's resistances to
those reforms -- and undoing them after they happened -- spawned the revolution needed to
secure them. In that revolution, society moves beyond capitalism itself. So it was in the
French Revolution: demands for reform within feudal society could only finally be realized by a
social transition from feudalism to capitalism.
"... It's a commonplace to say the primary job of police is to "protect and serve," but that's not their goal in the way it's commonly understood -- not in the deed, the practice of what they daily do, and not true in the original intention, in why police departments were created in the first place. "Protect and serve" as we understand it is just the cover story. ..."
"... Urban police forces in America were created for one purpose -- to "maintain order" after a waves of immigrants swept into northern U.S. cities, both from abroad and later from the South, immigrants who threatened to disturb that "order." The threat wasn't primarily from crime as we understand it, from violence inflicted by the working poor on the poor or middle class. The threat came from unions, from strikes, and from the suffering, the misery and the anger caused by the rise of rapacious capitalism. ..."
"... What's being protected? The social order that feeds the wealthy at the expense of the working poor. Who's being served? Owners, their property, and the sources of their wealth, the orderly and uninterrupted running of their factories. The goal of police departments, as originally constituted, was to keep the workers in line, in their jobs, and off the streets. ..."
"... In most countries, the police are there solely to protect the Haves from the Have-Nots. In fact, when the average frustrated citizen has trouble, the last people he would consider turning to are the police. ..."
"... Jay Gould, a U.S. robber baron, is supposed to have claimed that he could hire one half of the working class to kill the other half. ..."
"... I spent some time in the Silver Valley of northern Idaho. This area was the hot bed of labor unrest during the 1890's. Federal troops controlled the area 3 separate times,1892, 1894 and 1899. Twice miners hijacked trains loaded them with dynamite and drove them to mining company stamping mills that they then blew up. Dozens of deaths in shoot outs. The entire male population was herded up and placed in concentration camps for weeks. The end result was the assassination of the Governor in 1905. ..."
"... Interestingly this history has been completely expunged. There is a mining museum in the town which doesn't mention a word on these events. Even nationwide there seems to be a complete erasure of what real labor unrest can look like.. ..."
"... Straight-up fact: The police weren't created to preserve and protect. They were created to maintain order, [enforced] over certain subjected classes and races of people, including–for many white people, too–many of our ancestors, too.* ..."
Yves here. Tom mentions in passing the role
of Pinkertons as goons for hire to crush early labor activists. Some employers like Ford went as far as forming private armies for
that purpose. Establishing police forces were a way to socialize this cost.
[In the 1800s] the police increasingly presented themselves as a thin blue line protecting civilization, by which they meant
bourgeois civilization, from the disorder of the working class.
-- Sam Mitrani
here
It's a commonplace to say the primary job of police is to "protect and serve," but that's not their goal in the way it's commonly
understood -- not in the deed, the practice of what they daily do, and not true in the original intention, in why police departments
were created in the first place. "Protect and serve" as we understand it is just the cover story.
To understand the true purpose of police, we have to ask, "What's being protected?" and "Who's being served?"
Urban police forces in America were created for one purpose -- to "maintain order" after a waves of immigrants swept into northern
U.S. cities, both from abroad and later from the South, immigrants who threatened to disturb that "order." The threat wasn't primarily
from crime as we understand it, from violence inflicted by the working poor on the poor or middle class. The threat came from unions,
from strikes, and from the suffering, the misery and the anger caused by the rise of rapacious capitalism.
What's being protected? The social order that feeds the wealthy at the expense of the working poor. Who's being served? Owners,
their property, and the sources of their wealth, the orderly and uninterrupted running of their factories. The goal of police departments,
as originally constituted, was to keep the workers in line, in their jobs, and off the streets.
Looking Behind Us
The following comes from an
essay
published at the blog of the Labor and Working-Class History Association, an academic group for teachers of labor studies, by
Sam Mitrani, Associate Professor of History at the College of DuPage and author of The Rise of the Chicago Police
Department: Class and Conflict, 1850-1894 .
According to Mitrani, "The police were not created to protect and serve the population. They were not created to stop crime, at
least not as most people understand it. And they were certainly not created to promote justice. They were created to protect the
new form of wage-labor capitalism that emerged in the mid to late nineteenth century from the threat posed by that system's offspring,
the working class."
Keep in mind that there were no police departments anywhere in Europe or the U.S. prior to the 19th century -- in fact, "anywhere
in the world" according to Mitrani. In the U.S., the North had constables, many part-time, and elected sheriffs, while the South
had slave patrols. But nascent capitalism soon created a large working class, and a mass of European immigrants, "yearning to be
free," ended up working in capitalism's northern factories and living in its cities.
"[A]s Northern cities grew and filled with mostly immigrant wage workers who were physically and socially separated from the
ruling class, the wealthy elite who ran the various municipal governments hired hundreds and then thousands of armed men to impose
order on the new working class neighborhoods ." [emphasis added]
America of the early and mid 1800s was still a world without organized police departments. What the
Pinkertons were to strikes , these
"thousands of armed men" were to the unruly working poor in those cities.
Imagine this situation from two angles. First, from the standpoint of the workers, picture the oppression these armed men must
have represented, lawless themselves yet tasked with imposing "order" and violence on the poor and miserable, who were frequently
and understandably both angry and drunk. (Pre-Depression drunkenness, under this interpretation, is not just a social phenomenon,
but a political one as well.)
Second, consider this situation from the standpoint of the wealthy who hired these men. Given the rapid growth of capitalism during
this period, "maintaining order" was a costly undertaking, and likely to become costlier. Pinkertons, for example, were hired at
private expense, as were the "thousands of armed men" Mitrani mentions above.
The solution was to offload this burden onto municipal budgets. Thus, between 1840 and 1880, every major northern city
in America had created a substantial police force, tasked with a single job, the one originally performed by the armed men paid by
the business elites -- to keep the workers in line, to "maintain order" as factory owners and the moneyed class understood it.
"Class conflict roiled late nineteenth century American cities like Chicago, which experienced major strikes and riots in 1867,
1877, 1886, and 1894. In each of these upheavals, the police attacked strikers with extreme violence, even if in 1877 and 1894 the
U.S. Army played a bigger role in ultimately repressing the working class. In the aftermath of these movements, the police increasingly
presented themselves as a thin blue line protecting civilization , by which they meant bourgeois civilization, from the disorder
of the working class. This ideology of order that developed in the late nineteenth century echoes down to today – except that today,
poor black and Latino people are the main threat, rather than immigrant workers."
That "thin blue line protecting civilization" is the same blue line we're witnessing today. Yes, big-city police are culturally
racist as a group; but they're not just racist. They dislike all the "unwashed." A
recent study that reviewed "all the data
available on police shootings for the year 2017, and analyze[d] it based on geography, income, and poverty levels, as well as race"
revealed the following remarkable pattern:
" Police violence is focused overwhelmingly on men lowest on the socio-economic ladder : in rural areas outside the
South, predominately white men; in the Southwest, disproportionately Hispanic men; in mid-size and major cities, disproportionately
black men. Significantly, in the rural South, where the population is racially mixed, white men and black men are killed by police
at nearly identical rates."
As they have always been, the police departments in the U.S. are a violent force for maintaining an order that separates and protects
society's predator class from its victims -- a racist order to be sure, but a class-based order as well.
Looking Ahead
We've seen the violence of the police as visited on society's urban poor (and anyone else, poor or not, who happens to be the
same race and color as the poor too often are), and we've witnessed the violent reactions of police to mass protests challenging
the racism of that violence.
But we've also seen the violence of police during the mainly white-led Occupy movement (one instance
here ; note that while the officer involved
was fired, he was also compensated $38,000 for "suffering he experienced after the incident").
So what could we expect from police if there were, say, a national, angry, multiracial rent strike with demonstrations? Or a student
debt s trike? None of these possibilities are off the table, given the
economic damage -- most of it still unrealized -- caused by the current Covid crisis.
Will police "protect and serve" the protesters, victims of the latest massive
transfer of wealth
to the already massively wealthy? Or will they, with violence, "maintain order" by maintaining elite control of the current predatory
system?
If Mitrani is right, the latter is almost certain.
Possible solutions? One, universal public works system for everyone 18-20. [Avoiding armed service because that will never
happen, nor peace corp.] Not allow the rich to buy then or their children an out. Let the billionaires children work along side
those who never had a single family house or car growing up.
Two, eliminate suburban school districts and simply have one per state, broken down into regional areas. No rich [or white]
flight to avoid poor systems. Children of differing means growing up side by side. Of course the upper class would simply send
their children to private schools, much as the elite do now anyway.
Class and privilege is the real underlying issue and has been since capital began to be concentrated and hoarded as the article
points out. It has to begin with the children if the future is to really change in a meaningful way.
I would add items targeted as what is causing inequality. Some of these might be:
1). Abolish the Federal Reserve. It's current action since 2008 are a huge transfer of wealth from us to the wealthy. No more
Quantitative Easing, no Fed buying of stocks or bonds.
2). Make the only retirement and medical program allowed Congress and the President, Social Security and Medicare. That will
cause it to be improved for all of us.
3). No stock ownership allowed for Congress folk while serving terms. Also, rules against joining those leaving Congress acting
as lobbyists.
4). Something that makes it an iron rule that any law passed by Congress and the President, must equally apply to Congress
and the President. For example, no separate retirement or healthcare access, but have this more broadly applied to all aspects
of legislation and all aspects of life.
I think you'd also have to legalize drugs and any other thing that leads creation of "organized ciminal groups." Take away
the sources that lead to the creation of the well-armed gangs that control illegal activities.
Unfortunately, legalising drugs in itself, whatever the abstract merits, wouldn't solve the problem. Organised crime would
still have a major market selling cut-price, tax-free or imitation drugs, as well, of course, as controlled drugs which are not
allowed to be sold to just anybody now. Organised crime doesn't arise as a result of prohibitions, it expands into new areas thanks
to them, and often these areas involve smuggling and evading customs duties. Tobacco products are legal virtually everywhere,
but there's a massive criminal trade in smuggling them from the Balkans into Italy, where taxes are much higher. Any time you
create a border, in effect, you create crime: there is even alcohol smuggling between Sweden and Norway. Even when activities
are completely legal (such as prostitution in many European countries) organised crime is still largely in control through protection
rackets and the provision of "security."
In effect, you'd need to abolish all borders, all import and customs duties and all health and safety and other controls which
create price differentials between states. And OC is not fussy, it moves from one racket to another, as the Mafia did in the 1930s
with the end of prohibition. To really tackle OC you'd need to legalise, oh, child pornography, human trafficking, sex slavery,
the trade in rare wild animals, the trade in stolen gems and conflict diamonds, internet fraud and cyberattacks, and the illicit
trade in rare metals, to name, as they say, but a few. As Monty Python well observed, the only way to reduce the crime rate (and
hence the need for the police) is to reduce the number of criminal offences. Mind you, if you defund the police you effectively
legalise all these things anyway.
I dunno, ending Prohibition sure cut down on the market for bootleg liquor. It's still out there, but the market is nothing
like what it once was.
Most people, even hardcore alcoholics, aren't going to go through the hassle of buying rotgut of dubious origin just to save
a few dimes, when you can go to the corner liquor store and get a known product, no issues with supply 'cause your dealer's supplier
just got arrested.
For that matter, OC is still definitely out there, but it isn't the force that it was during Prohibition, or when gambling
was illegal.
As an aside, years ago, I knew a guy whose father had worked for Meyer Lansky's outfit, until Prohibition put him and others
out of a job. As a token of his loyal service, the outfit gave him a (legal) liquor store to own and run.
Yes, but in Norway, for example, you'd pay perhaps $30 for a six-pack of beer in a supermarket, whereas you'd pay half that
to somebody selling beers out of the back of a car. In general people make too much of the Prohibition case, which was geographically
and politically very special, and a a stage in history when OC was much less sophisticated. The Mob diversified into gambling
and similar industries (higher profits, fewer risks). These days OC as a whole is much more powerful and dangerous, as well as
sophisticated, than it was then, helped by globalisation and the Internet.
I think ending prohibitions on substances, would take quite a bite out of OC's pocketbook. and having someone move trailers
of ciggarettes of bottles of beer big deal. That isn't really paying for the lifestyle.and it doesn't buy political protection.
An old number I saw @ 2000 . the UN figured(guess) that illegal drugs were @ 600 billion dollars/year industry and most of that
was being laundered though banks. Which to the banking industry is 600 billion in cash going into it's house of mirrors. Taking
something like that out of the equation EVERY YEAR is no small thing. And the lobby from the OC who wants drugs kept illegal,
coupled with the bankers who want the cash inputs equals a community of interest against legalization
and if the local police forces and the interstate/internationals were actually looking to use their smaller budgets and non-bill
of rights infringing tactics, on helping the victim side of crimes then they could have a real mission/ Instead of just abusing
otherwise innocent people who victimize no one.
so if we are looking for "low hanging fruit" . ending the war on drugs is a no brainer.
"What's being protected? The social order that feeds the wealthy at the expense of the working poor. " – Neuberger
In the aftermath of these movements, the police increasingly presented themselves as a thin blue line protecting civilization,
by which they meant bourgeois civilization, from the disorder of the working class. – Mitrani
I think this ties in, if only indirectly, with the way so many peaceful recent protests seemed to turn violent after the police
showed up. It's possible I suppose the police want to create disorder to frighten not only the protestors with immediate harm
but also frighten the bourgeois about the threate of a "dangerous mob". Historically violent protests created a political backlash
that usually benefited political conservatives and the wealthy owners. (The current protests may be different in this regard.
The violence seems to have created a political backlash against conservatives and overzealous police departments' violence. )
My 2 cents.
Sorry, but the title sent my mind back to the days of old -- of old Daley, that is, and his immortal quote from 1968: "Gentlemen,
let's get the thing straight, once and for all. The policeman isn't there to create disorder; the policeman is there to preserve
disorder."
LOL!!! great quote. Talk about saying it the way it is.
It kind of goes along with, "Police violence is focused overwhelmingly on men lowest on the socio-economic ladder: in rural
areas outside the South, predominately white men; in the Southwest, disproportionately Hispanic men; in mid-size and major cities,
disproportionately black men. Significantly, in the rural South, where the population is racially mixed, white men and black men
are killed by police at nearly identical rates."
I bang my head on the table sometimes because poor white men and poor men of color are so often placed at odds when they increasingly
face (mostly) the same problems. God forbid someone tried to unite them, there might really be some pearl clutching then.
yeah, like Martin Luther King's "poor people's campaign". the thought of including the poor ,of all colors .. just too much
for the status quo to stomach.
The "mechanism" that keeps masses in line . is one of those "invisible hands" too.
Great response! I am sure you have more to add to this. A while back, I was researching the issues you state in your last paragraph.
Was about ten pages into it and had to stop as I was drawn out of state and country. From my research.
While not as overt in the 20th century, the distinction of black slave versus poor white man has kept the class system alive
and well in the US in the development of a discriminatory informal caste system. This distraction of a class level lower than
the poorest of the white has kept them from concentrating on the disproportionate, and growing, distribution of wealth and income
in the US. For the lower class, an allowed luxury, a place in the hierarchy and a sure form of self esteem insurance.
Sennett and Cobb (1972) observed that class distinction sets up a contest between upper and lower class with the lower social
class always losing and promulgating a perception amongst themselves the educated and upper classes are in a position to judge
and draw a conclusion of them being less than equal. The hidden injury is in the regard to the person perceiving himself as a
piece of the woodwork or seen as a function such as "George the Porter." It was not the status or material wealth causing the
harsh feelings; but, the feeling of being treated less than equal, having little status, and the resulting shame. The answer for
many was violence.
James Gilligan wrote "Violence; Reflections on A National Epidemic." He worked as a prison psychiatrist and talked with many
of the inmates of the issues of inequality and feeling less than those around them. His finding are in his book which is not a
long read and adds to the discussion.
A little John Adams for you.
" The poor man's conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind
takes no notice of him. He rambles unheeded.
In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar.
He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable
."
likbez, June 19, 2020 at 3:18 pm
That's a very important observation.
Racism, especially directed toward blacks, along with "identity wedge," is a perfect tool for disarming poor white, and suppressing
their struggle for a better standard of living, which considerably dropped under neoliberalism.
In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals manage
to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress the
protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network.
This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, "Floydgate" can be viewed as a variation on the same
theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and social
protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence against
blacks.
This is another way to explain "What's the matter with Kansas" effect.
John Anthony La Pietra, June 19, 2020 at 6:20 pm
I like that one! - and I have to admit it's not familiar to me, though I've been a fan since before I got to play him in a
neighboring community theater. Now I'm having some difficulty finding it. Where is it from, may I ask?
run75441, June 20, 2020 at 7:56 am
JAL:
Page 239, "The Works of John Adams, Second President of the United States."
Read the book "Violence: Reflections of A National Epidemic" . Not a long read and well documented.
MLK Jr. tried, and look what happened to him once he really got some traction. If the Rev. William Barber's Poor People's Campaign
picks up steam, I'm afraid the same thing will happen to him.
I wish it were only pearl-clutching that the money power would resort to, but that's not the way it works.
Yeah – that quote struck me too, never seen it before. At times when they feel so liberated to 'say the quiet part out loud',
then as now, you know the glove is coming off and the vicious mailed fist is free to roam for victims.
Those times are where you know you need to resist or .well, die in many cases.
That's something that really gets me in public response to many of these things. The normal instinct of the populace to wake
from their somnambulant slumber just long enough to ascribe to buffoonery and idiocy ala Keystone Cops the things so much better
understood as fully consciously and purposefully repressive, reactionary, and indicating a desire to take that next step to crush
fully. To obliterate.
Many responses to this – https://twitter.com/oneunderscore__/status/1273809160128389120
– are like, 'the police are dumb', 'out of touch', 'a lot of dumb gomer pyles in that room, yuk yuk yuk'. Or, 'cops/FBI are
so dumb to pursue this antifa thing, its just a boogieman' thinking that somehow once the authorities realize 'antifa' is a boogieman,
their attitudes towards other protesters will somehow be different 'now that they realize the silliness of the claims'.
No, not remotely the case – to a terrifyingly large percentage of those in command, and in rank & file they know exactly where
it came from, exactly how the tactics work, and have every intention of classifying all protesters (peaceful or not) into that
worldview. The peaceful protesters *are* antifa in their eyes, to be dealt with in the fully approved manner of violence and repression.
In most countries, the police are there solely to protect the Haves from the Have-Nots. In fact, when the average frustrated
citizen has trouble, the last people he would consider turning to are the police.
This is why in the Third World, the only job of lower social standing than "policeman" is "police informer".
The anti-rascist identity of the recent protests rests on a much larger base of class warfare waged over the past 40 years
against the entire population led by a determined oligarchy and enforced by their political, media and militarized police retainers.
This same oligarchy, with a despicable zeal and revolting media-orchestrated campaign–co-branding the movement with it's usual
corporate perpetrators– distorts escalating carceral and economic violence solely through a lens of racial conflict and their
time-tested toothless reforms. A few unlucky "peace officers" may have to TOFTT until the furor recedes, can't be helped.
Crowding out debt relief, single payer health, living wages, affordable housing and actual justice reform from the debate that
would benefit African Americans more than any other demographic is the goal.
The handful of Emperors far prefer kabuki theater and random ritual Seppuku than facing the rage of millions of staring down
the barrel of zero income, debt, bankruptcy, evictions and dispossession. The Praetorians will follow the money as always.
I suppose we'll get some boulevards re-named and a paid Juneteenth holiday to compensate for the destruction 100+ years of
labor rights struggle, so there's that..
Homestead, Ludlow, Haymarket, Matewan -- the list is long
Working men and women asking for justice gunned down by the cops. There will always be men ready to murder on command as long
as the orders come from the rich and powerful. We are at a moment in history folks were some of us, today mostly people of color,
are willing to put their lives on the line. It's an ongoing struggle.
So how can a tier of society(the police) . be what a society needs ? When as this story and many others show how and why the
police were formed. To break heads. When they have been "the tool" of the elite forever. When so many of them are such dishonest,
immoral, wanna be fascists. And the main direction of the US is towards a police state and fascists running the show . both
republican and democrat. With technology being the boot on the neck of the people and the police are there to take it to the streets.
Can those elusive "good apples" turn the whole rotten barrel into sweet smelling apple pie? That is a big ask.
Or should the structure be liquidated, sell their army toys. fill the ranks with people who are not pathological liars and
abusers and /or racists; of one sort or another. Get rid of the mentality of overcompensation by uber machismo. and make them
watch the andy griffith show. They ought to learn that they can be respected if they are good people, and that they are not respected
because they seek respect through fear and intimidation.
Is that idiot cry of theirs, .. the whole yelling at you; demanding absolute obedience to arbitrary ,assinine orders, really
working to get them respect or is it just something they get off on?
When the police are shown to be bad, they strike by work slowdown, or letting a little chaos loose themselves. So the people
know they need them So any reform of the police will go through the police not doing their jobs . but then something like better
communities may result. less people being busted and harassed , or pulled over for the sake of a quota . may just show we don't
need so much policing anyway. And then if the new social workers brigade starts intervening in peoples with issues when they are
young and in school maybe fewer will be in the system. Couple that with the police not throwing their family in jail for nothing,
and forcing them to pay fines for breaking stupid laws. The system will have less of a load, and the new , better cops without
attitudes will be able to handle their communities in a way that works for everyone. Making them a net positive, as opposed to
now where they are a net negative.
Also,
The drug war is over. The cops have only done the bidding of the organized criminal elements who make their bread and butter
because of prohibition.
Our representatives can legally smoke pot , and grow it in their windowboxes in the capital dc., but people in many places
are still living in fear of police using possession of some substance,as a pretext to take all their stuff,throw them in jail.
But besides the cops, there are the prosecutors . they earn their salaries by stealing it from poor people through fines for things
that ought to be legal. This is one way to drain money from poor communities, causing people to go steal from others in society
to pay their court costs.
And who is gonna come and bust down your door when you can't pay a fine and choose to pay rent and buy your kids food instead
. the cops. just doing their jobs. Evil is the banality of business as usual
The late Kevin R C O'Brien noted that in every case where the Police had been ordered to "Round up the usual suspects" they
have done so, and delivered them where ordered. It did not matter who the "Usual suspects" were, or to what fate they were
to be delivered. They are the King's men and they do the King's bidding.
To have a reasonable discussion, I think that it should be recognized that modern police are but one leg of a triad. The first
of course is the police who appear to seem themselves as not part of a community but as enforcers in that community. To swipe
an idea from Mao, the police should move amongst the people as a fish swims in the sea. Not be a patrolling shark that attacks
who they want at will knowing that there will be no repercussions against them. When you get to the point that you have police
arresting children in school for infractions of school discipline – giving them a police record – you know that things have gotten
out of hand.
The next leg is the courts which of course includes prosecutors. It is my understanding that prosecutors are elected to office
in the US and so have incentives to appear to be tough on crime"" . They seem to operate more like 'Let's Make a Deal' from what
I have read. When they tell some kid that he has a choice of 1,000 years in prison on trumped up charges or pleads guilty to a
smaller offence, you know that that is not justice at work. Judges too operate in their own world and will always take the word
of a policeman as a witness.
And the third leg is the prisons which operate as sweatshops for corporate America. It is in the interest of the police and
the courts to fill up the prisons to overflowing. Anybody remember the Pennsylvania "kids for cash" scandal where kids lives were
being ruined with criminal records that were bogus so that some people could make a profit? And what sort of prison system is
it where a private contractor can build a prison without a contract at all , knowing that the government (California in
this case) will nonetheless fill it up for a good profit.
In short, in sorting out police doctrine and methods like is happening now, it should be recognized that they are actually
only the face of a set of problems.
How did ancient states police? Perhaps Wiki is a starting point of this journey. Per Its entry, Police, in ancient Greece,
policing was done by public owned slaves. In Rome, the army, initially. In China, prefects leading to a level of government
called prefectures .
I spent some time in the Silver Valley of northern Idaho. This area was the
hot bed of labor unrest during
the 1890's. Federal troops controlled the area 3 separate times,1892, 1894 and 1899. Twice miners hijacked trains loaded them
with dynamite and drove them to mining company stamping mills that they then blew up. Dozens of deaths in shoot outs. The entire
male population was herded up and placed in concentration camps for weeks. The end result was the assassination of the Governor
in 1905.
Interestingly this history has been completely expunged. There is a mining museum in the town which doesn't mention a word
on these events. Even nationwide there seems to be a complete erasure of what real labor unrest can look like..
Yeah, labor unrest does get swept under the rug. Howard zinn had examples in his works "the peoples history of the United States"
The pictched battles in upstate new york with the Van Rennselear's in the 1840's breaking up rennselearwyk . the million acre
estate of theirs . it was a rent strike.
People remembering , we have been here before doesn't help the case of the establishment so they try to not let it happen.
We get experts telling us . well, this is all new we need experts to tell you what to think. It is like watching the
footage from the past 100 years on film of blacks marching for their rights and being told.. reform is coming.. the more things
change, the more things stay the same. Decade after decade. Century after century. Time to start figuring this out people. So,
the enemy is us. Now what?
Doubtless the facts presented above are correct, but shouldn't one point out that the 21st century is quite different from
the 19th and therefore analogizing the current situation to what went on before is quite facile? For example it's no longer necessary
for the police to put down strikes because strike actions barely still exist. In our current US the working class has diminished
greatly while the middle class has expanded. We are a much richer country overall with a lot more people–not just those one percenters–concerned
about crime. Whatever one thinks of the police, politically an attempt to go back to the 18th century isn't going to fly.
" the 21st century is quite different from the 19th "
From the Guardian: "How Starbucks, Target, Google and Microsoft quietly fund police through private donations"
More than 25 large corporations in the past three years have contributed funding to private police foundations, new report
says.
These foundations receive millions of dollars a year from private and corporate donors, according to the report, and are
able to use the funds to purchase equipment and weapons with little public input. The analysis notes, for example, how the
Los Angeles police department in 2007 used foundation funding to purchase surveillance software from controversial technology
firm Palantir. Buying the technology with private foundation funding rather than its public budget allowed the department to
bypass requirements to hold public meetings and gain approval from the city council.
The Houston police foundation has purchased for the local police department a variety of equipment, including Swat equipment,
sound equipment and dogs for the K-9 unit, according to the report. The Philadelphia police foundation purchased for its police
force long guns, drones and ballistic helmets, and the Atlanta police foundation helped fund a major surveillance network of
over 12,000 cameras.
In addition to weaponry, foundation funding can also go toward specialized training and support programs that complement
the department's policing strategies, according to one police foundation.
"Not a lot of people are aware of this public-private partnership where corporations and wealthy donors are able to siphon
money into police forces with little to no oversight," said Gin Armstrong, a senior research analyst at LittleSis.
Maybe it is just me, but things don't seem to be all that different.
While it is true, this is a new century. Knowing how the present came to be, is entirely necessary to be able to attempt any
move forward.
The likelihood of making the same old mistakes is almost certain, if one doesn't try to use the past as a reference.
And considering the effect of propaganda and revisionism in the formation of peoples opinions, we do need " learning against learning"
to borrow a Jesuit strategy against the reformation, but this time it should embrace reality, rather than sow falsehoods.
But I do agree,
We have never been here before, and now is a great time to reset everything. With all due respect to "getting it right" or at
least "better".
and knowing the false fables of righteousness, is what people need to know, before they go about "burning down the house".
You know it's not as though white people aren't also afraid of the police. Alfred Hitchcock said he was deathly afraid of police
and that paranoia informed many of his movies. Woody Allen has a funny scene in Annie Hall where he is pulled over by a cop and
is comically flustered. White people also get shot and killed by the police as the rightwingers are constantly pointing out.
And thousands of people in the streets tell us that police reform is necessary. But the country is not going to get rid of
them and replace police with social workers so why even talk about it? I'd say the above is interesting .not terribly relevant.
Straight-up fact: The police weren't created to preserve and protect. They were created to maintain order, [enforced] over
certain subjected classes and races of people, including–for many white people, too–many of our ancestors, too.*
And the question that arises from this: Are we willing to the subjects in a police state? Are we willing to continue to let
our Black and brown brothers and sisters be subjected BY such a police state, and to half-wittingly be party TO it?
Or do we want to exercise AGENCY over "our" government(s), and decide–anew–how we go out our vast, vast array of social ills.
Obviously, armed police officers with an average of six months training–almost all from the white underclass–are a pretty f*cking
blunt instrument to bring to bear.
On our own heads. On those who we and history have consigned to second-class citizenship.
Warning: this is a revolutionary situation. We should embrace it.
*Acceding to white supremacy, becoming "white" and often joining that police order, if you were poor, was the road out of such
subjectivity. My grandfather's father, for example, was said to have fled a failed revolution in Bohemia to come here. Look back
through history, you will find plenty of reason to feel solidarity, too. Race alone cannot divide us if we are intent on the lessons
of that history.
"... While not as overt in the 20th century, the distinction of black slave versus poor white man has kept the class system alive and well in the US in the development of a discriminatory informal caste system. ..."
"... a class level lower than the poorest of the white has kept them from concentrating on the disproportionate, and growing, distribution of wealth and income in the US. ..."
"... It was not the status or material wealth causing the harsh feelings; but, the feeling of being treated less than equal, having little status, and the resulting shame. ..."
"... In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals manage to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress the protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network. ..."
"... This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, “Floydgate” can be viewed as a variation on the same theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and social protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence against blacks. ..."
...A while back, I was researching the issues you state in your last paragraph. Was about ten pages into it and had to stop
as I was drawn out of state and country.
From my research.
While not as overt in the 20th century, the distinction of black slave versus poor white man has kept the class system
alive and well in the US in the development of a discriminatory informal caste system.
This distraction of a class level lower than the poorest of the white has kept them from concentrating on the disproportionate,
and growing, distribution of wealth and income in the US.
For the lower class, an allowed luxury, a place in the hierarchy and a sure form of self esteem insurance.
Sennett and Cobb (1972) observed that class distinction sets up a contest between upper and lower class with the lower social
class always losing and promulgating a perception amongst themselves the educated and upper classes are in a position to judge
and draw a conclusion of them being less than equal.
The hidden injury is in the regard to the person perceiving himself as a piece of the woodwork or seen as a function such as
"George the Porter."
It was not the status or material wealth causing the harsh feelings; but, the feeling of being treated less than equal,
having little status, and the resulting shame.
The answer for many was violence.
James Gilligan wrote "Violence; Reflections on A National Epidemic." He worked as a prison psychiatrist and talked with many
of the inmates of the issues of inequality and feeling less than those around them. His finding are in his book which is not a
long read and adds to the discussion.
A little John Adams for you.
"The poor man's conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind
takes no notice of him. He rambles unheeded.
In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar.
He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable."
likbez June 19, 2020 1:25 pm
That’s a very important observation. Racism, especially directed toward blacks, along with “identity wedge,” is a perfect tool
for disarming poor white, and suppressing their struggle for a better standard of living, which considerably dropped under neoliberalism.
In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals
manage to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress
the protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network.
This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, “Floydgate” can be viewed as a variation on
the same theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and
social protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence
against blacks.
This is another way to explain “What’s the matter with Kansas” effect.
"... Anti-racism as an ideology serves a perfect function for corporations that ultimately take workers for granted. ..."
"... Today, we find Lincoln statues desecrated . Neither has the memorial to the 54th Massachusetts Infantry , one of the first all-black units in the Civil War, survived the recent protests unscathed. To many on the left, history seems like the succession of one cruelty by the next. And so, justice may only be served if we scrap the past and start from a blank slate. As a result, Lincoln's appeal that we stand upright and enjoy our liberty gets lost to time. ..."
"... Ironically, this will only help the cause of Robert E. Lee -- and the modern corporations who rely on cheap, inhumane labor to keep themselves going. ..."
"... Before black slaves did this work, white indentured servants had. (An indentured servant is bound for a number of years to his master, i.e. he can't pack up and leave to find a new opportunity elsewhere.) ..."
"... But in the eyes of the Southern slavocracy, the white laboring poor of the North also weren't truly human. Such unholy antebellum figures as the social theorist George Fitzhugh or South Carolina Senator James Henry Hammond urged that the condition of slavery be expanded to include poor whites, too. Their hunger for a cheap, subservient labor source did not stop at black people, after all. ..."
"... Always remember Barbara Fields's formula: The need for cheap labor comes first; ideologies like white supremacy only give this bleak reality a spiritual gloss. ..."
"... Michael Lind argues in his new book The New Class War that many powerful businesses in America today continue to rely on the work of quasi indentured servants. Hungry for unfree, cheap workers, corporations in Silicon Valley and beyond employ tens of thousands of foreign workers through the H-2B visa program. These workers are bound to the company that provided them with the visa. If they find conditions at their jobs unbearable, they can't switch employers -- they would get deported first. In turn, this source of cheap labor effectively underbids American workers who could do the same job, except that they would ask for higher pay. ..."
"... We're getting turned into rats. Naturally, this is no fertile soil for solidarity. And with so many jobs precarious and subcontracted out on a temporary basis, there is preciously little that most workers can do to fight back this insidious managerial control. Free labor looks different. ..."
"... It's hard to come out of the 2020 primaries without realizing that the corporations that run our mainstream media will do anything to protect their right to abuse cheap labor. ..."
"... At this point in history, to the extent that black people suffer any meaningful oppression at all, its down to disproportionate poverty rates, not their racial background. ..."
"... I agree one hundred percent with your take on Biden. Let me add something else: he is a war hawk who not only voted for the Iraq war but used his position as the chairman of an important committee to promote it. ..."
"... Because of slavery alot of bad political policy was incorporated in the founding documents. If a police officer is about to wrongly arrest you because you are black , you do not care if his hatred stems from 400 years of discrimination against blacks. Rather you care that he won't kill you in this encounter because of his racism. ..."
"... Baszak believes racism has no life of its own, it exists only as a tool of the bosses. This is vulgar Marxism. At least since the decades after Bacon's Rebellion ended in 1677, poor whites have invested in white supremacy as a way of boosting their social status. Most Southern families owned no slaves, yet most joined the Civil War cause. ..."
"... They made a movie that beautifully touches this in the 1970s with Harvey Keitel and Richard Pryor called " Blue Collar ." ..."
"... "That's exactly what the company wants: to keep you on their line," says Smokey, the coolest and most strategically minded of the crew. "They'll do anything to keep you on their line. They pit the lifers against the new boys, the old against the young, the black against the white -- everybody -- to keep us in our place." ..."
"... The core thesis in this piece is the animating foundation of The Hill's political talk show "Rising." Composed of a populist Bernie supporter (Krystal Ball) and populist conservative (Saagar Enjeti) as hosts, they frequently highlight the purpose of woke cultural battles is to distract everyone for their neoliberal economic models ..."
Anti-racism as an ideology serves a perfect function for corporations that ultimately take workers for granted.
Former injured Amazon employees join labor organizers and community activists to demonstrate and hold a press conference
outside of an Amazon Go store to express concerns about what they claim is the company's "alarming injury rate" among warehouse
workers on December 10, 2019 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)
On April 2, 1865, in the dying days of the American Civil War, President Abraham Lincoln wandered the streets of burnt out Richmond,
the former Confederate capital. All of a sudden, Lincoln found himself surrounded by scores of emancipated men and women. Here's
how the historian James McPherson describes the moving episode in his magisterial book
Battle Cry of Freedom :
Several freed slaves touched Lincoln to make sure he was real. "I know I am free," shouted an old woman, "for I have seen Father
Abraham and felt him." Overwhelmed by rare emotions, Lincoln said to one black man who fell on his knees in front of him: "Don't
kneel to me. That is not right. You must kneel to God only, and thank Him for the liberty you will enjoy hereafter."
Lincoln's legacy as the Great Emancipator has survived the century and a half since then largely intact. But there have been cracks
in this image, mostly caused by questioning academics who decried him as an overt white supremacist. This view eventually entered
the mainstream when Nikole Hannah-Jones wrote misleadingly in her
lead essay
to the "1619 Project" that Lincoln "opposed black equality."
Today, we find Lincoln statues
desecrated . Neither has the memorial
to the 54th Massachusetts Infantry , one of the first all-black units in the Civil War, survived the recent protests unscathed.
To many on the left, history seems like the succession of one cruelty by the next. And so, justice may only be served if we scrap
the past and start from a blank slate. As a result, Lincoln's appeal that we stand upright and enjoy our liberty gets lost to time.
Ironically, this will only help the cause of Robert E. Lee -- and the modern corporations who rely on cheap, inhumane labor
to keep themselves going.
***
The main idea driving the "1619 Project" and so much of recent scholarship is that the United States of America originated in
slavery and white supremacy. These were its true founding ideals. Racism, Hannah-Jones writes, is in our DNA.
Such arguments don't make any sense, as the historian Barbara Fields clairvoyantly argued in a
groundbreaking essay from 1990. Why would Virginia planters in the 17th century import black people purely out of hate? No, Fields
countered, the planters were driven by a real need for dependable workers who would toil on their cotton, rice, and tobacco fields
for little to no pay. Before black slaves did this work, white indentured servants had. (An indentured servant is bound for a number
of years to his master, i.e. he can't pack up and leave to find a new opportunity elsewhere.)
After 1776 everything changed. Suddenly the new republic claimed that "all men are created equal" -- and yet there were millions
of slaves who still couldn't enjoy this equality. Racism helped to square our founding ideals with the brute reality of continued
chattel slavery: Black people simply weren't men.
But in the eyes of the Southern slavocracy, the white laboring poor of the North also weren't truly human. Such unholy antebellum
figures as the social theorist George Fitzhugh or South Carolina Senator James Henry Hammond
urged that the condition of slavery be expanded to include poor whites, too. Their hunger for a cheap, subservient labor source
did not stop at black people, after all.
Always remember Barbara Fields's formula: The need for cheap labor comes first; ideologies like white supremacy only give
this bleak reality a spiritual gloss.
The true cause of the Civil War -- and it bears constant
repeating for all the doubters -- was whether slavery would expand its reach or whether
"free labor" would reign supreme. The latter was the dominant
ideology of the North: Free laborers are independent, self-reliant, and eventually achieve economic security and independence by
the sweat of their brow. It's the American Dream. But if that is so, then the Civil War ended in a tie -- and its underlying conflict was never really settled.
***
Michael Lind argues in his new book The New Class War
that many powerful businesses in America today continue to rely on the work of quasi indentured servants. Hungry for unfree, cheap
workers, corporations in Silicon Valley and beyond employ tens of thousands of foreign workers through the H-2B visa program. These
workers are bound to the company that provided them with the visa. If they find conditions at their jobs unbearable, they can't switch
employers -- they would get deported first. In turn, this source of cheap labor effectively underbids American workers who could
do the same job, except that they would ask for higher pay.
America's wealth rests on this mutual competition between workers -- some nominally "free," others basically indentured -- whether
it be through unjust visa schemes or other unfair managerial practices.
Remember that the next time you read a public announcement by the Amazons of this world that they remain committed to "black lives
matter" and similar identitarian causes.
Fortunately, very few Americans hold the same racial resentments in their hearts as their ancestors did even just half a century
ago. Rarely did we agree as much than when the nation near unanimously condemned the death of George Floyd at the hands of a few
Minneapolis police officers. This is in keeping with another fortunate trend: Over the last 40 years, the rate of police killings
of young black men declined by 79% percent .
But anti-racism as an ideology serves a perfect function for our corporations, even despite the evidence that people in this country
have grown much less bigotted than they once were: As a management tool, anti-racism sows constant suspicion among workers who are
encouraged to detect white supremacist sentiments in everything that their fellow workers say or do.
We're getting turned into rats. Naturally, this is no fertile soil for solidarity. And with so many jobs precarious and subcontracted
out on a temporary basis, there is preciously little that most workers can do to fight back this insidious managerial control. Free
labor looks different.
And so, through a surprising back door, the true cause for which Robert E. Lee chose to betray his country might still be coming
out on top, whether we remove his statues or not -- namely, the steady supply to our ruling corporations of unfree workers willing
to hustle for scraps.
It's time to follow Abraham Lincoln's urging and get off our knees again. We should assert our rights as American citizens to
live free from economic insecurity and mutual resentment. The vast majority of us harbor no white supremacist views, period. Instead,
we have so many more things in common, and we know it.
Another anecdote from the last days of the Civil War, also taken from Battle Cry of Freedom, might prove instructive here: The
surrender of Lee's Army of Northern Virginia to Ulysses S. Grant at Appomattox Court House on April 9, 1865 essentially ended the
Civil War. The ceremony was held with solemn respect for Lee, though one of Grant's adjutants couldn't help himself but have a subtle
dig at Lee's expense:
After signing the papers, Grant introduced Lee to his staff. As he shook hands with Grant's military secretary Ely Parker,
a Seneca Indian, Lee stared a moment at Parker's dark features and said, "I am glad to see one real American here." Parker responded,
"We are all Americans."
Gregor Baszak is a PhD Candidate in English at the University of Illinois at Chicago and a writer. His articles have appeared
in Los Angeles Review of Books, Public Books, Spectator USA, Spiked, and elsewhere. Follow Gregor on Twitter at @gregorbas1.
It's a bit off-topic but this is a big reason I supported Bernie Sanders in the Democratic Primary this year, he was the only
candidate talking about how businesses demand that cheap labor, illegal labor, replace American labor. For this, the corporate
media called him a racist, an anti-semite, a dangerous radical. None of his opponents aside from Elizabeth Warren had anything
to run on aside from pseudo-woke touchy-feely bs. And somehow, with the media insisting that Joe Biden was the only one who could
beat Trump, we ended up with the one candidate who was neither good on economics, good for American workers, or offering platitudes
about wokeness.
It's hard to come out of the 2020 primaries without realizing that the corporations that run our mainstream media will do anything
to protect their right to abuse cheap labor.
Racism is very real. If it weren't it couldn't be used to "divide and conquer" the working calss. we can walk and chew gum
and the same time: oppose racism, and also oppose exploitive labor practices.
What kind of polemic, unsupported statement is "black fast food workers are the ones who gave us the fight for $15"? How about
it was a broad coalition of progressives (of all colors)? Moreover, $15 minimum wage is a poor, one-size-fits-all band-aid that
I doubt even fits ONE scenario. Tackling the broader shareholder capitalism model of labor arbitrage (free trade/mass immigration),
deunionization, and monopolistic hurdles drafted by corporations is where it actually matters. And on that, we are seeing the
inklings of a populist left-right coalition -- if corporate-funded race hustlers could only get out of the way.
That's the problem. We CAN'T chew gum and walk at the same time. Every minute focusing on racial friction is a minute NOT talking
about neoliberal economics. What's the ratio of air time, social media discussion, or newspaper inches are devoted to race vis-a-vis
the economic system that has starved the working class -- which is disproportionately black and brown? 10 to 1? 100 to 1? 1000
to 1? If there are no decent working class jobs for young black and brown men, then it makes it nearly impossible to raise families.
Let's be clear: Systemic racism is real, but it is far less impactful than economic injustices and family dissolution.
Class really isn't the primary issue for black people.
That's a frankly ridiculous statement. At this point in history, to the extent that black people suffer any meaningful oppression
at all, its down to disproportionate poverty rates, not their racial background. No one--except a few neurotic, high-strung corporate
HR PMC types--cares about "microaggressions". Even unjust police shootings of blacks are likely down to class and not race--despite
the politically correct narrative saying otherwise.
Putting racial identity politics as an equal (or even greater) priority than class-based solidarity creates an absurd system
where an upper-middle class black woman attending Yale can act as if a working class white man is oppressing her by not acknowledging
his "white privilege", and not bowing to her every demand. It's utterly delusional to think that sort of culture is going to create
a more just or equal world.
Biden is a Rorschach test, people see whatever they want in a party apparatchik. Trump has been Shiva, the destroyer of the
traditional Republican party. How else do you explain the support among Multi-Billionaires for the Democratic party. Truly ironic.
I agree one hundred percent with your take on Biden. Let me add something else: he is a war hawk who not only voted for the
Iraq war but used his position as the chairman of an important committee to promote it. I understand that he still wants to divide
Iraq into three separate countries--a decision for Iraqis to make and not us. If we try to implement that policy, it would doubtless
lead to more American deaths--to say nothing of Iraqi deaths.
So not only is he not good for American workers, he is not good for the American soldier who is disproportionately likely not
to be from the elite classes but rather from the working and lower-middle class.
The only other Democratic candidate who opposed war-mongering besides Sanders was Tulsi Gabbard. I watched CNN commentary after
a debate in which she participated. While the other participants received lots of commentary from CNN talking heads. she got almost
nothing. She was featured in a video montage of candidates saying "Trump"; other than that, she was invisible in the post-debate
analysis.
I don't know how far it travelled outside of Democratic primary voters, but I recall Biden's campaign saying that they were
planning to be sort of a placeholder that would pass the torch to the next generation. He's insinuated that he only wants to serve
one term and saw jumping into the race as the only way to beat Trump. Not the most exciting platform for the Democrats to run
on.
As depressing as this primary was, it's good to see that the rising generation of Democrats was resistant to platitudes and demanded
actual policy proposals.
Shame the party elders fell for the same old tricks yet again. I just hope that once there are more of
us, we can have a serious policy debate in both major parties about free trade, immigration, inequality. The parties' voters aren't
all that far apart on economics, yet neither of us is being given what we want. Whichever party sincerely takes a stand for the
American working class stands to dominate American politics for a generation.
The problem with Biden's "placeholder" comments is that he specifically mentioned it for Pete Buttigeig, the McKinsey-trained
career opportunist who believes in his bones the same neoliberal economics and interventionist foreign policies as the last generation.
Same bad ideas, new woke packaging.
Kamala Harris and Susan Rice, both tops on the VP list, will do just fine in place of Buttigieg - he's slated to revive TPP
as the new USTR cabinet lead.
Because of slavery alot of bad political policy was incorporated in the founding documents. If a police officer is about to
wrongly arrest you because you are black , you do not care if his hatred stems from 400 years of discrimination against blacks.
Rather you care that he won't kill you in this encounter because of his racism.
To me, I have always thought that America's original sin was slavery. Its stain can not be completely wiped out.
And I further believe that if Native Americans would have enslaved the newly arrived Europeans, and remained the ruling majority,
white people would be discriminated against today.
So the problem is not that white people are inherently evil, or other races are inherently good. It is that because of slavery
black people are bad, white people are good.
As a nation we have never been able to wash out the stain completely. Never will. Getting closer to the promised land is the
best we are going to do. Probably take another 400 years.
In everyday encounters no one cares how discrimination began, just treat me like you want to be treated. Pretty simple.
"As a management tool, anti-racism sows constant suspicion among workers who are encouraged to detect white supremacist sentiments
in everything that their fellow workers say or do."
The author does not offer one smidgen of proof that any company uses antiracism to divide workers. It might be plausible that
it's happened, but Baszak has no data at all.
Over the last 40 years, the rate of police killings of young black men declined by 79% percent.
You think this is an accident? It came about through intense pressure on the police to stop killing Black people -- exactly
the sort of racial emphasis the author seems to be decrying. Important to note that the non-fatal mistreatment has remained high.
The need for cheap labor comes first; ideologies like white supremacy only give this bleak reality a spiritual gloss
Baszak believes racism has no life of its own, it exists only as a tool of the bosses. This is vulgar Marxism. At least since
the decades after Bacon's Rebellion ended in 1677, poor whites have invested in white supremacy as a way of boosting their social
status. Most Southern families owned no slaves, yet most joined the Civil War cause. The psychological draw of racism, its cultural
strength, are obviated by Barszak. And I bet Barbara Fields does not consider racism an epiphenomenon of economics.
They made a movie that beautifully touches this in the 1970s with Harvey Keitel and Richard Pryor called "Blue
Collar."
"That's exactly what the company wants: to keep you on their line," says Smokey, the coolest and most strategically minded
of the crew. "They'll do anything to keep you on their line. They pit the lifers against the new boys, the old against the young,
the black against the white -- everybody -- to keep us in our place."
The core thesis in this piece is the animating foundation of The Hill's political talk show "Rising." Composed of a populist
Bernie supporter (Krystal Ball) and populist conservative (Saagar Enjeti) as hosts, they frequently highlight the purpose of woke
cultural battles is to distract everyone for their neoliberal economic models -- a system that actually has greater deleterious
impact on black communities.
This video is one recent example of what you'll rarely see in mainstream media:
Krystal Ball exposes the delusion of the American dream.
About Rising: Rising is a weekday morning show with bipartisan hosts that breaks the mold of
morning TV by taking viewers inside the halls of Washington power like never before. The show
leans into the day's political cycle with cutting edge analysis from DC insiders who can
predict what is going to happen.
It also sets the day's political agenda by breaking exclusive
news with a team of scoop-driven reporters and demanding answers during interviews with the
country's most important political newsmakers.
Got my degree just as the great recession hit. Couldn't find real work for 3 years, not
using my degree... But it was work. now after 8 years, im laid off. I did everything "right".
do good in school, go to college, get a job...
I've never been fired in my life. its always,
"Your contract is up" "Sorry we cant afford to keep you", "You can make more money collecting!
but we'll give a recommendation if you find anything."
Now I'm back where i started... only
now I have new house and a family to support... no pressure.
Sound too familiar? Sometime in the late 80s (??) Americans began to see day labors line up at Home Depot and Lowe's lots in numbers
not seen since The Great Depression. Manufacturing Corporations began subbing out their work to sub-contractors, otherwise known
as employees without benefits; Construction Contractors subbed out construction work to these employees without benefits; Engineering
Firms subbed out engineering to these employees without benefits; Landscapers' workers were now sub-contractors/independent contractors;
Here, in the SF Bay Area, time and again, we saw vans loads of undocumented Hispanics under a 'Labor Contractor' come in from the
Central Valley to build condos; the white Contractor for the project didn't have a single employee; none of the workers got a W-2.
Recall watching, sometime in the 90s (??), a familiar, well dressed, rotund guest from Wall Street, on the PBS News Hour, forcefully
proclaiming to the TV audience:
American workers are going to have to learn to compete with the Chinese; Civil Service employees, factory employees, are all
going to have to work for less
All this subcontracting, independent contractors, was a scam, a scam meant to circumvent paying going wages and benefits, to enhance
profit margins; a scam that transferred more wealth to the top. Meanwhile back at The Ranch, after the H1B Immigration Act of 1990,
Microsoft could hire programmers from India for one-half the cost of a citizen programmer. Half of Bill Gates' fortune was resultant
these labor savings; the other half was made off those not US Citizens. Taking a cue, Banks, Bio-Techs, some City and State Governments
began subcontracting out their programming to H1Bs. Often, the subcontractors/labor contractors (often themselves immigrants) providing
the programmers, held the programmers' passports/visas for security.
In the aftermath of Hurricane Katrina, friends of Bush/Cheney made fortunes on clean up contracts they subbed out for next to
nothing; the independent/subcontractor scam was now officially governmentally sanctioned.
By about 2000 we began to hear the term gig-workers applied to these employees without benefits. Uber appeared in 2007 to be followed
by Lift. Both are scams based on paying less than prevailing wages, on not providing worker benefits,
These days, the nightly news, when talking about the effect of the pandemic on the populace in America, shows footage of Food
Banks in California with lines 2! miles long. Many of those waiting in these lines didn't have a real job before; they were gig-workers;
they can't apply for Unemployment Benefits. It is estimated that 1.6 million American workers (1% of the workforce) are gig-workers;
they don't have a real job. That 1% is in addition to the 16 million American workers (10% of the workforce) that are independent
contractors. Of the more than 40 million currently unemployed Americans, some 17 million are either gig-workers or subcontractors/independent
contractors. All of these are scams meant to transfer more wealth to the top. All of these are scams with American Workers the victims;
scams, in a race to the bottom.
Democrats in the so called battle ground states would clean up at the polls with this. Why do you think those states strayed?
It was because Obama and Hillary had no idea what they really needed. Voters had no idea what they SPECIFICALLY needed either
-- UNIONS! They had been deunionized so thoroughly for so long that they THEMSELVES no long knew what they were missing (frogs
in the slowly boiling pot).
In 1988 Jesse Jackson took the Democratic primary in Michigan with 54% against Dukakis and Gephardt. Obama beat Wall Street
Romney and red-white-and-blue McCain in Wisconsin, Ohio and Michigan. But nobody told these voters -- because nobody seems to
remember -- what they really needed. These voter just knew by 2016 that Democrats had not what they needed and looked elsewhere
-- anywhere else!
Strom presents an easy as can be, on-step-back treatment that should go down oh, so smoothly and sweetly. What do you think?
ken melvin , May 31, 2020 1:04 pm
Denis
Thanks for your comment and the link. Wow! Where to start, huh?
SEIU was a player from the get go, but I don't want to go there just now.
Before Reagan, there was the first rust belt move to the non-union south. Why was the south so anti-union? I think this stuff
is engendered from infancy and most of us are incapable of thinking anew when it comes to stuff our parents 'taught' us. MLK was
the best thing that ever happened to the dirt-road poor south, yet they hated him and they hated the very unions that might have
lifted them up. They did seem to take pleasure in the yanks' loss of jobs.
I think the Reagan era was prelude to what is going on now, i.e., going backward while yelling whee look at me go. No doubt,
Reagan turned union members against their own unions. But, the genesis of demise probably lay with automation and the early offshoring
to Mexico. By Reagan, the car plants were losing jobs to Toyota and Honda and automation. By 1990, car plants that had previously
employed 5,000, now automated, produced more cars employing only 1200. At the time, much of the nation's wealth was still derived
from car production.
Skipping forward a bit, the democrats blew it for years with all their talk about the 'middle-class' without realizing it was
the 'disappearing middle-class'. They ignored the poor working-class vote and lost election after election.
I've come to not like the term labor, think it affords capital an undeserved status, though much diminished, I think thought
all workers would be better off in a union. Otherwise, as we are witnessing, there is no parity between workers and wealth; we
are in a race to the bottom with the wealth increasingly go to the top.
ken melvin , May 31, 2020 1:15 pm
Matthew – thanks for your comment
I think that we are into a transition (about 45 yrs into) as great as the industrial revolution. We, as probably those poor
souls of the 18th and 19th centuries did, are floundering, unable to come to terms with what is going on.
I also think that those such as the Kochs have a good grasp of what is going on and are moving to protect themselves and their
class.
ken melvin , May 31, 2020 1:21 pm
EMichael, thanks for the comment
Are you implying that the politicians are way behind the curve? If so, I think that you are right.
Let me share what I was thinking last night about thinking:
Descartes' problem was that he desperately wanted to make philosophy work within the framework of his religion, Catholicism.
Paul Krugman desperately wants to make economics all work within the Holy Duality of Capitalism and Free Markets. Even Joe Stiglitz
can't step out of this text. All things being possible, it is possible that either could come up with a solution to today's economic
problems that would fit within the Two; but the odds are not good. Better to think anew.
We see politicians try and try to find solutions for today's problems from within their own dogmas/ideologies. Even if they
can't, they persist, they still try to impose these dogmas/ideologies in the desperate hope they might work if only applied to
a greater degree. How else explain any belief that markets could anticipate and respond to pandemics? That markets could best
respond to housing demand?
Racism Is the Biggest Reason the U.S. Safety Net Is So Weak
Harvard economist Alberto Alesina, who died last week, found that ethnic divisions made the country less effective at providing
public goods.
7:50 AM · May 31, 2020
The Alesina/Glaeser/Sacerdote paper on why America doesn't have a European-style welfare state -- racism -- had a big impact
on my own thinking 2/
For a long time anyone who pointed out that the modern GOP is basically a party that serves plutocratic ends by weaponizing
white racism was treated as "shrill" and partisan. Can we now admit the obvious? 3/
Why Doesn't the United States Have a European-Style Welfare State?
By Alberto Alesina, Edward Glaeser and Bruce Sacerdote
Abstract
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that
redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps
because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors
appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity
in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately
black, unappealing to many voters. American political institutions limited the growth of a socialist party, and more generally
limited the political power of the poor.
rick shapiro , May 31, 2020 2:07 pm
This dynamic is not limited to low-skill jobs. I have seen it at work in electronics engineering. When I was a sprat, job shoppers
got an hourly wage nearly twice that of their company peers, because they had no benefits or long-term employment. Today, job
shoppers are actually paid less than company engineers; and the companies are outsourcing ever more of their staffing to the brokers.
Without labor market frictions, the iron law of wages drives wages to starvation levels. As sophisticated uberization software
eliminates the frictions that have protected middle class wages in the recent past, we will all need to enlist unionization and
government wage standards to protect us.
ken melvin , May 31, 2020 2:29 pm
Rick
The big engineering offices of the 70s were decimated and worse by the mid-90s; mostly by the advent of computers w/ software.
One engineer could now do the work of 10 and didn't need any draftsman.
rick shapiro , May 31, 2020 2:40 pm
I was speaking of engineers with equal skill in the same office. Many at GE Avionics were laid off, and came back as lower
paid contract employees.
"... After claiming that "economists have argued for centuries that trade is good for the economy as a whole", Goldberg has also noted that "trade generates winners and losers", with many losing out, and urges acknowledging "the evidence rather than trying to discredit it, as some do." Following Samuelson and others, she recommends compensating those negatively effected by trade liberalization, claiming "sufficient gains generated by open trade that the winners can compensate the losers and still be better off" without indicating how this is to be done fairly. ..."
"... "Free" trade means removing regulations and tariffs. As Michael Hudson reminds us, in Classical economics, it used to mean free of the unproductive burdens of the rentiers. ..."
"... There's a growing realisation on our continent that outsiders aren't going to lead us to the promised land. ..."
"... This redistribution never happens, the rich get richer in a role reversal of "I'll gladly pay you Tuesday for a hamburger today". Any attempt to have the rich share the hamburger is greeted with a "not now!" and a assurance that if the rich stop continuously getting richer at this particular point in time then everything will collapse. ..."
"... The best understanding of what is going on in Africa I got from Jared Diamond – book, "Collapse: How Societies Choose to Fail or Succeed". And for background – "Guns, Germs, and Steel". Global climate heating is going to destroy Africa, already is. The usual story, no water, no forests, too much heat and humidity. It's a terrible reckoning. And largely not of their making. ..."
By Jomo Kwame Sundaram, a former economics professor, who was Assistant Director-General for
Economic and Social Development, Food and Agriculture Organization, and who received the Wassily Leontief Prize
for Advancing the Frontiers of Economic Thought in 2007. Originally published by
Inter Press Service
Economic growth is supposed to be the tide that lifts all boats.
According to the conventional wisdom until recently, growth in China, India and East Asian countries took off
thanks to opening up to international trade and investment.
Such growth is said to have greatly reduced poverty despite growing inequality in both sub-continental
economies and many other countries. Other developing countries have been urged to do the same, i.e., liberalize
trade and attract foreign investments.
Doha Round 'Dead in Water'
However, multilateral trade negotiations under World Trade Organization (WTO) auspices have gone nowhere
since the late 1990s, even with the so-called Doha Development Round begun in 2001 as developing countries
rallied to support the US after 9/11.
After the North continued to push their interests despite their ostensible commitment to a developmental
outcome, the Obama administration was never interested in completing the Round, and undermined the WTO's
functioning, e.g., its dispute settlement arrangements, even before Trump was elected.
To be sure, the
Doha
Round proposals were hardly 'developmental'
by any standards, with most developing countries barely
benefitting, if not actually worse off following the measures envisaged, even according to World Bank and other
studies.
GVC miracle?
According to the World Bank's annual flagship
World Development Report (WDR) 2020 on Trading for
Development in the Age of Global Value Chains
, GVCs have been mainly responsible for the growth of
international trade for two decades from the 1990s.
GVCs now account for almost half of all cross-border commerce due to 'multiple counting', as products cross
more borders than ever. Firms' creative book-keeping may also overstate actual value added in some tax
jurisdictions to minimize overall tax liability.
WDR 2020
claims that GVCs have thus accelerated economic development and even convergence between
North and South as fast-growing poor countries have grown more rapidly, closing the economic gap with rich
countries.
WDR 2020
presumes trends that no longer exist. Trade expansion has been sluggish for more than a
decade, at least since the 2008 global financial crisis when the G20 of the world's largest economies and
others adopted protective measures in response.
GVC growth has slowed since, as economies of the North insisted on trade liberalization for the South, while
abandoning their own earlier commitments as the varied consequences of economic globalization fostered
reactionary jingoist populist backlashes.
Nonetheless,
WDR 2020
urges developing countries to bank on GVCs for growth and better jobs.
Success of this strategy depends crucially on developed countries encouraging 'offshoring', a policy hardly
evident for well over a decade!
As the last
World
Bank chief economist
, albeit for barely 15 months, Yale Professor Pinelopi Koujianou Goldberg recently
agreed
,
"the world is retreating from globalization". "Protectionism is on the rise -- industrialized countries are
less open to imports from developing countries. In addition, there is by now a lot of competition".
The Covid-19 crisis has further encouraged 'on-shoring' and 'chain shortening', especially for food, medical
products and energy. Although the Japanese and other governments have announced such policies, ostensibly for
'national security' and other such reasons, Goldberg has nonetheless
reiterated
the case for GVCs in Covid-19's wake
.
Trade Does Not Lift All Boats
After claiming that "economists have argued for centuries that trade is good for the economy as a whole",
Goldberg has also
noted
that
"trade generates winners and losers", with many losing out, and urges acknowledging "the evidence rather than
trying to discredit it, as some do."
Following Samuelson and others, she recommends compensating those negatively effected by trade
liberalization, claiming "sufficient gains generated by open trade that the winners can compensate the losers
and still be better off" without indicating how this is to be done fairly.
Compensation and redistribution require transfers which are typically difficult to negotiate and deliver at
low cost. Tellingly, like others, she makes no mention of international transfers, especially for fairly
redistributing the unequal gains from trade among trading partners.
Interestingly, she also observes, "There are plenty of examples, especially in African countries, where
wealth is concentrated in the hands of a few even when the tide rises, only very few boats rise. Growth
doesn't trickle down and doesn't improve the lot of the poor."
Unlikely Pan-Africanist
After decades of World Bank promotion of the 'East Asian miracle' for emulation by other developing
countries, especially in Africa, Greek-born American Goldberg insists that what worked for growth and poverty
reduction in China will not work in Africa today.
Echoing long time Bank critics, she argues, "If trade with rich countries is no longer the engine of growth,
it will be more important than ever to rely on domestic resources to generate growth that does trickle down and
translates to poverty reduction."
Instead, as if supporting some contemporary pan-Africanists, she argues, "Africa needs to rely on itself
more than ever. The idea that export-led industrialization as it happened in China or East Asia is going to
lead growth in Africa becomes less and less plausible".
She argues that "the African market is a very large market with incredible potential. It has not been
developed yet. So, regional integration might be one path forward. Rather than opting for global integration,
which may be very hard to achieve these days when countries are retreating from multilateralism, it might be
more feasible to push for regional trade agreements and create bigger regional markets for countries' goods and
services".
Acknowledging "We are still a very long way from there because most countries are averse to this idea -- they
see their neighbors as competitors rather than countries they can cooperate with", not seeming to recognize the
historical role of the Bank and mainstream trade economists in promoting the 'free trade illusion' and
discrediting pan-Africanism.
hear him, and hear him
Econospeak at its best. Filled with cliches and "on the one hand(s)." This articles perfectly describes
why social distancing can ultimately be a boon to mankind. This fellow Sundaram can self isolate at home
and still get a paycheck. He can begin puttering about in his garden and start growing his own food.
Eventually, he will find this activity to be far more rewarding than cogitating on the various cost and
benefits of the international value chains, and will be spending more and more time in his garden. UBI
will kick in. He will decide to disengage from "globalization" and being a public nuisance and adopt this
new, socially beneficial lifestyle permanently. By doing "piecework at home" he will add to real gross
domestic product, and he, the economy and the rest of the planet will be immeasurably improved.
Good analysis. But part of my confusion with this article started with the headline: "Covid-19 Straw
Breaks Free Trade Camel's Back"
What free trade? Nothing in the article discusses free trade and I doubt that there has ever been free
trade for a very long time. Is this more Econospeak?
I do agree with the author that the way trading is done now, however he defines it, has not risen all
boats.
Regarding the existence of "Free Trade"
I watched this in real time when Nafta passed(i was agin it, and voted for Perot accordingly, both times)
I knew a middle class mexican american guy father of a friend of mine. His business, pre-Nafta, was going
to his extended familia's ranch/farm(100 acres) in Tamaulipas, and returning with fruits and veggies and
vanilla and a whole bunch of "junk" like that metal yard art and terra cotta birdbaths and such.
had a dually pickup and a 20 foot trailer.
Post Nafta, this was suddenly illegal he wasn't part of the Club, and went to work as a cook along side
me and his son.
since that time, I've heard essentially the same story from numerous mexican american folks who used to
do similar stuff.
nafta killed that small time cross border trade and the only "Freedom" involved was for the
Maquiladora-owners, US Welfare Corn Corporations and the Cartels.
anecdata, of course, but still
if "they" were really for "free trade", they'd allow me to legally sell a frelling egg or tomato or grow
some weed, for that matter(high demand, low quality unstable supply).
I voted for ross perot too. I even went across the street and talked to my neighbors – the last
time I did that – as they always say, it's like staring into the eyes of a chicken – oh so "liberal"
at the time – To them Ross Perot was just an insufferable hick. But I loved the guy. And he was right.
I think he lived in the same neighborhood as little George in Dallas – but Ross didn't want us to
spread our resources too thin whereas little George saw MidEast oil as our best security. So now that
that has blown up, it's regionalism v. globalism. It's a brake on turbo trade. It's not a fix. We
don't want to be lulled into thinking we've achieved something like a trade balance and an
environmental balance – that will take a century – and only if we stop fibbing to ourselves.
I worked for Ross, for a while post GM (1987). I liked him very much, although we fought quite a
bit. Mostly, I agreed with his public policy outlook, when I didn't and it came up I told him. He
didn't surround himself with the wights that the Orange Menace does. Striking -he was very loyal to
people in his orbit. NAFTA had protections for labor, unions, & the environment they just never
were enforced. There must be some 'law' that says anything neoliberal turns into a racket over
time, so it was with NAFTA.
The NAFTA protections for workers were just hand waves. Lance Compa, who is at Cornell, ran
the US office trying to get the labor provisions (weak as they were) enforced. As I recall, they
were never able to bring even a single case forward.
"Free" trade means removing regulations and tariffs. As Michael Hudson reminds us, in Classical
economics, it used to mean free of the unproductive burdens of the rentiers.
As for NAFTA, one might figure shipping a bunch of subsidized Iowa corn down to Mexico would impair
the income of Mexican farmers.. The NAFTA treaty compensates the big ones.
Corn is only arguably the most important food crop in the world. The little (uncompensated by
NAFTA) Mexican farmers were only keeping the disease resistance and diversity of the corn genome alive
with the varieties they grew .But they weren't making any money for Monsanto So they were hung out to
dry and migration to "Gringolandia" increased dramatically not all of it "legal."
In the wake of NAFTA, not only did Mexico experience capital flight (remember the Clinton
administration's $20 billion bank bailout?), Mexico's real median income declined 34%. (Source: Ravi
Batra's
Greenspan's Fraud
).
One has to go back to the Great Depression to find that kind of decline in the U.S. Of course that
provoked no great migration Oh wait! The Okies!
Imagine the Okies exiting the dust bowl to go to California where they would be caged, separated
from their families, and ultimately shipped back to Oklahoma, where they would either be very
miserable or even starve. That's what we've been doing to the Mexican refugees U.S. actions
created never mind the fact that U.S. military and political attacks on its southern neighbors have
been going on for literally centuries. (Between 1798 and 1994, the U.S. is responsible for 41 changes
of government south of its borders).
Incidentally, the Harvard-educated neoliberal, Carlos Salinas Gotari, the Mexican president who
signed NAFTA, was so despised he had to spend at least the initial years of his retirement in Ireland.
It's not for nothing that the guys who stand up to the Yanquis (Castro!) are heroes in the South.
It's amazing how economists can focus solely on economic activity, and the thought that something like
climate change or politics might make their pronouncements useless isn't even rebutted.
Has that one of the Covid-19 lockdown effects has been a fall in expected incremental CO2 added to the
atmosphere in 2020 relative to 2019:
"Forecasters expect emissions to fall more than 5% in 2020, the greatest annual reduction on record. But
it's still short of the 7.6% decline that scientists say is needed every year over the next decade to stop
global temperatures from rising more than 1.5 degrees Celsius.*.
Yes, the earth's climate is one of the uncompensated losers of the world's current system of economic
growth.
Economists seem to be forever optimizing for the GDP measure, while giving lip service to "uncompensated
losers" such as workers and the earth's climate.
Me, being a cynic and all – I thought the way trade worked in the real world (not the one described by well
paid economists) was a multi step process
1) target developing country by undermining their core farming, self sustaining activity and export industries
through cheap importation of grains and crops and other goods – thus making it impossible for locals to survive
through their own industry
2) simultaneous loans (investment) to the country (economic aid) and corruption of political leaders designed
to enable step three
3) Whence said country is indebted – force country to export whatever (mineral) wealth onto a glutted market to
pay back its debts – this is easily done as the labor component is ripe for the picking/ fleecing
4) crush the country into economic austerity for as long as it takes to enslave its citizens and grab
everything of value from the country
5) pretend that the IMF etc did such a great job – but the countries people (victims) or government did not do
enough and must take care of themselves better
I think that you covered the Standard Operation Procedure here in better detail than I could. I would
only add to point 2) that the bankers will go to these local leaders and show them how to hide their money
and help them set up accounts in a place like the Caymans as part of the service.
And if that economist wants to find where all of Africa's wealth is going, he might want to start in the
City of London and New York first.
I share the general sense of confusion. I'm not quite sure what the point of this essay is. It's full of
wild generalisations like:
"According to the conventional wisdom until recently, growth in China, India and East Asian countries took off
thanks to opening up to international trade and investment."
I don't think that's ever been conventional wisdom for Japan, Korea and China, for example, whose economies
were (and in part still are) highly protected. Industrialisation in those countries was not "export-led".
It also confuses "trade" in the old sense, of countries importing things they couldn't produce and exporting
what they could, with "trade" in the new sense of moving stuff around the world largely for financial reasons.
Trade in the classic sense may have benefited the country as a whole (though this is debatable) but trade in
the current sense was never intended to. Likewise I hadn't heard that globalisation had fostered a "jingoist
backlash" – jingoism after all means aggressive calls for war. But then the whole article is clumsily written
and badly constructed.
And the idea that Africa should rely on itself is fair enough, but runs counter to every piece of advice given
to Africa since independence: remember, the World Bank master plan was for African countries to grow cash-crops
for export to generate cash for industrial development? We know how that worked out. And yes the African market
has enormous potential but it's desperately lacking in infrastructure, which makes trade between eve adjacent
nations desperately difficult. You need to fix that first.
There's a growing realisation on our continent that outsiders aren't going to lead us to the promised
land. The obstacles to effective intra-african trade that you identify will have to be cleared before
Africa's potential can be realised, and as an African I have to believe they will be, challenging as that
will be.
The overthrow of Omar Al Bashir in Sudan has shown that people in Africa are agitating for real,
lasting changing, liberation from the rule of corrupt leaders and true, not pseudo independence from the
West and increasingly China as well.
Other leaders have taken notice of this, as have ordinary citizens
across the continent. It will take time, ther'll probably be a few false starts, we'll wobble a bit but in
the end I believe we'll get there.
"trade generates winners and losers", with many losing out, and urges acknowledging "the evidence rather
than trying to discredit it, as some do."
I don't known who "discredits" it.
What I see is that everybody important acknowledges it, but does squat about it. This redistribution never
happens, the rich get richer in a role reversal of "I'll gladly pay you Tuesday for a hamburger today". Any
attempt to have the rich share the hamburger is greeted with a "not now!" and a assurance that if the rich stop
continuously getting richer at
this
particular point in time then everything will collapse.
The poor, of course, ain't got until this mythical "Tuesday".
Indeed! Very few Africans have IoT sous-vide sticks yet, or Smart doorbells. I'll bet they are way behind
on fast fashion, too. Vast market to sell them things no-one needs and that wreck the earth
on credit
.
Just gotta get those roads built so Jeff can deliver stuff to them in 2 days.
The best understanding of what is going on in Africa I got from Jared Diamond – book, "Collapse: How
Societies Choose to Fail or Succeed". And for background – "Guns, Germs, and Steel". Global climate
heating is going to destroy Africa, already is. The usual story, no water, no forests, too much heat and
humidity. It's a terrible reckoning. And largely not of their making.
Me, being a cynic and all – I thought the way trade worked in the real world (not
the one described by well paid economists) was a multi step process
1) target developing country by undermining their core farming, self sustaining activity
and export industries through cheap importation of grains and crops and other goods –
thus making it impossible for locals to survive through their own industry
2) simultaneous loans (investment) to the country (economic aid) and corruption of
political leaders designed to enable step three
3) Whence said country is indebted – force country to export whatever (mineral)
wealth onto a glutted market to pay back its debts – this is easily done as the labor
component is ripe for the picking/ fleecing
4) crush the country into economic austerity for as long as it takes to enslave its
citizens and grab everything of value from the country
5) pretend that the IMF etc did such a great job – but the countries people
(victims) or government did not do enough and must take care of themselves better
I think that you covered the Standard Operation Procedure here in better detail than I
could. I would only add to point 2) that the bankers will go to these local leaders and show
them how to hide their money and help them set up accounts in a place like the Caymans as part
of the service.
And if that economist wants to find where all of Africa's wealth is going, he might want to
start in the City of London and New York first.
There is a cost and "True cost". The latter is often hidden and might higher the the
cost.
Notable quotes:
"... The Price Mechanism Theory only works well when there is honest and accurate information to understand the true costs, but our leadership is corrupt and has not been honest with us. In order to protect both American interests and American citizens, it is important to develop mechanisms to fully understand the consequences of many of our policies and who is making them. Who ..."
Our elites have been responding to incentives which are beneficial to their institutions,
and China, but detrimental to America.
A shell of a piano in the lobby of the Lee Plaza Hotel. The decades-long decline of the U.S.
automobile industry is acutely reflected in the urban decay of Detroit, the city lovingly
referred to as Motor City. (Photo by Timothy Fadek/Corbis via Getty Images)
George D. O'Neill Jr. We have come to a point in our nation's public discourse where there is a widespread
realization that many of the economic policies pursued and promoted by our political, business
and media elites have failed us in multiple ways. We have heard our trade policies called "Free
Trade" and "Free Market", but those statements were often dishonest.
When crafting these agreements, our elites have been responding to incentives which are
beneficial to their institutions but detrimental to the well-being of American citizens.
... ... ...
The same is true for manufacturing businesses. The closing of a factory has huge costs for a
neighborhood: unemployed people. Not just those from the factory, but the people who work at
companies which supply goods and services to that factory. The consequences of a factory
closing cascades through the economy. The tax base for that neighborhood is also eroded, which
reduces the community's ability to maintain and deliver essential services and support civic
institutions.
We cannot just turn off a factory like a light switch and turn it back on at will when the
Chinese decide to raise their prices at a later date.
None of this takes into account the quality of the goods that we receive. We have just
become aware that more than 90% of our pharmaceutical antibiotics are manufactured in China.
When you hear of the big drug recalls, keep in mind many of them are from China, which is
famous for ubiquitous and flagrant corruption as well as a disregard for quality control. Do we
really know if our antibiotics are safe?
Now, back to our leadership, which we have relied on to guide our nation. Their incentives
often lead them to make choices which do not benefit the American people. The Chinese have
famously made generous
deals with a sitting vice-president's son and a Secretary of State's stepson that likely
insured high level government silence about their predatory practices. The Chinese have
purchased important media assets, such as the largest film distribution company in America and
inked lucrative media deals with huge media companies to purchase silence about their predatory
behavior. The same is true with many other industries.
... ... ...
The Price Mechanism Theory only works well when there is honest and accurate information
to understand the true costs, but our leadership is corrupt and has not been honest with us. In
order to protect both American interests and American citizens, it is important to develop
mechanisms to fully understand the consequences of many of our policies and who is making them.
Who is making the decisions is often just as important as what is being
decided.
George D. O'Neill, Jr., an artist, is the founder of The Committee for Responsible
Foreign Policy and a board member of The American Ideas Institute, the parent of The American
Conservative. Mr. O'Neill has been in the mining industry for more than four decades. He and
his wife reside in Florida.
Correct. The so called "free markets & trade" worked in conditions after WWII, when US
goverment used it's military and political influence to set up favorable economic &
trade conditions for US. It's an utopian vision, that has nothing to do with real world.
It's important to recognize that it's not realistic to do all manufacturing in America, at
least in the short term. We consume too much. Before the virus, we were already running on
all cylinders as employment was concerned and have been for a few years.
There is a significant difference however in our trade dependencies being on China,
versus Japan, Mexico, Vietnam, or India. The former is a geopolitical rival, the latter are
not. In fact, laying groundwork to move more of our trade to the latter builds up China's
regional rivals at the expense of China, and at comparatively less expense to us.
It's not healthy for a future multipolar world for such a capable power projector as
China to be so disproportionately profiting from declining hegemon America.
If you think the hallowing of the US economy with it increasing wage inequalities, outsized
wealth allocation to financial sectors, increasingly political divisions, etc. is because
CHINA BAD, then you are no different than the other corporate profiteers who dug us in this
hole in the first place. This is how the corporatists are trying to avoid blame for their
fundamentalist policies over the past four decades. They lash out, "It's only the BAD
Chinese, everything will be better if we just move it to Vietnam/Bangladesh/Ethiopia."
You ascribe things to me that have nothing to do with what I said. The Chinese are not bad,
just a competitor, and China is not responsible for America's own choices.
You're just replacing one utopian thinking about free trade, with another about economic
protectionism. The world doesn't fit neatly around ideological dogma.
Until you square America's overconsumption you have to tolerate trade deficits. You can
make strategic choices about where they come from at least. Free traders were not honest
about impacts on domestic industry. Domestic protectionism is not being honest about the
fact that for it to succeed, consumption of imported goods, and some domestic, to free up
capacity to import substitute, has to tank, without the prospect of enough domestic
production happening to replace them, and certainly not at anything like the price levels
that exist currently.
In the long run overconsumption should be attacked. Strategic, mutually beneficial trade
relationships will still exist. In the short run we should be more careful about the source
of trade deficits. Overconsumption will not be solved overnight. But that's not a neat
campaign slogan.
I don't disagree with the problems of an over-consumption reliant economy, which prefers we
purchase new TVs every 3 years, smartphones every 2 years, and 3 new winter coats every
season. But it's a huge fallacy to imagine that reallocating production to Vietnam or
Bangladesh will reduce China's power. Who will be creating those factories? Sorry, Chinese
investment. Where will the logistics chain need to connect? Sorry, all roads will lead to
China - both for its 1.4 billion consumer and their ability to control the higher end of
the manufacturing. When will they demand China's inclusion in a grouping like TPP? Sorry,
within 1-2 years of signing that supposed "Keep China Out" agreement. Guess whose economies
will be even more reliant on China? You guessed it, all those supposed U.S. allies who want
no part in global decoupling.
It was ok to let low margin manufacturing move offshore because Americans were going to
move up the value chain. These other countries, like China, would develop their economy,
lift a few billion people out of poverty, and transform themselves into beacons of freedom
and democracy across the developing world. The globalists told us this over and over again.
China (and India) would make our plastic junk and we would sell them financial products and
services like credit default swaps and make a killing!
And that's how it worked out. The bankers made out. No one cared about the displaced
factory workers because it was their own fault they weren't smart enough to become Wall
Street masters of the universe. Buying American, we were told way back in the 80s by Saint
Ronald Reagan was a scam to support corrupt unions and lazy management. How dare they
demand, for example, that Japanese car makers locate here in the US. We should just let
them import what they want and let Ford go bankrupt. Union busting was more important than
anything else.
What you want with trade is to keep it somewhat balanced, and watch employment. To continue
the example Japan exports roughly twice to us what we export to them. Ideally that'd be
more even, but who is going to make more products to export to Japan, or produce Japanese
products here? You'll have to fight for workers already being employed elsewhere. And many
on the right probably would not like the idea of more immigrants to help staff production,
or to free up Americans to staff it.
America does suck up too many talented people into well paid jobs that do little to
advance us, but certainly not enough to correct the trade imbalances of every country we
trade with. Probably not even Japan whose imbalance is a tiny fraction of China's.
America's trade imbalances are a collaboration between foreign producers seeing
opportunities, domestic elites seeing major profit, but most importantly Americans
themselves whose consumption impulses are so, so lucrative. Americans cannot make all the
stuff that Americans want right now. Enter immigrants. Enter outsourcing. Enter major trade
deficits. People profit on the exchange, but this is a setup that America collectively has
voted for with its wallet, over and over again.
Also America makes/made products that other people don't want. From 2 by 4 lumber in inches
and feet, when the rest of the world is in metric system, to oversize fridges and pick-up
trucks that do not fit in the European or Japanese size houses and roads.
"Deliver a good product at a price and quality acceptable to the customer."
LOL. Obviously a failed businessman. The purpose is to put your customer's money in your
pocket. If your customer is making a profit off of your product, raise the price. If the
customer balks and buys from a different vendor, buy all the vendors. Create a monopoly.
Once you have a monopoly, stop paying whiney American workers who expect decent pay and
respect, and have Chinese slaves make your product. The purpose of the "Free Market" is not
about price. It's about maximizing shareholder value. It's not about creating good jobs,
America or any of that other nostalgia from the pre-Free Market days.
It's about liberty. The liberty of the property and capital owning class to keep their
wealth (their wealth is the same thing as your labor), in their hands and away from you and
your stupid government's grubby, unwashed hands.
The ideal market conditions result in happy customers and profitable businesses. Its true
that ideal market conditions often don't prevail when a monopoly is created. But what makes
it even worse is when government enables those conglomerates to become even larger by
making it impossible for small businesses to compete due to onerous regulations and
gobbletygook tax loopholes gained by conglomerate lobbyists.
I believe the economic policies based on the dominant economic theory in Germany is the
best approach for a solid, competitive economy. That theory is Ordo-liberalism, which
allows government to make sure a proper legal environment for the economy exists to
maintain a healthy level of competition through measures that adhere to market
principles.
The Ordo-liberalists believe if the state does not take active measures to foster
competition, firms with monopoly power will emerge, which will not only subvert the
advantages offered by the market economy, but also possibly undermine good government,
since strong economic power can be transformed into political power. We have seen this
happen in the US and it is BIPARTISAN. In fact some of the worst examples of unholy
alliances between corporations and government come from the Dem side of the aisle.
The open markets, open borders policy has been good for the elite but detrimental for the
US. Millions of immigrants were let in as the jobs they could perform were outsourced to
China and Asia in general. Consumer electronics,textiles,steel, appliances, automotive and
manufacturing of all sorts were allowed to leave. Not everyone can be a coder, work on Wall
Street, for the Government or Academia. This same elite is aghast at the rise of Trump,
what else could anyone have reasonably expected?
The problem is Milton Friedman was wrong about central planning. Adam Smith's Wealth of
Nations was written when communication systems were poor, so localized information was
better. With modern data collection, "big data" analysis, AI and other such tools central
planning exists and works. We call the winners in that planning world companies like
Walmart and Amazon. We also know that central planning in the US worked with less than
perfect data. The War Production Board in the US in WWII did allocate production of all
those things necessary to manufacture Milton Friedman's needle (or more likely a cotter
pin). There were imperfections but we let those run over into the consumer segment of
goods. Flash forward to today, the "free market" is the myth used to convince average
American to allow hedge funds, private equity, and companies like Bain Captial ship their
jobs overseas. Especially as we move to robots, there is no reason to import any
manufactured goods. Likewise, those pesky environmental rules we have? There is no reason
we don't apply those rules to things people seek to sell in the US market--meaning we could
make an importer prove goods were manufactured according to US standards. Health and safety
standards are not sources of "comparative advantage" in free market theories.
And this is why the Chinese, Russians, Indians, Iranians, Japanese, Europeans, Koreans,
don't want their economies run from Wall Street and carefully control the shares owned by
outsiders.
I think on the topic of "planning" its important to clarify. Some call any government
intervention an example of "central planning" while others apply that term only to
Soviet-style Gosplan. Either way the "Knowledge Problem", while true to an extent, is
incomplete. The fact of the matter is we don't need to know everything about the market to
make correct decisions regarding what economic goals we want to set, and there is a scale,
a difference, between something like the American System and Gosplan. Julius Krein's
article in the American Compass was excellent, I'll link it below. One need only look to
the success of the East Asian Tigers or to the US from 1791-1965 (dates vary) to see the
success of a healthy sort of developmentalist "planning". Not all planning has to be
adverse to private business, the most successful types are done in conjunction with it.
There will be imperfections whether the government is involved or not, the fact that
imperfections will exist or that mistakes might be made is no excuse for inaction,
especially when that inaction leads to the situation we're currently in regarding
pharmaceuticals.
Yes, interesting article. I liked how quickly in the article it started talking about risk
and the important role government has in mitigating that risk.
What is also missing from this entire discussion about free markets, which is essential
and it is eschewed or pooh-pooed or entirely not acknowledged by libertarians and
conservatives alike (not that progressive / liberals talk about it), is what is the role of
representative democracy in steering how economy (which is a means to an end, not an end to
itself) should work, what is the role of government, and who's really the sovereign (We the
People of the United States, in Order to form a more perfect Union, establish Justice,
insure domestic Tranquility, provide for the common defence, promote the general Welfare,
and secure the Blessings of Liberty to ourselves and our Posterity.....).
Is the government by the people and for the people or it isn't? Are there proper
mechanisms in place to oversee how well operations are conducted by government, according
to approved budgets? Is government supposed to do forecasting and crystal balling solely by
using think tank reports or should have internal professional and knowledgeable analysts
doing this work (I swear on the constitution of the US to serve, etc., etc, etc.).
All this rabbit hole over which libertarians and conservatives starting with Reagan have
been pooping on. Nixon nowadays, or Eisenhower wouldn't be accepted by Republicans, nor FDR
by Democrats... And talking about free markets and democracy, it is puzzling to have just a
duopoly entrenched in the marketplace of political ideas in the US. Everything else is
literally killed.
It's too easy to just blame corrupt elites and therefore let the system itself completely
off the hook. Any system that allows for a small number of private entities to twist
everything to their personal advantage is a system with major structural flaws. The
essential core of the problem is that any system pursued too rigidly and ideologically will
lead to short-sighted decisions that ultimately lead to perverse and absurd
outcomes.Offshoring most of our manufacturing wasn't a corrupt decision made by a small
cabal of villains. It was a logical, yet ultimately destructive, result of blind and
unthinking pursuit of pure "free trade."
Imagine a society (like the U.S.) to be like an organism with a heart, lungs, brain,
limbs, etc. Now imagine that each part of the body is told to maximize its own benefit
without any concern for the organism as a whole.
Those in charge of the brain say "We function better with more blood flow, so let's
block off blood flow to the arms and legs so that we get more. Great idea!" Now the
organism's brain is doing great, but its arms and legs wither and die.
"We are benefiting from the increased blood flow too," says the lungs, "but the heart
just isn't producing enough for us to really flourish." What if we outsource blood pumping
to an external entity that promises us more volume? So now the heart dies and what is left
of the organism is now hooked to an external machine to keep it alive.
"Why do we have to rely on an inefficient mouth and teeth to give us our source
material?" chimes the stomach. "How about a feeding tube to give us cheaper and faster raw
materials?" Etc etc etc.
On and on it goes with some parts doing great from their perspective, but with the
overall organism being hollowed out and weakened.
The best type of economic system in a country is a mixed one that blends together
capitalism with some degree of central thinking and planning (egads, heresy!) about how
decisions could adversely affect the long term health of the country as a whole.
Nice comparison. Are you letting us think and believe that one part of the body ends up
thinking that is in fact totally independent and can leave all the rest wither and die?
With deep psychopathic tendencies, that filters all the stimuli and the information
received from the body, except its own?
The communists had said that capitalism would sell the seeds of its own destruction. Our
elites came up with free trade but chose to ignore that free trade was merely a facade to
export jobs and import goods with them skimming the profit. They chose to ignore all the
financial (and political) machinations like currency rigging, state subsidies, forced state
sharing or ownership of technology when off shored to China, they choise to ignore prison
labor and others. This isnt about free trade or free markets because there is no such
thing. Every nation has a different social welfare system, medical system, tax system,
copyright and patent system, system of legal bribery and payoff, etc and each is meant to
tip the scales of free markets and free trade to their advantage (and in the case of China
a technological and monopolistic and militaristic advantage). We are now at a point where
the game and the cards have been revealed though the Democrats have been profiting for so
long that they want to keep the game going with the Chinese and other foreign nations (its
easy money to line their pockets and their campaign funds since they dont have to listen to
their constituents diverse views...they just need to manage them and listen to Chinese
demands). Id say the american citizenry is boiling mad and arent far away from boiling over
but we shall see where it goes or if it goes anywhere. To date Trumps restrictions on
immigration and his trade deals are better than the nonexistent policies of the democrats
but they are will woefully catering to the elites and lacking in spine and substance to do
as Trump promised.
I think prison labour is more relevant and widespread in the US rather than China. China
has all the political interest to provide work for all the free multitudes teaming in their
cities and countryside, why to give that to prisoners?
Same as the story with the Uighur camps. Just seen recently a Reuters article on the
Russian vessel arriving in Germany to finish laying down the NS2 pipeline, with satellite
pictures, etc. Just a ship. However, there was no picture provided to the world to show the
massive developments required to house 1 million people, not one, and I looked.
Sorry, just a pet peeve of mine to see statements that don't stand close scrutiny.
The Price Mechanism Theory only works well when there is honest and accurate information
to understand the true costs [ ]
You're conflating the economic with the political. There is nothing wrong with Mises'
work on prices and how they coordinate an advanced, widely distributed, division-of-labor
economy. It works in the "macro" as well as the "micro" -- because that is an artificial
distinction (something Mises could tell you about, too).
The fallacy is imagining that economic theory is the be-all-end-all. When people think
that, they ignore political considerations and consequences, to the detriment of society at
large. The bottom line is there is nothing wrong with free trade among free countries in a
peaceful world. The political situation of the present world, however, demands a somewhat
more modified approach. If these are the "true costs" you're talking about, fine. But
you've expressed it in such a way as to muddy the waters of what is an honest and accurate
economic theory.
That is because he doesn't understand what really happened in China. If you read this
thread you also see many theories. They are all based on preconceptions and not actually
reading about what happened China after the gang of four were ousted. They understand the
consequences and they theorize about the cause. But they don't have to theorize. There is
an actual history.
China was not selling cheap products to the United States until about three decades
after the job transfers started and it was almost already done by then. The truth is, China
had nothing to export but its labor. It did that by letting American and other companies
set up in China for exploitative wages and protected them by denying its people any rights.
They then built products under American management and training. The products were then
shipped back to the US as "Chinese" products. But they really were American products made
in China. The companies here were not protecting China. They were protecting themselves
directly. The jobs transfer was not an unfortunate side effect. It was the whole point.
China had nothing to trade. Mao had destroyed the economy.
I recall a long time ago when there was a documentary on this topic and one of the workers
from a electric appliance manufacturing facility was interviewed. They were complaining
about the Chinese manufactures taking over their product line with cheaper products and
causing layoffs at the plant. The moderator asked them where they shopped, they replied
"Walmart". When the moderator pointed out that Walmart was the leader in offshoring to get
cheaper products, like the appliances they made, they just stared.
You are going to somehow have to make Americans pay more for the same thing they can get
cheaper from China. Who is going to do that? Not going to be those workers you are trying
to protect, they don't have the money to do that. Price is king to them, it is only those
snobby liberal types that can afford to do that.
Lets say you manage to get our factory worker to buy 1 expensive American shirt instead
of 3 cheap Chinese shirts for the same price. They are not going to get 3 times the life
out of that shirt so they are in the hole for that purchase.
Lets say you are really persuasive and the workers really do change, what about all the
rest of the people that were employed in the retail and supply chain? What are they going
to do? You just put them out of business. You are just deciding to move around who is
unemployed.
What about the exporters? Do you really think that China is going to buy American
products if you don't buy theirs? How did Trumps trade war work out? Have we won yet? As I
recall it cost the average consumer between 500 and 1000 dollars by the time all the
tariffs were applied and the farmers and ranchers in the Midwest that exported there are
now on government welfare because they could not sell their products. His new "deal" was
panned by economists as being nothing more than a minor cosmetic change, the same as the
updated NAFTA deal that really changed little.
It is fun to blame the elites but it is a bit simplistic as the american workers have
not had a problem sacrificing a few other workers to save some of their own money. If you
want to change that you are going to have to start at the bottom and work up.
It should be mentioned that the cheap clothing we buy is rarely made in China. China has
leveled up and no longer makes the general crap people buy. The shirt cheap t-shirt I'm
wearing was made in Vietnam.
A free market with foreign governments is an impossibility. We would have to know every
single that is happening within their government and that will never happen. Indeed our
internal free market is fading away due to cronyism and secrecy within our own governments.
Tax breaks to lure businesses to your state are anti-free market (not to mention the taxes
still have to be paid, by the people who are already there). Tax breaks and subsidies to
companies already in your state (like windmills and solar panels) are anti-free market. So
the conclusion that I draw is the Democrat and Republican parties are imbeciles and crooks
and both parties must be destroyed.
If you believe economic efficiency is the primary value, you would say, "if the Chinese
are stupid enough to sell us products below their costs, we should be happy to take
advantage of their stupidity." True enough .
But it is not true that is what is happening. It never happened. Chinese invited
American companies to manufacture in China. China was selling labor. Not products. It had
no products to sell. But when the American companies in China use Chinese labor to
manufacture American products the products come to America marked "made in China". But
all that the Chinese really sold was cheap labor without rights .
The second thing to know is that the Chinese forbid American companies to use their own
brand names in China. They had to create Chinese companies that are 51% Chinese owned but
wholly American managed with Chinese management in training. The Americans operated as if
they were at home. The only difference is that they had Chinese under studies and the line
workers were Chinese. The American companies didn't care because they were making money
hand over foot. So when they spoke of "free trade" we were selling out America workers and
bringing home cheap goods that our public loved. This was called globalism. That was phase
one.
In the second stage, the Chinese quietly reminded the Americans that these were Chinese
companies and it was time to begin to promote their Chinese understudies. The Americans
didn't care because they still maintained control from America. And they could always find
spots for the management back home. But from the Chinese point of view, they now had
American technology in Chinese companies, run by Chinese. The technology was now
theirs.
They felt free to grow their businesses with wholly owned and controlled subsidiaries
since they now owned the technology. This was when the American companies began to scream
about intellectual property. They cared because the interests of the rich were now being
hurt. When they were stealing American jobs, that was Ok. Only then did our government see
a problem. Shipping American jobs overseas is globalism, but shipping patents and
copyrights is not. Globalism was always a con. It never existed. It was simply a
smokescreen to exploit cheap, unprotected labor in the developing world. They knew from the
start that it was not good for America. It was not a discovery. They didn't care because it
made them rich.
Though I largely agree with the premise of this article the assumptions latent in mr.
O'Neill's thinking specifically the US government has to do anything in reflection to the
Chinese Communist politburo misses the point of freedom and property rights, in an economy
free of the regulatory burden that the oligarchs in pose on the market through their
governmental collusion not to mention the tax burden that helps to maintain the shipping
lanes to China the American manufacturer will be fine. It should also be said for me
environmental point of view free of state protection the perpetrators of mountaintop
removal coal mining,glyphosate manufacture etc. Would find themselves much more vulnerable
to civil lawsuit/tort law.
Markets are created and managed by government, Mr. Gruff. Governments are developed to
establish justice, ensure tranquility, provide for the common defense, and promote the
general welfare. Without these no market is possible. There is no "free market" without
government.
Pleonexia is a
concept I introduced into a discussion of a similar topic about 2 or so years ago on this
board as being at the root for the decline and fall of the Outlaw US Empire. Here's what Wiki
says about it at the link:
"Pleonexia, sometimes called pleonexy, originating from the Greek
πλεονεξία, is a philosophical concept
which roughly corresponds to greed, covetousness, or avarice, and is strictly defined as '
the insatiable desire to have what rightfully belongs to others ', suggesting what
Ritenbaugh describes as ' ruthless self-seeking and an arrogant assumption that others and
things exist for one's own benefit '" [My Emphasis]
That trait's shared by all Imperialist nations all of which arose based on the same
Greco-Roman foundations or learned those traits from them as in the case of the Japanese.
Indeed, that such traits aren't recognized speaks to the illiteracy of those rising to or
placed in leadership positions as they seem to be totally unaware of the numerous lessons
within Greek and Roman literature/culture--lessons known by the Founders and others 250 years
ago when to be considered educated you had to know Greek, Latin, and their classical
literature. As Walter says, it's a Greek Tragedy; but the play began in the last quarter of
the 19th Century as has also been written about.
Those running the Outlaw US Empire seem oblivious to the wall they're about to run the
nation into, or we might say it's a cliff that will take the nation into the abyss. The G-20
determined last year that a new global currency to conduct commerce was required to replace
the dollar. A short discussion and linking of articles occurred on that topic yesterday
between me and Likklemore. Bevin insisted we discuss the failure of Capitalism and what needs
to come next as its replacement. I've advocated the need for a steady-state socialist system
as the new global political-economy. As I reported, a prominent Singaporean in promoting his
newest book wrote in The Economist that the advent of the pandemic marks the start of
the Asian Century thanks to the gross Moral Failure of the West and the Outlaw US Empire as
its lead nation.
How does a group of people get cured of Pleonexia? It's likely way too late for the
current crop of oligarchs; but what of their heirs who were presumably schooled in similar
fashion to their elders, and their progeny? I'm with Hudson in that their wealth must be
written down close to zero, and the new system emplaced will not allow a repetition.
Meanwhile, someone needs to get busy writing about the current Tragedy such that future
generations can learn its lessons so they're not repeated.
"... Countries that have allowed their domestic industry to decay have found they cannot now produce the crucial equipment they need, from respirators to gas masks. Countries with strong manufacturing bases like China, or with a prudent nationalist sense of preparing ahead for emergencies like Russia, have done far better. The shortage of respirators in Britain has become more than a national scandal: It is a national shame. That is another inexorable consequence of the pernicious doctrine of Free Trade. ..."
"... While half the counties in the United States remain so far virtually free of the virus, infections have soared in most major metropolitan areas, especially in so-called Sanctuary cities. Invariably these centers are ruled by liberal Democrats where illegal immigrants congregate. ..."
"... the ruling elites of the West have mindlessly embraced Open Borders and Free Trade ..."
"... Russia suffered the full horrors of the merciless laissez-faire, unregulated Free Market policies of the liberal West in the 1990s. Boris Yeltsin never woke up to the catastrophe that Bill Clinton and Larry Summers were inflicting on his country. ..."
"... National social responsibility has succeeded where the crazed, simplistic theories of Adam Smith, David Ricardo and Ayn Rand all palpably failed. ..."
"... The ravages of Liberalism – its Open Borders and Free Markets – have already stripped the West of all its defenses, social, demographic, industrial and economic. ..."
"... open border free trade globalism was an EPIC scam foisted on us ..."
"... Liberals have been selling out American workers for decades, and getting personally wealthy the whole time. Bill, Hillary, Barack, now Joe. ..."
"... This is not a coincidence. The worst part is how they profess to care so much about the underprivileged, unless that person is a worker put out of a job by imports. What a bunch of sleaze balls. ..."
"... NWO Billionaire Globalists have imposed this nightmare on the USA and other citizens of the Western world. ..."
Open Borders and Free Trade induce national suicide slowly and gradually, without the
victims waking up to what is going on until it is too late. But the coronavirus has brought
home with global clarity that human societies need governments and regulated borders for their
own survival.
The bottom line is clear, societies that have had open borders to previous major centers of
infection and transmission, like Iran and Italy which kept open strong flows of people to and
from China in the early stages of pandemic, suffered exceptionally badly.
Countries obsessed with maintaining liberal values and open borders like France, Germany,
the United Kingdom and the U.S. also suffered disproportionately.
Countries that have allowed their domestic industry to decay have found they cannot now
produce the crucial equipment they need, from respirators to gas masks. Countries with strong
manufacturing bases like China, or with a prudent nationalist sense of preparing ahead for
emergencies like Russia, have done far better. The shortage of respirators in Britain has
become more than a national scandal: It is a national shame. That is another inexorable
consequence of the pernicious doctrine of Free Trade.
There, I showed how even the French Revolution of 1789 was in fact triggered by the
catastrophic Free Trade Treaty that hapless King Louis XVI approved with England only three
years before. It led immediately to the worst economic depression in French history which
triggered revolution. In three years, liberal Free Trade succeeded in destroying a society that
had flourished for a thousand years and the most powerful state Europe had known since the fall
of the Roman Empire.
In his classic television series and accompanying book "How the Universe Changed", the great
British broadcaster and historian James Burke showed how the discipline of statistics was
responsible for discovering the way the cholera bacteria spread through contaminated water in
19th Century London, then the largest urban area ever experienced.
Today, we see a similar pattern in the spread of the coronavirus: While half the counties in
the United States remain so far virtually free of the virus, infections have soared in most
major metropolitan areas, especially in so-called Sanctuary cities. Invariably these centers
are ruled by liberal Democrats where illegal immigrants congregate. They are the places where
the values and consequences of Free Trade and Open Borders most clearly flourish. And they ar
ealso the places where the terrifying costs of those policies are most evident as well. The
chickens have come home to roost.
Countries like Russia and China itself, which have reacted most quickly and decisively to
shut down international and domestic travel, have been able to keep their numbers of infections
and rates of spread down.
In Europe, by contrast, the impact of the virus has been appalling, The European Union has
been as useless as New York City Mayor Bill de Blasio,. Pro-EU liberal national leaders like
President Emmanuel Macron in France and the venerable Chancellor Angela Merkel in Germany
(Berlin's version of Nancy Pelosi) just sat back in bemused silence till it was too late. In
Italy and Spain, the political splintering of societies has woefully added to the chaos.
This is in fact a very old lesson indeed: The ruling elites of the world should not have had
to relearn it.
But for more than 225 years, the ruling elites of the West have mindlessly embraced Open
Borders and Free Trade. Yet these have always been mere assertions of prejudice and mindless
faith: They have never been proven to be true in any scientific manner.
Instead, when we look at the factual evidence of economic history over the past two
centuries, it has always been the case that developing industrial societies which protect their
manufactures behind strong tariff barriers flourish with enormous foreign trade and balance of
payments surpluses. Then the living standards of their people soar.
In contrast, free market societies too powerless, or just too plain dumb to protect their
economic borders get swamped by cheap manufactures and their domestic industries get decimated.
This was the case with liberal free market Britain caught between the rising Protectionist
powers of the United States, Japan and Germany for the next century.
It has been true for the decline of American industry since the 1950s, the more the United
States embraced global free trade, the more its own domestic manufactures and their dependent
populations suffered. This never bothered the liberal intellectual elites of the East and West
Coast at all. It still doesn't. Having inflicted lasting ruin and despair on hundreds of
millions of people for generations, they despise their victims as "deplorables" for crying out
in pain and seeking to end the disastrous policies.
Russia suffered the full horrors of the merciless laissez-faire, unregulated Free Market
policies of the liberal West in the 1990s. Boris Yeltsin never woke up to the catastrophe that
Bill Clinton and Larry Summers were inflicting on his country. Over the past two decades,
Russia's recovery from that Abyss under President Vladimir Putin has been miraculous. National
social responsibility has succeeded where the crazed, simplistic theories of Adam Smith, David
Ricardo and Ayn Rand all palpably failed.
The coronavirus pandemic therefore should serve as a wake up call to the peoples of the
West, what Thomas Jefferson memorably called "A Fire Bell in the Night." They need to start
following Russia's examples of self reliance, prudent preparation and maintaining strong
borders.
The ravages of Liberalism – its Open Borders and Free Markets – have already
stripped the West of all its defenses, social, demographic, industrial and economic.
The West is out of time: The Audit of Pandemic has been taken, and the reckoning is now
due.
xxx
best thing that trump ever did was to hire navarro to shape the nationalist econ
policies
open border free trade globalism was an EPIC scam foisted on us
they are doing the same to the kids right now with their globalist warming claptrap
xxx
Liberals have been selling out American workers for decades, and getting personally
wealthy the whole time. Bill, Hillary, Barack, now Joe.
This is not a coincidence. The worst
part is how they profess to care so much about the underprivileged, unless that person is a
worker put out of a job by imports. What a bunch of sleaze balls.
xxx
There is nothing "compassionate" about open borders. It is a total myth / scam. Stealing a
country's right to free association and control of its own borders is the ULTIMATE betrayal.
NWO Billionaire Globalists have imposed this nightmare on the USA and other citizens of the
Western world. No different then the kings & dictators of the past these tyrants control
our lives like we are slaves. True compassion would entail (among other things) exporting
commerce, jobs & freedom to every corner of the globe. It's becoming more obvious
everyday why this is never even discussed. Globalism is about spreading tyranny & poverty
not freedom & wealth. Open borders is a one way ticket to Hell. 💀 Time to rise up
and stop this national suicide.
xxx
Liberals will still be only concerned with racism and global rights instead of border
security. Nothing trumps that for them. Not even death. How it's possible for us to be racist
again 1.5B Chinese when we are the vast minority compared to them is something that liberals
have yet to explain to me.
Let's say Bob can make 10 high-quality wigets per hour, while Jim can make 8 medium-quality wigets per hour. Bob gets paid
100$, while Jim gets paid 50$. Bob is more efficient and productive worker. But he will be fired and replaced by Jim, because
Jim's cost of labor is lower. In this case market will eliminate the more productive worker in favor of a less productive one.
Now, within one nation this difference in wages will be very unlikely and quickly adjusted by the market. But between nations,
Jim could be living in a poor country, where he can afford to survive on 50$, while Bob lives in a rich country with high rents
and high product costs, so he'd barely get by on 100$.
So, how much of the global trade is increasing overall value due to local advantages and how much is just shifting value from
some people in favor of others? And shouldn't we favor the first and minimize the second?
Warnings like this have been happening over the past decade, and there are books (Poorly made in China) showing each part of
the threat.
Each time, it was "Interview with a Zombie" with someone from NR, or Cato, or Mises, or even here, gurgling "Freeeeee Traaaade;
Laaaazeeeee Faaaaire".
Trade has frictional costs. The shipping between the Ricardian tautological countries is not free. If it costs $10,000 to send
the products to the destination, there is no comparitive advantage. Nature provides barriers.
But even worse, there is NO free trade, just regulatory arbitrage. Lets say you need to open a factory. You can:
1. Open it here and wait for the swarms of agents from OSHA, EEOC, EPA, IRS, etc. to harrass you and eat out your substance,
and your workers to be treated like people, and have to get loans from an often hostile banking system that prefers wall street
ETFs. An implacable bunch of socialists and SJWs that think Capitilists are evil and capitalism must be destroyed or just people
on power trips will constantly try to close you down and bankrupt you personally and throw you in prison.
2. Open it in China where they will kick farmers off the land and build it for you, and staff it with disposable workers and
you can just dump pollution into the local stream. There will be the customary cultural cronyism and corruption, but that's what
a consultant is for (Poorly made in china, whats wrong with China). But it is the symbiont that wants to keep the host healthy
so there will be the most blood to skim.
3. Open it in Mexico where it also has different customs than China, but the crony corruption is still far easier to deal with
and less expensive than the Destroyer Obamabots.
Capitalism is really good at optimizing for lowest cost, it is really bad at dealing with "externalities" like a once in a hundred
year global pandemic. Governments should take the "long view" well at least 4-5 years at a time. Corporations look at things more
quarter to quarter.
As Nassim Taleb in his book Antifragile, the two authors are making a straw men argument with regard to David Ricardo.
I don't blame them. They are repeating what is written in most economics textbooks about the theory of comparative advantage.
How they should know that this textbook theory is based on a misinterpretation of Ricardo's famous numerical example. (See here:
https://dx.doi.org/10.2139/...
Ricardo did not assume that prices would remain stable, nor did he recommended that a nation should specialise in one major
industry or that no two agents should specialise in the same industry. Depending on a single supplier is indeed a risky bet, but
that is not what their original case for free trade recommended. On the contrary, it was meant to be a remedy against national
and foreign monopolies.
Many lessons can be learned from the present crisis. To make countries less vulnerable or fragile to pandemics like COVID-19,
we need robust public health care systems that covers all its residents. The health care system needs to have excess capacities
(hospital beds, medical personal, ) and sufficient stocks (masks, ventilators, ) to handle the significant increase in the number
of patients during pandemics. We need more international cooperation, coordination and solidarity, not less. So the exact opposite
of protectionism and national solo efforts.
"Contrary to free-market catechism, the pursuit of profit frequently runs contrary to the
public's well-being. This is especially true in an industry devoted to inventing and
manufacturing health-giving and life-saving drugs."
More activity on the dark, unethical side of capitalism. There's an entire history of it,
opium wars, Atlantic slave trade, pornography, control of political agents through
pedophilia. The list does go on and strangely enough it's usually the same actors.
If you'd ever tried to set up a business here in the UK, you'd realise pretty quickly that
you are under complete and utter control of the government in every aspect and they own your
business by dint of the taxes and the loans you have to take out from their banker friends,
we have soft communism because the government owns you but pretends not to. Magna Carta is
dead and it's only possible resuscitation would be a Runnymede 2 Electric Boogaloo.
"... 1) Pompeo and Grenell reportedly arguing that coronavirus has created window of opportunity for a direct strike on a weak and divided Iran. ..."
"... Deputy Health Minister Alireza Raisian has criticized the #UK for not delivering millions of masks #Iran bought in preparations ahead of #Covid19 outbreak. The London govt. refused to deliver them citing US sanctions! Note that Germany took supplies meant for Switzerland, The US via the Italian Mafia (I suppose) gets masks from Bergamo. etc. ..."
I just think that the US "Intelligence" and most of the US Administration just haven't got it. I suppose when you are waiting
for the "rapture" anything that can add to the chaos is to be included.
1) Pompeo and Grenell reportedly arguing that coronavirus has created window of opportunity for a direct strike on a weak
and divided Iran. They were arguing about the severity of the strike.
2) Deputy Health Minister Alireza Raisian has criticized the #UK for not delivering millions of masks #Iran bought in preparations
ahead of #Covid19 outbreak. The London govt. refused to deliver them citing US sanctions! Note that Germany took supplies
meant for Switzerland, The US via the Italian Mafia (I suppose) gets masks from Bergamo. etc. Wonderful show of
world-wide solidarity.
Pompeo should hold his "rapture" in his hot little hand and .....
"... "Congress/staff who dumped stocks after private briefings on impending coronavirus epidemic should be investigated and prosecuted for insider trading," ..."
"... "Members of Congress should not be allowed to own stocks." ..."
"... "stomach churning," ..."
"... "For a public servant it's pretty hard to imagine many things more immoral than doing this," ..."
"... "Richard Burr had critical information that might have helped the people he is sworn to protect. But he hid that information and helped only himself." ..."
"... "If you find out about a nation-threatening pandemic and your first move is to adjust your stock portfolio you should probably not be in a job that serves the public interest," ..."
"... "calling for immediate investigations" ..."
"... "for possible violations of the STOCK Act and insider trading laws." ..."
"... Think your friends would be interested? Share this story! ..."
In a rare moment of bipartisanship, commenters from all sides have demanded swift punishment for US
senators who dumped stock after classified Covid-19 briefings. Hawaii Rep. Tulsi Gabbard has called
for criminal prosecution.
As chairman of the Senate Intelligence Committee, Richard Burr (R-North Carolina) has received daily
briefings on the threat posed by Covid-19 since January. Burr insisted to the public that America was
ready to handle the virus, but sold up to $1.5 million in stocks on February 13, less than a week
before the stock market nosedived, according to Senate
filings
. Immediately before the sale, Burr wrote an
op-ed
assuring Americans that their government is
"better prepared than ever
" to handle
the virus.
After the sale, NPR
reported
that he told a closed-door meeting of North Carolina business leaders that the virus
actually posed a threat
"akin to the 1918 pandemic."
Burr does not dispute the NPR report.
In a tweet on Saturday, former 2020 presidential candidate and Hawaii Rep. Tulsi Gabbard called for
criminal investigations.
"Congress/staff who dumped stocks after private briefings on impending
coronavirus epidemic should be investigated and prosecuted for insider trading,"
she wrote.
"Members of Congress should not be allowed to own stocks."
Congress/staff who dumped stocks after private briefings on impending
coronavirus epidemic should be investigated & prosecuted for insider trading (the STOCK Act). It
is illegal & abuse of power. Members of Congress should not be allowed to own stocks.
https://t.co/rbVfJxrk3r
Burr was not the only lawmaker on Capitol Hill to take precautions, it was reported. Fellow
Intelligence Committee member Dianne Feinstein (D-California) and her husband sold off more than a
million dollars of shares in a biotech company five days later, while Oklahoma's Jim Inhofe (R) made a
smaller sale around the same time. Both say their sales were routine.
Sen. Kelly Loeffler (R-Georgia) attended a Senate Health Committee briefing on the outbreak on
January 24. The very same day, she began offloading stock, dropping between $1.2 and $3.1 million in
shares over the following weeks. The companies whose stock she sold included airlines, retail outlets,
and Chinese tech firm Tencent.
She did, however, invest in cloud technology company Oracle, and Citrix, a teleworking company
whose value has increased by nearly a third last week, as social distancing measures forced more and
more Americans to work from home. All of Loeffler's transactions were made with her husband, Jeff
Sprecher, CEO of the New York Stock Exchange.
Meanwhile, Alexandria Ocasio-Cortez (New York) and Ilhan Omar (Minnesota) have joined the clamor of
voices demanding punishment. Ocasio-Cortez
described
the sales as
"stomach churning,"
while Omar reached across the aisle to side
with Fox News' Tucker Carlson in calling for Burr's resignation.
"For a public servant it's pretty hard to imagine many things more immoral than doing this,"
Carlson said during a Friday night monolog.
"Richard Burr had critical information that might have
helped the people he is sworn to protect. But he hid that information and helped only himself."
As of Saturday, there are nearly 25,000 cases of Covid-19 in the US, with the death toll heading
towards 300. Now both sides of the political aisle seem united in disgust at the apparent profiteering
of Burr, Loeffler, and Feinstein.
Right-wing news outlet Breitbart
savaged
Burr for voting against the STOCK Act in 2012, a piece of legislation that would have
barred members of Congress from using non-public information to profit on the stock market. At the
same time, a host of Democratic figures - including former presidential candidates
Andrew Yang
and
Kirsten Gillibrand
- weighed in with their own criticism too.
"If you find out about a nation-threatening pandemic and your first move is to adjust your
stock portfolio you should probably not be in a job that serves the public interest,"
Yang
tweeted on Friday.
If you find out about a nation-threatening pandemic and your first move
is to adjust your stock portfolio you should probably not be in a job that serves the public
interest.
Watchdog group Common Cause has filed complaints with the Justice Department, the Securities and
Exchange Commission and the Senate Ethics Committee
"calling for immediate investigations"
of
Burr, Loeffler, Feinstein and Inhofe
"for possible violations of the STOCK Act and insider trading
laws."
Think your friends would be interested? Share this story!
who make profits as well. I cannot remember exactly when insider trading for
them became legal but it should be no surprise to anyone paying the slightest bit of attention
that they're ALL doing it. That is one reason, at least in my semi-educated opinion, they did
not go after Trump for emoluments during Shampeachment, because THEY ALL DO IT.
That goes all the way to the White House, no doubt.
It may one day be said that the coronavirus delivered the death blow to the New World Order,
to a half-century of globalization, and to the era of interdependence of the world's great
nations.
Tourism, air travel, vacation cruises, international gatherings, and festivals are already
shutting down. Travel bans between countries and continents are being imposed. Conventions,
concerts, and sporting events are being canceled. Will the Tokyo Olympics go forward? If they
do, will all the anticipated visitors from abroad come to Japan to enjoy the games?
Trump has issued a one-month travel ban on Europe.
As for the "open borders" crowd, do Democrats still believe that breaking into our country
should no longer be a crime, and that immigrants arriving illegally should be given free health
care, a proposition to which all the Democratic debaters raised their hands?
The ideological roots of our free trade era can be traced to the mid-19th century, when its
great evangelist, Richard Cobden, rose at Free Trade Hall in Manchester on January 15, 1846,
and rhapsodized: "I see in the Free Trade principle that which shall act on the moral world as
the principle of gravitation in the universe -- drawing men together, thrusting aside the
antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace."
In the pre-Trump era, Republicans held hands with liberal Democrats in embracing NAFTA,
GATT, the WTO, and most favored nation trade privileges for China.
In retrospect, was it wise to have relied on China to produce essential parts for the supply
chains of goods vital to our national security? Does it appear wise to have moved the
production of pharmaceuticals and lifesaving drugs for heart disease, strokes, and diabetes to
China? Does it appear wise to have allowed China to develop a virtual monopoly on rare earth
minerals crucial to the development of weapons for our defense?
In this coronavirus pandemic, people now seem to be looking for authoritative leaders and
nations seem to be looking out for their own peoples first. Would Merkel today invite a million
Syrian refugees into Germany no matter the conditions under which they were living?
Is not the case now conclusive that we made a historic mistake when we outsourced our
economic independence to rely for vital necessities upon nations that have never had America's
best interests at heart?
Which rings truer today? We are all part of mankind, all citizens of the world. Or that it's
time to put America and Americans first!
Patrick J. Buchanan is the author of Nixon's White House Wars: The Battles That Made
and Broke a President and Divided America Forever. To find out more about Patrick Buchanan and
read features by other Creators writers and cartoonists, visit the Creators website at
www.creators.com.
Which leaders have been speaking of ways to reverse the ways of globalism and how close are
they to obtaining power? This is going to require a changing of the elites fro mthe ones
who are and will continue to push this form of globalism to the ones that are willing to
switch to a new system.
(there will always be an elite. It's just a question of which ones you let wield power
as not all of them are the type that we carry.)
Unfortunately a ton of people are still espousing open borders globalism. This includes a
large number of visible elites, the vast majority, in fact.
The best thing that could happen is that those who espouse such dangerous ideas are held to
account by nature. Let them get sick with the Wu flu, let them be unable to attain
medication because China has restricted exports to us. Let's see what they think after they
have finally begun to experience the ramifications of their ideological thinking.
The elites will ALWAYS have access to medication they need. Most of them will NEVER
"experience ramifications" in any way more than minor inconveniences.
Considering that you can get from New York City to Tokyo in under 24 hours, and that there
are no major city on the Planet that cannot be reached from the lower forty-eight in under
48 hours, how do you intend to reverse globalism? Ban airplanes, telephones and the
internet-based communications?
Under neoliberalism inequality is recast as virtuous. The market ensures that everyone gets what they deserve: Neoliberalism sees competition as the defining characteristic of
human relations and redefines citizens as consumers
Notable quotes:
"... Imagine if the people of the Soviet Union had never heard of communism. The ideology that dominates our lives has, for most of us, no name. Mention it in conversation and you'll be rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to define it. Neoliberalism: do you know what it is? ..."
"... Its anonymity is both a symptom and cause of its power. It has played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8, the offshoring of wealth and power, of which the Panama Papers offer us merely a glimpse, the slow collapse of public health and education, resurgent child poverty, the epidemic of loneliness , the collapse of ecosystems, the rise of Donald Trump . ..."
"... Inequality is recast as virtuous. The market ensures that everyone gets what they deserve. ..."
"... Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances. ..."
"... Never mind structural unemployment: if you don't have a job it's because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you're feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it's your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers. ..."
"... Among the results, as Paul Verhaeghe documents in his book What About Me? are epidemics of self-harm, eating disorders, depression, loneliness, performance anxiety and social phobia. ..."
"... It may seem strange that a doctrine promising choice should have been promoted with the slogan 'there is no alternative' ..."
"... Where neoliberal policies cannot be imposed domestically, they are imposed internationally, through trade treaties incorporating " investor-state dispute settlement ": offshore tribunals in which corporations can press for the removal of social and environmental protections. When parliaments have voted to restrict sales of cigarettes , protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical firms from ripping off the state, corporations have sued, often successfully. Democracy is reduced to theatre. ..."
"... Neoliberalism was not conceived as a self-serving racket, but it rapidly became one ..."
"... Another paradox of neoliberalism is that universal competition relies upon universal quantification and comparison. The result is that workers, job-seekers and public services of every kind are subject to a pettifogging, stifling regime of assessment and monitoring, designed to identify the winners and punish the losers. The doctrine that Von Mises proposed would free us from the bureaucratic nightmare of central planning has instead created one. ..."
"... When you pay an inflated price for a train ticket, only part of the fare compensates the operators for the money they spend on fuel, wages, rolling stock and other outlays. The rest reflects the fact that they have you over a barrel . ..."
"... Those who own and run the UK's privatised or semi-privatised services make stupendous fortunes by investing little and charging much. In Russia and India, oligarchs acquired state assets through firesales. In Mexico, Carlos Slim was granted control of almost all landline and mobile phone services and soon became the world's richest man. ..."
"... Financialisation, as Andrew Sayer notes in Why We Can't Afford the Rich , has had a similar impact. "Like rent," he argues, "interest is ... unearned income that accrues without any effort". ..."
"... Chris Hedges remarks that "fascist movements build their base not from the politically active but the politically inactive, the 'losers' who feel, often correctly, they have no voice or role to play in the political establishment". When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation . To the admirers of Trump, for example, facts and arguments appear irrelevant. ..."
"... Like communism, neoliberalism is the God that failed. But the zombie doctrine staggers on, and one of the reasons is its anonymity. Or rather, a cluster of anonymities. ..."
"... The invisible doctrine of the invisible hand is promoted by invisible backers. Slowly, very slowly, we have begun to discover the names of a few of them. We find that the Institute of Economic Affairs, which has argued forcefully in the media against the further regulation of the tobacco industry, has been secretly funded by British American Tobacco since 1963. We discover that Charles and David Koch , two of the richest men in the world, founded the institute that set up the Tea Party movement . We find that Charles Koch, in establishing one of his thinktanks, noted that "in order to avoid undesirable criticism, how the organisation is controlled and directed should not be widely advertised". ..."
"... The anonymity of neoliberalism is fiercely guarded. ..."
"... Neoliberalism's triumph also reflects the failure of the left. When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive economic theory to replace it. When Keynesian demand management hit the buffers in the 70s, there was an alternative ready. But when neoliberalism fell apart in 2008 there was ... nothing. This is why the zombie walks. The left and centre have produced no new general framework of economic thought for 80 years. ..."
"... What the history of both Keynesianism and neoliberalism show is that it's not enough to oppose a broken system. A coherent alternative has to be proposed. For Labour, the Democrats and the wider left, the central task should be to develop an economic Apollo programme, a conscious attempt to design a new system, tailored to the demands of the 21st century. ..."
Financial meltdown, environmental disaster and even the rise of Donald Trump –
neoliberalism has played its part in them all. Why has the left failed to come up with an
alternative? @GeorgeMonbiot
Imagine if the people of the Soviet Union had never heard of communism. The ideology
that dominates our lives has, for most of us, no name. Mention it in conversation and you'll be
rewarded with a shrug. Even if your listeners have heard the term before, they will struggle to
define it. Neoliberalism: do you know what it is?
Its anonymity is both a symptom and cause of its power. It has
played a major role in a remarkable variety of crises: the financial meltdown of 2007‑8,
the offshoring of wealth and power, of which the Panama Papers offer us merely a
glimpse, the slow collapse of public health and education, resurgent child poverty, the
epidemic of loneliness , the collapse of ecosystems, the rise of Donald Trump . But we respond to these
crises as if they emerge in isolation, apparently unaware that they have all been either catalysed or exacerbated by the same coherent philosophy; a philosophy that has – or had
– a name. What greater power can there be than to operate namelessly?
Inequality is recast as virtuous. The market ensures that
everyone gets what they deserve.
So pervasive has neoliberalism become that we seldom even
recognise it as an ideology. We appear to accept the proposition that this utopian, millenarian
faith describes a neutral force; a kind of biological law, like Darwin's theory of evolution.
But the philosophy arose as a conscious attempt to reshape human life and shift the locus of
power.
Neoliberalism sees competition as the defining characteristic of
human relations. It redefines citizens as consumers, whose democratic choices are best
exercised by buying and selling, a process that rewards merit and punishes inefficiency. It
maintains that "the market" delivers benefits that could never be achieved by
planning.
Attempts to limit competition are treated as inimical to liberty.
Tax and regulation should be minimised, public services should be privatised. The organisation
of labour and collective bargaining by trade unions are portrayed as market
distortions that impede the formation of a natural hierarchy of winners and losers. Inequality
is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to
enrich everyone. Efforts to create a more equal society are both counterproductive and morally
corrosive. The market ensures that everyone gets what they deserve.
We internalise and reproduce its creeds. The rich
persuade themselves that they acquired their wealth through merit, ignoring the advantages
– such as education, inheritance and class – that may have helped to secure it. The
poor begin to blame themselves for their failures, even when they can do little to change their
circumstances.
Never mind structural unemployment: if you don't have a job it's
because you are unenterprising. Never mind the impossible costs of housing: if your credit card
is maxed out, you're feckless and improvident. Never mind that your children no longer have a
school playing field: if they get fat, it's your fault. In a world governed by competition,
those who fall behind become defined and self-defined as losers.
Among the results, as Paul Verhaeghe documents in his book What
About Me? are epidemics of self-harm, eating disorders, depression, loneliness, performance
anxiety and social phobia. Perhaps it's unsurprising that Britain, in which neoliberal ideology
has been most rigorously applied, is
the loneliness capital of Europe . We are all neoliberals now.
***
The term neoliberalism was coined at a meeting in Paris in 1938.
Among the delegates were two men who came to define the ideology, Ludwig von Mises and
Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin
Roosevelt's New Deal and the gradual development of Britain's welfare state, as manifestations
of a collectivism that occupied the same spectrum as nazism and communism.
In The Road to Serfdom , published in 1944, Hayek argued
that government planning, by crushing individualism, would lead inexorably to totalitarian
control. Like Mises's book Bureaucracy , The Road to Serfdom was widely read. It
came to the attention of some very wealthy people, who saw in the philosophy an opportunity to
free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation
that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by
millionaires and their foundations.
As it evolved, neoliberalism became more strident. Hayek's view
that governments should regulate competition to prevent monopolies from forming gave way
– among American apostles such as Milton Friedman
– to the belief that monopoly power could be seen as a reward for efficiency.
Something else happened during this transition: the movement lost
its name. In 1951, Friedman was happy to describe
himself as a neoliberal . But soon after that, the term began to disappear. Stranger still,
even as the ideology became crisper and the movement more coherent, the lost name was not
replaced by any common alternative.
At first, despite its lavish funding, neoliberalism remained at
the margins. The postwar consensus was almost universal: John Maynard Keynes 's economic
prescriptions were widely applied, full employment and the relief of poverty were common goals
in the US and much of western Europe, top rates of tax were high and governments sought social
outcomes without embarrassment, developing new public services and safety nets.
But in the 1970s, when Keynesian policies began to fall apart and
economic crises struck on both sides of the Atlantic, neoliberal ideas began to enter the
mainstream. As Friedman remarked, "when the time came that you had to change ... there was an
alternative ready there to be picked up". With the help of sympathetic journalists and
political advisers, elements of neoliberalism, especially its prescriptions for monetary
policy, were adopted by Jimmy Carter's administration in the US and Jim Callaghan's government
in Britain.
It may seem strange that a doctrine promising choice should have
been promoted with the slogan 'there is no alternative'
After Margaret Thatcher and Ronald Reagan took power, the rest of
the package soon followed: massive tax cuts for the rich, the crushing of trade unions,
deregulation, privatisation, outsourcing and competition in public services. Through the IMF,
the World Bank, the Maastricht treaty and the World Trade Organisation, neoliberal policies
were imposed – often without democratic consent – on much of the world. Most
remarkable was its adoption among parties that once belonged to the left: Labour and the
Democrats, for example. As Stedman Jones notes, "it is hard to think of another utopia to have
been as fully realised."
***
It may seem strange that a doctrine promising choice and freedom
should have been promoted with the slogan "there is no alternative". But, as Hayek remarked on a
visit to Pinochet's Chile – one of the first nations in which the programme was
comprehensively applied – "my personal preference leans toward a liberal dictatorship
rather than toward a democratic government devoid of liberalism". The freedom that
neoliberalism offers, which sounds so beguiling when expressed in general terms, turns out to
mean freedom for the pike, not for the minnows.
Freedom from trade unions and collective bargaining means the
freedom to suppress wages. Freedom from regulation means the
freedom to poison rivers , endanger workers, charge iniquitous rates of interest and design
exotic financial instruments. Freedom from tax means freedom from the distribution of wealth
that lifts people out of poverty.
Facebook
Twitter Pinterest Naomi Klein documented that neoliberals advocated the use of crises to
impose unpopular policies while people were distracted. Photograph: Anya Chibis/The
Guardian
As Naomi Klein documents in The Shock Doctrine ,
neoliberal theorists advocated the use of crises to impose unpopular policies while people were
distracted: for example, in the aftermath of Pinochet's coup, the Iraq war and Hurricane
Katrina, which Friedman described as "an opportunity to radically reform the educational
system" in New Orleans
.
Where neoliberal policies cannot be imposed domestically, they are
imposed internationally, through trade treaties incorporating "
investor-state dispute settlement ": offshore tribunals in which corporations can press for
the removal of social and environmental protections. When parliaments have voted to restrict
sales of cigarettes ,
protect water supplies from mining companies, freeze energy bills or prevent pharmaceutical
firms from ripping off the state, corporations have sued, often successfully. Democracy is
reduced to theatre.
Neoliberalism was not conceived as a self-serving racket, but it
rapidly became one
Another paradox of neoliberalism is that universal competition
relies upon universal quantification and comparison. The result is that workers, job-seekers
and public services of every kind are subject to a pettifogging, stifling regime of assessment
and monitoring, designed to identify the winners and punish the losers. The doctrine that Von
Mises proposed would free us from the bureaucratic nightmare of central planning has instead
created one.
Neoliberalism was not conceived as a self-serving racket, but it
rapidly became one. Economic growth has been markedly slower in the neoliberal era (since 1980
in Britain and the US) than it was in the preceding decades; but not for the very rich.
Inequality in the distribution of both income and wealth, after 60 years of decline, rose
rapidly in this era, due to the smashing of trade unions, tax reductions, rising rents,
privatisation and deregulation.
The privatisation or marketisation of public services such as
energy, water, trains, health, education, roads and prisons has enabled corporations to set up
tollbooths in front of essential assets and charge rent, either to citizens or to government,
for their use. Rent is another term for unearned income. When you pay an inflated price for a
train ticket, only part of the fare compensates the operators for the money they spend on fuel,
wages, rolling stock and other outlays. The rest reflects the fact that
they have you over a barrel .
In Mexico, Carlos Slim was granted control of almost all phone services
and soon became the world's richest man. Photograph: Henry Romero/Reuters
Those who own and run the UK's privatised or semi-privatised
services make stupendous fortunes by investing little and charging much. In Russia and India,
oligarchs acquired state assets through firesales. In Mexico,
Carlos Slim was granted control of almost all landline and mobile phone services and soon
became the world's richest man.
Financialisation, as Andrew Sayer notes in Why We Can't Afford the
Rich , has had a similar impact. "Like rent," he argues, "interest is ... unearned
income that accrues without any effort". As the poor become poorer and the rich become richer,
the rich acquire increasing control over another crucial asset: money. Interest payments,
overwhelmingly, are a transfer of money from the poor to the rich. As property prices and the
withdrawal of state funding load people with debt (think of the switch from student grants to
student loans), the banks and their executives clean up.
Sayer argues that the past four decades have been characterised by
a transfer of wealth not only from the poor to the rich, but within the ranks of the wealthy:
from those who make their money by producing new goods or services to those who make their
money by controlling existing assets and harvesting rent, interest or capital gains. Earned
income has been supplanted by unearned income.
Neoliberal policies are everywhere beset by market failures. Not
only are the banks too big to fail, but so are the corporations now charged with delivering
public services. As Tony Judt pointed out in Ill Fares the
Land , Hayek forgot that vital national services cannot be allowed to collapse, which
means that competition cannot run its course. Business takes the profits, the state keeps the
risk.
The greater the failure, the more extreme the ideology becomes.
Governments use neoliberal crises as both excuse and opportunity to cut taxes, privatise
remaining public services, rip holes in the social safety net, deregulate corporations and
re-regulate citizens. The self-hating state now sinks its teeth into every organ of the public
sector.
Perhaps the most dangerous impact of neoliberalism is not the
economic crises it has caused, but the political crisis. As the domain of the state is reduced,
our ability to change the course of our lives through voting also contracts. Instead,
neoliberal theory asserts, people can exercise choice through spending. But some have more to
spend than others: in the great consumer or shareholder democracy, votes are not equally
distributed. The result is a disempowerment of the poor and middle. As parties of the right and
former left adopt
similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of
people have been shed from politics.
Chris Hedges
remarks that "fascist movements build their base not from the politically active but the
politically inactive, the 'losers' who feel, often correctly, they have no voice or role to
play in the political establishment". When political debate no longer speaks to us, people
become responsive instead
to slogans, symbols and sensation . To the admirers of Trump, for example, facts and
arguments appear irrelevant.
Judt explained that when the thick mesh of interactions between
people and the state has been reduced to nothing but authority and obedience, the only
remaining force that binds us is state power. The totalitarianism Hayek feared is more likely
to emerge when governments, having lost the moral authority that arises from the delivery of
public services, are reduced to "cajoling, threatening and ultimately coercing people to obey
them".
***
Like communism, neoliberalism is the God that failed. But the
zombie doctrine staggers on, and one of the reasons is its anonymity. Or rather, a cluster of
anonymities.
The invisible doctrine of the invisible hand is promoted by
invisible backers. Slowly, very slowly, we have begun to discover the names of a few of them.
We find that the Institute of Economic Affairs, which has argued forcefully in the media
against the further regulation of the tobacco industry,
has been secretly funded by British American Tobacco since 1963. We discover that
Charles and David
Koch , two of the richest men in the world, founded the institute that set up the
Tea
Party movement . We find that Charles Koch, in establishing one of his thinktanks,
noted that "in order
to avoid undesirable criticism, how the organisation is controlled and directed should not be
widely advertised".
The nouveau riche were once disparaged by those who had
inherited their money. Today, the relationship has been reversed
The words used by neoliberalism often conceal more than they
elucidate. "The market" sounds like a natural system that might bear upon us equally, like
gravity or atmospheric pressure. But it is fraught with power relations. What "the market
wants" tends to mean what corporations and their bosses want. "Investment", as Sayer notes,
means two quite different things. One is the funding of productive and socially useful
activities, the other is the purchase of existing assets to milk them for rent, interest,
dividends and capital gains. Using the same word for different activities "camouflages the
sources of wealth", leading us to confuse wealth extraction with wealth creation.
A century ago, the nouveau riche were disparaged by those who had
inherited their money. Entrepreneurs sought social acceptance by passing themselves off as
rentiers. Today, the relationship has been reversed: the rentiers and inheritors style
themselves entre preneurs. They claim to have earned their unearned income.
These anonymities and confusions mesh with the namelessness and
placelessness of modern capitalism: the franchise model which ensures that workers do not know for
whom they toil ; the companies registered through a network of offshore secrecy regimes so
complex that even the
police cannot discover the beneficial owners ; the tax arrangements that bamboozle
governments; the financial products no one understands.
The anonymity of neoliberalism is fiercely guarded. Those who are
influenced by Hayek, Mises and Friedman tend to reject the term, maintaining – with some
justice – that it is used today only pejoratively . But they
offer us no substitute. Some describe themselves as classical liberals or libertarians, but
these descriptions are both misleading and curiously self-effacing, as they suggest that there
is nothing novel about The Road to Serfdom , Bureaucracy or Friedman's classic
work, Capitalism and Freedom .
***
For all that, there is something admirable about the neoliberal
project, at least in its early stages. It was a distinctive, innovative philosophy promoted by
a coherent network of thinkers and activists with a clear plan of action. It was patient and
persistent. The Road to Serfdom became the path to power.
Neoliberalism, Locke and the Green party |
Letters Read more
Neoliberalism's triumph also reflects the failure of the left.
When laissez-faire economics led to catastrophe in 1929, Keynes devised a comprehensive
economic theory to replace it. When Keynesian demand management hit the buffers in the 70s,
there was an alternative ready. But when neoliberalism fell apart in 2008 there was ...
nothing. This is why the zombie walks. The left and centre have produced no new general
framework of economic thought for 80 years.
Every invocation of Lord Keynes is an admission of failure. To
propose Keynesian solutions to the crises of the 21st century is to ignore three obvious
problems. It is hard to mobilise people around old ideas; the flaws exposed in the 70s have not
gone away; and, most importantly, they have nothing to say about our gravest predicament: the
environmental crisis. Keynesianism works by stimulating consumer demand to promote economic
growth. Consumer demand and economic growth are the motors of environmental
destruction.
What the history of both Keynesianism and neoliberalism show is
that it's not enough to oppose a broken system. A coherent alternative has to be proposed. For
Labour, the Democrats and the wider left, the central task should be to develop an economic
Apollo programme, a conscious attempt to design a new system, tailored to the demands of the
21st century.
George Monbiot's How Did We Get into This Mess? is
published this month by Verso. To order a copy for £12.99 (RRP £16.99) ) go to
bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online
orders only. Phone orders min p&p of £1.99.
At international arrivals in Atlanta, the overwhelmingly black TSA staff are not taking
temps by infrared or taking any pro active measures. If they are, it was hidden from me. It
seems- obtuse- to constantly harp on the catastrophe that is AA hires- but there it is.
Its the busiest airport in the world, BTW.
A sinister side note; Delta offered me an $83 upgrade for first class when I went in to
delay another trip. It's a $6000 ticket to fly first class. My total would have been a little
over $500. Dangling the carrot as everyone cancels.
One day, Americans will fully understand , with horrible consequences, that not every
single human transaction must revolve around making a few people obscenely rich.
re ... Your house foreclosed upon by shady bank: naked capitalism, .0001% paid on interest
savings: naked capitalism, poor wages: naked capitalism, dangerous workplace: naked
capitalism, etc. ...
"naked capitalism" is not a clear description. Consider using "predatory capitalism",
which clearly describes what it is.
Here's the Wiki dictionary definition:
Predatory--
1. relating to or denoting an animal or animals preying naturally on others.
synonyms: predacious, carnivorous, hunting, raptorial, ravening;
Example: "predatory birds".
2. seeking to exploit or oppress others.
synonyms: exploitative, wolfish, rapacious, greedy, acquisitive, avaricious
Example: "I could see a predatory gleam in his eyes"
Note where the word comes from:
The Latin "praedator", in English meaning "plunderer".
And "plunderer" helps the reader understand and perhaps recognize what is happening.
This was an outright declaration of "class war" against working-class voters by a
"university-credentialed overclass" -- "managerial elite" which changed sides and allied with
financial oligrchy. See "The New Class War: Saving Democracy from the Managerial Elite" by
Michael Lind
Notable quotes:
"... By canceling the class compromise that governed the capitalist societies after World War II, the neoliberal elite saws the seed of the current populist backlash. The "soft neoliberal" backbone of the Democratic Party (Clinton wing) were incapable of coming to terms with Hillary Clinton's defeat -- the rejection of the establishment candidate by the US population and first of all by the working class. The result has been the neo-McCarthyism campaign and the attempt to derail Trump via color revolution spearheaded by Brennan-Obama factions in CIA and FBI. ..."
It looks like Bloomberg is finished. He just committed political suicide with his comments
about farmers and metal workers.
BTW Bloomberg's plan is highly hypocritical -- like is Bloomberg himself.
During the stagflation crisis of the 1970s, a "neoliberal revolution from above" was
staged in the USA by "managerial elite" which like Soviet nomenklatura (which also staged a
neoliberal coup d'état) changed sides and betrayed the working class.
So those neoliberal scoundrels reversed the class compromise embodied in the New Deal.
The most powerful weapon in the arsenal of the neoliberal managerial class and financial
oligarchy who got to power via the "Quiet Coup" was the global labor arbitrage in which
production is outsourced to countries with lower wage levels and laxer regulations.
So all those "improving education" plans are, to a large extent, the smoke screen over the
fact that the US workers now need to compete against highly qualified and lower cost
immigrants and outsourced workforce.
The fact is that it is very difficult to find for US graduates in STEM disciplines a
decent job, and this is by design.
Also, after the "Reagan neoliberal revolution" ( actually a coup d'état ), profits
were maximized by putting downward pressure on domestic wages through the introduction of the
immigrant workforce (the collapse of the USSR helped greatly ). They push down wages and
compete for jobs with their domestic counterparts, including the recent graduates. So the
situation since 1991 was never too bright for STEM graduates.
By canceling the class compromise that governed the capitalist societies after World War
II, the neoliberal elite saws the seed of the current populist backlash. The "soft
neoliberal" backbone of the Democratic Party (Clinton wing) were incapable of coming to terms
with Hillary Clinton's defeat -- the rejection of the establishment candidate by the US
population and first of all by the working class. The result has been the neo-McCarthyism
campaign and the attempt to derail Trump via color revolution spearheaded by Brennan-Obama
factions in CIA and FBI.
See also recently published "The New Class War: Saving Democracy from the Managerial
Elite" by Michael Lind.
One of his quotes:
The American oligarchy spares no pains in promoting the belief that it does not exist,
but the success of its disappearing act depends on equally strenuous efforts on the part of
an American public anxious to believe in egalitarian fictions and unwilling to see what is
hidden in plain sight.
"... To writer Michael Lind, Trump's victory, along with Brexit and other populist stirrings in Europe, was an outright declaration of "class war" by alienated working-class voters against what he calls a "university-credentialed overclass" of managerial elites. ..."
"... Lind cautions against a turn to populism, which he believes to be too personality-centered and intellectually incoherent -- not to mention, too demagogic -- to help solve the terminal crisis of "technocratic neoliberalism" with its rule by self-righteous and democratically unaccountable "experts" with hyperactive Twitter handles. Only a return to what Lind calls "democratic pluralism" will help stem the tide of the populist revolt. ..."
"... Many on the left have been incapable of coming to terms with Hillary Clinton's defeat. The result has been the stifling climate of a neo-McCarthyism, in which the only explanation for Trump's success was an unholy alliance of "Putin stooges" and unrepentant "white supremacists." ..."
"... To Lind, the case is much more straightforward: while the vast majority of Americans supports Social Security spending and containing unskilled immigration, the elites of the bipartisan swamp favor libertarian free trade policies combined with the steady influx of unskilled migrants to help suppress wage levels in the United States. Trump had outflanked his opponents in the Republican primaries and Clinton in the general election by tacking left on the economy (he refused to lay hands on Social Security) and right on immigration. ..."
"... Then, in the 1930s, while the world was writhing from the consequences of the Great Depression, a series of fascist parties took the reigns in countries from Germany to Spain. To spare the United States a similar descent into barbarism, President Franklin D. Roosevelt implemented the New Deal, in which the working class would find a seat at the bargaining table under a government-supervised tripartite system where business and organized labor met seemingly as equals and in which collective bargaining would help the working class set sector-wide wages. ..."
"... This class compromise ruled unquestioned for the first decades of the postwar era. It was made possible thanks to the system of democratic pluralism, which allowed working-class and rural constituencies to actively partake in mass-membership organizations like unions as well as civic and religious institutions that would empower these communities to shape society from the ground up. ..."
"... But then, amid the stagflation crisis of the 1970s, a "neoliberal revolution from above" set in that sought to reverse the class compromise. The most powerful weapon in the arsenal of the newly emboldened managerial class was "global labor arbitrage" in which production is outsourced to countries with lower wage levels and laxer regulations; alternatively, profits can be maximized by putting downward pressure on domestic wages through the introduction of an unskilled, non-unionized immigrant workforce that competes for jobs with its unionized domestic counterparts. By one-sidedly canceling the class compromise that governed the capitalist societies after World War II, Lind concludes, the managerial elite had brought the recent populist backlash on itself. ..."
"... American parties are not organized parties built around active members and policy platforms; they are shifting coalitions of entrepreneurial candidate campaign organizations. Hence, the Democratic and Republican Parties are not only capitalist ideologically; they are capitalistically run enterprises. ..."
"... In the epigraph to the book, Lind cites approvingly the 1949 treatise The Vital Center by historian Arthur Schlesinger Jr. who wrote that "class conflict, pursued to excess, may well destroy the underlying fabric of common principle which sustains free society." Schlesinger was just one among many voices who believed that Western societies after World War II were experiencing the "end of ideology." From now on, the reasoning went, the ideological battles of yesteryear were settled in favor of a more disinterested capitalist (albeit New Deal–inflected) governance. This, in turn, gave rise to the managerial forces in government, the military, and business whose unchecked hold on power Lind laments. The midcentury social-democratic thinker Michael Harrington had it right when he wrote that "[t]he end of ideology is a shorthand way of saying the end of socialism." ..."
"... A cursory glance at the recent impeachment hearings bears witness to this, as career bureaucrats complained that President Trump unjustifiably sought to change the course of an American foreign policy that had been nobly steered by them since the onset of the Cold War. In their eyes, Trump, like the Brexiteers or the French yellow vest protesters, are vulgar usurpers who threaten the stability of the vital center from polar extremes. ..."
A FEW DAYS AFTER Donald Trump's electoral upset in 2016, Club for Growth co-founder Stephen
Moore told an
audience of Republican House members that the GOP was "now officially a Trump working class
party." No longer the party of traditional Reaganite conservatism, the GOP had been converted
instead "into a populist America First party." As he uttered these words, Moore says, "the
shock was palpable" in the room.
The Club for Growth had long dominated Republican orthodoxy by promoting low tax rates and
limited government. Any conservative candidate for political office wanting to reap the
benefits of the Club's massive fundraising arm had to pay homage to this doctrine. For one of
its formerly leading voices to pronounce the transformation of this orthodoxy toward a more
populist nationalism showed just how much the ground had shifted on election night.
To writer Michael Lind, Trump's victory, along with Brexit and other populist stirrings
in Europe, was an outright declaration of "class war" by alienated working-class voters against
what he calls a "university-credentialed overclass" of managerial elites. The title of
Lind's new book, The New Class War: Saving Democracy from the Managerial Elite ,
leaves no doubt as to where his sympathies lie, though he's adamant that he's not some sort of
guru for a " smarter
Trumpism ," as some have labeled him.
Lind cautions against a turn to populism, which he believes to be too
personality-centered and intellectually incoherent -- not to mention, too demagogic -- to help
solve the terminal crisis of "technocratic neoliberalism" with its rule by self-righteous and
democratically unaccountable "experts" with hyperactive Twitter handles. Only a return to what
Lind calls "democratic pluralism" will help stem the tide of the populist revolt.
The New Class War is a breath of fresh air. Many on the left have been incapable of
coming to terms with Hillary Clinton's defeat. The result has been the stifling climate of a
neo-McCarthyism, in which the only explanation for Trump's success was an unholy alliance of
"Putin stooges" and unrepentant "white supremacists."
To Lind, the case is much more
straightforward: while the vast majority of Americans supports Social Security spending and
containing unskilled immigration, the elites of the bipartisan swamp favor libertarian free
trade policies combined with the steady influx of unskilled migrants to help suppress wage
levels in the United States. Trump had outflanked his opponents in the Republican primaries and
Clinton in the general election by tacking left on the economy (he refused to lay hands on
Social Security) and right on immigration.
The strategy has since been successfully repeated in the United Kingdom by Boris Johnson,
and it looks, for now, like a foolproof way for conservative parties in the West to capture or
defend their majorities against center-left parties that are too beholden to wealthy,
metropolitan interests to seriously attract working-class support. Berating the latter as
irredeemably racist certainly doesn't help either.
What happened in the preceding decades to produce this divide in Western democracies? Lind's
narrative begins with the New Deal, which had brought to an end what he calls "the first class
war" in favor of a class compromise between management and labor. This first class war is the
one we are the most familiar with: originating in the Industrial Revolution, which had produced
the wretchedly poor proletariat, it soon led to the rise of competing parties of organized
workers on the one hand and the liberal bourgeoisie on the other, a clash that came to a head
in the Bolshevik Revolution of 1917. Then, in the 1930s, while the world was writhing from the
consequences of the Great Depression, a series of fascist parties took the reigns in countries
from Germany to Spain. To spare the United States a similar descent into barbarism, President
Franklin D. Roosevelt implemented the New Deal, in which the working class would find a seat at
the bargaining table under a government-supervised tripartite system where business and
organized labor met seemingly as equals and in which collective bargaining would help the
working class set sector-wide wages.
This class compromise ruled unquestioned for the first decades of the postwar era. It was
made possible thanks to the system of democratic pluralism, which allowed working-class and
rural constituencies to actively partake in mass-membership organizations like unions as well
as civic and religious institutions that would empower these communities to shape society from
the ground up.
But then, amid the stagflation crisis of the 1970s, a "neoliberal revolution from above" set
in that sought to reverse the class compromise. The most powerful weapon in the arsenal of the
newly emboldened managerial class was "global labor arbitrage" in which production is
outsourced to countries with lower wage levels and laxer regulations; alternatively, profits
can be maximized by putting downward pressure on domestic wages through the introduction of an
unskilled, non-unionized immigrant workforce that competes for jobs with its unionized domestic
counterparts. By one-sidedly canceling the class compromise that governed the capitalist
societies after World War II, Lind concludes, the managerial elite had brought the recent
populist backlash on itself.
Likewise, only it can contain this backlash by returning to the bargaining table and
reestablishing the tripartite system it had walked away from. According to Lind, the new class
peace can only come about on the level of the individual nation-state because transnational
treaty organizations like the EU cannot allow the various national working classes to escape
the curse of labor arbitrage. This will mean that unskilled immigration will necessarily have
to be curbed to strengthen the bargaining power of domestic workers. The free-market orthodoxy
of the Club for Growth will also have to take a backseat, to be replaced by government-promoted
industrial strategies that invest in innovation to help modernize their national economies.
Under which circumstances would the managerial elites ever return to the bargaining table?
"The answer is fear," Lind suggests -- fear of working-class resentment of hyper-woke,
authoritarian elites. Ironically, this leaves all the agency with the ruling class, who first
acceded to the class compromise, then canceled it, and is now called on to forge a new one lest
its underlings revolt.
Lind rightly complains all throughout the book that the old mass-membership based
organizations of the 20th century have collapsed. He's coy, however, about who would
reconstitute them and how. At best, Lind argues for a return to the old system where party
bosses and ward captains served their local constituencies through patronage, but once more
this leaves the agency with entities like the Republicans and Democrats who have a combined
zero members. As the third-party activist Howie Hawkins remarked cunningly elsewhere ,
American parties are not organized parties built around active members and policy platforms;
they are shifting coalitions of entrepreneurial candidate campaign organizations. Hence, the
Democratic and Republican Parties are not only capitalist ideologically; they are
capitalistically run enterprises.
Thus, they would hardly be the first options one would think of to reinvigorate the forces
of civil society toward self-rule from the bottom up.
The key to Lind's fraught logic lies hidden in plain sight -- in the book's title. Lind does
not speak of "class struggle ," the heroic Marxist narrative in which an organized
proletariat strove for global power; no, "class war " smacks of a gloomy, Hobbesian
war of all against all in which no side truly stands to win.
In the epigraph to the book, Lind cites approvingly the 1949 treatise The Vital
Center by historian Arthur Schlesinger Jr. who wrote that "class conflict, pursued to
excess, may well destroy the underlying fabric of common principle which sustains free
society." Schlesinger was just one among many voices who believed that Western societies after
World War II were experiencing the "end of ideology." From now on, the reasoning went, the
ideological battles of yesteryear were settled in favor of a more disinterested capitalist
(albeit New Deal–inflected) governance. This, in turn, gave rise to the managerial forces
in government, the military, and business whose unchecked hold on power Lind laments. The
midcentury social-democratic thinker Michael Harrington had it right when he wrote that "[t]he
end of ideology is a shorthand way of saying the end of socialism."
Looked at from this perspective, the break between the postwar Fordist regime and
technocratic neoliberalism isn't as massive as one would suppose. The overclass antagonists of The New Class War believe that they derive their power from the same "liberal order"
of the first-class peace that Lind upholds as a positive utopia. A cursory glance at the recent
impeachment hearings bears witness to this, as career bureaucrats complained that President
Trump unjustifiably sought to change the course of an American foreign policy that had been
nobly steered by them since the onset of the Cold War. In their eyes, Trump, like the Brexiteers or the French yellow vest protesters, are vulgar usurpers who threaten the stability
of the vital center from polar extremes.
A more honest account of capitalism would also acknowledge its natural tendencies to
persistently contract and to disrupt the social fabric. There is thus no reason to believe why
some future class compromise would once and for all quell these tendencies -- and why
nationalistically operating capitalist states would not be inclined to confront each other
again in war.
Reagan was a free-trader and a union buster. Lind's people jumped the Democratic ship
to vote for Reagan in (lemming-like) droves. As Republicans consolidated power over labor
with cheap goods from China and the meth of deficit spending Democrats struggled with
being necklaced as the party of civil rights.
The idea that people who are well-informed ought not to govern is a sad and sick cover
story that the culpable are forced to chant in their caves until their days are done, the
reckoning being too great.
Freedom in the neo-liberal lexicon means freedom of the strong to predate on the weak. Free
Trade is a particular example of this. A rational person must expect the UK to be brutally
savaged in dealing with the EU, US and China.
@1, It is true that at present not having a Mediterranean coast is an advantage. But an
optimist might hope that the defeat of the US in Eurasia will bring new peace along the Belt
and Road, and Africa and the ME will see the greatest boom.
"... Steven Klein is a political theorist who is an Assistant Professor of Political Science at the University of Florida. He writes and teaches about democracy, the welfare state, and European political thought. ..."
A recent critique of Karl Polanyi reveals more about the limits of our current political debates than anything about the
man himself.
Globalization has not been doing so well lately. Since the 2008 financial crisis, the idea that unfettered free markets
bring unadulterated benefits to society has lost its sheen. Trump's election demolished Republican Party catechisms around
free trade. The irony of our current moment is that the center-left politicians, traditionally wary of markets, have become
the great defenders of global openness, while the opponents of globalization are gravitating to the nationalist right.
Once a relatively obscure Hungarian academic, Karl Polanyi has posthumously become one of the central figures in debates
about globalization. This recent interest in his thought has occasioned an unsympathetic treatment by Jeremy Adelman in the
Boston Review
.
Adelman, a Princeton professor, has scores to settle with Polanyi. But his article ends up revealing more about the limits
of our current political debates than anything about the man himself.
Polanyi's classic book,
The Great Transformation:
The Political and Economic Origins of Our Time
, published in 1944, argued that the utopian obsession with
self-adjusting markets had wreaked havoc in nineteenth-century European society, eventually laying the groundwork for the
rise of fascism. His once unfashionable views have witnessed a remarkable revival of late. His name is frequently invoked
when describing the dangers that global market integration poses to democracy. Polanyi has now moved one step closer to
intellectual canonization with the publication of Gareth Dale's excellent biography,
Karl Polanyi: A Life on the Left
(2016), the impetus of Adelman's article.
First, there
are
aspects of Polanyi's thought worth criticizing. His historical account of the origins of the
market society is murky. He neglects gender, race, and colonialism, although he was a supporter of anti-colonial struggles.
Yet, instead, Adelman returns to a well-worn and wrong-headed criticism of Polanyi: that his thought represents a romantic
revolt against markets in favor of a warm communalism, a stance that inevitably leads to violent nationalism and tyrannical
"collectivism."
More troubling still is Adelman's explanation for why Polanyi was supposedly attracted to romantic attacks on
liberalism. In Adelman's telling, Polanyi, who was born into an assimilated Jewish family but converted to Christianity,
suffered from a sort of intellectual Stockholm Syndrome: Excluded from European society, he romanticized his murderous
oppressors. He longed for the communal belonging that was denied to him as a Jew. And so Polanyi, Adelman declares, wanted
to "merge into the national
Volk
." This desire explains his "blind spot for reactionary nationalism," which "would
only grow with time" as he looked to the passions of nationalist belonging "as a way to restore a sense of fraternal
community." Polanyi's rejection of liberalism was thus a rejection of his own Judaism. He attacked market liberalism and
excused reactionary nationalism because of his unfulfillable desire to belong in a Europe defined by ethnic unity and
anti-Semitism.
Now, there is much to be said about Polanyi's social circumstances and life story, beautifully recounted in Dale's
biography. The complex identity of assimilated Jewish elites in the Austro-Hungarian Empire and Polanyi's lifelong
attraction to Christianity certainly informed his thinking. There is also a larger story here about the attraction of
interwar Jewish intellectuals to various strains of Christianity. Perhaps this fascination reflected a degree of
self-loathing for highly educated Jews, caught in the double binds of Jewish identity: either too assimilated and therefore
incapable of authenticity, or else clinging to their primitive roots. Or perhaps a radical interpretation of aspects of
Christianity provided such Jews with a standpoint to criticize Europe without having their criticisms dismissed on account
of their Judaism. These are all interesting and worthy questions.
For Adelman, though, Polanyi's conversion to Christianity is a bludgeon with which to attack him, a crude device to
explain Polanyi's (again supposed) hatred for European liberalism. But the idea that Polanyi, who was forced to flee
Europe, is some sort of apologist for nationalism is just plain wrong. Indeed, he viewed European liberalism's attachment
to market fundamentalism as the barrier to an alliance between democratically inclined liberals and the working masses. The
worst that could be said of him on this account is that he underestimates nationalism as a source of opposition to markets,
although he certainly was aware of the fascist threat. But his central point was always that, if we want to avoid an
authoritarian reaction to the ravages of the market, we need to develop a democratic alternative to pro-market liberalism.
To tar Polanyi with the brush of reactionary nationalism, Adelman makes some strange claims. For instance, he argues
that Polanyi affiliates Judaism with liberalism, both of which he then views as stepping stones to Christianity and
socialism, respectively. The only problem is that Polanyi explicitly associated
Christianity
, and not Judaism,
with liberalism -- Christianity revealed the principle of individual freedom that is the core of liberalism -- and, for him, both
Christianity and liberalism stood in need of a revision that would push them toward democratic socialism. Of course, deeply
internalized anti-Semitism could be more important than Polanyi's actual statements. The problem with such psychological
arguments, though, is their pointillist quality: They cohere better from afar than up close.
Reading Polanyi is admittedly a frustrating experience. He mixes high theory, historical narrative, and overheated
journalistic polemic into a distinct mélange. Yet at the center of his thinking is a brilliant idea: that the three core
"inputs" of the economy -- labor, land, and money -- are what he calls "fictitious" commodities. By this, Polanyi means that, try
as we might, workers are never going to move at a moment's notice to wherever markets dictate, markets aren't going to
replenish rivers and fields, and governments will bail out banks to keep money flowing. To take one not-exactly-random
example: Since land, to Polanyi, is more than just a resource for market exchange, so too will housing only ever be a
partial commodity. Access to housing is a vital interest, and so democracies will face pressure to introduce a variety of
regulations that "distort" housing markets. So, it is hardly surprising that the financial crisis was centered on
mortgages -- try as we might, we will never get housing markets to be the smooth, frictionless edifices imagined by
economists. A house cannot be moved like a bushel of wheat. Adelman misses the significance of these arguments because he
reduces Polanyi's thinking to the binary of morality or markets. But the central opposition, for Polanyi, is
democracy
or markets. Democratic demands for social protection conflict with the dictates of the market, a fact that is ever
more apparent in our era of financial capitalism.
Adelman boils this down to a simplistic rejection of the market as such, an inability to see how markets can function as
engines of wealth-creation and need-satisfaction. But here Polanyi fully agrees with Adelman about the remarkable potential
of markets. Polanyi's attack on market liberalism is not that it impoverishes the masses in favor of the rich. The problem
with markets, for him, is that they are
so good
at producing efficiencies that they tend to override all other
considerations. To unlock their full potential, markets require the subordination of all individual, social, and political
institutions to their dictates.
Polanyi expresses this as the tension between habitation and improvement: We cannot live off the land while we improve
the land. This is a lesson that the Greeks and other Europeans are currently learning first-hand, as the search for
long-term competitiveness through "structural reforms" leads to massive unemployment. Polanyi thinks this hunt is
politically unrealistic and potentially explosive. Societies create moral expectations around fairness, rewards for effort,
and stability that markets, by their nature, cannot meet. What is efficient from a market perspective can be profoundly
harmful from a human perspective -- Polanyi learned this as a teenager, when his father went through a traumatic bankruptcy.
If Polanyi's argument was just that markets were immiserating and destroyed communal integration, we should certainly
consign him to the dustbin of failed moral economists. Fortunately, that was not his view. But Adelman's line of attack
reveals more about our contemporary moment than it does about Polanyi. It speaks to a growing rift between liberalism and
the left. Liberals want globalization with a human face, while leftists echo Polanyi in fundamentally questioning the
undemocratic political infrastructure of our current market era. The unexpected strength of Sanders in the United States,
Mélenchon in France, and now Corbyn in the UK shows that old political dogmas are dying.
Adelman's read of Polanyi reinforces the liberal view that globalization is a done deal and left anti-globalization
rests on a romantic fantasy, one that cannot but appease the racism and nationalism of the "losers" of the market. Just as,
if you squint hard enough, you can persuade yourself that Polanyi is a sort of self-hating, pseudo-nationalist reactionary,
despite his professed socialism, so too, if you work at it, can you merge Sanders and Trump, Mélenchon and Le Pen into one
anti-globalization, anti-liberal morass.
Yet Polanyi provides a vital avenue out of this paralyzing deadlock between pro-globalization liberalism and nationalist
populism. Our contemporary market order is in crisis not because of fuzzy-headed leftists, adorned in too many buttons, who
refuse to get with the program. Nor is the crisis one last revolt from the losers of globalization, animated by the fever
dreams of white Americans and "native" Europeans. Our order is in crisis because it has failed to deliver on its own
promise of widely distributed, real growth. For Polanyi, the central problem was how to channel the reaction to such
inevitable failures in a democratic rather than authoritarian direction. Polanyi saw many different avenues toward this
goal, including Roosevelt's New Deal. Today, of course, we face different political conditions, but many similar problems:
a massively exploitative consumer credit "marketplace," the degraded power of workers, and flows of speculative capital
that undermine democracy. Tackling these issues, though, will require a more foundational rethink of a global institutional
order that facilitates market exchange above all else.
One last thought: Adelman takes capitalism's revival after World War II as an embarrassment for Polanyi. To be sure,
Polanyi failed to foresee the remarkable resiliency of capitalism, produced in part by the ability of elites to absorb the
undercurrents of his own teaching and construct a form of embedded, organized capitalism. The flipside of post-war
capitalism, though, was the creation of an environmental crisis the full scope of which has only now become apparent. If
Polanyi failed to predict the persistence of our market society, he was certainly prescient about the destructive
environmental implications of unconstrained growth. In this respect, as in many others, we should heed his warnings and
learn from his thought, as today the stakes could hardly be higher.
Steven Klein
is a
political theorist who is an Assistant Professor of Political Science at the University of Florida. He writes and teaches
about democracy, the welfare state, and European political thought.
"... Yet it took until 1860 for the UK to fully embrace free trade, and even then the unpalatable historical record is that during this 'golden age', the British: Destroyed the Indian textile industry to benefit their own cloth manufacturers; Started the Opium Wars to balance UK-China trade by selling China addictive drugs; Ignored the Irish Potato Famine and continued to allow Irish wheat exports; Forced Siam (Thailand) to open up its economy to trade with gunboats (as the US did with Japan); and Colonized much of Africa and Asia. ..."
"... Regardless, the first flowering of free trade collapsed back into nationalism and protectionism - bloodily so in 1914. Free trade was tried again from 1919 - but burned-out even more bloodily in the 1930s and 1940s. After WW2, most developed countries had moderately free trade - but most developing countries did not. We only started to re-embrace global free trade from the 1990s onwards when the Cold War ended – and here it is under stress again. In short, only around 100 years in a total of 5,000 years of civilization has seen real global free trade, it has failed twice already, and it is once again coming under pressure. ..."
"... Of course, this doesn't mean liked-minded groups of countries with similar-enough or sympathetic-enough economies and politics should avoid free trade: clearly for some states it can work out nicely - even if within the EU one could argue there are also underlying strains. However, it is a huge stretch to assume a one-size-fits-all free trade policy will always work best for all countries, as some would have it. That is a fairy tale. History shows it wasn't the case; national security concerns show it can never always be the case; and Ricardo argues this logically won't be the case. ..."
"When I used to read fairy tales, I fancied that kind of thing never happened, and now here I am in the middle of one!" (Alice
in Wonderland, Chapter 4, The Rabbit Sends in a Little Bill)
Submitted by Michael Every of Rabobank
2020 starts with markets feeling optimistic due to a US-China trade deal and a reworked NAFTA in the form of the USMCA. However,
the tide towards protectionism may still be coming in, not going out.
The intellectual appeal of the basis for free trade, Ricardo's theory of comparative advantage, where Portugal specializes in
wine, and the UK in cloth, is still clearly there. Moreover, trade has always been a beneficial and enriching part of human culture.
Yet the fact is that for the majority of the last 5,000 years global trade has been highly-politicized and heavily-regulated . Indeed,
global free-trade only began following the abolition of the UK Corn Laws in 1846, which reduced British agricultural tariffs, brought
in European wheat and corn, and allowed the UK to maximize its comparative advantage in industry.
Yet it took until 1860 for the UK to fully embrace free trade, and even then the unpalatable historical record is that during
this 'golden age', the British:
Destroyed the Indian textile industry to benefit their own cloth manufacturers;
Started the Opium Wars to balance UK-China trade by selling China addictive drugs;
Ignored the Irish Potato Famine and continued to allow Irish wheat exports;
Forced Siam (Thailand) to open up its economy to trade with gunboats (as the US did with Japan); and
Colonized much of Africa and Asia.
As we showed back in '
Currency
and Wars ', after an initial embrace of free trade, the major European powers and Japan saw that their relative comparative advantage
meant they remained at the bottom of the development ladder as agricultural producers, an area where prices were also being depressed
by huge US output; meanwhile, the UK sold industrial goods, ran a huge trade surplus, and ruled the waves militarily. This was politically
unsustainable even though the UK vigorously backed the intellectual concept of free trade given it was such a winner from it.
Regardless, the first flowering of free trade collapsed back into nationalism and protectionism - bloodily so in 1914. Free
trade was tried again from 1919 - but burned-out even more bloodily in the 1930s and 1940s. After WW2, most developed countries had
moderately free trade - but most developing countries did not. We only started to re-embrace global free trade from the 1990s onwards
when the Cold War ended – and here it is under stress again. In short, only around 100 years in a total of 5,000 years of civilization
has seen real global free trade, it has failed twice already, and it is once again coming under pressure.
What are we getting wrong? Perhaps that Ricardo's theory has major flaws that don't get included in our textbooks, as summarized
in this overlooked quote
"It would undoubtedly be advantageous to the capitalists of England [that] the wine and cloth should both be made in Portugal
[and that] the capital and labour of England employed in making cloth should be removed to Portugal for that purpose." Which is pretty
much what happens today! However, Ricardo adds that this won't happen because "Most men of property [will be] satisfied with a low
rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations," which
is simply not true at all! In other words, his premise is flawed in that:
It is atemporal in assuming countries move to their comparative advantage painlessly and instantly;
It assumes full employment when if there is unemployment a country is better off producing at home to reduce it, regardless
of higher cost;
It assumes capital between countries is immobile , i.e., investors don't shift money and technology abroad. (Which Adam Smith's
'Wealth of Nations', Book IV, Chapter II also assumes doesn't happen, as an "invisible hand" keeps money invested in one's home
country's industry and not abroad: we don't read him correctly either.);
It assumes trade balances under free trade - but since when has this been true? Rather we see large deficits and inverse capital
flows, and so debts steadily increasing in deficit countries;
It assumes all goods are equal as in Ricardo's example, cloth produced in the UK and wine produced in Portugal are equivalent.
Yet some sectors provide well-paid and others badly-paid employment: why only produce the latter?
As Ricardo's theory requires key conditions that are not met in reality most of the time, why are we surprised that most of reality
fails to produce idealised free trade most of the time? Several past US presidents before Donald Trump made exactly that point. Munroe
(1817-25) argued: " The conditions necessary for Free Trade's success - reciprocity and international peace - have never occurred
and cannot be expected ". Grant (1869-77) noted "Within 200 years, when America has gotten out of protection all that it can offer,
it too will adopt free trade".
Yet arguably we are better, not worse, off regardless of these sentiments – so hooray! How so? Well, did you know that Adam Smith,
who we equate with free markets, and who created the term "mercantile system" to describe the national-protectionist policies opposed
to it, argued the US should remain an agricultural producer and buy its industrial goods from the UK? It was Founding Father Alexander
Hamilton who rejected this approach, and his "infant industry" policy of industrialization and infrastructure spending saw the US
emerge as the world's leading economy instead. That was the same development model that, with tweaks, was then adopted by pre-WW1
Japan, France, and Germany to successfully rival the UK; and then post-WW2 by Japan (again) and South Korea; and then more recently
by China, that key global growth driver. Would we really be better off if the US was still mainly growing cotton and wheat, China
rice and apples, and the UK was making most of the world's consumer goods? Thank the lack of free trade if you think otherwise!
Yet look at the examples above and there is a further argument for more protectionism ahead. Ricardo assumes a benign global political
environment for free trade . Yet what if the UK and Portugal are rivals or enemies? What if the choice is between steel and wine?
You can't invade neighbours armed with wine as you can with steel! A large part of the trade tension between China and the US, just
as between pre-WW1 Germany and the UK, is not about trade per se: for both sides, it is about who produces key inputs with national
security implications - and hence is about relative power . This is why we hear US hawks underlining that they don't want to export
their highest technology to China, or to specialize only in agricultural exports to it as China moves up the value-chain. It also
helps underline why for most of the past 5,000 years trade has not been free. Indeed, this argument also holds true for the other
claimed benefit of free trade: the cross-flow of ideas and technology. That is great for friends, but not for those less trusted.
Of course, this doesn't mean liked-minded groups of countries with similar-enough or sympathetic-enough economies and politics
should avoid free trade: clearly for some states it can work out nicely - even if within the EU one could argue there are also underlying
strains. However, it is a huge stretch to assume a one-size-fits-all free trade policy will always work best for all countries, as
some would have it. That is a fairy tale. History shows it wasn't the case; national security concerns show it can never always be
the case; and Ricardo argues this logically won't be the case.
Yet we need not despair. The track record also shows that global growth can continue even despite protectionism, and in some cases
can benefit from it. That being said, should the US resort to more Hamiltonian policies versus everyone, not just China, then we
are in for real financial market turbulence ahead given the role the US Dollar plays today compared to the role gold played for Smith
and Ricardo! But that is a whole different fairy tale...
Financialization killed Boeing. All those MBA's who dreamed up outsourced supply-chains
for the Dreamliner. Thought they were going to make a lot of money through savings.
Silly rabbit MBA's... if you don't spend money? You don't make money.
MBA graduates are f*cking useless retards trained in only one system: FAILURE.
What sank McDonald Douglas - bought out by Boeing? Is the same bullsh*t that is ruining
Boeing. Boeing kept a lot of board member & management failures around from McDonald
Douglas. Poisoned the Boeing culture.
How many of you remember all the McDonald Douglas passenger jet success stories? There
wasnt any - the whole mgmt of MD was to to strip out every possible cost and maximize very
profit at the expense of the end customer and the government - and these are the guys who
bought Boeing - and then made the first step of moving the headquarters to chicago. Guess
which party gave lots and lots of government boondoggles to MD?
I had a Polish executive tell me how proud they were as they were about to hire an
American executive who graduated with an MBA.
That is, until I asked him... "Have you checked what happened to the previous companies
that he worked at?"
So the Polish executive did just that. This led to a ban on hiring any American MBA. Turns
out, the American MBA worked at companies, all of which FAILED.
Though, somehow, despite a track record of working at failed companies? The American was
still quite well off.
The ******* alternative you stupid ******* americunt is already in the air. They are
labelled Airbus A220 and A230, otherwise known as Bombardier CS200 and CS300 and they are
sold out 15 years in advance.
That was part of the problem. The parts from Boeing's foreign suppliers MET
SPECIFICATIONS.
That is, until they went to assemble the Dreamliner. Where parts did not fit together.
You see, Boeing found out LONG, LONG AGO... that it was necessary to have manufacturing
close to design. That way, when parts that "met specifications" did not fit? The engineers
and machinists were there to correct deficiencies. Thus leading to reliable planes that were
fit together very well. Only THEN could Boeing could assemble parts in other locations and
mate them together.
This never happened with the Dreamliner. Quadrupled costs. The Dreamliner only exists
thanks to taxpayer subsidies through the ExIm Bank. The Dreamliner WILL NEVER BE PROFITABLE.
Accounting gimmicks make it appear as if Boeing makes money on the Dreamliner.
Amazing that in less than a generation, we go from "if it's not Boeing, I'm not going" to
wondering what the next Boeing screw-up will be and how many will be killed as a result.
The existing 777 is a fantastic plane and, other than pilot error (Asiana at SFO), a
missile attack (Malaysia 17) and some unknown (but apparently not mechanical) issue (Malaysia
370), the 777 has been the safest plane around.
American executives are incentivized to manipulate their company's stock. So they squeeze
the workforce and cut everything to the bone. That's why Boeing, GM, and other household
names are crashing.
According to economist William Lazonick, Boeing spent $43.1 billion on stock buybacks
from 2013 to 2019, raising the company's stock price to a record high just 10 days before
the second crash of its 737 MAX. Boeing CEO Muilenburg collects most of his pay through
stock or compensation based on financial metrics. Yet the company reportedly avoided
spending the estimated $7 billion it would have needed to engineer a safer plane. Less than
10 years after a public sector bailout, GM has spent $10.6 billion on stock buybacks, while
engaging in layoffs and plant closures. That amounts to $221,308 for each of the 47,897
active UAW members currently on strike at GM. Walmart spent $9.2 billion on stock buybacks
from August 2018 to July 2019, which, by my calculations, could have been used to give a
raise of roughly $5/ hour to each of its 1 million hourly workers instead.
Boeing should have been spending all its supposed profits on R&D. The other problem is
the military side of the business is grossly corrupt. Remember the blowup over Air Force
1?
This is what happens when the Federal Reserve lets the financial cat out the bag, and pump
up the stock market to the tune of 35-60 billion every 3 days, because some hedge funds
"could" fail and topple the financial system.
If multiple entities are now too important and could topple the financial system if they
failed, the Fed has massively screwed up.
In 1991 a Boeing purchaser told me that he would give us a contract if we transferred 51%
of the shares to a minority.
This is God's truth
He added that when he could not find minority businesses that would make components
according to specifications, he would buy stuff from minority owned businesses and not use it
but store it in warehouses around the country indefinitely. this in order to meet a quota of
20% purchases from minority owned businesses mandated by the Feds for all government
suppliers.
I can just imagine how bad the discrimination is now.
These are politically connected animals who feed from the trough of government pork barrel
a.k.a taxpayer money. Exactly what has Nikki Haley achieved in her life, except for being a
pathological liar?
These animals were responsible for our reckless fiscal deficits and looming debt bombs
which will soon come crashing down. Kinda good metaphor for Boeing.
All former CFOs and politicians ( civilian and military - only political types in the
military get stars ). No evidence of any engineering expertise. Sad for a once-proud global
leader.
In the "investor economy", there is no morality. EVERYTHING is "commoditized". Even you ..
your DNA. A pricetag hovers over your head like a dialog bubble. Bean counters can
incorporate your morbidity and mortality into mathematical equations showing investors why
cutting costs and saving 0.01% is worthy of investment. While 911 was the paradigm shift for
Rights ... the Lehman "crisis" was its own "911" -- the death of the labor economy ... and
rise of the "investor economy". Nobody works, trading time for dollars. They "invest" Why
work? Investors can kill without being held personally responsible. They only risk their fiat
capital. You die.
There is a lot of talk here and in comment sections at forums about how the American Empire
is going to collapse soon due to its blunders and Russia and China gaining military
superiority over it. This kind of talk is a type of magical thinking and has no basis in
reality. The United States' most potent weapon isn't military, it's economic, and through it
the US government controls the world. That weapon is the US Dollar and ever since Nixon took
it off the gold standard it has been used to further the Empire's imperial hold on the global
economy. The economist Michael Hudson in an article called A Note To China (link at
bottom) explains how this works:
The U.S. strategy is to control your economy in order to force you to sell your most
profitable industrial sectors to US investors, to force you to invest in your industry only
by borrowing from the United States.
So the question is, how do China, Russia, Iran and other countries break free of this
U.S. dollarization strategy?
There are a lot of articles on alt.media sites about how China and Russia are
de-dollarizing their economies in order to resist, and eventually end, the US domination of
the global economy that is preventing them from maintaining independent economic policies
that benefit their citizens rather than global elites and US central bankers.
Russia managed to put a stop to overt US economic imperialism after the looting spree in
the post-Soviet 1990s decimated Russia's ability to provide for its citizens and degraded the
country's ability to maintain economic independence. But it still ultimately got caught in
the neoliberal trap. Hudson again:
Yet Russia did not have enough foreign exchange to pay domestic ruble-wages or to pay for
domestic goods and services. But neoliberal advisors convinced Russia to back all Ruble
money or domestic currency credit it created by backing it with U.S. dollars. Obtaining
these dollars involved paying enormous interest to the United States for this needless
backing. There was no need for such backing. At the end of this road the United States
convinced Russia to sell off its raw materials, its nickel mines, its electric utilities,
its oil reserves, and ultimately tried to pry Crimea away from Russia.
China, Hudson argues, by accepting the advice of American and IMF/World Bank economic
"experts" and through Chinese students schooled in American universities in American
neoliberal theory is in great danger of falling into the same trap.
The U.S. has discovered that it does not have to militarily invade China. It does not have
to conquer China. It does not have to use military weapons, because it has the intellectual
weapon of financialization, convincing you that you need to do this in order to have a
balanced economy. So, when China sends its students to the United States, especially when
it sends central bankers and planners to the United States to study (and be recruited),
they are told by the U.S. "Do as we say, not as we have done."
He concludes that:
The neoliberal plan is not to make you independent, and not to help you grow except to the
extent that your growth will be paid to US investors or used to finance U.S. military
spending around the world to encircle you and trying to destabilize you in Sichuan to try
to pry China apart.
Look at what the United States has done in Russia, and at what the International
Monetary Fund in Europe has done to Greece, Latvia and the Baltic states. It is a dress
rehearsal for what U.S. diplomacy would like to do to you, if it can convince you to follow
the neoliberal US economic policy of financialization and privatization.
De-dollarization is the alternative to privatization and financialization.
Loosening the Empire's hold on economic and geopolitical affairs and moving to a
multipolar world order is a tough slog and the Empire will use everything it can to stop this
from happening. But at the moment even countries under American sanctions and surrounded by
its armies, with the possible exception of Iran, aren't really fighting back. That's a bitter
pill for many to swallow but wishful thinking isn't going to change the world. After all, the
new world has to be imagined before it can appear and right now it's still global capitalism
all the way down.
The article in full, and Hudson's work generally, is well worth reading. He is one of only
a few genuinely anti-imperialist economists and he is able to explain in layman's terms
exactly how the US-centric global economy is a massive scam designed to benefit US empire at
the rest of the world's expense.
I was thinking about
winston2's comment in the previous thread. A good way for China and Russia to respond is
to go after those in the MIC; the CEO, lobbyists, financiers, etc... If they follow the money
and take them out, I suspect we all would see a dramatic turn of events. No need to publicize
their early retirement. Make it messy and public but not to the point of taking out
innocents.
Yes, Michael Hudson is excellent, mostly because he's rare economist, that is, one who
begins from the premise that the 'economy' is a set of historically-situated and specific
modes of exchange and forms of human relations. Aristotle located what we call the economy in
ethics and politics; we follow the fairytales of neo-classical economics and global capital
by imagining that it has some scientific autonomy from human social relations. Marx was right
in following Aristotle's insight by critiquing the very idea of an autonomous economy, which
the chief ideological fiction of late capitalism. Sam Chambers and Ellen Meiksens-Wood are
also excellent critics of this obstacle to reimagining a viable alternative to the economy as
it is propagated by the US neoliberal global apparatus.
Inkan1969 , Jan 16 2020 22:34 utc |
42S , Jan 16 2020 22:37 utc |
43
@Daniel #36:
The United States' most potent weapon isn't military, it's economic, and through it the US
government controls the world. That weapon is the US Dollar and ever since Nixon took it
off the gold standard it has been used to further the Empire's imperial hold on the global
economy.
But at the moment even countries under American sanctions and surrounded by its armies,
with the possible exception of Iran, aren't really fighting back.
Exclude me from this squad. I's always from the opinion that the USA would collapse
slowly, i.e. degenerate/decay. I won't repeat my arguments again here so as to spare people
who already know me the repetition.
However, consider this: when 2008 broke out, some people thought the USA would finally
collapse. It didn't - in great part, because the USG also thought it could collapse, so it
acted quickly and decisively. But it cost a lot: the USA fell from its "sole superpower"
status, and, for the first time since 1929, the American people had to fell in the flesh the
side effects of capitalism. It marked the end of the End of History, and the realization -
mainly by Russia and China - that the Americans were not invincible and immortals. It may
have marked the beginning of the multipolar era.
--//--
The world (bar China) never recovered from 2008. Indeed, world debt has grown to another
record high:
The world governments - specially the governments from the USA, Japan and Europe -
absorbed private debt (through purchase of rotten papers and through QE) so the system could
be saved. But this debt didn't disappear, instead, it became public debt. What's worse:
private debt has already spiked up, and already is higher than pre-2008 levels. The Too Big
To Fail philosophy of the central banks only bought them time.
--//--
Extending my previous link (from the previous Open Thread) about money laundering:
The global TV subscription streaming company, Netflix made $1.2bn in profits in 2018, of
which $430m was shifted into tax havens, reports Tax Watch UK.
The estimated revenue from UK subscribers was about $860m, but most of this was booked
offshore in a tax haven Dutch subsidiary. Netflix claims its UK parent company got only
$48m in revenue. When the costs of Netflix UK productions were put against this, Netflix
was able to avoid paying any tax at all to the UK government. Indeed, it received tax
reliefs for productions in the UK from the government.
A simple question requires a simple answer. Russia's defence expenditure in PPP terms is
probably in excess of $180 billion per year which buys a shedload of "capable military
equipment".
It should be noted that the point Hudson's trying to make in his "Note to China" is to warn
China of what if faces by using historical examples. As S points out @43, Russia's Ruble is
very sound and its dollar and T-Bill holdings are extremely low. The message to China and the
entire SCO community is to cease supporting the Outlaw US Empire's military by supporting its
balance of payments by buying T-Bills. The sooner the SCO community, or just the core
nations, can produce a new currency for use in trade, the sooner a crisis can be created
within the Outlaw US Empire--essentially by turning the "intellectual weapon of
financialization" against the global rogue nation foe.
"... "The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well." ..."
"... Recently I read Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his thoughts about dying from cancer. ..."
For the longest time, I believed that there's only one purpose of life: And that is to be happy. Right? Why else go through all
the pain and hardship? It's to achieve happiness in some way. And I'm not the only person who believed that. In fact, if you look
around you, most people are pursuing happiness in their lives.
That's why we collectively buy shit we don't need, go to bed with people we don't love, and try to work hard to get approval of
people we don't like.
Why do we do these things? To be honest, I don't care what the exact reason is. I'm not a scientist. All I know is that it has
something to do with history, culture, media, economy, psychology, politics, the information era, and you name it. The list is endless.
Just a few short years ago, I did everything to chase happiness.
You buy something, and you think that makes you happy.
You hook up with people, and think that makes you happy.
You get a well-paying job you don't like, and think that makes you happy.
You go on holiday, and you think that makes you happy.
But at the end of the day, you're lying in your bed (alone or next to your spouse), and you think: "What's next in this endless
pursuit of happiness?"
Well, I can tell you what's next: You, chasing something random that you believe makes you happy.
It's all a façade. A hoax. A story that's been made up.
Did Aristotle lie to us when he said:
"Happiness is the meaning and the purpose of life, the whole aim and end of human existence."
I think we have to look at that quote from a different angle. Because when you read it, you think that happiness is the main goal.
And that's kind of what the quote says as well.
But here's the thing: How do you achieve happiness?
Happiness can't be a goal in itself. Therefore, it's not something that's achievable. I believe that happiness is merely a byproduct
of usefulness. When I talk about this concept with friends, family, and colleagues, I always find it difficult to put this into words.
But I'll give it a try here. Most things we do in life are just activities and experiences.
You go on holiday.
You go to work.
You go shopping.
You have drinks.
You have dinner.
You buy a car.
Those things should make you happy, right? But they are not useful. You're not creating anything. You're just consuming or doing
something. And that's great.
Don't get me wrong. I love to go on holiday, or go shopping sometimes. But to be honest, it's not what gives meaning to life.
What really makes me happy is when I'm useful. When I create something that others can use. Or even when I create something I
can use.
For the longest time I foud it difficult to explain the concept of usefulness and happiness. But when I recently ran into a quote
by Ralph Waldo Emerson, the dots connected.
Emerson says:
"The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some
difference that you have lived and lived well."
And I didn't get that before I became more conscious of what I'm doing with my life. And that always sounds heavy and all. But
it's actually really simple.
It comes down to this: What are you DOING that's making a difference?
Did you do useful things in your lifetime? You don't have to change the world or anything. Just make it a little bit better than
you were born.
If you don't know how, here are some ideas.
Help your boss with something that's not your responsibility.
Take your mother to a spa.
Create a collage with pictures (not a digital one) for your spouse.
Write an article about the stuff you learned in life.
Help the pregnant lady who also has a 2-year old with her stroller.
Call your friend and ask if you can help with something.
Build a standing desk.
Start a business and hire an employee and treat them well.
That's just some stuff I like to do. You can make up your own useful activities.
You see? It's not anything big. But when you do little useful things every day, it adds up to a life that is well lived. A life
that mattered.
The last thing I want is to be on my deathbed and realize there's zero evidence that I ever existed.
Recently I read
Not Fade Away by Laurence Shames and Peter Barton. It's about Peter Barton, the founder of Liberty Media, who shares his
thoughts about dying from cancer.
It's a very powerful book and it will definitely bring tears to your eyes. In the book, he writes about how he lived his life
and how he found his calling. He also went to business school, and this is what he thought of his fellow MBA candidates:
"Bottom line: they were extremely bright people who would never really anything, would never add much to society, would leave
no legacy behind. I found this terribly sad, in the way that wasted potential is always sad."
You can say that about all of us. And after he realized that in his thirties, he founded a company that turned him into a multi-millionaire.
Another person who always makes himself useful is Casey Neistat
. I've been following him for a year and a half now, and every time I watch his
YouTube show , he's doing something.
He also talks about how he always wants to do and create something. He even has a tattoo on his forearm that says "Do More."
Most people would say, "why would you work more?" And then they turn on Netflix and watch back to back episodes of Daredevil.
A different mindset.
Being useful is a mindset. And like with any mindset, it starts with a decision. One day I woke up and thought to myself: What
am I doing for this world? The answer was nothing.
And that same day I started writing. For you it can be painting, creating a product, helping elderly, or anything you feel like
doing.
Don't take it too seriously. Don't overthink it. Just DO something that's useful. Anything.
Darius Foroux writes about productivity, habits, decision making, and personal finance. His ideas and work have been featured
in TIME, NBC, Fast Company, Inc., Observer, and many more publications. Join
his free weekly newsletter.
This article was originally published on October 3, 2016, by Darius Foroux, and is republished here with permission. Darius Foroux
writes about productivity, habits, decision making, and personal finance.
@Dutch
Boy rk, employees need to make an adequate wage. Unfortunately, this premise does not
exist in today's business climate.
Henry Ford openly criticized those of the "tribe" for manipulating wall street and
banksters to their own advantage, and was roundly (and unjustly) criticized for pointing out
the TRUTH.
Catholic priest, Father Coughlin did the same thing and was punished by the Catholic
church, despite his popularity and exposing the TRUTH of the American economy and the
outsider internationalists that ran it . . . and STILL run it.
Our race to the bottom will not be without consequences. A great realignment is necessary
(and is coming) . .
This
site regularly discusses the rise of neoliberalism and its consequences, such as rising
inequality and lower labor bargaining rights. But it's also important to understand that these
changes were not organic but were the result of a well-financed campaign to change the values
of judges and society at large to be more business-friendly. But the sacrifice of fair dealing
as a bedrock business and social principle has had large costs.
We've pointed out how lower trust has increased contracting costs: things that use to be
done on a handshake or a simple letter agreement are now elaborately papered up. The fact that
job candidates will now engage in ghosting, simply stopping to communicate with a recruiter
rather than giving a ritually minimalistic sign off, is a testament to how impersonal hiring is
now perceived to be, as well as often-abused workers engaging in some power tit for tat when
they can.
But on a higher level, the idea of fair play was about self-regulation of conduct. Most
people want to see themselves as morally upright, even if some have to go through awfully
complicated rationalizations to believe that. But when most individuals lived in fairly stable
social and business communities, they had reason to be concerned that bad conduct might catch
up with them. It even happens to a small degree now.
Greg Lippmann, patient zero of toxic CDOs at Deutsche Bank, was unable to get his kids into
fancy Manhattan private schools because his reputation preceded him. But the case examples for
decades have gone overwhelmingly the other way. My belief is that a watershed event was the
ability of Wall Street renegade, and later convicted felon Mike Milken, to rehabilitate himself
spoke volumes as to the new normal of money trumping propriety.
Another aspect of the decline in the importance of fair dealing is the notion of the
obligations of power, that individuals in a position of authority have a duty to
The abandonment of lofty-sounding principles like being fair has other costs. We've
written about the concept of obliquity, how in complex systems, it's not possible to chart a
simple path though them because it's impossible to understand it well enough to begin to do so.
John Kay, who
has made a study of the issue and eventually wrote a book about it , pointed out as an
illustration that studies of similarly-sized companies in the same industry showed that ones
that adopted nobler objectives did better in financial terms than ones that focused on
maximizing shareholder value.
Our Brexit regulars wound up talking about these issues as part of a UK election post
mortem. Hoisted from e-mail. First from David:
Around the time of the cold dawn of Friday 13 December, I began to ask myself why the
whole grisly Brexit business had turned out so differently to what I, and many others, had
expected. Now it's true that politics is unpredictable, but in 2015, any satirist worthy of
their name would surely not have dared to imagine a sequence of events so bizarre as that
which actually happened. And of course we can all be wrong, but I was basing my judgements
not only on a lifetime of watching politicians at play, but also on the well-understood
general principles of how politics, and especially international politics, operates.
The conclusion I came to involves conceding that, yes, politics is unpredictable, yes we
all make wrong calls from time to time, but there's something more profound than that. Simply
put, the traditional rules and procedures of British politics have stopped applying. It's not
now possible to count on the British system for planning, forethought, rationality, strategy,
tactical sense, political sense, common sense or any other kind of sense.
Consider. Cameron's referendum promise was an error of judgement, but it could have been
handled very differently even so. I'd assumed that there would be some kind of threshold (55%
perhaps), and some provision for a later stage of reflection and time-wasting.
I assumed that the government would be wary of the possible result, and try to
de-dramatise the referendum campaign.
I assumed that Remain would do a reasonably competent job, underlining the positive
benefits of EU membership.
I assumed that the result, if it was "leave" would be the beginning of a long process of
reflection and discussion. A Royal Commission, or something, would be set up, with several
years to work out what kind of future relationship there should be with the EU. Bits of the
UK most affected (agriculture for example) would be consulted in depth. Discreet soundings
would be made throughout Europe to see what our partners might accept. Only after all this
was done would it be time to press the Art 50 button.
At that point, I assumed, the UK would be well prepared and, in the traditional manner,
have working papers and draft treaty language to propose as soon as the negotiations started.
All aspects (including NI) would have been at least thought of.
I assumed that the Cabinet would have agreed a fairly detailed set of objectives and
negotiating guidelines to give to the UK delegation, fine-tuned in the light of first
reactions from partners.
I assumed that the Cabinet would have agreed fallback positions and some idea of what the
Tories, and Parliament, would accept.
Literally none of this was true.
Now we're not talking rocket-science here. Yes, the UK system was once pretty Rolls-Royce,
but the kind of list I've given above would have seemed obvious to any middle-level
functionary of any medium-sized country. Actually achieving all of it is not necessarily
easy, but at least you can make a serious attempt: there are important stakes involved.
So what does this imply for the future?
Well, things are getting worse, not better. The Cabinet hasn't even begun to think yet
about the future relationship. Some of them probably think Brexit is all over. I don't think
there's any agreement even about the vaguest outlines of this future relationship, which
means that it could be months before any political objectives emerge, if they ever do.
Which is to say that we are in for another year of Keystone Cops diplomacy, with the
stakes if anything even greater.
From Clive:
Your thought-process sounds like my trains of thought. And when I think those sorts of
thoughts, I think that I'm a remnant or a bygone era. Which I am.
What disappeared from that world was playing fair. Everyone played fair, or, at least,
playing fair was a bedrock than you could drift away from, but, sooner or later, you fell
back on it.
There will be a lot of casualties until our societies get to the stage where they can
rediscover fairness. I bought a book from a second hand bookstore about the founding of the
EEC, from 1978 I think the copyright said it was. When I read it, it's like it was written by
some long-since vanished ancient civilisation. There were honourable intentions, strategies
to deliver them, honest evaluations of emerging problems and, above all, a shared shouldering
of responsibility to resolve them equitably. There was a sense of pride which leaps off the
pages not at what had been achieved, but at what the prevailing culture intended to achieve.
The book went on about the European ideal -- and didn't think it was in any danger of
naivety.
That world has vanished -- and it's not coming back any time soon.
Brexit was a reaction to that. We can't fix it, think a majority of the U.K. population,
and we're not even going to try. This is why Leave has progressed the way it has. The last
thing the Leave majority (or maybe the smidge over 50% who think Leave is the best option)
want to do is try to return to the failed common-cause based solutions. Johnson has no
intention whatsoever of anything other than the lightest of lightweight FTAs -- or even no
FTA. Anything more would be an anathema to the Thatcher-esque approach the Conservatives have
on remaking UK society by severing all EU ties. This isn't really Thatcherism -- a common
misconception. It's the sort of response which Thatcher would have devised, had she been
placed in the same position, so is easily confused.
So this isn't some unplanned, accidental stumbling along to an unexpected surprise
conclusion. It is, rather, a laser like focus on an intended destination.
Anyone expecting some great effort or thought-process to be applied by the U.K. to
salvaging a relationship with the EU will be disappointed. In effect, they'd be asking for
the U.K. to spend time and resources saving something that isn't, in the U.K.'s prevailing
worldview, worth saving. The EU has been nothing but a bother, so the thinking goes, what's
the point in trying to flog the dead horse that is the European ideal? What did it ever do
for us, anyway..?
Brexit is just a here's-one-we-made-earlier example of a long-term global trend. If
humanism -- or fairness as I reduced it to earlier -- makes a comeback, it might all be
fixable. In the meantime, prepare for an increasingly atomised, separatist world.
Vlade's response:
I'd like to agree with you. Except I believe you're idealising it. The world was never
playing fair – but it did cooperate more, because the US needed the Europe more in the
cold war than it does now (when it's more of a rival, definitely in Trumps' eyes). Hell, the
Soviet Block cooperated – except it didn't really, it did what the SU told it to. But
it definitely didn't play fair. It did follow the rules, because the cost of breaking them
was seen as too high (US was terrified I believe of France and Italy doing a deal with the
SU). At least to me, following the rules and playing fair are distinct.
It's possible that the western society was more fair before 90s, I can't know. But again,
I suspect that a lot of it was almost a self-protection against the SU and "communism", which
disappeared in the 80s., but possibly started disappearing even in 70s (when you live with
some danger for a while, you get oblivious to it).
I do think that the Brexit was a reaction to the word that was. But I disagree that it was
really the EU specific reaction, as in "the EU is the source of all this". It played the
part, but the underlying reasons were IMO much more varied than the EU – where I have
doubts many of the people there really understood in any way, except as an externality you
can rail against.
You get the crawing for the world-that-was in the US, and it doesn't have any EU. You get
it in Russia, and it has the EU and the US, or, if you want, "the West" which puts
conveniently both of them together.
The world as most people knew it is coming apart, and chances are it will get worse (and
who knows it it ever gets better). In times like those, people want the world-that-was.
Sometimes it can actually be a force for good, like after WW2 in "the west". Except even
there it wasn't the world-that-was, but more of the world-we-want (on both sides of the iron
curtain, there was a reason why the communist regimes were, at least initially, strongly
supported by the populace). But wanting the world-that-was was also what brought Nazis and
Fascist into the power.
And PlutoniumKun's:
A key casualty of neoliberalism was corporatism in its more benign form. It used to be
that policy was made in the early hours in those proverbial smoke filled rooms where
different groups at least made some type of attempt at compromise. This is still a feature of
many countries and sectors, but I think its significant that the rot is most advanced in the
neolib early adopters. It's not just the formal art of making compromises, it's the simple
force of human contact when people in the same room together. It's unfortunate I think that
the UK joined the EU just as it lost interest in being run by civil servants having endless
meetings with sectoral interest groups. This is a core reason I think why the UK never really
engaged with the EU, even if in the short term its engagement was quite effective
(essentially bullying other countries into getting its way on issues like agriculture and
competition policy).
But as we've discussed before, the long term destruction of the British civil service has
in many ways been just as stupid, and just as damaging, as the long term destruction of
Britain's manufacturing base. In both cases, the reasons have been ideological, not
pragmatic.
Outsiders I think see it more clearly. I was travelling in Asia for a while and I was
really surprised at how casually people would discuss what they see as the once admired
anglosphere fall apart. Most Asians in my experience viewed Britain with a mixture of
distrust and some awe and admiration. Now the commonest response seems to be a shrug of the
shoulder or just plain schadenfreude.
This bodes particularly badly for the UK's trade negotiators when they start face to face
meetings. They will be a little like late 19th Century Russia or Turkey -seen as a country
who's only right to be at the top table is due to history, not present circumstances. The
gradual retreat of the US from the eastern Pacific is pretty much seen as a done deal,
everyone is frantically scrambling to ensure they are not caught on the hop. I'm a great
believer that the true indicator of what a country sees as its future can be seen in what it
spends its military budget on. Every major Asian country is spending serious cash on
domestically sourced air superiority, long distance strike capability, in addition to A2AD
for its brown water coasts.
There are many parts of the world where the 'old ways' are still pretty much intact
– much of Europe still likes the EU and the way it works and vaguely corporatist/social
democratic ways of doing things. Its easy to get carried away with stories of austerity and
decay, but when I travel in Europe much of it (including countries like Spain and Portugal)
look pretty good and no more or less full of discontent than they ever were. Much of northern
Europe and individual countries like Portugal are doing very well indeed, and France has been
defying the naysayers for as long as I've been reading English language economics papers and
magazines. Its not clear to me that the foment in those countries – even in France
– is much worse than its been in any given post war decade. There are cycles within
cycles for these things. Ireland is, all things considered, booming economically and
culturally content, austerity a long forgotten problem for most people.
What we are seeing is the postponed breakdown of the traditional centre left and rights.
The wipeout of traditional left wing parties has been much commented upon, but less obvious
is the breakdown of the old Christian Democrat/centre right tradition in much of Europe and
other parts of the world in favour of a more libertarian/populist/nationalist form. It's just
that the change has tended to be more within parties, while the left is always more
fissiparous.
I think the left is slowly, very slowly, reformulating along lines closer to the older
anarchy tradition, as seen by the rise of Green Parties – but it will take time before
a more grassroots, collaborationist form of left wing politics really starts to make a
difference. I think the libertarian/neolib wing of the right is being well and truly wiped
out by the more ruthless nationalistic (I hate to use the F word) tradition. The
transformation of the Tory party into an English nationalist party with a focus on serving
its new working class/lower middle class base has been carried out with quite remarkable
speed. The Tory business class will come to deeply regret its silence over the internal
revolution that took place post the Brexit vote.
All this of course is within the context of slowing growth and a rapid climate
deterioration. All bets are off in significant parts of the world as the fires rage. The only
certainty about climate change is that there will be completely unforeseen negative
impacts.
Sorry, I forgot to say that this was one of these think-provoking posts that I like so
much.
In a loosing fairness world, what is the proper personal conduct one must follow? Go with the
trend, or try to keep the old-style way as much as you can?
I would expect the whole spectrum of answers to this question. Fortunately, there will
always be some people that put fairness forefront.
" Fortunately, there will always be some people that put fairness forefront "
Yes Ignacio but I do hope youngsters don't become embittered by a world that is certainly
a lot harsher for them than it was for me 40 odd years ago.
After a year of fighting to get money from those who have plenty of it, am now working on
a transatlantic commission for a wealthy guy from Colorado, who has actually shocked me with
his fairness – particularly as I was worried about the possible downsides of getting
into such a far flung relationship.
He has actually kept my head above water while am waiting for a large long overdue payment
from a public institution that I almost wish privatisation on for their lack of effort in
addressing the situation.
I had a great Christmas trying to play Santa without the suit, with the best bit being the
giant full facial smile received from one of those likely old beyond her years Roma women
selling " The Big Issue " as she sat as if clinging to the wall in the pouring rain.
I hope everyone at NC is having a fine Holiday can anyone post the link to some of the
videos explaining neoliberalism posted at NC a short while ago? Can't seem to find them.
Thanks
I've just tried, for the second time, to watch that video. For me, it is too quickly paced
to be effective, or even informative -- and mind you, like other NC regulars, I KNOW this
stuff. IMO, Nancy MacLean's "Democracy in Chains" does a much better job. Yes, it takes more
than 26 minutes to read -- but I think understanding what has happened to the world over the
last 75 to 80 years SHOULD take more than 26 minutes.
Yes, it is quick paced. I had to do the pause-rewind-replay this or that bit,
pause-rewind-replay steps several times to get what was being said. Too much condensed info
for me to take in all at once.
Thank you, Yves. This post is about exactly the sort of thing that keeps me up at night.
Frankly I spend a lot of time mourning for what our society used to be, and the notion that
nobody has the backbone to do the right thing regardless.
I spend my share of time in conversation with many people in the upper/middle class,
business leaders and Conservatives in particular. The entire thinking is, "Losers cry about
being fair, winners go home and bang the Prom Queen". [paraphrased]
I always ask them if this is the kind of society they want to live in, and raise their
kids in. It is lizard brain, writ large.
Anyway, I just want to say "thank you" for all your efforts as a beacon in the darkness.
It is comforting to know that someone else also can see.
They dont have the backbone as we are deep into the "time of the end" where the love of
the greater number will cool off, they will be lovers of money and themselves, and the list
goes on. This system of things is all Satans and its on the verge of being extinguished
forever.
What disappeared from that world was playing fair. Everyone played fair, or, at least,
playing fair was a bedrock than you could drift away from, but, sooner or later, you fell
back on it.
Was it "fair" or was it Because the Soviet Block offered an alternative, purportedly
Communism but what appears to me as totalitarianism. The alternative to the Communist block
had to appear more appealing for the players to gain advantage in the great game.
With the Communist block gone, do we now just see the reality, and whatever accommodation
was made to have the Western/US based system more appealing has now changed. How is the US'
system viewed in Latin America? As "fair?"
When the British Empire controlled much of the world, was it "fair"? I was a part of that,
and I could not describe it as "fair".
In the British Empire's demolition the US played a good part of being "fair," but it was
"fair" only if it advanced the US' interests. An example of this is the forgiveness of War
Loans. Germany, on the Soviet systems' door step had war debts forgiven. The UK, which paid a
huge penalty for fighting the wars received no such favor for its "special relationship" with
the US, coupled with a not-so-polite demand to dismantle the British Empire (aka Self
Determination).
I perceive the world's governing system not in terms of left and right, but as the surface
of a sphere, with the the horizontal axis being changing from "free" to "totalitarian" which
can be approached from the political left or the right, and the vertical axis varying from
market based (neoliberal) to centrally controlled, and any country is always being affected
by words or threats to slide from one point on the sphere along some rhumbh line to another
point.
The idea of "fairness" is one of those things that used to be a lot more clear in the past
than it seems to be today. In general, the rules were the rules, and anyone who decided to
play accepted them. A level and "fair" playing field, with the same rules for everyone, was
what determined the "winner," and made "winning" legitimate.
But lately society has apparently decided to determine the "winners" first, and change the
rules to match the desired outcome. That approach has wreaked havoc with the concept of
"fairness."
Everybody gets a trophy for "participation." Eliminate the electoral college
because hillary didn't win it. Pretend that biological males are actually women because
that's how they "self-identify," and let them "compete" against biological women instead of
those with the same chromosomes.
You can't have "fairness" without rules, and playing fast and loose with the rules means
you can never tell who the cheaters are.
Thanks for this post. It seems like many of the economic and democratic govt and even
social rules once reliably enforced by laws and custom have become mere suggestions. The idea
of rules or fair play that existed from, say, the 1930's – 1980's, in the US now seem
entirely overtaken by a sort of modern, re-invigorated, social Darwinism, a once rightly
discredited moral theory. imo.
Everything old is new again, unfortunately. Neoliberalism is like the old social Darwinism
dressed up in newer, erudite, clothes. Substitute today's words 'the market' for yesterday's
words 'the strongest and fittest' and you have a pretty close 1:1 match. Misapplying Darwin's
studies in biology to sociology.
The following text was written for school kids' history class. It's a quick read.
And way before Darwinianism, at the dawn of capitalism, we had the Puritans.
According to their doctrine, if you were wealthy it was because you were favoured by God.
If you weren't wealthy, God didn't intend you to be. In every era, the selfish and the greedy
have a justification.
Nothing to do with the fact that you stitched up your fellow countrymen by enclosing
common land and kicking those that had used it for generations off their means of self
subsistence.
Your comment about the courts role in eroding a sense of fairness and, by extension, trust
in the system called to mind the courts' role in maintaining the vast US prison system. The
Supreme Court was recently considering a case filed from a pro se prisoner and Justice
Sotomayor referenced a secret policy within the Fifth Circuit Court of Appeals of denying all
petitions filed by pro se prisoners for thirteen years without even so much as glancing at
the briefs. The policy only came to light when an employee of the court referenced it in
their note before committing suicide, apparently out of guilt.
The Fifth Circuit happens to include Louisiana, which has the highest incarceration rate
of any state. Eventually the policy was reversed, but in practice I'm sure most filings from
pro se petitioners in prison are met with a similar lack of interest and consideration.
Perhaps there are good reasons to dismiss some filings quickly given the large backlogs and
legal rumors and nonsense that makes it way through prisons.
However, the courts remain the last best hope for prisoners in trying to overturn wrongful
convictions or address abuse at the hands of prison officials, at least for now. If the
courts are happy to deny these people fair consideration for efficiency's sake unless they
can secure outside counsel you can bet this abuse and neglect will continue. Maybe that
sounds like a fine trade-off to those in power now, but the long-term effect is the erosion
of trust and confidence in the system beyond just those directly affected.
Another consequence of the loss of fair play is a termination of the phenomenon that many
workers, especially white collar workers, wanted to believe that their employer was
trustworthy and, as a consequence, they trusted their employer at a higher level that is or
was warranted. This trust was mis-placed to some extent but served as a bulwark when
relationships between employee and employer became strained.
I wonder now, whether this is still the case. It seems not to be. Granted employers have
earned their employees distrust or, at a bare minimum, lack of trust that formerly was
granted (due to wishful thinking).
I know exactly what you're talking about. Before I was laid off, I watched as many
colleagues were shown the door. Oddly from a trust perspective, most of these people were
vastly more talented and experienced than the employees who continued to keep their jobs.
(Though, of course, from a strictly shareholder perspective, their high pay levels justified
their dismissal.)
So from the canned employees' point of view, after years of awards, high praise and
affirmation from management, the fact that they were being hustled out the door (sometimes
literally) amounted to a profound betrayal of trust. And you could see it in the look of
shock on many of their faces.
When my time came, I had absorbed the lesson and had completely detached my ego from my
work, no longer taking any pride in what I did for a living. And I never will again as long
as I'm working for someone else, even an employer who in the moment is kind and appreciative.
They can turn on you in a heartbeat, and for the flimsiest of reasons.
Just to add in impeachment (prexit?), it once was considered a big deal that Nixon lied
("the coverup is worse than the crime"). And lying was at the center of the Clinton
impeachment. But that's less true with the current dispute and perhaps that's because the
impeachers themselves are shamelessly lying. The truth no longer seems to matter to anyone as
long as a fairy tale "narrative" can be found to substitute. Perhaps it's not so much that
the world has become more evil or selfish but that modern society has a serious reality
problem. People still understand fairness but simply pretend they are being fair as long as
nobody is challenging their narrative (see Amazon post today). And that may be because we are
saturated with media that are all too willing to tell us what we want to hear.
Thank goodness for NC where some of us come–and for a long time–to find out
the truth. Perhaps it's not just a coincidence that many of those who hang out here seem to
be older–old enough to remember a time when truth mattered.
A little more patience, but not too much, is needed in awaiting the inevitable and
continuing sunlight disinfectant applied to so many top level employees of the FBI, DOJ,
their institutions and other malefactors in other branches. When, not if, that day arrives,
when perp walks, trials, sentencing, mea culpas and much feckless deflection and gnashing of
teeth occur, then will there be some perception of a symbolic return to the fairness that was
once felt by much of the country. The preponderance of evidence, not punditry or spin, points
to likely criminal convictions, ruined careers and discredited institutions. Repairing those
institutions, and regaining public trust will be difficult given the inertia and FUD residues
that have built up, but we do have a country at stake for all of us.
There are many other aspects of the justice system that need review and reform, as noted
by other commenters. Without some highly publicized changes to those institutions to restore
some initial and fundamental element of trust, then people both in the US and abroad will
have doubts about the Rule of Law. Most people do not want to have a country where that
statue of a blindfolded justice has to peek to see who is trying to tip the scales.
The main word used here is fairness but what we are really talking about is justice. It
does not matter what country or culture that we are talking about, we all know when we are
being treated fairly, or justly, and when we are suffering an injustice. An example? Two
people have a meal together when one reaches over and helps themselves to the food on the
other person's plate. That sort of unfairness can get you killed in some places. But likely
that feeling of unfairness or injustice is universal.
And here is the crux of neoliberalism. It picks sinners and losers – deliberately
– and abandons those they deem to be losers. But it does not do so on the basis of
worth but on what it perceives to be worth which is why a college sports coach or
administrator can earn millions while a professor earns peanuts. If anything, there is a
strong streak of Social Darwinism to this as a justification to who these "winners" are. But
most of us can think of people in business, sports, politics, etc. who in reality aren't
worth two bits based on their performance.
The result for the UK? Those designated the losers who were abandoned, policed and watched
by the winners saw their chance to strike back at them by picking Leave in the Brexit
campaign. Life was not good for them and it was not going to get any better and so they
decided to make a choice to deny the winners something that they valued – Remain. There
is not a doubt in my mind that if these people had not been abandoned but had been able to
share in the success of the country, then they too would have chosen Remain. You saw the same
with the Trump vote in 2016 in the US. And this is only the first installment.
I think the insight in your last paragraph, more than any other single factor, explains
Donald Trump's electoral success in 2016 and identifies who his "base" really are.
The court system is perhaps the best example of how Fair Play has been degraded in the
US.
For 20+ years we ran a small mom-and-pop consulting business for large companies, all
Fortune-500. We did highly technical work with such efficiency and economies of scale
providing industry standings and granular decision support, the companies themselves or
McKinsey-types could never come close to doing a similar product. At least until an industry
association, facilitated by a customer decided to steal misappropriate our
intellectual property and produce a knock-off product. This happened even though we offered
to collaborate with the industry association and had a "good" contract prohibiting
stealing misappropriation.
Let it suffice to say that a mom-and-pop consulting business is at serious disadvantage as
soon as you get a lawyer and file a lawsuit in federal court. The defense attorneys were
given a blank check by their members and spent high 7 figure sums trying to pulverize us. By
the time the thing was winding down, we were paying our attorneys our of our retirement
account. I understand that in the UK and EU things are even more stacked against
plaintiffs.
While 98% of federal civil cases and tossed out or settled, we ended up with a 3 week
trial. The defendants team had 3 partners, an IT person and paralegal from a national firm in
court at all times, plus 3 people working locally at rented office space. We had a mid-size
regional firm represent us -- it was not cheap.
What strikes us most is the defendants seemed to be on home turf from the get-go with the
court. There were YEARS of delays and all sorts of spurious filings and even a counterclaim
based on fiction. This is standard procedure. Further, it was a highly technical case and we
performed thousands of hours of work to refine the details for the lawyers and jury to
understand. The defendants had unlimited resources to obfuscate and confuse, which they did
masterfully. The majority of evidentiary ruling were in favor of the defendants. It was a
huge upward struggle.
What is even worse is there is zero incentive for defendants not to lie
mis-remember facts. Our lead attorney told us in 25 years of litigation practice he had never
seen or heard of a sanction, much less prosecution, for perjury. In fact some of these
liars were promoted and rewarded for their courtroom performance.
This whole process took 5 years. We "won"; the jury didn't buy the industry's arguments.
But our business was destroyed, we've been blacklisted and any residual value a business with
20+ years of stable income was destroyed. The industry group pays their staff handsomely (its
just added to your monthly bill) and while a few people were pushed aside, the main perps
remain and are well compensated. They plod along with a garbage imitation, but the
associations membership executives don't care -- there is no third party assessment of their
performance -- they grade their own performance now.
Needless to say, we are tired, disgusted and cynical. But glad we won and that it is over.
I would not do it again
It reminds me a bit of the Phone Hacking trial in the UK. Peter Jukes has a good book on
it – Beyond Contempt. The mismatch between the resources available to the News
International people and those available to the British Government was risible. As a result
News International was effectively in control of the proceedings almost from start to finish,
though the Crown was able to get Coulson as there was incriminating evidence against him in
writing.
Yes there may well have been perjury as well and the police seemed as I recall to have
been very slow to get to a farm where there were reports that major bundles of paper were
going on to a bonfire. Hugh Grant, when he taped a journalist, was told that 20% of
Metropolitan Police officers had been bribed by the press. Wonder if that had anything to do
with it?
And yet many Britons still think that the UK is a pretty straight place ..so much more
honest than those foreign countries.
Have recently watched series The Loudest Voice about Fox News. They make Murdoch look like
an avuncular figure in order to heighten the villainy of Ailes but of course you don't let
the organ grinder off the hook so as to blame the monkey. No Rupert no Fox News and perhaps
no current version of the NYT that acts like Fox News.
Thanks for the summary of the courts' action as a millstone around the neck of honest
commerce, and my sympathy for your loss.
It's worth remembering this kind of thing has consequences too. Fred Koch patented the
basic refining processes to turn crude oil into useful products, then the Rockefellers'
refineries essentially stole those processes (used them without paying patent royalties) in
their refineries. Koch sued .and *lost*! A few years later it came out that the Rockefellers
bribed the judge and Koch re-sued and won but at what cost? And ever after Koch and his
offspring came after the government whose courts were so corrupt.
The lament about declining standards is as old as the Pharaohs–read Howard Zinn's
People's History of the U.S. which exposes the New World's history of
venality–but recent events seem to be sounding the depths of the most profound
dishonesty. It's gotten bad enough that political economist Mark Blythe talks about the
positive impact a disaster like the Climate catastrophe would have in breaking up this cabal
of evil.
Your story reminds me of Florida inventor Steve Morton's case against copyright theft
being closed down and covered up by then-FBI Director Mueller and then-Attorney General Eric
Holder. Definitely a good example of unfairness at the top of the system.
For further information on Morton's case and story a good search engine for "Steve Morton"
, " Fincantieri ", " Mueller", " Holder" , "Comey" , ought bring up an outlet covering said
situation.
> The gradual retreat of the US from the eastern Pacific is pretty much seen as a done
deal,
> everyone is frantically scrambling to ensure they are not caught on the hop.
Not sure I understand this. Eastern Pacific? What retreat?
Wall*Street is often described as a casino, but in reality most every house of chance has
a security exchange commission of it's own, making sure that there is no cheating, and fair
play on both sides of the green felt jungle, and should a dealer in it's employ be caught in
an act of larceny, they'll be arrested toot suite.
When Wall*Street was paid off on losing wagers a dozen years ago, fair play lost it's
luster and has only become more meaningless in it's absence.
"I see in the near future a crisis approaching that unnerves me and causes me to tremble
for the safety of my country. . . . corporations have been enthroned and an era of corruption
in high places will follow, and the money power of the country will endeavor to prolong its
reign by working upon the prejudices of the people until all wealth is aggregated in a few
hands and the Republic is destroyed."
-- U.S. President Abraham Lincoln, Nov. 21, 1864
(letter to Col. William F. Elkins)
"These capitalists generally act harmoniously and in concert to fleece the people, and now
that they have got into a quarrel with themselves, we are called upon to appropriate the
people's money to settle the quarrel."
speech to Illinois legislature, Jan. 1837.
I find your Lincoln quotes curious. I thought Lincoln that after splitting wood for rail
supports Lincoln made his name and money as a lawyer arguing cases for the large rail road
corporations. If so, the quote you provided seems much like Eisenhower's speech on the
Military Industrial Complex.
"Lincoln made his name and money as a lawyer "
How better to learn about the 'real' machinations of the ruling elites? What Lincoln did with
that 'education' was what made him famous, not the education itself.
The word 'multiculturalism' has a range of meanings, both sociological and political. You
need clearly define your meaning of the word. As it is, your assertion is vague, imo.
I imagine that the operative word in his or her comment is "imposed." That implies an
'authority' that can dictate to everyone else. Such a state of affairs would be the opposite
of what I grew up imagining "progressivism" was.
What are the conditions imposed?
Because as much of a problem as people have with the idea of "cancel culture" there still is
the flip side that people aren't going to continue to let themselves be treated like
garbage.
The ultimate 'problem' in all this is the perennial one of who controls the resources, or,
as Marx and Engels put it, the means of production.
People will be "treated like garbage" for as long as 'garbage' is all that is available to
them. In an extremely unequal society, as the modern Wast has evolved into, once some
threshold of resource 'ownership' is crossed, the only feasible method of redressing the
balance seems to be outright revolt and warfare. Except for the example of Cincinnatus in the
Roman Republic period, (See: https://en.wikipedia.org/wiki/Lucius_Quinctius_Cincinnatus
) who knows of a time when concentrated power ever voluntarily gave up any significant
portion of their powers?
Inequality is inherently unfair.
With the site admin's forbearance.
We encountered the 'ground level' fruits of the loss of the ethos of fairness yesterday.
Phyl was told to see the "Pain Management Practice," an independent section of the local
medical apparat in order to 'manage' her use of the pain meds she was prescribed for her
amputation. So far, so good. The appointment is for two o'clock. Show up at one thirty
o'clock to fill out paperwork. Due to a tight schedule and other impediments, we show up at
the office at a quarter to two o'clock. The receptionist nurses, who sit at a desk behind an
armoured glass partition, tell us that we are late and must reschedule the appointment for
two weeks later. At which time, Phyllis begins to argue. This is normal behaviour with her
when confronted with 'unfair' conditions. One of the receptionists relents somewhat and goes
back into the back room and consults with someone.
She returns and declares; "No exceptions are allowed. You are late and that is that."
Phyl replies: "You can see my problem. Are you going to be rigid?"
Receptionist; "The best I can do for you is two weeks off."
Phyl; "Is there anything sooner?"
Receptionist; "Do you want the appointment or not? We have work to do here!"
Me, sotto voice to Phyl; "We will get nowhere with this bunch. Take the next appointment and
we'll see what we can do later."
Phyl; "All right."
As we left the waiting room, one of the two patients sitting there was visibly trying not to
laugh. The other patient got up and helped open the large glass door so I could maneuver the
wheelchair out into the hallway.
The point of all this, (besides an apologetically admitted venting on my part,) is that this
medical establishment has opted for a rigid and formalized rules based imposition of
authority in place of any sort of fairness or flexibility in dealing with their clients. (I
use the word client in it's original [?] Roman sense.) Speaking with several of our neighbors
yesterday I have discovered that this sort of rigidity in scheduling is becoming more common
around here.
One of the main features of fairness, at the least in medical situations is the belief that
the patients deserve some leeway in their treatment at the hands of 'officials.' This new
experience of ours highlights the emerging ethos that the system is paramount now. The
patients are now there for the convenience of the providers, and their stockholders. Fairness
has now officially been banned.
I was going to make a remark about this system change being an example of late stage
capitalism, but just realized that formalism and inflexibility are hallmarks of late stage
anything.
'Fairness,' however one defines it is a function of flexibility. 'Fairness' shows the desire
and ability to think out complex situations and move to balanced outcomes. All 'actors' in
the social situation are considered and dealt with in some semblance of a socially supportive
ethos. Communitarian at root, this has been, as is mentioned several times above, replaced by
an atomistic and minimalist pseudo philosophy. The foregoing because a strategy of adherence
to a rigid and simplistic set of rules in social situations is a rejection of thought and
reflection. "I was just following orders." Does that sound familiar?
Alas, I fear that "things" are going to get much worse in the times ahead, for everyone.
Thanks for your indulgence.
Ambrit, I am so sorry you and Phyl have to deal with humans utterly lacking in compassion
and human decency. If think if this happened to me, I would argued forcefully –
screamed- which would have probably had me removed from the office or banished from the
practice. This kind of treatment from people who are dealing with patients who need help just
makes my blood boil. Unfortunately, I think this kind of treatment towards others is a side
effect of living in an unfair/unjust society. Many people's hearts become bitter and hardened
( like I'm suffering and I don't care if you suffer too). The dark world we live in now is
cold hearted and full of tears. My heart goes out to you and Phyl and all others who are
suffering because of this.
Thanks Elizabeth. The Home Health nurse this morning didn't want to believe our tale. She
finally suggested that we complain directly to the top level of the Medical Organization that
this practice is a part of. I'm going to try that Monday. As a side note, the Physical
Therapist this afternoon mentioned that the nurses are stymied because absolutely no pain med
scrips are written on Fridays. (I found it hard to credit, but reflection seemed to prove her
correct.) This is evidently not just a function of the doctors wanting Fridays off, but a
conscious policy on the part of the local medical establishment. [Your only recourse would be
to admit yourself in to the Emergency Room I was told. Hmmm . what's the most expensive part
of a Hospital practice? You guessed it!]
My favourite aspect of the "visit" to the Pain Management Office was the presence of the
armoured glass partition between the Lobby and the receptionist's desk. This assumes that
someone in the physical office planning stage anticipated a high potential for violence in
that office. {I wonder why?}
I was tempted to let Phyl scream her head off, but remembered the presence of a uniformed
'Security Person' in the building lobby. The two behind the glass partition looked like, and
acted like the sort who would love to smack an unruly 'client' down. /Bored and smug would be
how I summed up how the two women appeared.\
Luckily, Phyl is already tapering off her drugs usage, so, there is a small cushion with
which to maneuver around this unholy edifice of Mammon.
I wonder if Phyllis's doctor could refer her to another clinic, one a little more
compassionate to people in pain? (Couldn't they let you finish the paperwork while you wait
in that little room for the always late doctor?)
This story has me enraged for Phyllis and also you. I am so sorry. Two weeks. The
audacity. Making her wait even a day! (I am almost crying in frustration. So very sorry)
While I definitely agree that ruling classes have deteriorated remarkably over the last
few decades, I don't think the old days were very fair either. Fairness is of interest -- in
fact, it's crucially important -- in a society composed of people who are more or less equal
and autonomous. It's a way to get along without a lot of conflict and risk. In an highly
unequal society, like those of the US and the UK, it's much less valuable than access to the
levers of power. You don't have to get along with those you can crush or brush aside. As the
scene here in the US continues to deteriorate, I expect concepts like fairness and justice to
seem more and more quaint to the movers and shakers and fixers, until finally the general
system breaks down completely. It's anybody's guess what will succeed that.
I think this loss of fair play is partly because many have realized that fortunes can be
made simply by gaining exceptions to established rules and laws. There have always been
exceptions, here and there, but our situation now is there are exceptions to established
rules everywhere. Companies can now simply lobby for some exclusive benefit or to ignore some
law that everyone else must follow, and then collect a risk free guaranteed profit for
essentially doing nothing.
Many large firms use these exceptions in the form of legal protections not available to
their competitors to both attain and maintain their competitive advantage. These protections
include ignoring existing laws, profiting from illegal businesses where profits exceed fines,
and profiting from exclusive U.S. government subsidies not available to competitors. The
banking and drug industry are notorious for routinely engaging in illegal practices that
generate profits which far exceed the fines that regulators impose when these firms are
caught. Preferential government subsidies that benefit a single company in an industry are
now also acceptable business strategy as companies like Amazon can obtain confidential
agreements with the U.S. Post office to ship packages for at least half of what UPS and FedEx
would charge for the same deliveries. A subsidy like this contributes to the many reasons
that its competitors are driven into bankruptcy, and probably explains why Amazon's retail
business
loses money everywhere except in the U.S.
Many small firms, especially tech unicorns in their early days, use these exceptions in
the same way. Amazon started as a small company that would sell mail-order books in a way
that allowed it to avoid sales tax. Early Uber investors were probably attracted by a belief
that government will look the other
way while it made cab rides cheaper by ignoring local taxi regulation, then transferring
all its business costs to its drivers, and then collecting a substantial fee for each of taxi
fare. AirBnB started as a small company whose rent would also ignore local hotel regulations,
zoning laws, health laws to prevent public health hazards, and fire safety codes. Small drug
companies like Turing Pharmaceuticals can simply acquire patents for drugs with no substitute
and then raise prices by 5,456%.
The problem is that too many of these risk free 'rent seeking' opportunities can overwhelm
an economy filled with corporations who are all chasing the highest risk adjusted rate of
return. When there are too many of these rent seeking opportunities in an economy then its
companies will select only these risk-less rent seeking strategies, while abandoning all
riskier but socially productive profit strategies like the pursuit of new breakthroughs,
product innovations, design quality, superior service, and product reliability. A related
negative outcome which you hint at with 'fair play' is most of these rents offer particular
exclusions from laws designed to protect society like those prohibiting consumer or investor
fraud, prohibiting worker exploitation, ensuring consumer safety, and maintaining financial
market stability.
So an economy with systemic rent seeking often incentivizes its corporations to abandon
their socially productive profit strategies, and then replace them with risk-less 'rent'
strategies where profit comes from ignoring laws that protect our society from fraud,
exploitation, and economic disruption.
Jeff Bezos was the first thing that popped into my mind. The Technocracy –with no
room for humanity, where the masses serve as hosts for 24/7 parasites – the second.
In this neck of the woods,Silicon Valley, the infestation of unfairness reflects itself
everywhere, particularly in the homelessness. Cars, the way they're driven, and how they are
judged, are also a perfect example. You can see it in very pricey new model cars with
dangerously blinding LED lights as the norm (which an insane National Highway Traffic Safety
Administration has yet to address after over a decade of complaints); so called demon
light headlight adaptations which make the car appear like a predatory night stalker in
one's rearview mirror; and disturbing personalized license plates, saw one the other day that
said MALWARE. And then there's the judgment by vehicle. After having lived where I am for
over a decade, was asked by a new neighbor, in a brand new vehicle, if I needed directions,
as if I was lost, when I stopped to speak with another neighbor in my not clunker looking,
almost 20 year old car. It cut me to the bone, as words can.
Small businesses are increasingly losing their shirts and being shut down due to amoral
commercial property owners; Amazon; Google, Facebook and Apple Campuses ™; and
corrupt mayors and city council members' neighborhood planning ™.
The Silicon Valley CalTrain commuter line just had its 16th pedestrian fatality of the
year in early December (a thirty two year old female youth therapist), and a hospitalized,
attempted 17th fatality, 9 days later; despite ever increasing rail vigilance. Meanwhile the
Local News™ keeps alluding to track improvements versus addressing the now tangible
despair. It's all gut rending and no surprise that Santa Clara County led California in
negative migration between 2018 – 2019. Unfortunately many were left with no means to
even leave, and/or couldn't leave their loved ones who needed them..
The age old term walking in another person's shoes – implying looking beyond
oneself, treating others fairly, and not taking ones luck in life as an indicator that
they're worthier people – seems utterly lost on many who are doing well and wish the
millions of 'losers' would disappear from their sight.
Who will be the new Wright Patman?
Who will be the new Sal Pecora?
Prior generations provided guidance on how to identify and call out unfairness, and get
meaningful results, for the benefit of the citizenry.
With absolutely 100% respect to the original posters and their points, I'd side w/Vlade
and argue that there are some serious rose-tinted glasses being worn.
Yes, (in my opinion) there was an era of "fair play" .but this was a flash-in-the-pan
consequence of WWII. As rightfully the bottom 95% earned their just desserts after years of
sacrifice for their country and rescuing the elites from the literal existential threat of
authoritarianism.
Now we're merely reverting to the time immemorial-style of 'every person for themselves'
social ruthlessness. sadly.
As I recall, the elites were in no danger from authoritarianism in the 1900s. Au
contraire, they profited at every turn from the acts of authoritarianism. Prescott Bush and
other business leaders (sic) did business with the Nazis and Fascists, and even with the
Japanese imperium. These days, platforms and algorithms setvup by the Elites of this time
loot and pollute and accelerate the many races to the bottom.
Good thing for that "life force" that when the last Elite human (possibly the last human
of any sort) dies, there will be other species already carving out niches of precedence and
preference It hurts, a little, to know we won't be missed
This post is a tad deceptive. It sounds like a review of neoliberalism and all that has
happened since c. 1980 when in fact it is now The Question. What is fair play/ What is/was
fair play and how do we create it going forward. Now that there can be no growth, very little
manufacturing and no labor unions as we once knew them. Automation and an elite class of
oligarchs and their functionaries are taking over. States/Nations still have their
constitutions but they are creating internal conflict as the old ways disappear back into
what Varoufakis calls a new feudalism. Like upstart above, however, I have only experienced
fair play in the courts, never in economic situations. But then I'm old, b. 1946, and female.
So I'm keeping an open mind as best I can, like the above clips from David, Clive, Vlade and
PK. One thing to add from the FR24 Debate on good regulation – it was pointed out by
one panelist that regulations are stricter in the EU for going into business, but on a
"horizontal" basis. Whereas it is easy to go into Bz in the US, all you need are vertical
connections. I took this to describe the fact that many corporations are monopolies. But
connections are few and far between. And lurking in the wings, as we all know, is climate
change. The new discussion about societal collapse has started. Now would be an excellent
time to interject the concept of fair play. I am optimistic because there is a basic, rock
solid strength in fair play that might serve to make it a survivor.
I've mentioned before that my father, an investment manager who retired around the time
Yves started, made a similar point prospectively. Background: he ran a smallish private firm
in Indiana, but it gave him rather wide exposure, including in a large industrial firm, plus
direct investments, besides the stock market.. Plus, my mother inherited a (then) good-sized
farm that was operated by a tenant.
His comment was that a culture of honesty saved a lot of money, otherwise spent on
guarding your interests, watching the watchers, hiring lawyers, etc. His firm shied away from
investing in anything with a hint of shadiness.
This is merely confirmatory of Yves' point, but from a different point of view and from
before the cultural changes (aka crapification) her post goes over.
And come to think, a younger relative who is a corporate lawyer told us, from her
contemporary experience, that handshake agreements are NOT a good idea. They tend to lead to
her getting involved, and she ain't cheap, nor are the consequences predictable.
I would add that I think human institutions, like human beings, have a life cycle, so to a
great extent the vagaries of, say, Brexit are a result of predictable senescence. Not that
you want to experience the down side, as we seem to be doing.
Your word is your bond.
Another old-fashioned saying that might yet make a comeback, starting with some undergrad
research paper on forgotten sayings of, say, the mid-20th century.
On the opening mention of recruiters and employees ghosting I'd like to add a few thoughts
of how different things are in that regard.
We're now all supposed to be part of some social network or another because we need to get
our names out there and grow our networks. Those services then turn around and pelt you with
emails and phone calls non-stop if you're whatever flavor of the moment they deem desirable.
They also don't give you the time of day if they decide you're not. And those services have
tried to evolve new tools to prevent you turning them away or ignoring them. Emails with
"decision required" and polls and notices that seem to imply if you don't respond they'll
kick you off. That's problem since any boss can fire you for any reason at any time. And they
definitely mention that you're not being polite or fair by not responding to an email
conversation you didn't initiate for a job position you didn't inquire about on a service you
didn't ask them to use.
I have a job I like so I was really annoyed that one recruiter on Indeed couldn't take no
for an answer and demanded I tell them why I wasn't going to permit them to sell my resume to
a potential job opening. I don't understand why we're supposed to be at everyone else's beck
and call and they don't have to respond to even polite overtures from us.
So it's more than just fair play seems to be missing in our society right now. It's that
whatever echoes of fairness exist are used to abuse the people who believe in them. They
steal your time, your attention, your professional connections, anything they can. Then they
complain about you not responding. That's another facet of this that I really don't like.
There is so much one can say on this topic. Unfortunately, I am increasingly pessimistic
and of the view that nothing will really change until we suffer a true calamity as was the
case in the past.
An oversimplifying example. My father was a combat veteran from the Korean War, having
been just a little young to serve in WWII. There was a clear sense of inter-relationship in
this generation. They experienced the depths of the depression and the massive loss of life
and destruction of WWII. My dad eventually became the COO of one of the most powerful
financial services firms in the US. His generation of leaders would never have considered the
(1) levels of compensation relative employees as appropriate, (2) becoming predators on their
customers, they prized their customer relationships, (3) using the firms balance sheet to
gamble at the casino in a heads they win, tails you lose game. It simply wasn't in their DNA.
They had suffered too much to jeopardize shared prosperity and general welfare.
When my father took early retirement he had a unique resume and was offered very serious
positions of prestige and power, with high levels of compensation. He turned them all down,
as did his piers, as they violated an inherent code of ethics and fairness that they didn't
need to articulate it was just their from their shared sacrifices earlier in life.
In my experiences on Wall Street, both as a banker and as a CFO of firms, this would be
anathema.
My only source of hope is that our daughter's generation, she is 27, sees this for what it
is. They fully understand that our society is failing and eschew the loss of fairness on
multiple levels. They consciously avoid politics and participation, not out of laziness, but
because they see our leaders (both political and business) as fundamentally corrupt. She and
her friends have no interest in voting for a neo-liberal (e.g., Biden, Buttagieg, etc.) who
is just better behaved than Trump. They are well educated, have gone to excellent schools,
and want something more from life than a high paying Wall Street job.
We see so much goodness in them, yet worry that it will take a global war or financial
collapse leading to depression to reset our society.
Reagan pocketed a huge, at the time, $2,000,000 speaking fee. That provided the imprimatur
that cashing in was okey-dokey. Later grifters looked on with amusement pondering the blood,
sweat, toil and tears of others that led to their own book and speaking shakedown deals with
multiples of that fee in laundered money.
Two assertions in this post caught my eye:
Firms "that adopted nobler objectives did better in financial terms than ones that focused on
maximizing shareholder value."
I believe firms that adopted nobler objectives -- may -- have done better over the
long-term than firms that focused on maximizing shareholder value but next I wonder about how
well the managers did in the short-term [perhaps even the long-term after correcting for the
differences in the qualities and abilities of the management] in each type of firm. I suppose
mediocre managers did very much better when "focused on maximizing shareholder value". Before
engaging the relatively long read of the linked post discussing details of the study which
the main post refers to -- I also wonder how the referenced study deals with immoral acts
which are not quite clearly immoral -- like outsourcing. Over the long-run outsourcing is bad
for a country, bad for the resilience of a firm, and bad for the firm over the long-run
before we are dead. However, I believe many of the firms that "adopted nobler objectives" --
and remained steadfast to them -- were driven out of business by price competition.
The second assertion:
"Another aspect of the decline in the importance of fair dealing is the notion of the
obligations of power, [w]hat individuals in a position of authority have a duty to."
In regard to this assertion, I immediately recalled Machiavelli's "the Prince". Many of
the ideas of noblesse oblige were anchored in the power and authority of the Catholic
[Universal] Church. Though in conflict with a God Chosen Monarch -- noblesse oblige operated
to attach similar moral authority to the Aristocratic Classes. In my Youth I thought of
Machiavelli as completely unmoral. Later when I learned more about his life and actions I
realized his "Prince" unveiled the unmoral reality behind the operations of monarchical and
aristocratic actions. Neoliberalism has succeeded in stripping all moral coverings from power
and through the efforts of an extremely well-funded Thought-Collective and propaganda machine
it has divorced thinking about morality from power -- except as a thin fig-leaf. Most
significantly it has exalted Power and its co-worker Wealth to positions of 'moral goodness'.
Fair dealing in the Neoliberal moral universe is a slogan without content to fool those
unaware and/or unwilling to 'see'.
I also feel much of the nostalgia for noblesse oblige and critique of the Neoliberal Age
may originate from the residual conflicts and cross-envies between 'Old'-money and
'New'-money. Old-money has already forgotten the immoral origins of its wealth.
Much of this post is related to Brexit -- something I avoided study of or comment upon and
still little understand. I excuse myself as someone squeamish about traffic accidents and
train wrecks though powerful feelings of sadness overwhelm me.
The heart of this post resides in the ancient question of the tie between morality and its
enforcement -- the question for how you would act given a "cloak of invisibility" which is a
prop for posing concrete questions about how you might act without the constraints of dealing
with any of the moral consequences or implications of your acts. I may be a fool -- but I
believe most all of Humankind believes in Justice [and acts Justly] -- the Justice which I
believe The Rev Kev equates to 'fairness' -- which is a much weaker word. But I also believe
there are a certain number of individuals who do not care about Justice and the Neoliberal
Thought Collective has somehow transformed this indifference ['disregard' -- 'disdain for']
Justice into a moral imperative and belittled Justice as a throw-back to benighted times
past.
We live in DarkTimes when the very worst among us claim the most and worse still brand
themselves as praise-worthy while using their colossally disproportionate Power and Wealth to
squelch criticism and amplify their accolades often self-accolades through their wholly owned
Media.
"... we have sent the factories to distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and cheap stuff from Asia is your consolation prize. Enjoy ..."
"... Homelessness in America runs way deeper than just the winos and drug addicts living on the big city sidewalks. ..."
All the people of America, including the flyovers, are responsible for the sad situation
we're in: this failure to reestablish a common culture of values most people can subscribe to
and use it to rebuild our towns into places worth caring about. Main Street, as it has come to
be, is the physical manifestation of that failure. The businesses that used to occupy the
storefronts are gone, except for second-hand stores. Nobody in 1952 would have believed this
could happen. And yet, there it is: the desolation is stark and heartbreaking.
Even George Bailey's "nightmare" scene in It's a Wonderful Life depicts the
supposedly evil Pottersville as a very lively place, only programmed for old-fashioned
wickedness: gin mills and streetwalkers. Watch the movie and see for yourself.
Pottersville is way more appealing than 99 percent of America's small towns today,
dead as they are.
The dynamics that led to this are not hard to understand. The concentration of retail
commerce in a very few gigantic corporations was a swindle that the public fell for.
Enthralled like little children by the dazzle and gigantism of the big boxes, and the free
parking, we allowed ourselves to be played.
The excuse was "bargain shopping," which actually meant we have sent the factories to
distant lands and eliminated your jobs, and all the meaning and purpose in your lives -- and
cheap stuff from Asia is your consolation prize. Enjoy
The "bones" of the village are still standing but the programming for the organism of a
community is all gone: gainful employment, social roles in the life of the place, confidence in
the future. For a century starting in 1850, there were at least five factories in town. They
made textiles and later on, paper products and, in the end, toilet paper, ironically enough.
Yes, really.
They also made a lot of the sod-busting steel ploughs that opened up the Midwest, and cotton
shirts, and other stuff. The people worked hard for their money, but it was pretty good money
by world standards for most of those years.
It allowed them to eat well, sleep in a warm house, and raise children, which is a good
start for any society. The village was rich with economic and social niches, and yes, it was
hierarchical, but people tended to find the niche appropriate to their abilities and
aspirations -- and, believe it or not, it is better to have a place in society than to have no
place at all, which is the sad situation for so many today.
Homelessness in America runs way deeper than just the winos and drug addicts living on
the big city sidewalks.
It seems there's a major political party exactly working against a common American
culture. They jeer at the thought of it. It seems to be the main platform, above all
else.
It is a major party alright BRH, but it is no so much political as it is economic and
socially stratified. They are opulent, self consumed and greedy as hell (literally). There
can only be so many parasites sucking the lifeblood out of any herd of servant beasts, and
they can only suck so long on their hosts before the poor beasts fall over and die. And that
is the tipping point, where we lose enough life blood that we can no longer stand upright,
but drop to the deck and are consumed. It is the classic Goose that laid the Golden Egg fairy
tale being acted out in real life and coming to a neighborhood near you soon.
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Beautiful, thoughtful post Jim, yet to be honest it fills me with a sense of anxiety, and
this is simply because the catastrophic events you forecast, although for the better in the
long run (as they will compel a return to a world made by hand, or the recovery of human
scale) will nonetheless bring much suffering to a lot of people ( including my own family). I
would personally like to believe there is another way a more sustainable civilization could
be attained than on the heels of societal collapse. I do believe the world is full of
mystery, and that life itself is a series of unfolding miracles we lack the capacity to
comprehend due to our limited perspective. Yet perhaps you are right and some type of
collapse is inevitable before a new beginning can be made. If such be the case, as
individuals we will be compelled to tap into inner potentials that will needed to meet the
approaching apocalypse, potentials which currently lie dormant and undeveloped. Maybe in the
process of doing so we will recover our wholeness as well.
The new US defense bill, agreed on by both parties, includes sanctions on executives of companies involved in the completion
of Nordstream 2. This is companies involved in laying the remaining pipe, and also companies involved in the infrastructure around
the arrival point.
This could include arrest of the executives of those companies, who might travel to the United States. One of the companies
is Royal Dutch Shell, who have 80,000 employees in the United States.
Some people believe 'the market' for crude oil is a fair and effective arbiter of the industry supply and demand.
But if we step back an inch or two, we all can see it has been a severely broken mechanism during this up phase in oil.
For example, there has been long lags between market signals of shortage or surplus.
Disruptive policies and mechanisms such as tariffs, embargo's, and sanctions, trade bloc quotas, military coups and popular revolutions,
socialist agendas, industry lobbying, multinational corporate McCarthyism, and massively obese debt financing, are all examples
of forces that have trumped an efficient and transparent oil market.
And yet, the problems with the oil market during this time of upslope will look placid in retrospect, as we enter the time beyond
peak.
I see no reason why it won't turn into a mad chaotic scramble.
We had a small hint of what this can look like in the last mid-century. The USA responded to military expansionism of Japan by
enacting an oil embargo against them. The response was Pearl Harbor. This is just one example of many.
How long before Iran lashes out in response to their restricted access to the market?
People generally don't respond very calmly to involuntary restriction on food, or energy, or access to the markets for these things.
In 2012, when economist Thomas Philippon was looking into some data, something odd caught
his attention.
His homeland, France, was undergoing another revolution, although a much different one: a
revolution in the country's telecommunication market. A new mobile operator, Free, had
entered the market and disrupted it almost overnight. The new operator slashed prices,
offering plans that hadn't been seen before in France.
France's three legacy mobile operators were forced to react and drop their own prices. It
didn't help. In only three months, Free's market share reached 4 percent. At the end of the
following year, its market share tripled. Today, Free controls 15 to 16 percent of the
market, making it France's third largest mobile operator. (If you add the six virtual
operators to the mix -- meaning companies who lease broadband space -- you'll get a total of
10 different mobile operators in a country with a population one-fifth the size of the United
States.)
"Digging deeper into that crystallized everything for me," says Philippon. "It was an
oligopoly based on three legacy carriers that lobbied very hard to prevent anybody from
getting a fourth (mobile) license. For 10 years they were successful. But then, in 2011, the
regulator changed and gave a license [to] Free. It wasn't a technological change or a change
in consumers' taste. It was purely a regulatory decision."
For French consumers, this one decision changed everything. Instead of paying $55 for a
1-gigabyte plan, the new prices for much better plans cost half that. And prices continued to
drop. Today, a Free 60-gigabyte plan costs only $12.
But Philippon wasn't just interested in what the new competition in the French telecom
industry said about French markets. Having lived in the United States since 1999, he compared
the French telecom revolution to the American market. The numbers blew his mind. While in
France the number of mobile operators was rising, in the US the number was getting smaller
(and that number might even decline further, if the planned Sprint-T-Mobile merger goes
through).
The result was a huge price gap between the two countries.
"France went from being much more expensive to much cheaper in two years," he says. "The
change in price was drastic -- a relative price move of 50 percent. In such a big market with
gigantic firms, that's a big change. And it was not driven by technology, it was driven by
pro-competition regulation." He immediately adds, just to emphasize the irony: "It happened
in France of all places, a country that historically had a political system that made sure
there wasn't too much competition. This is not the place where we expected this kind of
outcome."
The opposite was very surprising too: The level of competition in the United States, the
role model of free-market democracy, was declining.
Philippon, an acclaimed professor of finance at the New York University Stern School of
Business, kept pulling that thread. He gathered an overwhelming amount of data on various
markets, took a few steps back to look at the big picture, and then identified a pattern. The
result is "The Great Reversal," his recent book, in which he explores and explains when, why,
and how, as his subtitle puts it, "America Gave Up on Free Markets."
The telecom story is just one of many examples Philippon provides throughout the book of
non-competitive US markets, in which most or all of the power is concentrated in the hands of
a few big companies. It's a situation that makes it almost impossible for new competitors to
enter and lower prices for consumers. The airline market is another example, as is the
pharmaceutical industry, the banking system, and the big tech companies such as Google and
Facebook, who have no real competition in the markets they operate in.
The book's main argument has a refreshing mix of both right- and left-leaning economic
thinking. It goes like this: During the last 20 years, while the European Union has become
much more competitive, the United States has become a paradise for monopolies and oligopolies
-- with a few players holding most of the market share. As US companies grew bigger, they
became politically powerful. They then used their influence over politicians and regulators,
and their vast resources, to skew regulation in their favor.
The fight over net neutrality, to name one example, demonstrates it well.
"Guess who lobbied for that? It's a simple guess -- the people who benefited from it, the
ISP's [internet service providers]. And they are already charging outrageous prices, twice as
high [as] any other developed country," Philippon says.
This growing concentration of power in the hands of a few has affected everything and
everyone. It has inflated prices because consumers have fewer options. Wages are stagnant
because less competition means firms don't have to fight over workers. Financial investment
in new machinery and technology has plummeted because when companies have fewer competitors
they lose the incentive to invest and improve. It has driven CEO compensation up, and
workers' compensation down. It has caused a spike in inequality, which in turn has ignited
social unrest.
If all of this is too much to wrap your head around, Philippon puts a price tag on it:
$5,000 per year. That's the price the median American household pays every year for the lost
competition. That's the cost of the United States becoming a Monopoly Land.
How did this happen? According to Philippon, it's a story with two threads. The European
side of this story happened almost by mistake. The American side, on the contrary, was no
coincidence.
When the European Union was formed in the early 1990s, there was a lot of suspicion
between the member states, namely France and Germany. (Two World Wars tend to have that
effect.) This mistrust birthed pan-European regulators who enjoyed an unprecedented amount of
freedom, more powerful than any of the member countries' governments.
"We did that mostly because we didn't really trust each other very much," he says. Now, 20
years later, "it turns out that this system we created is just a lot more resilient towards
lobbying and bad influences than we thought."
At the same time in the United States, the exact opposite was happening. Adopting a
free-market approach, regulators and legislators chose not to intervene. They didn't block
mergers and acquisitions, and let big companies get bigger.
This created a positive feedback loop: As companies grew stronger, the regulators got
weaker, and more dependent on the companies they are supposed to regulate. Tens of millions
of dollars were channeled into lobbying. The Supreme Court's Citizens United decision gave
corporate money even more political influence.
At some point, big companies started using regulation itself to prevent new competitors
from entering the market.
The result wasn't free markets, but "the opposite -- market capture," says Philippon,
referring to a situation in which the regulator is so weak it depends completely on the
companies it regulates to design regulation.
Philippon is not the only one who's making these claims. A group of economists from the
University of Chicago Booth School of Business holds a similar view. They are called
Neo-Brandeisian, after the late Justice Louis Brandeis, who, a century ago, fought to broaden
antitrust laws. They believe the big tech companies, for example, managed to rig the system,
and fly under current antitrust regulation. They think it is time to break them apart.
But not everyone agrees with Philippon's narrative or his conclusions. Economists like
Edward Conard, author of "The Upside of Inequality," thinks Philippon's claim that big
companies are evidence of less competition is upside down. According to his criticism, it's
exactly the opposite: These companies became big and powerful because they innovate and give
a lot of value to consumers. He also argues that the conclusion that Europe is more
competitive and innovative than the United States is preposterous, given that the biggest
tech companies are American, not European.
Philippon addresses this counterclaim in his book. The United States is one giant market
of English speakers. Theoretically, if you have a good idea for a new product and you can
finance it, you have more than 300 million potential users on day one. In the EU, on the
other hand, there are 28 countries, with residents who speak 24 different languages. It's not
as simple.
Philippon, who by the age of 40 was named one of the top 25 promising economists by the
International Monetary Fund, also differentiates himself from the Chicago school of thought
in one important way: He's not dogmatic, he's pragmatic. Instead of a one-size-fits-all
solution to the problem, he suggests a more nuanced approach. This is exactly what makes his
case both unique and somewhat tricky to grasp. His approach is neither right nor left.
"The idea that free markets and government intervention are opposites, that's bogus. So
half of me agrees with the Chicago School and half disagrees," he says.
"But if you think that you can get to a free market without any scrutiny by the
government, that's crazy. That's simply untrue empirically. We need to make entry easier to
increase competition, that's the objective," he says. "And the way to do so sometimes means
more government intervention."
OK, but how do you do that? According to Philippon, each case is different.
"In some cases it will be by more intervention. Like maybe force Facebook to break from
WhatsApp. And sometimes it will be by less intervention. Kill a bunch of regulations and
requirements for small companies," he says.
The first idea, at least, has caught a lot of public attention during the last year, and
has been a talking point of the presidential campaigns of Senators Bernie Sanders and
Elizabeth Warren. Facebook's CEO Mark Zuckerberg was recorded saying that if Warren wins, it
will "suck for us." Warren's plan for the big tech companies, for example, includes
"reversing mergers," which means uncoupling WhatsApp and Instagram from Facebook. Her plan
would also forbid Amazon being both a marketplace and a vendor at the same time.
But can any of these interventions actually happen? And if so, what would they mean for
American consumers? Those are more complicated questions.
If big tech companies were broken up, Philippon estimates that the average American
consumer won't be affected financially.
"Since people don't pay these companies directly, it won't change the bottom line for the
middle class, it won't have a big impact on people's disposable income," he says.
What would have a tremendous impact on Americans' lives and income is to keep on going
beyond the big tech companies. "We should go after the big ticket items -- telecom,
transport, energy, and healthcare. That's where you want action, but there is much less
bipartisan support for that," he says.
Something similar to the French telecom revolution is still far from happening in the
United States, but the fact that the 2020 campaign is already pushing competition-promoting
ideas back into the public discourse is a reason for cautious optimism, according to
Philippon. Nevertheless, he warns, we should not let this mild optimism mislead us.
"Free markets are like a public good: It is in nobody's interest to protect them.
Consumers are too dispersed and businesses love monopolies," he says. "So to take free
markets for granted, that's just stupid."
(Shaul Amsterdamski is senior economics editor
for Kan, Israel's public broadcasting corporation.)
(Hmmm. Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service.
There's no competitive offering in our town.)
"...Our largest monthly bill is for 'telecom',
from Comcast, for TV, phone & internet service..."
[I got the same information from the service tech doing the annual clean and test on my
propane fireplace insert yesterday, in reference to his parents though. They were on Verizon
Fios for cable. He thought they should dump cable for a web-TV solution and just use cell
phones. Their bill was over $400/month. Mine is a little over $200/month for the same
service, which in both cases includes land line. In my zip code Verizon does not bundle Fios
with mobile. The only difference that I know is that we have neither any premium channels nor
DVR boxes and I assume that his parents must have both to run up a bill that high. When we
pony up for Fios Gb, then at least for three years our bill will fall below $100/month, then
return to a higher monthly yet if we do not take another new contract after that upgrade
contract ends. Verizon only makes new contracts when new services are added or upgraded.
Customers get next to no benefit for loyalty/retention. We have both Verizon and Comcast
available in our area. I have had both in my present home at different times, but hate
Comcast for failures on their part to provide tall vehicle clearance to pass down my driveway
until forced to do so by the power company whose poles they must use and for a duplicate
billing error where they billed me for two separate addresses and put me into collections for
the one that I never resided at since I never saw that bill or knew of it prior to the first
collections call.]
Bernie Sanders unveils plan to boost broadband
access, break up internet and cable titans https://cnb.cx/34TzaQw
CNBC - Jacob Pramuk - Dec 6
Bernie Sanders unveiled a plan Friday to expand broadband internet access as part of a
push to boost the economy and reduce corporate power over Americans.
In his sprawling "High-Speed Internet for All" proposal, the Vermont senator and
Democratic presidential candidate calls to treat internet like a public utility. His campaign
argues that the internet should not be a "price gouging profit machine" for companies such as
Comcast, AT&T and Verizon.
Sanders' plan would create $150 billion in grants and aid for local and state governments
to build publicly owned broadband networks as part of the Green New Deal infrastructure
initiative. The total would mark a massive increase over current funding for broadband
development initiatives. The proposal would also break up what the campaign calls "internet
service provider and cable monopolies," stop service providers from offering content and end
what it calls "anticompetitive mergers."
Sanders and his rivals for the 2020 Democratic presidential nomination have pushed to
boost high-speed internet access for rural and low-income Americans, saying it has become a
necessity to succeed in school and business. The self-proclaimed democratic socialist has
unveiled numerous plans to root out corporate influence as he runs near the top of a jammed
primary field. ...
Aa excellent article that brings no new ideas to the debate but updates the debate to today.
One thing economist Thomas Philippon did not mention is that voters must turn out the
elected and get new ones who will vote to create more and vigorous competition instead of
oligopoly.
"... "Fifty years of shareholder primacy," wrote the Financial Times, "has fostered short-termism and created an environment of popular distrust of big business." ..."
"... The rise of stock options to compensate corporate managers entrenched shareholder value by aligning the interests of managers and shareholders. Companies began sacrificing productive investments, environmental protections, and worker security to ensure shareholder returns were maximised. The fear of stock market verdicts on quarterly reports left them no choice. ..."
"... This account fits a widespread belief that financiers and rentiers mangled the postwar golden era of capitalism. More importantly, it suggests a simple solution: liberate companies from the demands of shareholders. Freed from the short-term pursuit of delivering shareholder returns, companies could then return to long-term plans, productive investments, and higher wages. ..."
"... In the 1960s, a group of firms called the conglomerates were pioneering many of the practices that later became associated with the shareholder revolution: aggressive mergers, divestitures, Leverage buy-outs (LBOs), and stock repurchasing. ..."
"... These firms, such as Litton Industries, Teledyne and LTV revolutionised corporate strategy by developing new techniques to systematically raise money from financial markets. They wheeled and dealed their divisions and used them to tap financial markets to finance further predatory acquisitions. Instead of relying on profits from productive operations, they chased speculative transactions on financial markets to grow. ..."
"... With fortunes to be made and lost, no manager could ignore the stock market. They became increasingly concerned with their position on financial markets. It was in this context that corporate capitalism first spoke of the desire to 'maximise shareholder value'. While sections of the corporate establishment were put on the defensive, the main reason for this was not that shareholders imposed their preferences on management. Instead, it was competitor managers using the shareholder discourse as a resource to expand and gain control over other firms. Capital markets became the foundation of a new form of financialised managerial power. ..."
"... Third, the notion of shareholder primacy helped to offload managerial responsibility. An amorphous and often anonymous 'shareholder pressure' became the explanation for all manner of managerial malpractice. Managers lamented the fact they had no choice but to disregard workers and other stakeholders because of shareholder power. Rhetorically, shareholders were deemed responsible for corporate problems. Yet in practice, managers, more often than not, enrolled shareholders into their own projects, using the newly-formed alliance with shareholders to pocket huge returns for themselves. ..."
"... Amorphous? Anonymous? Anybody who faced one of Milken's raiders, or paid Icahn's Greenmail, would disagree. Nelson Putz, er, Peltz just forced P&G to start eating into the foundation of the business to feed his greed. There's nothing amorphous or anonymous about activist shareholders, especially when they take over a company and start carving it up like a Thanksgiving turkey. ..."
"... Corporations are artificial creations of the state. They exist in their current form under a complex series of laws and regulations, but with certain privileges, such as Limited Liability Corporations. It is assumed that these creatures will enhance economic activity if they are given these privileges, but there is no natural law, such as gravity, that says these laws and regulations need to exist in their current form. They can be changed at will be legislatures. ..."
"... The semantics of "shareholder primacy" are problematic. The word "shareholder" in this formula echoes the kind problems that whirl around a label like "farmer". ..."
"... I believe "shareholder primacy" is just one of many rhetorical tools used to argue for the mechanisms our Elites constructed so they could loot Corporate wealth. There is no misunderstanding involved. ..."
"... This fits within a Marxist analysis as the material conditions spurred the ideological justifications of the conditions, not the ideology spurring the conditions. ..."
"... I think about stock markets as separate from companies and I'm wrong. Each of the stock exchanges I have heard of started off when 4-5 local companies invested a few thousand each in renting a building and a manager to run an exchange hoping it would attract investment, promote their shares and pay for itself. ..."
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.
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?
"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.
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.)
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.
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.
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.
"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.
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.
This fits within a Marxist analysis as the material conditions spurred the ideological justifications of the conditions,
not the ideology spurring the conditions.
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.
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.
"... As part of the scam, parents would "donate" money to a fake charity run by Singer. The funds would then be laundered to either pay off an SAT or ACT administrator to take the exams or bribe an employee in college athletics to name the rich, non-athlete children as recruits. Virtually every scenario relied on multiple layers of corruption, all of which eventually allowed wealthy students to masquerade as "deserving" of the merit-based college slots they paid up to half a million dollars to "qualify" for. ..."
"... When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it. ..."
"... The conclusion of the study? We live in an oligarchy: ..."
The college bribery scandal reveals an ugly truth: our society is unjust, dominated by a small elite. Actress Lori
Loughlin, who has been implicated in the Operation Varsity Blues scandal. Credit:
Featureflash Photo Agency/Shutterstock The most destructive
and pervasive myth in America today is that we live in a meritocracy. Our elites, so the myth goes, earned their places at Yale and
Harvard, on Wall Street and in Washington -- not because of the accident of their birth, but because they are better, stronger, and
smarter than the rest of us. Therefore, they think, they've "earned" their places in the halls of power and "deserve" to lead.
The fervor with which so many believe this enables elites to lord over those worse off than they are. On we slumber, believing
that we live in a country that values justice, instead of working towards a more equitable and authentically meritocratic society.
Take the Operation Varsity Blues scandal. On Tuesday, the FBI and federal prosecutors announced that 50 people had been charged in,
as Sports Illustrated put it , "a nationwide college admissions scheme that used bribes to help potential students cheat
on college entrance exams or to pose as potential athletic recruits to get admitted to high-profile universities." Thirty-three parents,
nine collegiate coaches, two SAT/ACT exam administrators, an exam proctor,
and a college athletics administrator were among those charged. The man who allegedly ran the scheme, William Rick Singer, pled
guilty to four charges of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the U.S., and obstruction of
justice.
As part of the scam, parents would "donate" money to a fake charity run by Singer. The funds would then be laundered to either
pay off an SAT or ACT administrator to take the exams or bribe an employee in college athletics to name the rich, non-athlete children
as recruits. Virtually every scenario relied on multiple layers of corruption, all of which eventually allowed wealthy students to
masquerade as "deserving" of the merit-based college slots they paid up to half a million dollars to "qualify" for.
Cheating. Bribery. Lying. The wealthy and privileged buying what was reserved for the deserving. It's all there on vivid display.
Modern American society has
become increasingly and
banally corrupt , both in the ways in which "justice" is meted out and in who is allowed to access elite education and the power
that comes with it.
The average American citizen has very little power, as a 2014
study by Princeton University found. The research reviewed 1,779 public policy questions asked between 1981 and 2002 and the
responses by different income levels and interest groups; then calculated the likelihood that certain policies would be adopted.
A proposed policy change with low support among economically elite Americans (one-out-of-five in favor) is adopted only about
18 percent of the time, while a proposed change with high support (four-out-of-five in favor) is adopted about 45% of the time.
That's in stark contrast with policies favored by average Americans:
When a majority of citizens disagrees with economic elites and/or with organised interests, they generally lose. Moreover,
because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor
policy change, they generally do not get it.
The conclusion of the study? We live in an oligarchy:
our analyses suggest that majorities of the American public actually have little influence over the policies our government
adopts. [T]he preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact
upon public policy.
The belief in the myth of merit hurts the smart kid with great grades who aced his SATs but was still rejected from Yale and Harvard.
It hurts talented athletes who have worked their tails off for so many years. It hurts parents who have committed hundreds of school
nights and weekends to their children. It hurts HR departments that believe degrees from Ivy League schools mean that graduates are
qualified. It hurts all of us who buy into the great myth that America is a democratic meritocracy and that we can achieve whatever
we want if only we're willing to expend blood, toil, sweat, and tears.
At least in an outright class system like the British Houses of Lords and Commons, there is not this farcical playacting of equal
opportunity. The elites, with their privilege and titles, know the reason they are there and feel some sense of obligation to those
less well off than they are. At the very least, they do not engage in the ritual pretense of "deserving" what they "earned" -- quite
unlike those who descend on Washington, D.C. believing that they really are better than their compatriots in flyover country.
All societies engage in myth-making about themselves. But the myth of meritocracy may be our most pervasive and destructive belief
-- and it mirrors the myth that anything like "justice" is served up in our courts.
Despite all this evidence, most Americans embrace a version of the Calvinist beliefs promulgated by their forebears, believing
that the elect deserve their status. We remain confident that when our children apply to college or are
questioned by police , they will receive just and fair outcomes. If our neighbors' and friends' kids do not, then we assure ourselves
that it is they who are at fault, not the system.
The result has been a gaping chasm through our society. Lives are destroyed because, rather than working for real merit-based
systems and justice, we worship at the altar of false promises offered by our institutions. Instead we should be rolling up our sleeves
and seeing Operation Varsity Blues for what it is: a call to action.
Barbara Boland is the former weekend editor of the Washington Examiner . Her work has been featured on Fox News, the
Drudge Report, HotAir.com, RealClearDefense, RealClearPolitics, and elsewhere. She's the author of Patton Uncovered , a book
about General Patton in World War II. Follow her on Twitter@BBatDC.
If conservatives are going to dance the graves of Aunt Beckie, the backlash is going to be big. Sure this is a 'scandal' but it
seems these parents weren't rich enough to bribe their kids in college the right way, like Trumps and Kushner, and probably slightly
duped into going along with this scheme. (It appears the government got the ring leader to call all defendants to get evidence
they participated in a crime.)
Just wait until the mug shot of Aunt Beckie is on the internet and Olivia Jade does 60 minutes doing teary eyed interview of
how much she loves her mother. And how many parents are stress that their kids will struggle in the global competitive economy.
I fully recall the days of getting government computing contracts. Once a certain threshold was reached, you discovered you had to
hire a "lobbyist," and give him a significant amount of money to dole out to various gatekeepers in the bureaucracy for your contracts
to be approved. That was the end of our government contracts, and the end was hastened by the reaction to trying to complain about
it.
Thank you, Barbara Boland, for "The Myth of American Meritocracy" and for linking ("Related Articles" box) to the 2012 "The Myth
of American Meritocracy" by Ron Unz, then publisher of the American Conservative.
The 26,000-word Ron Unz research masterpiece was the opening salvo in the nation-wide discussion that ultimately led to the federal
court case nearing resolution in Boston.
"The Myth of American Meritocracy -- How corrupt are Ivy League admissions?" by Ron Unz, The American Conservative, Nov 28, 2012:
Barbara Boland "While black people make up only 13 percent of the population, they make up 42 percent of death row and 35 percent
of those who are executed."
Ms. Boland: According to the US Department of Justice, African Americans [13 per cent of the population] accounted for 52.5% of
all homicide offenders from 1980 to 2008.
I agree with prodigalson. This is the type of article that TAC should uphold as a 'gold standard'. One reason I read, and comment
on, TAC is that it offers thought provoking, and sometimes contrarian, articles (although the constant harping on transgender BS
gets annoying).
America has always been somewhat corrupt. But, to borrow a phrase, wealth corrupts, and uber wealth corrupts absolutely.
As Warren Buffet says "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning".
I have said it before, and I will say it again. During the next severe financial recession, if the rich are protected and coddled
and everybody else is left to fend for themselves the ARs will come out of the closets when the sheriff comes to take the house or
the pickup truck. My sense is that average Americans have had enough.
Imagine if the digital transfer of money was abolished. Imagine if everybody had to have their money in a local bank instead of
on an account in one of the major banks. Imagine if Americans saw, day after day, armored vehicles showing up at local banks to offload
sacks of currency that went to only a few individual accounts.
Instead, the elites get their financial statements showing an ever increasing pile of cash at their disposal. They see it, but
nobody else does. But, if everybody physically saw the river of wealth flowing to the elites, I believe things would change. Fast.
Right now this transfer of wealth is all digital, hidden from the view of 99.99% of Americans. And the elites, the banking industry,
and the wealth management cabal prefer it that way.
I am amazed by the media coverage of this scandal. Was anyone actually under the impression that college admissions were on the
level before these Hollywood bozos were caught red handed?
No, the meritocracy is not dead; it's not even dying. It is, in fact, alive and well and the absolute best alternative to any
other method used to separate wheat from chaff, cream from milk, diamonds from rust.
What else is there that is even half as good?
Are merit-based systems perfect? Heck, no. They've never been perfect; they will never be perfect. They are administered by people
and people are flawed. Not just flawed in the way Singer, and Huffman are flawed (and those individuals are not simply flawed, they're
corrupt) but flawed in the everyday kind of sense. Yes, we all have tendencies, biases, preferences that will -- inevitably -- leak
into our selection process, no matter how objectively strict the process may be structured, no matter how rigorously fair we try
to be.
So the fact that -- as with most things -- we can find a trace of corruption here that fact is meaningless. We can find evidence
of human corruption, venality, greed, sloth, lust, envy (all of the 7 Deadly Sins) pretty much everywhere. But if we look at the
20M students enrolled in college, the vast majority are successfully & fairly admitted through merit-based filtering systems (which
are more or less rigorous) which have been in place forever.
Ms. Boland tells us (with a straight face, no less) that "The U.S. is now a country where corruption is rampant and money buys
both access and outcomes." But what does that even mean?
Certainly money can buy access and certainly money can buy outcomes. But that's what money does. She might as well assert that
money can buy goods and services, and lions and tigers and bears -- oh my! Of course it can. Equally networks can 'buy' access and
outcomes (if my best friend is working as the manager for Adele, I'm betting he could probably arrange my meeting Adele). Equally
success & fame can buy access and outcomes. I'm betting Adele can probably arrange a meeting with Gwen Stefani .and both can arrange
a meeting with Tom Brady. So what? Does the fact that money can be used to purchase goods & services mean money or the use of money
is corrupt or morally degenerate? No, of course not. In truth, we all leverage what we have (whatever that may be) to get what we
want. That's how life works. But the fact that we all do that does not mean we are all corrupt.
But yes, corruption does exist and can usually be found, in trace amounts -- as I said -- pretty much everywhere.
So is it rampant? Can I buy my way into the NBA or the NFL? If I go to Clark Hunt and give him $20M and tell him I want to play
QB for the Chiefs, will he let me? Can I buy my way into the CEO's position at General Electric, Apple, Microsoft, Google, Sprint,
Verizon, General Motors, Toyota or any of the Fortune 500? Heck, can I even buy my way into the Governor's mansion? To become the
Mayor of Chicago? Or the Police Commissioner? No -- these things are not possible. But what I can buy is my presence on the media
stage.
What happens after cannot be purchased.
So no, by any measure, corruption is not rampant. And though many things are, in fact, for sale -- not everything is. And no matter
how much money I give anyone, I'm never gonna QB the Chiefs or play for the Lakers.
She tells us, "we are dominated by a rich and powerful elite." No, we're not. Most of us live our lives making the choices we
want to make, given the means that each of us has, without any interference from any so-called "elite". The "elite" didn't tell me
where to go to school, or where to get a job, or how to do my job, or when to have kids, or what loaf of bread to buy, or what brand
of beer tastes best, or where to go on the family vacation. No one did. The elite obviously did not tell us who to vote for in the
last presidential election.
Of course one of the problems with the "it's the fault of the elite" is the weight given institutions by people like Ms.Boland.
"Oh, lordy, the Elite used their dominating power to get a brainless twit of a daughter into USC". Now if my kid were cheated out
of a position at USC because the Twit got in, I'd be upset but beyond that who really cares if a Twit gets an undergraduate degree
from USC or Yale .or Harvard .or wherever. Some of the brightest people I've known earned their degrees at Easter PolyTechnic U (some
don't even have college degrees -- oh, the horror!); some of the stupidest have Ivy League credentials. So what?
Only if you care about the exclusivity of such a relatively meaningless thing as a degree from USC, does gaming the exclusivity
matter.
She ends with the exhortation: "The result has been a gaping chasm through our society. Lives are destroyed because, rather than
working for real merit-based systems and justice, we worship at the altar of false promises offered by our institutions. Instead
we should be rolling up our sleeves and seeing Operation Varsity Blues for what it is: a call to action."
To do what, exactly?
Toss the baby and the bathwater? Substitute lottery selection for merit? Flip a coin? What?
Again the very best method is and always will be merit-based. That is the incentive which drives all of us: the hope that if we work
hard enough and do well enough, that we will succeed. Anything else is just a lie.
Yes, we can root out this piece of corruption. Yes, we can build better and more rigorously fair systems. But in the end, merit
is the only game in town. Far better to roll-up our sleeves and simply buckle down, Winsocki. There isn't anything better.
"While black people make up only 13 percent of the population, they make up 42 percent of death row and 35 percent of those who are
executed. There are big racial disparities in charging, sentencing, plea bargaining, and executions, Department of Justice reviews
have concluded, and black and brown people are disproportionately found to be innocent after landing on death row. The poor and disadvantaged
thereby become grist for a system that cares nothing for them."
So to what degree are these "disparities" "disproportionate" in light of actual criminal behavior? To be "proportionate," would
we expect criminal behavior to correlate exactly to racial, ethnic, sex, and age demographics of society as a whole?
Put another way, if you are a victim of a violent crime in America, what are the odds your assailant is, say, an elderly, Asian
female? Approximately zero.
Conversely, what are the odds your assailant is a young, black male? Rather high, and if you yourself are a young, black male,
approaching 100 percent.
Mostly thumbs up to this article. But why you gotta pick on Calvinism at the end? Anyway, your understanding of Calvinism is entirely
upside down. Calvinists believe they are elect by divine grace, and salvation is something given by God through Jesus, which means
you can't earn it and you most assuredly don't deserve it. Calvinism also teaches that all people are made in the image of God and
worthy of respect, regardless of class or status. There's no "version" of Calvinism that teaches what you claim.
You see, free markets are a great idea in theory. Or you can call it "capitalism", or
combine the two and say "free market capitalism". There's very little wrong with it in theory.
You have an enormous multitude of participants in an utterly complex web of transitions, too
complex for the human mind to comprehend, and in the end that web figures out what values all
sorts of things, and actions etc., have.
I don't think capitalism in itself is a bad thing; what people don't like is when it veers
into neo-liberalism, when everything is for sale, when communities or their governments no
longer own anything, when roads and hospitals and public services and everything that holds
people together in a given setting is being sold off to the highest bidder. There are many
things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in
itself, not so much.
It's like nature, really, like evolution, but it's Darwin AND empathy, individuals AND
groups. The problem is, and this is where it diverges from nature, you have to make sure the
markets remain free, that certain participants -or groups thereof- don't bend the rules in
their own favor. In that sense it's very similar to what the human race has been doing to
nature for a long time, and increasingly so.
Now, if you limit the discussion to finance and economics, there would appear to be one
institution that's in an ideal place to make sure that this "rule-bending" doesn't take place,
that markets are fair and free, or as free as can be. That institution is a central bank. But
whaddaya know, central banks do the exact opposite: they are the ones making sure markets are
not free.
In the ideal picture, free markets are -or would be- self-correcting, and have an inbuilt
self-regulating mechanism. If and when prices go up too much, the system will make sure they go
lower, and vice versa. It's what we know from physics and biology as a negative -self
correcting- feedback loop. The self-correcting mechanism only activates if the system has
veered too much in one direction, but we fail to see that as good thing when applied to both
directions, too high and too low (yes, Goldilocks, exactly).
It's only when people start tweaking and interfering with the system, that it fails.
Negative feedback vs positive feedback are misunderstood terms simply because of their
connotation. After all, who wants anything negative? But this is important in the free markets
topic, because as soon as a central bank starts interfering in, name an example, housing prices
in a country, the system automatically switches from negative feedback to positive -runaway-
feedback, there is no middle ground and there is no way out anymore, other than a major crash
or even collapse.
Well, we're well on our way to one of those. Because the Fed refused to let the free market
system work. They, and the banks they represent, wanted the way up but then refused the way
down. And now we're stuck in a mindless positive feedback loop (new highs in stocks on a daily
basis), and there's nothing Jay Powell and his minions can do anymore to correct it.
The system has its own correction mechanism, but Greenspan, Bernanke, Yellen and now Powell
thought they could do better. Or maybe they didn't and they just wanted their banker friends to
haul in all the loot, it doesn't even matter anymore. They've guaranteed that there are no free
markets, because they murdered self-correction.
Same goes, again, for ECB and BOJ; they're just Fed followers (only often even crazier). In
fact since they have no petrodollar, they don't just follow, they have to do the Fed one
better. Which is why they have negative interest rates -and the US does not -yet-: it's the
only way to compete with the reserve currency. Of course today even the Fed, and "even even"
the PBOC, are discussing moving to negative rates, and by now we're truly talking lemmings on
top of a cliff.
"Let's throw $10 trillion at the wall just so home prices or stock prices don't go down!"
Yeah, but if they've been rising a lot, maybe that's the only direction they can and should go.
It may not be nice for banks and so-called "investors", but it's the only way to keep the
system healthy. If you don't allow for the negative feedback self-correction, you can only
create much bigger problems than you already have. And then you will get negative feedback
squared and cubed.
Author conflicts himself in the article. This paragraph is utterly stupid:
"I don't think capitalism in itself is a bad thing; what people don't like is when it veers
into neo-liberalism, when everything is for sale, when communities or their governments no
longer own anything, when roads and hospitals and public services and everything that holds
people together in a given setting is being sold off to the highest bidder. There are many
things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in
itself, not so much."
We have a healthcare cartel and massively subsidized costs (medicare, etc). It's not a free
market at all. It's a cartel. The Fed is a true monopoly. Free markets would be much better for
roads, hospitals and public services - all of those are horrible everywhere I've lived.
Investing is the biggest scam this side of the milkyway. I see it all the time and its
nailing future generations to the deck of a sinking ship.
Everytime I see one of those multi million or multi billion jobs, like a shopping mall or
some resort going up all I can say is, "Its never going to get paid off in the investors
lifetime. Since most of the people that invested in them are in their 60's, 70's and 80's.
They just skim the money off the top until the day they die and all that will be left are
hollowed out abandoned shells for the next generations to pay taxes on just to have them torn
down and the whole polluted mess cleaned up.
NO WAY most of these projects will ever get paid off before they're totally useless to
society. Look at all those falling down apartment buildings in the cities. Once a great
investment now a great pile of worthless junk.
" In the ideal picture, free markets are -or would be- self-correcting"
Yeppers. That is why when globalists exclaim "we have a LABOR SHORTAGE in ________
industry", it's b.s.
If you have a labor shortage, the rules of supply and demand would dictate that the company
owners must pay higher prices (wages) to employees to retain them, and attract new ones. It's
exactly what happens to consumers when there is a lemon, tomato or gas shortage -- prices go up
and we all pay. When companies attract employees with higher wages, the market responds -- kids
in school realize if they want a job, they could go into that industry and get snapped up
easily -- since there's a supposed "labor shortage". And voila, no more "labor shortage" and
the market corrects itself.
That should happen, but it doesn't, as globalists manipulate the market by allowing in more
surplus labor (mass immigration) from developing countries, which is labor market manipulation
-- forever gaming the system so they always have more leverage and the upper-hand in wage
negotiations. If you have a "labor shortage" and are offering minimum wage, no one is going to
step up for those jobs, other than the immigrants you just flooded into your country.
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.
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.
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
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.
"... 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. ..."
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.
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?
"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.
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.)
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.
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.
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.
"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.
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.
This fits within a Marxist analysis as the material conditions spurred the ideological
justifications of the conditions, not the ideology spurring the conditions.
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.
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.
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.
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.
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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.
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.
"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?"
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.
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.
From the above discussion, one could conclude that conventional economic theory is standing
on its head: it uses money as a measure of wealth, when in reality wealth is the measure of
money.
Take the Icelanders for example: the only "Western" country to follow China's excellent
practice of jailing crooked bankers. The Icelandic Leader did not look at the enormous sums
stolen, and exclaim in awe, These crooks are too big to fail. Instead, Iceland looked at
their real wealth: water, fish, a fragile but productive soil, and geothermal energy. So they
cocked a snook at British PM George Brown who called Icelanders "terrorists", jailed their
crooked bankers and their crooked politicians, and are doing much better than the UK's
Classical Monetarist economy.
Toby Russell
Precisely. In a very real sense, we are a simple 180 degree twist away from something
wonderful. Its our collective somnambulist imagination that stands in our way.
BigB
Precisely.
WEALTH:
From Middle English – *wele* = wellbeing; welfare
closely allied to HEALTH – *hoelp* = wholeness; being whole (among other roots).
The word has been engineered in use into a narrowly defined measure of accumulation.
Real wealth is simply being here. Economies do not allow for that anymore.
Toby Russell
Thank you. No, I hadn't heard of Merleau-Ponty but will now look into him. It sounds very
observant, clear sighted. There is so much of this stuff out there, but the deep dog-whistle
excellence of public-relations brain washing has been able to keep the infantile solipsism
– which I take to be Cartesian subjectivity – alive and kicking in its pram of
consumer conveniences. Who knows what the cost will be.
BigB
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It is way to early to falsely declare that the individual Cartesian subject is dead. But it
its disembodied subjectivity is under threat: from the very science that stands between us
and nature.
We supposedly live in a positivist empirical scientific paradigm. Supposedly: because we
left us out of the representation. And the rational empirical Self we invented from science
and philosophy is nowhere to be found for anyone who cares to look. Which is too few
unfortunately.
No one wants to totally debunk science: only to liberate an observer participant/dependent
second order science – with first person phenomenology at its heart. After all: we do
not experience ourselves via self-reports to others who dictate back to us what and who we
can be. Actually, we pretty much do exactly that for the moment.
To bridge the gap: Varela proposed his 'neurophenomenology' – which was a rigorous
first person accounting "mutually constraining" the third person neursoscientific lab
approach (how much we are supposed to learn from 'rubber hand' illusions – I have never
quite been sure. In fact I believe this 'third person' approach to be quite distorting and
very possibly even dangerous we 'hallucinate' consciousness; reality is an illusion;
etc).
We need to end up with a holistic account – not a 'Frankenstein' paradigm stitched
together from phantom limb pains; whole body illusions; aphasia and lesion studies; etc.
We are whole: not the sum of our dead deterministic parts! What a pity Varela died too
soon too.
Toby Russell
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Yes, a holistic account. For me that starts with accepting there is no matter, just
information; no space, just the mathematics of dimension, volume, distance, etc.; no energy,
just the mathematics and physics of force, attraction, repulsion, etc.: all information.
There is only experience, which is a necessary property of consciousness. We cannot know what
is 'beyond' that, because it lies outside what we are. We cannot even know if anything
'beyond' consciousness is possible.
And yes, the proposition that dead bits and pieces can be arranged in such a way as to
create the 'illusion' of life and consciousness is wholly untenable. Just the simple query:
"Who or what is being deceived by the illusion?" bursts that bubble. Or ought to. People do
so cling to their beliefs
Tim Jenkins
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Fine comment, Toby and may I submit that for real values to shine through, on collective
societal 'growth' & evolution of consciousness, harmonised with critical reasoning, then
the very first thing we need to get rid of is the IMF & Co.
Now that Kristalina Georgieva is the new M.D. people should be able to quickly see
clearly, that after her 1,001 days at the WBO and her previous pathetic E.U. C.V. one does
not need to understand ANYthing to do with how the system truly functions presently & how
it could be made to work for the people.
Stalinka's wholly unsuitable levels of deception, distraction & professional
incompetence, combined with her love & respect for Mafia Bosses, (literally), in her own
personal drive of pure self-interest and fuck Bulgaria and the Bulgarians mentality, was well
proven when she sided against Irina Bokova for Secretary General of the U.N. :- purely to get
on side with Merkel, May & BG PM Borisov's alliance with Anglo-Zionist-Capitalists &
NATO's non-existent interest in the Palestinian Problem. Bokova, on the other hand, had
actually done more than just getting down to work in changing Law and scything Budgets
@UNESCO and since serving as boss of UNESCO, thanks to Bokova we can now proceed legally,
theoretically, against any genocidal policy of war, because in Law,
"The Destruction of Culture is a Terrorist Act "
A solid foundation from which to work from,
in securing Palestinian 'values' & property rights.
Forget the IMF & Stalinka's rhetoric: we don't grow olives in Bulgaria, but have much to
trade with those who do and after Erdogan's "Operation Olive Branch", it is high time people
penalised Rhetoric & rewarded Sincerity in actions, not empty words inverting
& perverting reality . . . to twist trust, spin meaning & annulate cultural
belonging.
"This idolatry produces almost wholly unwanted outcomes" no 'ifs', Toby.
Greetings,
Tim
Toby Russell
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Thank you, Tim.
Yes, the evolution of consciousness is central. Indeed, I don't think we'll manage to
lastingly root out our need for corruptible institutions like the IMF and World Bank and BIS
etc., until we have developed or evolved a robust cultural desire to do things very
differently. I don't feel a top-down change can happen. And for radical change to be bottom
up, effective, sustainable and true to who we are as humans, we have to change in our
consciousness, away from fear, distrust and greed, towards love, trust and sharing. And these
things take time
smoe
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yes , boundaries present profit opportunities. The nation states are bounded human
containers.. the humans caught in the containers are fed the information that makes up the
environment and so they only know what is made available to them. That means those in control
of the propaganda can differentiate the humans and then sort them by binaries..
like gun control, or politicians, or race, place of origin, social factors, education, mental
ability, religion or just about anything.. But separation is not enough, those in control of
the information (propaganda) then polarize the thinking or feelings of the persons in the
differentiated groups; its like a football game, everyone is either for the Red Team and
strongly against the blue team, or vice-a-versa.
If you exchange a new born child, born to a Jewish family in New York, for a child born
the same day in Iran.and and the parents of the exchanged children mature in their own native
societies the non genetic child, 24 years later. the adult version of these two now matured
children will hate each other, not be able to speak the language of the other and be
committed to a vastly different set of goals and hold a vastly different set of basic
beliefs.
Nation state encapsulation allows to different humanity and propaganda allows to polarize
the thinking of those incarcerated within the nation states. These two things (boundary and
propaganda) account for, or are the basis of citizen support for all wars, and binary
differences that lead to reasoned differences of opinions. War comes about when some greedy
person (usually those supporting the leader and the leader) wants something the polarized
other side has or refuses to yield on.
Toby Russell
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Yes. Your summation reminds me strongly of Lewis Mumford's The Myth of the Machine, which is
about how unchecked ego – the mythic solar hero run rampant – structures
societies as mechanical-processional systems revolving around its hidden fears and need for
final control of everything. Of course there is never enough control and it all breaks in the
end, as narcissism must.
I should add, though, that diversity is vital. Life without diversity is impossible. The
way for us all, unique as we are, to communicate as successfully as possible with each other,
is to have zero beliefs, as you suggest in another comment above. That means almost zero
propaganda, and that little which might remain – there may always be a need for some
common vision of what life is about as part of meaning making and the fact that humans are
social beings – must be explicit and transparent, and always open to robust
questioning.
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.
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.
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. ..."
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.
"... 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. ..."
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.
"... 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. ..."
"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.
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.
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:
Location bound jobs (sales, marketing, legal, HR, administration, ..., also functions attached to those or otherwise preferring
"cultural affinity") - which are largely staffed with locals, also foreigners (visa as well as free agent (green card/citizen))
"Technical functions" and "technical" back office (i.e. little or no customer contact) - predominantly foreigners on visa
(e.g. graduates of US colleges), though some "free agent" hiring may happen depending on circumstances
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.
15-20 years ago it was testing and "low level" programming, perhaps self contained limited-complexity functions or modules
written to fairly rigid specifications, or troubleshooting and bug fixes implemented here or there.
Then 10-15 years ago it advanced to offshore product maintenance, following up on QA issues, small development projects,
or assisting/supporting roles in "real" projects (either conducted offshore or people visiting the domestic offices for weeks
to months).
This went on in parallel with domestic visa workers from the first 15-20 years ago wave either being encouraged or themselves
expressing a desire to go back home (personal, career, family reasons etc.) and "spread the knowledge" and advancing into technical/organization
management roles.
Then 5-10 years ago with clearly grown offshore skills (my theory is that people everywhere are cut from the same cloth,
and we are now at 10+ years industry experience in this narrative), the offshore sites started taking on ownership of product
components, while all the "previous" functions of testing, R&D support, tech pub (which I didn't mention earlier), etc. remained
and evolved further. Also IT (though IT support is more timezone bound and is thus present in all time zones).
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:
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.
" 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.
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.
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."
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.
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.
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.
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.
"... 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. ..."
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.
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. ..."
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."
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.
"... 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. ..."
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.
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.
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.
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.
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.
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. ..."
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.
Samuel Berrick Saul, Studies in British Overseas Trade, 1870–1914
(Liverpool: Liverpool University Press, 1960).
Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York:
Monthly Review Press, 1966).
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).
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.
Federal Reserve Board of Saint Louis Economic Research, FRED, "Capacity Utilization:
Manufacturing," February 2019 (updated March 27, 2019), http://fred.stlouisfed.org .
This issue is discussed by Charles P. Kindleberger in The World in Depression,
1929–1939 , 40th anniversary ed. (Oakland: University of California Press,
2013).
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).
"... 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%. ..."
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 .
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.
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.
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.
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.
Is Big Necessarily Bad?
Antitrust cannot be used as a cudgel based on size. There are other ways of whacking at corporate excess.
By
Marshall Auerback
•
August 19, 2019
Teddy Roosevelt with trust-busting stick, circa 1904. (Image: Library of Congress/Wikimedia Commons)
When it comes to relations between consenting adults, size may not matter (or so one
hears). But it's a different story in regard to companies and the politically fraught area of antitrust law.
Today, a number of
policymakers
,
economists
,
and
legal scholars
connect a host of
problems -- excessive wealth inequality, wage stagnation, political dysfunction, market distortions -- directly to the
corporate
"curse of bigness
," which they argue is a product of lax antitrust
enforcement. But they may be misdiagnosing the cause of these diseases and, in so doing, offering up the wrong cure.
Instead of moving toward a new antitrust paradigm, we might do better to consider a
more robust utility system of regulation that is "function-centric," rather than size-centric. In other words,
regulation that restricts the range of corporate activities (e.g., structural separation so as to prevent companies like
Amazon and Google from owning both the platform as well as participating as a seller on that platform), or the prices
such companies can charge (as regulators often do for utilities or railways). These considerations would be "size
neutral": they would apply independently of corporate size per se. Regulation, rather than antitrust, also better
addresses other issues like privacy protection (via a national model that could replicate
California's Consumer Privacy Act of 2018
),
labor abuses (it shouldn't matter whether workers are employed by Apple or mom-and-pop sweatshops), and controlling
"fake news" dissemination (by placing social media companies under the purview of the Federal Communications
Commission).
"Break 'em up" has great historical resonance in the United States. Yet one of the
nation's earliest trust-busters, President Theodore Roosevelt,
argued that
"the remedy for [corporate] abuse was not mindlessly breaking up big firms, but preventing specific abuses by means of a
strong national regulation of interstate corporations." Likewise, in the early days of the New Deal, his cousin,
Franklin Delano Roosevelt, initially embraced the antitrust philosophy of
Supreme Court Justice Louis
Brandeis
(who, like many of today's modern trust-busters, prioritized power
and business structure over consumer welfare). Ultimately though, frustrated that the incessant focus on corporate
concentration was hindering World War II efforts to mobilize greater industrial production, FDR
concluded
that
optimal outcomes were more likely to be achieved via "prudent government oversight and using antitrust laws to police
abuses -- not to break up every big company simply because it's big."
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After World War II, historian Richard Hofstadter
noted a gradual public acceptance of big
business
. In large part, this was due "to the emergence of countervailing
bigness in government and labor" that ultimately led to the "big three tripartite" model among government, business, and
unions exemplified in the Treaty of Detroit agreement between General Motors and the United Auto Workers (UAW).
From the 1950s through the 1970s, "Tripartism" was exceptionally successful at
promoting economic growth and high wages (the wage growth was explicitly linked to rising productivity in the Treaty of
Detroit). Big unions flourished alongside growing conglomerates that emerged as the new face of corporate consolidation
(a prime example being International Telephone and Telegraph -- ITT). Equally significant, as the economist Thomas Piketty
observed in his sweeping account of rising inequality,
Capital in
the Twenty-first Century
, a new wave of corporate consolidation did not
exacerbate prevailing inequalities. To the contrary, this period coincided
with a diminution of wealth inequality
, as
relative wealth gains for the top tier stabilized for the first time in decades.
That all changed in the 1980s with the rise of Ronald Reagan's market fundamentalist
agenda. His presidency was characterized by a
sustained attack on unions
, cuts in public
services, and the ascendancy of the doctrine of "shareholder capitalism," used to legitimize the establishment of
SEC Rule 10b-18
. That rule engendered an
explosion in share buybacks (until it was introduced, companies buying back their own shares was considered a form of
stock manipulation). Rather than focusing on job-creating investment, corporate cash flow was thus directed toward stock
repurchases to fatten executive compensation.
The legacy of Reagan's market fundamentalism persists today. It is the most cogent
explanation we have for growing wealth inequality, wage stagnation, and reduced emphasis on corporate R&D.
This period also coincided with the rise of the
"Bork Doctrine,"
when, citing
Robert Bork, the Supreme Court asserted that the main focus of antitrust law should be on economic efficiency and
consumer welfare, as opposed to granting the government broad discretion to shape the economy. That shift in priorities
is a major source of the
neo-Brandeisians'
criticism of Bork's antitrust
philosophy. It reflects their Jeffersonian vision of a social-economic order organized along the lines of small-scale
businesses, with atomistic competition between a large number of equally advantaged units, in theory producing greater
innovation and economic dynamism.
But that's a highly idealized vision that doesn't comport with reality. Our modern
economy isn't comprised of village blacksmiths, yeoman farmers, and cobblers. A crucial component of the economy today
is big business, including many large multinational corporations that operate globally. And it is questionable whether
their size automatically equates to market power (in the sense of having the ability to manipulate prices at will and
exclude competitors), especially in the context of a global economy featuring a multiplicity of competing national
champions. Seldom do we hear calls to break up Detroit's "Big Three," despite global revenues in the hundreds of
billions. Why? Because there is a widespread recognition that these companies face significant challenges in a global
market dominated by similarly large competitors.
On virtually every meaningful indicator, including wages, productivity,
environmental protection, exporting, innovation, employment diversity and tax compliance, large firms as a group
significantly outperform small firms.
That insight parallels the scholarship of Joseph Schumpeter, the intellectual
godfather of the economics of innovation, who showed that R&D spending and productivity increase with scale. Latterly,
Schumpeter's insights have been validated by a recent study from Professors Ann Marie Knott and Carl Vieregger, who
conclude (emphasis added):
Not only do large firms (using the U.S. Small Business Association definition of
greater than 500 employees) conduct 5.75 more R&D in aggregate than small firms, they have 13% higher productivity
with that R&D. However this merely captures the private returns to their R&D. A further benefit of large firm R&D is
that
it generates the spillovers upon which small firm innovation free-rides
.
Size-centric antitrust proposals also ignore the increasing prevalence of economic
network theory, which suggests that social networks like Facebook or search engines such as Google lend themselves to
becoming natural monopolies in order to function optimally. Here again, function-centric regulation -- i.e., separation
between the control of content and distribution -- makes more sense to rectify market abuse. And this could be achieved via
utility-style regulation,
as no less a figure than right-wing populist Steve Bannon has suggested
,
rather than creating a bunch of new mini-Facebooks or Googles via court-mandated break-ups (especially if the owners of
the newly broken-up companies retain full control of algorithms to determine what people see in their News Feeds, what
privacy settings they can use, and even what messages get delivered to news consumers,
as Mark Zuckerberg does today
).
It is also the case that many businesses characterized by minimal levels of corporate
concentration -- construction, education, entertainment, accommodation, food, business services, transportation,
warehousing -- generally experience sub-standard productivity levels, sluggish growth, and low real wages, according to an
INET-funded study
by Professors Lance Taylor
and Özlem Ömer. Working conditions are generally worse, and wages and employment benefits lower, as small business
owners are often the first to protest increased regulation or "burdensome" mandates, such as health care provisions. The
real point is not to beat up on small businesses, but simply to note that the abuses commonly ascribed to big business
are just as, if not more, likely to manifest themselves in smaller industries less prone to corporate concentration.
What about the claim that corporate consolidation
contributes to a
corrosion of American democracy
? It is true that as companies get bigger, it
maximizes their abilities to "pay to play," as Professor Thomas Ferguson asserts in his seminal work,
Golden Rule
. Ferguson says that powerful blocs of business elites, large
and
small, with durable (largely
economic) interests, are a constant feature of American politics. All have an incentive to get bigger in order to
maximize political leverage. That includes smaller businesses that scale up via trade associations to maximize the
impact of their "political investment." But again, what is needed here is not an antitrust remedy, but a change in the
"pay to play" rules so as to ensure that money and corporate scale have less of a polluting impact on the American
polity.
So it may be time to reconsider the simplistic notion that "big is bad." Yes, we want
a dynamic economy and a thriving democracy. But mindlessly breaking up big businesses may not be the best path to get us
there.
Marshall Auerback is a market analyst and a research associate at the
Levy
Economics Institute
at Bard College.
This article was supported by the Ewing Marion Kauffman Foundation.
I notice that this entire article only once uses the word "monopoly", which AFAIK was the
entire point of America's antitrust laws. Instead the author chooses to focus on corporate
size. Hence the article's title: "Is Big Necessarily Bad?"
That suggests that he is
either missing the point of the antitrust laws or he's choosing to ignore it so as allow
him to bathe large corporations in a rosy glow.
BTW, as an FYI, I notice that this article was supported by Ewing Marion Kauffman
Foundation. As it happens that particular non-profit was founded by Ewing Marion Kauffman
who also founded Marion Laboratories. As it happens, Marion Laboratories was later bought
by Dow Chemicals, one of the top three chemical corporations.
That being the case, one can kinda see why they might support an article arguing that
big corporations aren't "necessarily bad".
The author might be right about attacking vertical domination, but it seems to me that an
important shortcoming of his analysis is failure to define "bigness," except to cite
someone else's definition as any company with more than 500 employees. Such a low bar
prevents the author from seriously grappling with the issue of "bigness." Any discussion
about whether or not "big is bad" must reckon with the extent to which the bigness in
question creates industry consolidation. Potential oligopoly is seen by most analysts and
economists as the major issue with "bigness." Oligopoly means loss of industry
competition, and it is therefore oligopoly that is rightly the target of antitrust law.
Interesting article cover quite a scope of time. Am an American Ex pat working in Canada.
In Canada to avoid total integration with the US aside from controlling the currency
Canada has very successful Oligopolies . I see that with the US airline Industry.
Oligopolies are mandated to work in concert with Government regulations, to retain their
protected status.Biggest example in Canada is the extremely successful 5 big Banks. Our
government doesn't have lawyers with the expertise to challenge the likes of Google,
Facebook, etc.
Antitrust laws aren't enforced because those corps. who are at fault pay generously for
campaigns to ensure they aren't enforced. Besides, the SCOTUS made rulings in the past
allowing monopolies, which is against the Constitution. But, the Constitution gets in the
way of business and profits, doesn't it?
Size isn't the determining factor. It's competition. You need at least 5 companies in a
product category to ensure that a pricing oligarchy won't be formed. I also agree on
breaking up companies horizontally to ensure that they can't create platform monopolies.
Competition is what drives innovation.
There he goes again! with the charge that Reagan was an unabashed union buster, by way of
what could be taken either as the classic push toward GOP monopolism, or nihilistic
competition, take your pick -- we are not clear what the administration stood for by way
of this article.
Just who would defend the behavior of the Teamsters, which earned
itself a forced trusteeship under NY attorney general Guiliani? Or PATCO, whose strike was
illegal under federal law, which warranted the right to fire airline staff? Much criticism
has been leveled against the reorganization of the trucking industry, whereby the
elimination of freight tariffs and also of the mandate to force deadhead backhauling did
lower wages and effectively bust union organizing. But this deregulation was actually
initiated under Carter, and it did have the longterm effect of enlarging national carriers
-- though that had not done Consolidated Freight much good in this century. Similarly, the
creation of CSX under Reagan only followed a huge history of consolidations, mergers, and
rail closures.
What of the villainous Robert Bork? In "The Antitrust Paradox", he raised the issue
that "mush language" attends many legal rationales for government action, such as the
notion that such and such action be "reasonable". We have heard all this again and again
in field after field of American jurisprudence, and there is no reason for conservatives
to disagree.
To this day, the granddaddy of bad antitrust law is the Leow's Theatre case. Had the
chain simply been allowed to keep both its theaters and some of its block booking system,
provided that fair access, booking, and payment be provided to film production
competitors, the monopolism problem would have been solved. But rest assured, chain
theaters could not avoid a massive pruning in the 50's.
I find it ironic that for all our solicitude for trust busting, corrupt unions escape
scrutiny. The fact that they are largely organized along the lines of the former CPUSSR
(that was progress in 1934),have carte blanche in siphoning dark money into political
campaigns in contravention of most campaign laws, and have spent more effort colluding
with employers in back deals to stifle dissenters within truly independent union forces
than actually fighting corrupt corporate boards, says a lot.
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.
A legacy of 'free' trade deals, pitting US labor against slave labor abroad while the
profiteers stuck their windfall profits into tax havens offshore.
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.
"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."
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"
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.
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.
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.
"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.
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.
'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
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.
"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.
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. ]
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, ....
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.
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 $.
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.
"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.
"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?
"... 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. ..."
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.
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.
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.
"... 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. ..."
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.
"... 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. ..."
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.
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.
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.
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.
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.
"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.
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 )
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.
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.
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.
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.
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.
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.
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.
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.
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.
"... 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. ..."
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.
"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.
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.
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.
"... 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. ..."
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.
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.
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.
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.
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!
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®
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.
" 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.
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."
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.
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".
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.
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.
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.
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%.
"... China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom. ..."
"... The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's income taxes, igniting that most dynamic of decades -- the Roaring '20s. ..."
"... Once a nation is hooked on the cheap goods that are the narcotic free trade provides, it is rarely able to break free. The loss of its economic independence is followed by the loss of its political independence, the loss of its greatness and, ultimately, the loss of its national identity. ..."
As his limo carried him to work at the White House Monday, Larry Kudlow could not have been pleased with the headline in The Washington
Post: "Kudlow Contradicts Trump on Tariffs."
The story began: "National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers end up paying
for the administration's tariffs on Chinese imports, contradicting President Trump's repeated inaccurate claim that the Chinese foot
the bill."
A free trade evangelical, Kudlow had conceded on Fox News that consumers pay the tariffs on products made abroad that they purchase
here in the U.S. Yet that is by no means the whole story.
A tariff may be described as a sales or consumption tax the consumer pays, but tariffs are also a discretionary and an optional
tax.
If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not
pay the tariff.
China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is
howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's
economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.
Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen,
before the coming of the globalists Woodrow Wilson and FDR.
Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries
, before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free
trade.
The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second
act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted
the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming
U.S. market. It worked.
Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley,
who said that a foreign manufacturer "has no right or claim to equality with our own. He pays no taxes. He performs no civil duties."
That is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's
income taxes, igniting that most dynamic of decades -- the Roaring '20s.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth in which America's schoolchildren have been
indoctrinated for decades.
The Depression began with the crash of the stock market in 1929, nine months before Smoot-Hawley became law. The real villain:
The Federal Reserve, which failed to replenish that third of the money supply that had been wiped out by thousands of bank failures.
Milton Friedman taught us that.
A tariff is a tax, but its purpose is not just to raise revenue but to make a nation economically independent of others, and to
bring its citizens to rely upon each other rather than foreign entities.
The principle involved in a tariff is the same as that used by U.S. colleges and universities that charge foreign students higher
tuition than their American counterparts.
What patriot would consign the economic independence of his country to the "invisible hand" of Adam Smith in a system crafted
by intellectuals whose allegiance is to an ideology, not a people?
What great nation did free traders ever build?
Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws,
the British showed the folly of free trade.
They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours,
and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System.
Of the nations that have risen to economic preeminence in recent centuries -- the British before 1850, the United States between
1789 and 1914, post-war Japan, China in recent decades -- how many did so through free trade? None. All practiced economic nationalism.
The problem for President Trump?
Once a nation is hooked on the cheap goods that are the narcotic free trade provides, it is rarely able to break free. The
loss of its economic independence is followed by the loss of its political independence, the loss of its greatness and, ultimately,
the loss of its national identity.
Brexit was the strangled cry of a British people that had lost its independence and desperately wanted it back.
As is usual, the headline economic number is always the
rosiest number .
Wages for production and nonsupervisory workers accelerated to a 3.4 percent annual pace,
signaling gains for lower-paid employees.
That sounds pretty good. Except for the part where it is a lie. For starters, it doesn't account for
inflation .
Labor Department numbers released Wednesday show that real average hourly earnings, which
compare the nominal rise in wages with the cost of living, rose 1.7 percent in January on a
year-over-year basis.
1.7% is a lot less than 3.4%. While the financial news was bullish, the
actual professionals took the news differently.
Wage inflation was also muted with average hourly earnings rising six cents, or 0.2% in April
after rising by the same margin in March. Average hourly earnings "were disappointing," said Ian Lyngen, head of U.S. rates strategy at
BMO Capital Markets in New York.
Secondly, 1.7% is an average, not a median.
For instance, none of this applied to you if you are an
older
worker .
Weekly earnings for workers aged 55 to 64 were only 0.8% higher in the first quarter of 2019
than they were in the first quarter of 2007, after accounting for inflation, they found.
For comparison, earnings rose 4.7% during that same period for workers between the ages of 35
and 54.
On the other hand, if you worked for a
bank your wages went up at a rate far above average. This goes double if you are in
management.
Among the biggest standouts: commercial banks, which employ an estimated 1.3 million people in
the U.S. Since Trump took office in January 2017, they have increased their average hourly wage
at an annualized pace of almost 11 percent, compared with just 3.3 percent under Obama.
Finally, there is the reason for this incredibly small wage increase fo regular workers.
Hint: it wasn't because of capitalism and all the bullsh*t jobs it creates.
The tiny wage increase that the working class has seen is because of what the capitalists said
was a
terrible idea .
For Americans living in the 21 states where the federal minimum wage is binding, inflation
means that the minimum wage has lost 16 percent of its purchasing power.
But elsewhere, many workers and employers are experiencing a minimum wage well above 2009
levels. That's because state capitols and, to an unprecedented degree, city halls have become
far more active in setting their own minimum wages. ... Averaging across all of these federal, state and local minimum wage laws, the effective minimum
wage in the United States -- the average minimum wage binding each hour of minimum wage work --
will be $11.80 an hour in 2019. Adjusted for inflation, this is probably the highest minimum
wage in American history. The effective minimum wage has not only outpaced inflation in recent years, but it has also
grown faster than typical wages. We can see this from the Kaitz index, which compares the
minimum wage with median overall wages.
So if you are waiting for capitalism to trickle down on you, it's never going to happen.
span y gjohnsit on Fri, 05/03/2019 - 6:21pm
Thousands of South Carolina teachers rallied outside their state capitol Wednesday, demanding
pay raises, more planning time, increased school funding -- and, in a twist, more legal
protections for their freedom of speech SC for Ed, the grassroots activist group that organized Wednesday's demonstration, told CNN
that many teachers fear protesting or speaking up about education issues, worrying they'll
face retaliation at work. Saani Perry, a teacher in Fort Mill, S.C., told CNN that people in
his profession are "expected to sit in the classroom and stay quiet and not speak [their]
mind."
To address these concerns, SC for Ed is lobbying for the Teachers' Freedom of Speech Act,
which was introduced earlier this year in the state House of Representatives. The bill would
specify that "a public school district may not willfully transfer, terminate or fail to renew
the contract of a teacher because the teacher has publicly or privately supported a public
policy decision of any kind." If that happens, teachers would be able to sue for three times
their salary.
Teachers across the country are raising similar concerns about retaliation. Such fears
aren't unfounded: Lawmakers in some states that saw strikes last year have introduced bills
this year that would punish educators for skipping school to protest.
...you may have missed weeks of debate on the Right over a reasonable comment made by
the popular Fox News host.
"Market capitalism is not a religion. Market capitalism is a tool, like a staple gun or a
toaster," Carlson said. "Any economic system that weakens and destroys families isn't worth
having." Does this observation make Tucker a socialist? Hardly. As is often the case,
TAC founding editor Patrick J. Buchanan was more than a decade ahead of the curve.
"To me, the country comes before the economy; and the economy exists for the people,"
Buchanan said in a 1998 speech to the Chicago Council on Foreign Relations. "I believe in free
markets, but I do not worship them. In the proper hierarchy of things, it is the market that
must be harnessed to work for man -- and not the other way around."
The free market thinks these questions of culture, family and social cohesiveness are cute
but ultimately irrelevant. Conservatives need to come to terms that global capital has no
mercy or care for its concerns and ultimate ends. You cant tax credit your way out of that
confrontation. City of God vs the city of man is still the battle.
It would have been nice if the Conservative Movement had started this "search for answers"
after the failure of the 2012 election where the Republican Party picked a vulture capitalist
as a Presidential nominee.
"... Media consolidation itself has played an enormous role in driving up the cost of political campaigns. How did we get to this second Gilded Age and what lessons can we infer regarding our democratic prospects? ..."
"... Notre Dame University 's Philip Mirowski Never Let a Serious Crisis G to Waste has provided a careful and detailed analysis of this neoliberal movement in American politics. ..."
"... Adam Smith and JS Mill saw markets as non-coercive means to allocate resources and produce goods and services. Neoliberals regarded markets as perfect information processing machines that could provide optimal solutions to all social problems ..."
"... Market is miraculous and a boon to many, but paradoxically only a strong state can assure its arrival and maintenance. Sometimes it may appear that the market is yielding iniquitous or unsustainable outcomes, which my lead to premature or disastrous rejection of its wisdom ..."
"... The neoliberal deification of markets has many parents. This mindset encouraged and was encouraged by a revolt against democracy. The wealthy had always been concerned that a propertyless working class might vote to expropriate them, but neoliberalism gave them further reason to bypass democracy. Markets were seen as better indicators of truth than democratic elections, though that point was seldom expressed as directly ..."
"... Here is FA Hayek's oblique expression of this concern: "if we proceed on the assumption that only the exercises of freedom that the majority will practice are important, we would be certain to create a stagnant society with all the characteristics of unfreedom." ..."
Why "free" why not "fair". Neoliberals are as dangerious as Big brother in 1994. Actually
neoliberal state is as close to Big Brother regine described in 1994. We have total
surveillance, with technological capabiltiies which probably exceed anything rulers of 1984
world possessed, Russiagate as "hour of anger", permanent war for permanent people (and total
victory of "democracy") , and of course "[neoliberal] freedom is [debt[ slavery..." in
neoliberal MSM.
Fast forward from one Gilded Age to another. Citizens United, granting unions and
corporations the right to spend unlimited amounts of money to advocate for and against
political candidates, is often regarded as a singularly dangerous challenge to our democratic
norms, especially with its infamous assertion that money is speech. Less attention, however,
is pad to the context in which this decision occurred, including corporate consolidation in
most sectors of the economy, obscene levels of economic inequality, and near religious
reverence for deregulated markets.
Media consolidation itself has played an enormous role in
driving up the cost of political campaigns. How did we get to this second Gilded Age and what
lessons can we infer regarding our democratic prospects?
The post World War II decades saw white working class gains in income made possible by
unionization, the GI bill, and a federal commitment to full employment. Positive as these
gains were, they carried with them unintended consequences. Workers and employers, having
less fear of depression, periodically drove wages and prices up.
Bursts of inflation and an
unprecedented profit squeeze led to unemployment even in the midst of inflation, an
unprecedented and unexpected circumstance. Blacks had been left out of the full benefits of
the New Deal welfare state and raised demands not only for political equality but also for
economic opportunity, one of Reconstruction's forgotten promises.
These events provided an opening for a group of academics who had long despised the New
Deal welfare state. Notre Dame University 's Philip Mirowski Never Let a Serious Crisis G to
Waste has provided a careful and detailed analysis of this neoliberal movement in American
politics.
These neoliberals shared with their nineteenth- century predecessors a faith in markets,
but with an important difference. Adam Smith and JS Mill saw markets as non-coercive means to
allocate resources and produce goods and services. Neoliberals regarded markets as perfect
information processing machines that could provide optimal solutions to all social problems.
Hence a commitment not only to lift rent control on housing but also to privatize prisons,
water and sewer systems, and to deregulate all aspects of personal finance and treat
education and health care as commodities to be pursued on unregulated markets. An essential
part of this faith in markets is the post Reagan view of corporate consolidation.
Combinations are to be judged only on the basis of cheap products to the consumer.
Older
antitrust concerns about worker welfare or threat to democracy itself are put aside.
Corporate mergers and the emergence of monopoly are seen as reflections of the omniscient
market. In practice, however as we shall see, such a tolerant attitude is not applied to
worker associations.
Neoliberals differ from their classical predecessors in a second important way. Market is
miraculous and a boon to many, but paradoxically only a strong state can assure its arrival
and maintenance. Sometimes it may appear that the market is yielding iniquitous or
unsustainable outcomes, which my lead to premature or disastrous rejection of its wisdom. The
answer to this anger is more markets, but that requires a strong state staffed by
neoliberals. They would have the capacity and authority to enact and impose these markets and
distract the electorate and divert them into more harmless pursuits. Recognition of the need
for a powerful state stands in partial contradiction to the neoliberal's professed
deification of pure markets and was seldom presented to public gatherings. As Mirowski put
it, neoliberals operated on the basis of a dual truth, an esoteric truth for its top scholars
and theorists and an exoteric version for then public. Celebration of the spontaneous market
was good enough for Fox News, whereas top neoliberal scholars discussed how to reengineer
government in order to recast society.
The signs of neoliberalism are all around us. Worried about student debt? There is a
widely advertised financial institution that will refinance your loan. Trapped in prison with
no money for bail. There are corporations and products that will take care of that. Cancer
cures, money for funerals and burial expenses can all be obtained via the market. Any problem
the market creates the market can solve. The implications of this view have been ominous for
democracy and social justice.
The neoliberal deification of markets has many parents. This mindset encouraged and was
encouraged by a revolt against democracy. The wealthy had always been concerned that a
propertyless working class might vote to expropriate them, but neoliberalism gave them
further reason to bypass democracy. Markets were seen as better indicators of truth than
democratic elections, though that point was seldom expressed as directly.
Here is FA Hayek's
oblique expression of this concern: "if we proceed on the assumption that only the exercises
of freedom that the majority will practice are important, we would be certain to create a
stagnant society with all the characteristics of unfreedom."
The revolt against democracy has occurred on several different levels of the political
process. The question of who can vote is just as contested as during Reconstruction, and not
just in the South. As during Reconstruction, it does not take the form of explicit racial
appeals. The strategy includes further limiting the time polls are open, reduction in the
number of polling places, voter identification cards that take time and money to obtain. Who
can vote is also a function of the racist legacy of our history, with prohibitions on voting
by felons serving to exclude large numbers of potential voters, disproportionately
minorities. It should be mentioned more than it is that these techniques also work to the
disadvantage of poor whites. Political scientists Walter Dean Burnham and Thomas Ferguson
point out: "In Georgia in 1942, for example, turnout topped out at 3.4 percent (that's right,
3.4 percent; no misprint). Why is no mystery: the Jim Crow system pushed virtually all
African-Americans out of the system, while the network of poll taxes, registration
requirements, literacy tests and other obstacles that was part of that locked out most poor
whites from voting, too. Since the civil rights revolution, turnouts in the South have risen
fitfully to national levels, amid much pushback, such as the raft of new voter ID
requirements (though these are not limited to the South)."
Minorities, poor, and even substantial segments of the working class are further
disadvantaged by efforts to defund the labor opposition. Unions have been the one big money
source that Democrats had available, but as the party from Bill Clinton on increasingly
became a kind of neoliberalism light, embracing corporate trade agreements with a little bit
of job training assistance thrown in, unions lost members, many corporations forced
decertification elections. Democrats lost not only financial resources but also the ground
troops that had mobilized their voters.
One result of and partial driving force behind these changes is that both parties become
big money parties. Burnham and Ferguson-( December 2014)- The President and the Democratic
Party are almost as dependent on big money – defined, for example, in terms of the
percentage of contributions (over $500 or $1000) from the 1 percent as the Republicans. To
expect top down money-driven political parties to make strong economic appeals to voters is
idle. Instead the Golden Rule dominates: Money-driven parties emphasize appeals to particular
interest groups instead of the broad interests of working Americans that would lead their
donors to shut their wallets.
As David Stockman, President Reagan's Budget Director once all but confessed,
"in the
modern era the party has never really pretended to have much of a mass constituency. It wins
elections by rolling up huge percentages of votes in the most affluent classes while seeking
to divide middle and working class voters with various special appeals and striving to hold
down voting by minorities and the poor."
Challenging this bipartisan money driven establishment becomes even more difficult as
state level ballot access laws are notoriously hostile to third parties. Add to this the
private, deceptively named Presidential Debate Commission, which specializes in depriving
even candidates about whom large segment s of the population are curious access to the widely
watched debates. Unfortunately the celebrated voting reform proposal, HR1, though containing
some democratic initiatives such as early voting and automatic voter registration, makes it
own contribution to economic and political consolidation.
Bruce Dixon, editor of Black Agenda
Report, maintains that only two provisions of this bill are likely to become law and both are
destructive: "by raising the qualifying amount from its current level of $5,000 in each of 20
states to $25,000 in 20 states. HR 1 would cut funding for a Green presidential candidate in
half, and by making ballot access for a Green presidential candidate impossible in several
states it would also guarantee loss of the party's ability to run for local offices." Dixon
also predicts that some Democrats "will cheerfully cross the aisle to institutionalize the
Pentagon, spies and cops to produce an annual report on the threat to electoral security.
Dixon maintains:
"Democrats are a capitalist party, they are a government party, and this
is how they govern. HR 1 reaches back a hundred years into the Democrat playbook politicians
created a foreign menace to herd the population into World War 1, which ended in the Red
Scare and a couple of red summers, waves of official and unofficial violence and deportations
against US leftists and against black people. The Red Scare led to the founding of the FBI,
the core of the nation's permanent political police . Fifty years ago these were the same
civil servants who gave us the assassinations, the disinformation and illegality of
COINTELPRO, and much, much more before that and since then. HR 1 says let's go to the
Pentagon and the cops, let's order them to discover threats to the electoral system posed by
Americans working to save themselves and the planet."
Dixon is surely right that both parties are capitalist parties, but capitalism itself has
taken different forms. New Deal and neoliberal capitalism had far different implications for
working class Americans. The New Deal itself was heavily influenced by Norman Thomas and the
socialist tradition. In this regard, if what Paul Wellstone used to call the democratic wing
of the Democratic Party wishes to see its ideals translated into practice, it must resist
efforts to exclude third parties or to deny primary opponents an even playing field.
I am not claiming that there has been a carefully coordinated conspiracy among the
individuals and groups that supported these policies, but leaders did act out of a general
animus toward popular movements that further reinforced their reverence for corporate
markets, and the faith in markets drove the worries about popular movements.
One positive conclusion to be drawn is that if this attack on democracy exists on several
levels, activism might be fruitful in many domains and may have a spillover effect. Unions
are still not dead, and there is a fight now for the soul of the Democratic Party and that
fight might stimulate voter access and eligibility reforms. These in turn could reshape the
party's orientation and ideology. Even at the Federal level Dark money is worrisome to many
voters and could be an incentive to mobilize for better disclosure laws. There are ample
fronts on which to fight and good reason to keep up the struggle.
@Digital Samizdat
Excellent intelligence. As opposed to the "high IQ" idiocy promulgated on here.
You may like the way an acquaintance, a PhD from Chicago School of Business, who had just
finished working on a project for Big Pharma, observed when I brought up the concept of "free
market."
"'Free market?!'" he exclaimed. "No such thing. Because it's all crooked."
"... The first, directed outward, finds its expression in the global War on Terror and in the Bush Doctrine that the United States
has the right to launch preemptive wars. This amounts to the United States seeing as illegitimate the attempt by any state to resist
its domination. ..."
"... The second dynamic, directed inward, involves the subjection of the mass of the populace to economic "rationalization", with
continual "downsizing" and "outsourcing" of jobs abroad and dismantling of what remains of the welfare state created by President Franklin
D. Roosevelt's New Deal and President Lyndon B. Johnson's Great Society. Neoliberalism is an integral component of inverted totalitarianism.
The state of insecurity in which this places the public serves the useful function of making people feel helpless, therefore making
it less likely they will become politically active and thus helping maintain the first dynamic. ..."
"... By using managerial methods and developing management of elections, the democracy of the United States has become sanitized
of political participation, therefore managed democracy is "a political form in which governments are legitimated by elections that
they have learned to control". ..."
"... Under managed democracy, the electorate is prevented from having a significant impact on policies adopted by the state because
of the opinion construction and manipulation carried out by means of technology, social science, contracts and corporate subsidies.
..."
According to Wolin, domestic and foreign affairs goals are each important and on parallel tracks,
as summarized at Wikipedia,the United
States has two main totalizing dynamics:
The first, directed outward, finds its expression in the global War on Terror and in the Bush Doctrine that the United
States has the right to launch preemptive wars. This amounts to the United States seeing as illegitimate the attempt by any
state to resist its domination.
The second dynamic, directed inward, involves the subjection of the mass of the populace to economic "rationalization",
with continual "downsizing" and "outsourcing" of jobs abroad and dismantling of what remains of the welfare state created by
President Franklin D. Roosevelt's New Deal and President Lyndon B. Johnson's Great Society. Neoliberalism is an integral component
of inverted totalitarianism. The state of insecurity in which this places the public serves the useful function of making people
feel helpless, therefore making it less likely they will become politically active and thus helping maintain the first dynamic.
<> <> <> <> <> <> <> <> <> <>
Wolin's Inverted Totalitarianism provides the ground work for my suspicions regarding faux populists Obama and Trump:
By using managerial methods and developing management of elections, the democracy of the United States has become sanitized
of political participation, therefore managed democracy is "a political form in which governments are legitimated by elections
that they have learned to control".
Under managed democracy, the electorate is prevented from having a significant impact on policies adopted by the state
because of the opinion construction and manipulation carried out by means of technology, social science, contracts and corporate
subsidies.
Free market is possible only under strict government regulation. Without government regulation free market quickly
deteriorates into the law of jungles. Such a paradox ;-)
And if financial oligarchy gets to power as they got via coup d'état in the USA in late 7th, it is only a matter of time before
the society collapses. They are very destructive to the society at large. Probably more so then organized crime. But wait. They
actually can be viewed as special type of organized prime as is "The best way to rob the bank is to own it".
Notable quotes:
"... Idiots on here are always going on about how we don't got capitalism, if we only had capitalism, we don't got free markets, if only we had free markets, then everything would be hunky-dory. Without any proof, of course, because there never was and never will be a "free" "market." The US has plenty capitalism. And everything sucks. And they want more. Confused, stupid, disingenuous liars. ..."
"... Free markets are crookedness factories. As a PhD from Chicago Business School told me, "Free markets?! What free markets?! There is no free market! It's all crooked!" ..."
Idiots on here are always going on about how we don't got capitalism, if we only had
capitalism, we don't got free markets, if only we had free markets, then everything would be
hunky-dory. Without any proof, of course, because there never was and never will be a "free"
"market." The US has plenty capitalism. And everything sucks. And they want more. Confused,
stupid, disingenuous liars.
Look, what you call "capitalism" and "free markets" just means scams to make rich people
richer. You read some simple-minded description of some pie-in-the-sky theory of some perfect
world where rational actors make the best possible decisions in their own interest without
any outside interference, and you actually think you are reading a description of something
real.
I'll tell you what's real. Crookedness. Free markets are crookedness factories. As a
PhD from Chicago Business School told me, "Free markets?! What free markets?! There is no
free market! It's all crooked!"
"... If anything, Trump and the GOP have finally shown common decent folk what the democratic experiment in America has become: a system that looks alot like feudal systems of the past. Including walls! ..."
"... There is no such thing as a free market. Let me repeat it again for effect: there is NO such thing as a free market. Whether one calls it libertarianism or neoliberalism, the idea is pretty much the same: if we just unleash the power of human greed, the market will equal everything out, and we'll all be freer because of it. Sorry, but it doesn't work that way. Our government gives huge incentives to large corporations with the idea that wealth will trickle down into middle class jobs and prosperity. But guess what? Those corporations keep most of the incentives and profits for themselves and their shareholders. The comparatively minuscule recent tax cuts for the middle class pale in comparison to the huge corporate cuts that added $2 trillion to our national deficit. The only thing stopping corporate excess and monopolies is government. Many libertarians cry "starve the beast." Well, they shouldn't complain if they get food poisoning because their food wasn't properly inspected by a government they loath. And neither should President Trump complain, if, like most Americans, his next Big Mac doesn't agree with him. ..."
"... Anarchy is oligarchy. The rule of law -- law crafted by dedicated public servants, who are elected by sober and informed citizens -- is the closest we can come to freedom. ..."
"... The libertarian philosophy is this: while you're young and healthy and productive, you can help make money for your boss. However, once you are old and no longer capable of making a contribution to someone else, it is your obligation to simply die. ..."
"... Privatizing Social Security so that investment firms can get a piece of the action, privatizing Medicare so that insurance companies can get a piece of the action, and privatizing the military, so that private paramilitary companies can get more than their fair share of the action. It's theft in plain sight. We can't believe it, because it's so obvious. ..."
"... Paraphrasing Marie Antoinette "Let them eat contaminated cake" ..."
"... Funny how libertarians never argue for privatizing the military, or law enforcement. ..."
"... I cannot enumerate the number of rich Republicans who tried to get the government to support their elderly while the children of those elderly got the money. I could tell you stories, including one about a certain Republican Governor of Pennsylvania who tried to put his adult, but mentally handicapped child on Medicaid. ..."
"... Cutting tax rates on the wealthy are stealing from the rest of us. We make contributions every hour of every day which are hoovered up by the wealthy and the powerful. Meanwhile we cannot afford the cost of living, which has skyrocketed vs wages and benefits. The cost of an apartment is exorbitant. The cost of health care is exorbitant. Meanwhile the commons suffer. Infrastructure suffers. Sidewalks are a menace. There is lead in the water. Rich people who do not pay their fair share of taxes are stealing from the people in so many ways it's impossible to count them. But count them in years lost, in lives cut short, in lives blighted. ..."
"... Republicans aren't against government, it has grown more under every Republican president including Reagan himself. They simply have their preferences as to who benefits from it. ..."
"... As the saying goes, you never miss your water until your well runs dry. ..."
That said, the truth is that libertarian ideology isn't a real force within the G.O.P.; it's
more of a cover story for the party's actual agenda.
In the case of the party establishment, that agenda is about redistributing income up the
scale, and in particular helping important donor interests. Republican politicians may invoke
the rhetoric of free markets to justify cutting taxes for the rich and benefits for the poor,
or removing environmental regulations that hurt polluters' profits, but they don't really care
about free markets per se. After all, the party had little problem lining up behind Trump's
embrace of tariffs.
Meanwhile, the philosophy of the party's base is, in essence, big government for me but not
for thee. Stick it to the bums on welfare, but don't touch those farm subsidies. Tellingly, the
centerpiece of the long G.O.P. jihad against Obamacare was the
false claim that it would hurt Medicare.
And as it happens, many of the spending cuts being forced by the shutdown fall heavily and
obviously on base voters. Small business owners are much
more conservative than the nation as a whole, but they really miss those government loans.
Rural
voters went Republican during a Democratic midterm blowout, but they want those checks.
McConnell may have trash-talked food stamps in the past, but a sudden cutoff would have a
catastrophic effect on the
most Republican parts of his home state.
I had an idiot,er, libertarian friend once who actually believed the market would take
care of food safety, because people wouldn't buy food from a source if that source was known
to have sold tainted food. "What about the people who die in the meantime?" I asked. "Well,
it's up to people to decide what to eat. The government shouldn't tell people what to eat."
"But how are you supposed to know? How much tainted food has to be sold and eaten before
people even know to avoid it? People get sick or die.
What about people's lives?" "Argh,
'people's lives.'" (Eye roll.) "Liberals are always talking about 'people's lives.'" I swear
this is an actual conversation that I repeated so many times I have it
memorized.
One of the big obstacles I've observed is that conservatives, in general, have to
experience negative consequences directly to understand the link between cause and effect.
Liberals, in general, are better at imagining negative consequences and taking preventive
action before they directly experience it. It has to do with empathy and solidarity, I think.
Liberals see someone suffering, and they think, "We should find out what caused that and fix
it so it doesn't happen to the rest of us." Conservatives see someone suffering, and they
think, "That guy must be a terrible person. He totally deserves what happened to him. It can
never happen to me because I'm a good guy." It is only when the negative thing does directly
happen to the conservative that he may reconsider. That's when it is important to find a
scapegoat- illegal immigrants, minorities, Jews- to blame in order to obscure the causal
link.
Libertarianism attracts the finest stunted teenaged and hypocritical minds that are either
disconnected from reality or that suffer from cognitive dissonance that allows hypocrisy and
selfishness to flourish like mutant bacteria. Taxes and good government are the price of any
decent civilization...and both of these concepts are completely demonized by Republicans even
though Republicans are some of the greatest welfare queens in the nation. Productive, modern,
blue Democratic state federal tax dollars have long subsidized rural, religious Republican
states that hate the federal government....they curse they horse that feeds them and then
they curse even more when the federal teat is turned off. America's 0.1% Robber Barons and
crony vulture capitalists curse 'high tax rates' that aren't particularly high compared to
the rest of the world while using America's infrastructure, legal system, government-funded
research and technology, and corrupted electoral system to make parasitic profits that dwarf
those of foreign corporations who pay their fair share of taxes to countries with
increasingly better infrastructure and educational systems. The libertarian theology followed
to fruition is Somalia-like; an unregulated anarchy of human misery. Decent human beings
understand that healthy taxes produce healthy civilization. Today's version of libertarian
Republicanism is a demented form of arrested emotional development that's been destroying the
USA since 1980. Nice GOPeople.
Senator Mitch McConnel said that the food stamp program is "making it excessively easy to
be non productive." Well, Mitch McConnel is not on the food stamp program and he manages to
be one of the most "non productive" senator in the history of the US Senate. Congratulation
Senator!
Almost unfailingly, the stoutest Republican supporters seem to be the biggest
beneficiaries of government: the military, farmers, pensioners or small business owners.
Growing up in a military family, I remember subsidized gas, medical treatment for free and
school trips paid by the DoD. Yet anytime there was a Democratic president, it sounded like
there would be a coup when our military parents met at picnicks and had a few beers. If
anything, Trump and the GOP have finally shown common decent folk what the democratic
experiment in America has become: a system that looks alot like feudal systems of the past.
Including walls!
There is no such thing as a free market. Let me repeat it again for effect: there is NO
such thing as a free market. Whether one calls it libertarianism or neoliberalism, the idea
is pretty much the same: if we just unleash the power of human greed, the market will equal
everything out, and we'll all be freer because of it. Sorry, but it doesn't work that way.
Our government gives huge incentives to large corporations with the idea that wealth will
trickle down into middle class jobs and prosperity. But guess what? Those corporations keep
most of the incentives and profits for themselves and their shareholders. The comparatively
minuscule recent tax cuts for the middle class pale in comparison to the huge corporate cuts
that added $2 trillion to our national deficit. The only thing stopping corporate excess and
monopolies is government. Many libertarians cry "starve the beast." Well, they shouldn't
complain if they get food poisoning because their food wasn't properly inspected by a
government they loath. And neither should President Trump complain, if, like most Americans,
his next Big Mac doesn't agree with him.
For those who despise government regulations, I offer 3 observations: 1. I lived near
Muskegon, MI, prior to the EPA, when 3 foundries were constantly belching smoke and foundry
dust into the air. Breathing the air was equivalent to smoking 2 packs of cigarettes a day.
2. I lived in Cairo, Egypt for 3 years. I purchased 4 pairs of prescription eyeglasses before
finally giving up. None of them were right - and no regulations meant that I had no recourse.
3. I lived in Accra, Ghana for 3 years. No construction codes meant that the brand new luxury
apartment building I moved into suffered numerous problems with plumbing, resulting in mold,
flooded floors and sudden loss of water pressure.
In Cairo and in Accra, there was no social
safety net. Beggars were a constant. Often they would be horribly disfigured and with no
family what were they to do? I am happily retired now, back in Western Michigan, thoroughly
enjoying the clean air, safe food, and clean parks. Obama said it best - it's not the size of
government, it's the effectiveness of it. And if it's not working, that's on us - we're the
ones who put those people in office. 2020 can't arrive soon enough.
The Trump voter in my family was a libertarian before switching to the Party of Trump and
still believes that government is an interference. One conversation we had was about
electricians needing to be licensed. He said electricians did not need to be licensed because
if their work led to customers being injured or killed due to a fire, that information would
circulate and those electricians would be forced out of the market. I asked him if he cared
about the people injured or killed, he shrugged his shoulders and said that's just the way
things are. I then asked him what if he was one the customers injured or killed. He looked
rather shocked at that question and immediately dropped the subject. That is all that I ever
needed to know about libertarianism.
"Libertarianism" according to the GOP means that YOU need the discipline of the "free
market," but I deserve all the protections and support of the nanny state (financed with your
tax dollars, thank you very much.)
As George Lakoff reminded us, what the anti-government folks call "regulations" are, for
the most part, "protections." We shouldn't let the Kochs, Trumps, McConnells, and Ryans frame
the discussion. "The term "regulation" is framed from the viewpoint of corporations and other
businesses. From their viewpoint, "regulations" are limitations on their freedom to do
whatever they want no matter who it harms. But from the public's viewpoint, a regulation is a
protection against harm done by unscrupulous corporations seeking to maximize profit at the
cost of harm to the public." https://georgelakoff.com/2017/01/28/the-publics-viewpoint-regulations-are-protections
Michael McLemore Athens, Georgia Jan. 11 Times Pick
At some point the American people need to realize that conservative/libertarian pundits
are just on-air hucksters selling a product. Instead of selling Vegematics, Ginsu knives or
non-stick cookware, they are peddling right-wing bile for a profit. And the profits derived
from their corporate advertisers are huge. Forget truth or journalism, Rush Linbaugh openly
proclaims himself to be an "entertainer" and not a "journalist" (mainly to make it more
difficult to sue him for falsehood). Ann Coulter similarly declares herself a "polemicist".
Forget for a moment the subversive influence of Russian money and hacking on American
politics. Our own homegrown corporate advertisers are eagerly subverting America by
underwriting glib purveyors of corrosive right-wing propaganda, who will slyly proclaim the
gospel of unbridled greed and not of social responsibility. Of course drug companies don't
want the FDA. Why would they want oversight to keep the public safe, when safety costs them
money? Why would banks want regulation to safeguard the financial system and consumers, when
regulation interferes with short-term profits? The Koch brothers don't want pesky
interference from the EPA in regulating their mega-refinery in Minnesota. Their family homes
are in Aspen, Palm Beach and Manhattan, so why should it concern them if effluent rolls
through St. Louis, Memphis, and New Orleans? Don't dare call this something so plain as
"greed". Wrap it in a bow and call it "libertarianism".
FunkyIrishman member of the resistance Jan. 11 Times Pick
Republican mantra (even Libertarian) is to be left alone, so long as THEIR way of life is
left alone, and they are subsidized by you for living that way. That may mean a MASSIVE
military to be a deterrent, or to go invade some other country to keep the oil flowing. That
may mean subsidizing all sorts of industries, businesses and the like, because they cannot
compete at all on a truly free open market. That might mean support for all sorts of social
programs, health programs, education programs and the like as well, because bootstraps only
take you so far. I would use the word hypocrisy, but that would entail that many know what
they speak of when describing what Libertarian, or Socialist. or another ''ist'' form of
government actually means. We are all in this together or we are not. There is no in between,
but many would have you believe it is possible. It is not.
@Bill Once you our you loved one eats salmonella contaminated lettuce and nearly dies,
good luck going after, or even finding, the agra-business across the country who caused
it.
European food is heavily regulated, uh, by governments. Much tastier and doesn't contain
known carcinogens. Watching the train wreck of the United States.
Will Schmidt perlboy on a ranch 6 miles from Ola, AR Jan. 10
@C Wolfe This rings so true for me too. I majored in economics at UICC in the early
seventies. My favorite prof was a PhD candidate at U of Chicago, and one of his advisors was
Milton Friedman. Being at UICC, I did not study under the great man, but I did under one of
his acolytes, who was close to tenure (ABD, if I remember correctly), and I thought, a very
intelligent one. One of his two areas of doctoral specialty (you had to have two; his other
was labor) was macro, and I took him for among other things, money & banking. In fact, I
took M&B twice, because the first time (I got an A) was from a Keynesian, and I wanted to
get it from a Quantity Theory guy; another A.) Because my prof was a diciple of M.F., I got
to attend several special lectures at UC, and partake of the kool-aid. Well, I heard directly
from the horse's mouth how consumers would boycotte inferior suppliers and only the best
would survive. The free market would favor the best and punish the worst. Of course, this
required perfect information. Unfortunately, no good case was made how a perfect information
economy could be achieved nor how consumers could afford to acquire perfect information. The
price of discovering bad suppliers of tainted food would surely include the deaths of some
number of consumers before that information became generally available. We debated perfect
markets and perfect information but never did get a convincing case for abandoning government
inspection of food products.
The famous Republican philosopher Grover Norquist once said that he's want to have
government so small that one could drown it in the bathtub. Right now, nearly one million
government workers are facing the prospect of drowning in debt. Trump suggests that they
could make do like he always used to, namely declare bankruptcy or go to daddy for a loan.
All this while court jester Pence 'handles' the negotiations. His idea is to make more
requests while staying firm on a wall.
Perhaps the GOP base will finally learn just how dependent they really are on the
government they profess to hate. Trump loving farmers and small town business owners are in
for a particularly nasty surprise. It's not just farm subsidies. As described by Michael
Lewis in "The Fifth Risk": "As the U.S.D.A.'s loans were usually made through local banks,
the people on the receiving end of them were often unaware of where the money was coming
from. There were many stories very like the one Tom Vilsack told, about a loan they had made,
in Minnesota, to a government-shade-throwing, Fox News-watching, small-town businessman. The
bank held a ceremony and the guy wound up being interviewed by the local paper. "He's telling
the reporter how proud he is to have done it on his own," said Vilsack. "The U.S.D.A. person
goes to introduce herself, and he says, 'So who are you?' She says, 'I'm the U.S.D.A.
person.' He asks, 'What are you doing here?' She says, 'Well, sir, we supplied the money you
are announcing.' He was white as a sheet." There are rural counties in this country that are
only viable with government money. Trump counties. It's going to be an expensive and painful
education. Trump University lives.
If ever there was a group that lives in a fantasy world, it's the libertarians. In another
article in another newspaper that dealt with "intrusive" government, I submitted a comment
saying that I wouldn't be surprised if Libertarians would be opposed to STOP signs and
traffic lights because these would constitute an unnecessary infringement on their freedom.
Wouldn't you know that a person of that persuasion actually replied to my comment and
confirmed my suspicion. Working in an IT position for three decades I dealt with this type
daily. Many were 30-something white males, often both cognitively and physically well above
average, who had learned to program computers. They were blessed with being raised in
two-parent families. I acknowledge the hard work they did to learn to wrestle with computers,
but they lacked the perspective to realize that they had not hit a home run but rather had
been born on second or third base due to the intellectual and physical gifts they possess
that many others don't.They could not understand why others in society could not emulate
their success. In one conversation about affirmative action, one such person asked "Why do we
need that anymore? There are laws against discrimination.". Many of this type get bit in the
behind when some government regulation is repealed then it turns out that THEY are the ones
adversely affected by the repeal. But don't waste your breath trying to pierce the fantasy
balloon. They hold tight to those fantasies.
I'm waiting for Grover Norquist and the other small government proponents to relocate to
Somalia, home of no real government. Why it's not thriving without the yoke of onerous
regulations is surprising.
"...making it excessively easy to be non-productive." -- Senate Majority Leader Mitch
McConnell. The irony is too rich here. While he and his president and the "non-productive"
Republican Senators draw a paycheck for soaking up the public dime, kids will go hungry;
start-up hopefuls will lose loans; farmers will feel the bite; food will become contaminated
and people will fill hospital ER's and strain their health insurance. For openers. The Right
is getting its own back on FDR's New Deal. All because "government is the problem." Talk
about a self-fulfilling prophecy.
A relatively minor point: "Maybe you believe that private companies could take over the
F.D.A.'s role in keeping food safe, but such companies don't exist now and can't be conjured
up in a matter of weeks." Such inspection companies could only exist if they were funded by
the food companies they were inspecting. Competition among inspection companies would then
obviously lead to grade inflation: hire some other company that is more likely to give you a
passing grade, who in turn will be happy to lower standards to attract more customers. This
is not an avenue for effective replacement of the FDA. Libertarianism is for chumps and
fanatics, no one else.
We lived in a small West African nation for 25 years. There were no collectable taxes
because the tax collectors kept what they could extort from poor people, no safety nets such
as social security or medicaid/medicare, no fire fighters, no functional road departments, no
regulation of pharmaceuticals, an unprepared and unarmed military, no paid federal, regional
of local police forces, no judges who were not bought by the highest bidder, no standards for
the public hospitals, no communication systems, no running water in major cities, no electric
power that functioned more than 4-6 hours a day, and not a single government official who was
not on the take.
What we did have were cholera epidemics that killed 5000 people, annual measle epidemics that killed children under 5 years old , villages burned to the ground by
wildfire, a school system which did not pay its teachers and finally a 12 year civil war
which killed over 200,000 people and a [post war ebola epidemic which killed 12,000 more.
The
proper use of taxes was not even a dream. Now in the USA, the "leadership" under its current
president and his sycophants are playing personal and infantile grade school games with your
and my tax dollars and the congress is helping them do it. Amazing! I feel like I am back
home in my 3rd world village .
Anarchy is oligarchy. The rule of law -- law crafted by dedicated public servants, who are
elected by sober and informed citizens -- is the closest we can come to freedom. Governance
that provides basic order and rules and a safety net for when people fail (either from
behavior that is unwise or from ill fortune) is part of the rule of law. There are also
necessary things that the government can provide (without a profit motive) better than either
charity of for profit organizations. Roads and basic science are good examples. Other things
are best left alone by government -- things like sex, drugs, and rock'n'roll. These should be
principles that we all can live by, but it seems like the so-called conservatives believe
quite the opposite. They believe in unregulated guns, flows of money to unregulated trusts,
defunded public goods, and violent repression of sex, drugs, and free
expression.
@earlyman correct. The first thing those large corporations responsible will do is use
their lobbying power to legislate liability caps on what they have to pay in settlement
costs. That's the way the real world works. We're not living in some libertarian
utopia.
James Wallis Martin Christchurch, New Zealand Jan. 10
Problems with the food industry in the US isn't just a new issue since the Trump
administration, it has been an issue for decades. The problems of Big Ag and Food
Manufacturers lobbying has been so bad, that whenever I see doctors in Germany and New
Zealand, the first question they ask is have I been and eaten food in the US in the last six
months, when they are trying to ascertain health issues". When the medical community around
the world asks about US food intake, you know corporate libertarianism has run afoul and at
the cost of the health of America. The fact that foods that can't be sold in Europe for
health reasons are dumped in the US just highlights how it is no longer the United States of
America, but rather the Corporate States of America. When will the people demand for
Separation of Corporation and State?
I had serious Libertarian leanings up until a few years ago when my family and I moved to
Bangalore, India to work for three years. It was an eye opening experience to see what
actually happens when you don't have a strong central government regulating things like the
air you breathe, the water you drink, and the food you eat.
Bangalore was once known as the
Garden City and is considered the Silicon Valley of India, but corporate greed, unchecked
expansion, and government corruption, along with no meaningful environmental laws that are
actually enforced, has turned it into a nightmare-- or maybe into what Libertarianism looks
like in the real world, outside of Ayn Rand novels.
The river beside our street was so
polluted it had layers of chemical foam that would reach ten feet in height and blow across
the road, stopping traffic.
The nearby lake would literally catch on fire, burning for days.
Open sewers ran into nearby water sources. Forget tap water, it would make Flint, Michigan's
water crisis seem desirable by comparison. Food safety? Roll the dice and take your chances.
Within a year any trace of Libertarian beliefs were wiped clean from my mind and I longed for
strong government regulations to protect me and my family. This U.S. shutdown isn't even a
minor taste of what it truly means to live without powerful and enforceable government
regulations and protections.
@Bill it is important to keep in mind that contaminated food can kill you before you even
have a chance to pursue remedies. The critical elements for us now leaving much longer than
our ancestors involve personal and public hygiene (e.g. safe food, sewer systems), medicine
and healthy environments (e.g. pollution controls). I recommend watching the Trashopolis
series, its quite informative.
@C Wolfe Decades ago I had a very similar conversation with a doctrinaire libertarian,
though it was about a less essential question. I also repeated it many times. The incredulity
factor is large. I mean, I couldn't believe the degree to which rationality
disappeared.
On the bright side, a federal judge just ruled Iowa's so-called Ag-Gag law to be
unconstitutional, making it easier to expose the filthy and inhumane conditions on factory
farms. So agribusiness will be smacked with the double whammy of losing their corporate
welfare checks and bribery payments, and having their own cruelty exposed at the same time.
It's obvious that Trump's tantrum of a shutdown is the latest episode of disaster capitalism,
or what Naomi Klein has dubbed the Shock Doctrine. Create a crisis, like neglecting New
Orleans levees, or most recently, the criminally negligent homicides of Hurricane Maria
victims in Puerto Rico, and you allow the vulture capitalists to swoop in and cash in. The
entire school system of N.O. is now privatized, and libertarian billionaires are buying up
huge chunks of Puerto Rico at bargain basement prices to create palaces. With walls, of
course. The trash and overflowing toilets at our national parks are just the ticket for
corporations to take them over and charge exorbitant admissions... before selling out to
ranchers and drillers to further speed up the Anthropocene. The other semi-bright upshot of
this disaster capitalism is that rich conservatives will get just as sick from eating tainted
food as the poor. Trump probably figures he is immune, because he likes the polluting cow
flesh he consumes to be well-done to burnt. But without getting paid, how long will the White
House chefs continue to serve him? : -)
Exactly so. It has been my experience that my libertarian friends are only able to be
libertarian because they have been protected all their lives (at great expense, they would
argue) by the very government they deride.
What's fascinating about all of this is how the Gutless Obnoxious Popinjays refuse to take
any responsibility at all for the problems. It's always the Democrats fault. I'm surprised
that none of them have pointed a finger at Obama. After all, he didn't try to build a wall so
it must be his fault that Trump is demanding money for a beautiful wall that will protect all
Americans from the outside world. It's fascinating to realize that McConnell, Pence, Trump,
and the rest of the obnoxious crowd are getting paid by the government they want to drown.
They are contributing to the very cycles of misfortune that they blame people for. Are they
going to write letters for every federal employee who loses a home, falls farther behind on
loan payments than they should, who can't afford to pay for medical care or the premium? No.
The GOP has no plans to share the misery it's causing. Trump doesn't understand or care. This
is what happens when a complete incompetent is elected to run a country: chaos, uncertainty,
and worse. The party that abhorred communism and the Russians now has a president who may be
owned by the Russians. Even if he's not, the entire debacle that is Trump's presidency must
warming the hearts of Putin and his "friends" each day it continues. As Obama said, elections
have consequences. This is one of them. I don't know about the GOP and the libertarians but I
prefer to eat, drink, and breathe safely. It's why I like a functioning
government.
The libertarian philosophy is this: while you're young and healthy and productive, you can
help make money for your boss. However, once you are old and no longer capable of making a
contribution to someone else, it is your obligation to simply die.
If you look at all the
proposals of the Republicans, this seems to be the guiding force. Privatizing Social Security
so that investment firms can get a piece of the action, privatizing Medicare so that
insurance companies can get a piece of the action, and privatizing the military, so that
private paramilitary companies can get more than their fair share of the action. It's theft
in plain sight. We can't believe it, because it's so obvious.
It's the chaos this president keeps thrusting on all of us. We can't keep up day to day of
his lack of self control, his lack of understanding how government works, the principles of
the constitution, the rule of law that has sustained us through the years. He seems to
believe that he has the support to destroy everything that keeps us safe. The foundation that
made this a great country is at risk. I'm old now and can not believe what I see every day
from this American President.
@Zhou "I'll sue the company producing it". How will you do that in the absence of any
governmental mechanism to enforce compliance with a law suit? And how will you prove
contamination in the absence of any recognized standard to show it is present?
@Bill So, you prefer the pound of cure known as a lawsuit to a regulatory ounce of
prevention. Personally, I'd prefer to avoid both the discomfort of food poisoning and the
expense of a lawsuit. Besides, do you really think you'd win? None of the many people
poisoned by contaminated vegetables at Taco Bell stores a few years ago had any chance of
even bringing a lawsuit, much less winning one and gettting compensation. It took regulatory
agencies, public health departments, and the national Center for Disease Control simply to
track down the offending vegetables and force Taco Belll to clean up its act. As for your
checks and balances, most of the checks go from lobbyists to congressmen, and that throws any
balances way out of whack. Your annual deficit figure of $1 trillion is out of date. The
latest Trump tax cuts raised it to $1.5 trillion. So, start worrying real fast. But, I'd
start worrying more not merely about the deficit, but about how money is being spent. You
seem to worry more about the comparative peanuts spent on the FDA (which, by the way, also
regulates drugs and medical devices) or the USDA (which also helps regulate food safety).
than on the far larger amounts spent on the military (e.g. latest technology F-35 jets that
can't fly in the rain), US taxpayer funding of arms sales to foreign countries that neither
share our values nor help keep us safe (e.g. Saudi Arabia).
I work with alot of big Ag companies -- they're constantly raging about government regs
and the red tape, etc, etc., but they have HUGE lobby and political power. On an average
year, they get an amazing amount of subsidies coming in all kinds of forms, from direct
compensation packages to float an industry a la corn, or from electric rates that are lower
for them at the expense of the other rate classes. And when any hint of hardship comes,
nevermind true hardship, they're front and center for the hand-outs. And they get plenty. All
this before we even address immigrant labor! Ha! Libertarian Ag would look WAY different out
in the fields. And one thing that would surely be needed: Cheap immigrant (sometimes illigal)
labor. You get what you vote for.
@michjas Except the Republicans could reopen the government if they chose to. They could
pass the same bill they passed in December, and then override the President's veto. Their
conspiracy is that they won't do that.
So the party of fiscal responsibility which is already running up the deficit insists on
building a wall over 2000 miles of border, seizing private property along the way . When we
stopped teaching Geography and Citizenship and dismissed literature as irrelevant to getting
a good job, we created an electorate that could be gulled by such propaganda and conned into
thinking that fear is our avatar: fear of otherness, fear of government, fear of taxes, fear
of liberals, fear of fear itself.
@Aoy when food is contaminated, the FDA is able to locate "ground zero" with utmost
efficiency--Food Science 101. Without the FDA--which was established under T. Roosevelt's
administration--there is no coordination between the food chain and the population. You can
wash your lettuce to your heart's content, but if it was grown in contaminated soil, the
cells within are contaminated. So, yes, the FDA is extremely necessary.
"Government," declared Ronald Reagan in his first Inaugural Address, "is not the solution
to our problem, government is the problem." Yup, Republicans say government is the problem
and then they get in power and prove it. The Party of Problem
Government.
Anyone who thinks enforced food safety is unnecessary should go to India and eat in a
restaurant anywhere but a first-tier hotel for foreigners. Your odds of getting sick are very
high. Ditto in Alexandria, Egypt, and other places I've experienced where profit is important
and product is, well, less so. Remedies? Seriously? How will you prove anything? Especially
when all the restaurants have the same cavalier attitude toward washing food and hands. You
ate the salad? More fool you.
I wish that shutdowns were actually that-- shut things down. That means no air traffic
controllers, no TSA, no border agents. Wonder how quickly the politicians would solve their
differences if they couldn't rely on slave labor from unpaid federal employees forced to
work?
Funny how libertarians never argue for privatizing the military, or law enforcement. When
they think it's really important, even libertarians come running back to government. The
facts are that markets are only free if they are transparent, and in all of history nobody
has come up with a better way than government regulation to make markets transparent. We
tried unregulated markets in food production, and it was a disaster - which is why we have
federal regulation of food production today. We tried unregulated labor markets and it was
also a disaster - which is why we have child labor laws, minimum wage laws, and the full
range of other labor regulations we have today. politicsbyeccehomo.wordpress.com
People forget that government workers are themselves participants in the economy. They buy
cars and houses. They go to the grocery and the hardware store. When they don't get paid, the
businesses they patronize -- private businesses -- also go without. Yesterday, I had lunch at
a famous old restaurant right near the federal plaza in Chicago's Loop. One of the workers
there told me that because of the shutdown the place's business had fallen way off. (And
that's with the federal courthouse still open. Just wait until the courts shut, too.) It's a
closed system, folks.
Spot on. Naïveté about libertarianism runs deep. It was brought home to me
when I worked with programmers in Silicon Valley in the 1980s. A fair number espoused
libertarian ideas. Yet they had all had their computer science degrees paid for by the
Defense Department, many at state universities. I was not too sophisticated myself but even I
could see the disconnect between the ideas they were pushing and the real world
implications.
Have you ever actually tried a personal injury case? For a food borne illness? I ask those
questions rhetorically because I can tell from your comment that you haven't. As a lawyer,
who doesn't often get involved in personal injury cases, I can tell you that people often
think they aren't hurting anyone by cutting corners, and are only restrained from doing
things like serving contaminated food or doing illegal gas line plumbing by the threat of
fines if caught cutting those corners. It's not the lawsuit that makes them take
care.
The gilded age of the 1890's seem like a wonderful time for libertarians. The productivity
of the nation was high and gaining. But, it came with dirty air and water, bad food and
medicine, quackery and robber barons. It was followed by the Roaring 20's where stocks grew
without limits and borrowed money paid for it. That did not end well, either. Finally, in
FDR's first 100 days, government stepped in and wrote the rules that made life good for most
of us. The GOP does not know history and forgot what happened when there was a libertarian
society. They are getting an education, finally.
One of the things that might end is the Indian Health Services. The government made
contracts with tribes that in exchange for their land, the federal government would provide
education and healthcare. It's not a welfare program. It is payment for millions of acres of
land. If Indian Health Services ends, that's the same as reneging on a contract. Trump may
see tribes going to court to get what was promised to them in exchange for land and
lifestyle. If the shutdown continues, lots of people may be taking Trump to
court.
Do you believe in magic? Religious extremists do. So do Libertarians. And so do
Republicans though what they believe is a variant of magic that might be called delusion or
magic mixed with whisky and soda, which we call cynicism. What they all have in common is a
collective inability to see the forest from the trees: central to their emptiness is the
absence of humanity and all the messy ambiguity that entails, instead substituting a bogus
certainty that's nothing more than a palliative for existential panic at the absence of self
identity grounded in community. Bertrand Russell called it cosmic anxiety. It drives the
compulsion for religion, ideology, in fact all systems of coping that avoid the crushing
weight of freedom that comes without compass or owner's manual. Whether the god of the
invisible hand that directs the market, or the god of clubs with exclusive membership and
status, or the god of ancient fables told and retold for a millennium of successive
generations, all are rationales for the irrational aversion of responsibility to do the work
necessary to make freedom meaningful without making it meaningless for others. The two
bargain bins in the basement of modern life are religion and ideology. Libertarianism can be
found on the clearance rack for one size fits all.
Paul, you included this quote from Mitch McConnell, the Senate majority leader... When
talking about Food Stamps he has denounced the program for "making it excessively easy to be
nonproductive." He has no business being so judgmental. Being productive implies a positive
result for society. When it comes to being productive, his entire career is in
question.
@ebmem You don't know anything. For one thing, you are DEAD WRONG. Medicare DOES NOT PAY
FOR NURSING HOME CARE AT ALL! MEDICAID DOES, but only for the poor. It is WEALTHY REPUBLICANS
who "Medicaid Plan" their assets so the government will cover their living expenses so they
can preserve wealth for their heirs. How do I know this to be the truth? I spend 23 years as
a government regulator for Medicaid (Medical Assistance) in the state of Pennsylvania.
I
cannot enumerate the number of rich Republicans who tried to get the government to support
their elderly while the children of those elderly got the money. I could tell you stories,
including one about a certain Republican Governor of Pennsylvania who tried to put his adult,
but mentally handicapped child on Medicaid.
It is remarkable how farmers, who are particularly reliant on federal government programs
to buy seed, equipment, get loans, get crop subsidies, and market their food, still support
Trump, even though these programs are shut down and he's started a trade war. One farmer in
today's issue supports Trump, saying "we need some border security", even though it means he
might lose his farm. What kind of politics is this where people support a President who
intentionally ruins their prospects and their way of life? It reminds me how dictators keep
power through propaganda, rewriting history and painting its leadership as heroic. Fox News
is like North Korean TV rewiring Republican brains to believe that Republicans, no matter how
bone-headed, are always good, and Democrats are always bad, so much so they are willing to
lose the farm, like North Koreans are willing to starve.
@Mark Nuckols all the government programs that help business mean that the wealthy owe
some money back. when 5000 workers of a large corporation all drive the company trucks on
free public roads built with tax dollars, when those roads need repair, it sure should be
taxes on the company that helps pay, along with the gas tax we all pay. Your mistake is in
thinking that the income of the company owner was earned by him and him alone, but in
reality, the taxpayers helped him plenty every step of the way. You just did not see it
all.
The article focuses on food inspections, but what about drug inspections? Is the FDA
inspecting pharma manufacturing houses? Are they inspecting precursor chemicals commonly
imported from, say, China? Libertarians (along with the rest of us) may be in for much more
consequential disappointments than bad lettuce.
Well, at this point it certainly comes as no surprise that the narrowly tailored
ideological conceit republicans like to think of as - laughably - 'Libertarianism' was little
more than an economic grubsteak to the plutocratic interests. Indeed, it makes my head spin
to think how quickly the so-called libertarians of the republican party would support
rollbacks on women's reproductive liberties, not to mention the liberties of minorities and
the LGBTQ community, not to mention how they would import the Christian Right's version of
theology into the public domain. (Ah yes, get government off our backs, but shove God into
every home.) The issue that looms broadly over all this, however, is the republican's intent
to liquidate this nation's status as technologically advanced, industrialized liberal
democracy. Apparently the maintenance/perpetuation of modernity is not compatible with right
wing notions of 'liberty,' let alone libertarianism.
The first libertarian I knew was a slum landlord who did not want the Government
regulations concerning maintenance of apartments and the like. This seems like a common trait
among the political group as I think libertarians are more interested in
profit.
No one complains more loudly and more often about attempts to curtail his first amendment
rights "guaranteed by the constitution," than my libertarian friend, who refuses to pay
taxes, then expects the government he won't support to protect his freedoms. If you really
miss those debate club arguments from jr. high school, go try to talk sense to some
libertarians. For the rest of us, plain old Republicans are a perfectly adequate source of
flawed reasoning.
@Mark Nuckols Wrong! Cutting tax rates on the wealthy are stealing from the rest of us. We
make contributions every hour of every day which are hoovered up by the wealthy and the
powerful. Meanwhile we cannot afford the cost of living, which has skyrocketed vs wages and
benefits. The cost of an apartment is exorbitant. The cost of health care is exorbitant.
Meanwhile the commons suffer. Infrastructure suffers. Sidewalks are a menace. There is lead
in the water. Rich people who do not pay their fair share of taxes are stealing from the
people in so many ways it's impossible to count them. But count them in years lost, in lives
cut short, in lives blighted.
Republicans aren't against government, it has grown more under every Republican president
including Reagan himself. They simply have their preferences as to who benefits from
it.
I'm surprised that the air traffic controllers haven't all called in sick. They have the
collective power to bring air travel to a standstill. I've long felt that a general
nationwide strike would finally get the attention of our corporate overlords. After all, all
they care about is money--just like Trump and the GOP.
When two elephants fight, its the grass that gets uprooted. In this show of arrogance and
egos its the lives of many ordinary Americans that is adversely affected. I only wish that
this crisis comes to an end soon to the relief of many.
@jrinsc, exactly right with an academic exception. Adam Smith and his ideas of free market
competition assumed that there would be large number of companies competing with each other
with their sole means of competition being consumer satisfaction, price and employee
efficiency. Anyone who couldn't compete went out of business, hence "free market". The
government's only role is to enforce anti-trust laws to keep businesses small and
competitive, and assure that the competitive triangle of business, labor, and consumer are
kept in balance. Fundamentally big business is bad, always! What real "free markets" DO NOT
include is the idea that a small number of huge companies pay the government to create a
competition free environment. The term "free market" has been stolen to mean that companies
can do anything they want to succeed, including creating laws with profitable loopholes, laws
to inhibit labor participation in the competition, and laws that inhibit consumers from using
fraud laws to suppress shoddy products. In reality there is no "free market", as @jrinsc
said, except to mean that big companies are free to do whatever they want to be
profitable.
My first lecture in economics dealt with free. The professor, then the Chief Economist at
the Cleveland Fed, made the point that nothing was free: no free lunch; no free air; no free
love. The point that he made was that somebody always pays. For everything; maybe not you,
not now; but somebody does. So every time that I hear this Republican rant about free
markets, I begin to laugh.
I am wondering if Mitch McConnell and his close Republican allies have been living off
food stamps because it seems to me they all have been incredibly unproductive for years which
he sights as a consequence of anyone using food stamps.
@Joel Sanders This is completely specious reasoning. There are any number of non-state
food groups that compete to set, e.g., organic, standards for food... for their participants.
And they can restrict anyone from using their seal of approval without meeting their
requirements. What they can't do, and the State can, is to require tainted products to be
removed from distribution. Having the power of the State depends on law that transcends
private agreement. And in the case of food, drugs, highways, airlines, and a number of other
avenues of social life, that strikes me as a valuable thing. Why is this SO difficult for
you, Mr. Sanders?
I once heard a conservative economist give a speech in which he denounced the FDA for its
suppression of competition in the pharmaceutical industry. I asked him what would protect the
consumer if the market replaced the Feds as regulator of new drugs. He responded that, if my
wife died from the effects of a toxic drug, I could always sue the firm that produced it. I
found this notion deeply comforting. I might lose my wife, but the drug company would have to
compensate me with a pile of dollars, assuming I could prove its negligence. For this
libertarian, a life and money weighed equally in the scales of justice.
The people who support libertarianism are like those who support biblical literalism
(fundamentalism). The libertarians want to get rid of some laws and regulations but not all
of them. Just the ones they don't like. Usually these are laws which make corporations and
businesses sell clean and safe food, treat employees fairly, pay taxes, etc. The libertarians
don't want to get rid of laws which help business, corporations, and the well-to-do. They
want to be sure that Boeing, Lockheed, and others get cushy defense contracts, the petroleum
companies get subsidies, Big Pharma gets to charge a lot for drugs, etc. It is just a new
name for the same old playbook -- make things tough on the weak and poor -- those with dark
skins, immigrants, etc. All the while being solicitous for the well-off and powerful.
Religious literalist do the same -- pick out the Bible verses which support the desired
message. Ignore those which don't. So many things don't change. We get give them a new
name.
Actually, Krugman didn't confuse Libertarians and Republicans. He said that Republicans
used Libertarian rhetoric but weren't true Libertarians, and he didn't accuse Libertarians of
favoring Republican policies across the board.
@Bill: See Michael Moore's Fahrenheit 11/9, which covers the Flint water crisis in depth.
These people didn't even know they were drinking contaminated water until a health worker
broke ranks and made it public. THEN nothing was done.....(Oh, the state provided bottled
water for a while, to drink).... The children of Flint were suffering IRREVERSIBLE brain
damage due to lead in the water.....would suing 20 years later fix that? AND why did this
happen at all? The Republican governor of the state wanted to help his buddies make a lot of
money....
@Goodglud Excellent link! We need to call it what it is. No more reduce "regulations"
which people hear as reducing red tape. Make them advocate to "reduce
protections."
@AndyE, Berkley, MI: Nice turn on Jennings' corollary to Murphy's Law (the chances of the
toast falling buttered side down on the carpet is directly proportional to the cost of the
carpet).
Money talks louder than reason. So long as moneyed libertarians like the Koch Brothers buy
political influence, they will purchase an agenda to benefit themselves at our
expense.
"In the case of the party establishment, that agenda is about redistributing income up the
scale, and in particular helping important donor interests. Republican politicians may invoke
the rhetoric of free markets to justify cutting taxes for the rich and benefits for the poor,
or removing environmental regulations that hurt polluters' profits, but they don't really
care about free markets per se." Head of nail, meet hammer. The US used to be the world's
beacon of democratic values. No longer. The political system has been severely corrupted by
PACs, Super PACs, self-funding billionaire politicians, skewed campaign funding rules,
cynical electoral manipulation, self-interest and a lack of statesmanship amongst the
political classes. You'd think a credible third political party would be able to drive a bus
straight through the middle of this division. Two choices, left or right, just can't be
enough to sustain a democracy.
@Will Schmidt perlboy "We debated perfect markets ..." Like in engineering somebody would
design a car without engine because there is no friction and you just have to give it a push
to get around. I am so happy I am an engineer, forces me into reality.
"Knowing that the food you're eating is now more likely than before to be contaminated,
does that potential contamination smell to you like freedom?" Exactly. One of the most thing
I appreciated of being in the EU is a strong consumer protection and safety regulations. But
I guess, it's to "socialist" for some. Let's wait and see how the UK consumers will enjoy
post-Brexit "freedom".
In answer to to Bill from Michigan, the problem with food and water contamination is that
it may take years to find out that the food or water is actually contaminated, and then
additional time for the public to be informed. After all this time passes, the damage is
already done and lives are irreversibly damaged. As an example, the FDA has very strict
limits on the amount of mycotoxin and bacterial contamination in our food supply. While E.
coli contamination may be detected due to severe acute health effects, the carcinogenic
effects of mycotoxin contamination may not be detected in years. The Flint Michigan lead
contamination occurred in 2014 and wasn't declared an emergency until two years later, when
public health officials alerted the public in 2016. Although this was largely a local issue,
the H.R. 4470, the Safe Drinking Water Act Improved Compliance Awareness Act, mandates that
consumers be informed. So, personally I'd rather have the Federal Government be on the side
of the public and not rely on greedy lawyers.
@ebmem Republicans get in office and go to work to prove that Government doesn't work and
is the problem. Government works fine as long as Republicans are not in charge. The sabotage
any effort to resolve or solve a problem. They complain about the debt and deficit until they
are in office and then they blow the budget to smithereens with invented reasons for war so
they can enrich themselves. They are the problem, not Government.
@Bill, good luck with that. If you survive long enough to sue--and if you can prove the
source of your cancer or other illness--you'll find that personal injury lawsuits get you
nowhere. The big boys always win. Your best remedy is prevention. Don't let yourself or your
loved ones ingest or breathe toxins. Don't let toxins into your groundwater or soil. How do
you do that without government regulation?
Today, medical expenses are stratospheric. Meanwhile, the conservative movement strangles
the welfare state so that nearly everyone in the middle class (regardless of political
affiliation) who wants to live on more than $900 a month must go through legalized fiscal
contortions to be able to pay for adequate care.
@TM Exactly the correct response to libertarians. They like to talk about what "would"
happen, as though lack of government were a theoretical that can be calculated. There are
plenty of real world examples of what "would" happen. There are historical examples too, but
they "would" be different, of course.
@Aubrey Excellent analogy, although we can also use a good old-fashioned term to describe
these 'libertarians', 'conservatives' and religious types -- -- hypocrites ..... of the
highest despicable order.
What courts? Courts are set up, run by and paid for by government. No government means no
court system. You, the little, dying from tainted food, up against a huge agricultural
corporation with deep pockets. Libertarianism is a bully system. Those with the money win and
the rest die. That's it.
@jrinsc How quickly we forget, of course sometimes it isn`t that we forget but rather our
memory is clouded by the smoke from the fires set by vulture capitalism. Upton Sinclair The
Jungle should be required reading for all congress critters and all incoming Presidents. The
Jungle is a mirror to where todays American Nobility, the 21st century Robber Barons, would
like to take us. A disposable population for profit.
Where you see Libertarians, I see people who are so self-unaware and entitled that they
believe the only apt government subsidies are the ones that benefit them. Remember the ACA
debate line - "keep government out of my medicare?" Most people have no idea of what the
government does! What about the staunch GOP voters who nonetheless complain when the
government doesn't provide immediate aid to them after a disaster, but hesitate when the aid
is going to others? And do they comprehend that all disasters - even those claimed to be
"natural" - are actually man made? And do those that value privacy and their right to do what
they want - do they really think that corporations and businesses will keep their products
fair and safe? No, because corporations and businesses take the short view, while fairness
and safety - both of which contribute to the health of the nation and its people - take the
long view. Libertarians and their ilk are self-entitled peoples who only think about the
immediate impact on themselves and their wallets. They change their tunes quickly when
government is needed to help their bottom line.
What people with GOP/libertarian leanings should realize is that government regulations
were ONLY put into place in response to the horrifying abuses of laissez faire
capitalism.
@Bill You keep right on believing. THE FACTS ARE that people who would sell you
contaminated food have ways of covering up all the evidence. Besides, they could always hide
behind the fact that the USDA and FDA inspectors weren't working and "they didn't know"
because of that. You would lose any lawsuit because the inspectors didn't reveal any problems
and the business owner "did not know to the best of his/her knowledge." EVERYTHING would be
blamed on the shutdown, and you would LOSE>
Boy howdy, but it's easy to spout the libertarian line when the FDA, FTC, SEC, EPA, etc.
do what they do, day in and day out. Government succeeds quietly! Many post smack about what
seem like excesses, while they enjoy safe food and drugs, modest limits on fraudsters, clean
air and water, etc.: Now, maybe, we'll see what happens when those who mouth off get the
freedom they have demanded for decades. With a months' long shutdown lives will be lost, but
those who disparage the regulatory state might get their come-uppance. The coming months, if
they involve a partial shutdown, will highlight the value government offers. Opportunities
like this one don't appear often. This writer, for one, hopes it represents a crisis which
won't be wasted.
@C Wolfe I made friends with Libertarian from Texas in college my freshman year. He got me
to read Ayn Rand's Fountainhead and Atlas Shrugged. My first take was that Ayn Rand was a
pretty weak writer and clearly had serious empathy issues to the point of being a bit creepy.
My friend insisted that everyone should be self reliant and was responsible for their own
destiny until the day he flunked out because his academically weak high school left him
unprepared to survive in our highly selective college. I really felt sorry for him but he was
so far behind I could not help him. I have no idea where he ended up.
As the saying goes, you never miss your water until your well runs dry. A very big part of
me says this is the only way red states will learn how to stop biting the hand that feeds
them: they've been blindly following a party that made no secret that it wished to "starve
the beast". This is what it looks like. This new perspective has delighted me even as I worry
for my friends, family and colleagues who are feeling the effects. I hope our nation survives
this president and learns from the mistakes.
The problem I have with libertarian utopias is that 'the market' isn't going to work to
address all conflicts. So you need to hire enforcement, since government isn't doing it... or
are we keeping the courts? And if the courts rule for you, and the other party just refuses
to pay, now you have to go get your payment. Good luck with that. It all seems likely to
devolve into a 'might makes right' series of standoffs, until people band together into
unified groups to collectively agree to a set of rules, and work together with those rules.
Sounds a lot like government. Or you can just hire some soldiers and go take what you want.
Dare the other guys to take it back. Sounds a lot like anarchy. Libertarians always seems to
me like trying to cherry-pick what they like about government, what benefits them, and then
dump the rest, the stuff that costs them but they can't see the benefit for. Maybe they'll
understand better if they get some contaminated lettuce next time they go grocery
shopping...
@Bill Who exactly administers said courts that you would turn to for justice? Oh that's
right, the government. I hope the irony is not lost on you. Libertarians seem to forgot that
no man is an island to himself.
The people I have met who (loudly) espouse libertarian ideas tend to be of three types -
all of whom benefit from this philosophy at the expense of others: 1) wealthy heirs like
tRump who don't want to pay their taxes since it reduces their ability to live large AND pass
on a dynasty to their heirs. 2) those with the luck to obtain the particular skills and
education that provide a secure job with high remuneration. (Yes, it is usually a lot of
luck) 3) good looking women who are confident that they can latch on to one of those
described in 1) or in a pinch, 2) 2) will complain bitterly when the job market shifts - as
it did for many in computer science after the glory years of the 80s. 3) will complain if
their lawyer doesn't get them a big enough divorce settlement and their looks will no longer
give them a second chance. A good economic system works equally for all people, not just
those benefiting as members of the lucky gene club.
@Socrates Amen. Something also came to mind in reading your comment: Productive modern
blue states subsidize receiving red states, who then, thanks to their outsize representation
via the electoral college, bludgeon the blue states with red policies like deregulation and
taking of health care etc. Like I am paying someone to punch me. "Something is rotten in the
state of Denmark."
We don't see the few inspectors who quietly keep our food safe, the EPA folks testing our
air and rivers. The impact will be felt much later, and with no one to do the forensics, the
story won't be told until well after the shutdown ends. I'm wondering how long the shutdown
will last when visible folks start to go on strike. Will the federal employees who will
perform the promised IRS, Food Stamp and farm distributions go to work, or ally themselves
with their less visible brethren? With transportation, chaos will be most evident. After no
paycheck on Friday, what if TSA doesn't shows or they picket Atlanta, OHare, JFK, SFO, IAD
and DFW? Ditto for their compatriots in the Control Towers. Chaos. Who benefits? Perhaps
we'll learn from Michael Cohen.
We as a nation are in this condition because the American character is one of greed,
selfishness, one who does not think for himself/herself, and one that is controlled through
fear. Maybe once our empire crumbles it will be divided into smaller countries that are
easier to manage like the western European countries. I will move to one of the new countries
that support a balanced budget, hates the concept of Citizens United and K Street lobbyists,
wants to educate their masses, and provides healthcare for everyone rich and not so rich. An
ignorant populous is easier to control and manhandle. The US is a good
example.
@hen3ry "It's fascinating to realize that McConnell, Pence, Trump, and the rest of the
obnoxious crowd are getting paid by the government they want to drown." When you go the rest
of the way you finally get a true sense of how perverted these people are.
Thank you Dr. Krugman for a great perspective. It reminds me of the saying "be careful of
what you wish for" ... for it may actually come true. Save for the sacrifice of many good
Americans who depend on jobs and government benefits and the public in general, this may be
the medicine those Republicans need to cure themselves of their hands off
philosophy.
@Bill I don't believe for a nano-second you would be willing to expose your family to
contaminated or adulterated food on the chance you might be able sue someone after the fact.
It could take you years and many thousands of dollars to get justice that way. There is a
good reason we have agencies like the FDA. Many years before you were born, we in fact had
the very situation you say you would be fine with. It was buyer beware for all foodstuffs.
You could not trust food producers to put on the label what was actually in the can or
bottle. Meat packers were packing and sending out absolute filth. If you want a hint of what
it would be like here without these protective agencies, do a little research on food safety
in China. It will make you sick when you see what the Chinese are exposed
to.
@C Wolfe Libertarian or not, in this country money is always more valued than human life.
Again, it took Western Europe more than 2,000 years to become somewhat civilized and it will
take this continent at least that long.
@Eleanor How will you get around this? Reagan said, 'The nine most terrifying words in the
English language are "I'm from the government, and I'm here to help."'
@ebmem I am an employee of Medicaid who sees countless fellow workers toil long after
quitting time to cover the most people, with the least potential harm or burden to them, to
get the best services and quality of life possible, AND doing all that earning maybe half the
compensation of a comparable private sector position. It saddens me that even the program
ensuring our loved ones - or ourselves! - have care at the end of life is not safe from this
kind of bitter, distorted partisan anger.
@Bill Two words for you: Blue Milk. Look it up. Food contamination is an old story, as old
as tort law. The FDA was created because tort law was unequal to the task. If you think the
modern day is different, how is that romaine lettuce lawsuit going for you? As far as I know,
no one knows where the contamination came from, much less who to sue. The romaine situation
illustrates another flaw in your libertarian fantasy. The individual harm is collectively
huge but individually small. Any action -- preventive or retributive -- requires collective
action. Which, actually, is what democracy is, and why democracy created the
FDA.
@Linda You said it, Linda. I just returned from Europe. And I could not believe again how
much tastier the meat and produce was - not only in restaurants but in humble meals in the
country. Commercial food produced in the United States is terrible, tasteless, and full of
pernicious additives. Ma and Pa Kettle have become inured to it, and don't know any
better.
@Wilbray Thiffault "Well, Mitch McConnell is not on the food stamp program, and he manages
to be one of the most 'non productive' senators in the history of the US Senate." Correction:
Mitch McConnell and his fellow Republicans are indeed on the food stamp program, the best one
ever, and the government shutdown is not preventing them all from being paid. They will never
give it up willingly.
Prof. Krugman says, "Meanwhile, the philosophy of the party's base is, in essence, big
government for me but not for thee." I totally agree. It is indeed Trump and the Republican
party who is disrupting the free market. The free market can be sustained only when it is run
by smart and fair-minded people including top-notched economists and politicians. Otherwise,
the socialism-monster would threaten and collapse the free market anytime. What I mean by
'the socialism-monster' is not the economies of Northern European countries such as the
Netherlands, Sweden, etc. Some Americans call their economies 'socialism', but that's very
wrong; their economies are indeed one of the most advanced capitalistic systems. How can't
they be? Capitalism in a sense started from there, i.e., the business markets of the
Netherlands, Denmark, Portugal, etc. Only when capitalism is truly advanced can well-rounded
safety nets exist. In any case, genuinely socialist countries such as North-Korea and China
do not protect human rights and thus prohibit freedom. The real problem with Trump and his
allies is that they offer the strongest momentum for socialism by killing the chance for
developing truly healthy free market. Trump, with Putin, is turning the whole world back into
the days of nationalism, ideologism, and colonialism. They all champion big , huge, monstrous
government. If there is any American crisis, it is not border security but gun violence. But
Trump underwrites the NRA.
"... Human capital. This word as well as any other captures the dehumanizing nature of capitalism. Just a factor of production. We don't have blood and bone and families. We have exploitable skills. Screw that. ..."
"... Leave not one stone upon another when you rise up and destroy the dystopian economy these swine have created. ..."
Human capital. This word as well as any other captures the dehumanizing nature of
capitalism. Just a factor of production. We don't have blood and bone and families. We have
exploitable skills. Screw that.
Leave not one stone upon another when you rise up and destroy the dystopian economy
these swine have created.
"Human capital" is a deceptive way of saying "buy low, sell high". As an employee, you are
bought for as little as possible, and sold for as much as possible, with Davos Man collecting
that difference, making him filthy rich off the sweat of your brow. When you can no longer
sweat for Davos Man, you are no longer human capital, and Davos Man would prefer you die
quietly, so he can enjoy his jets and yachts without looking at the wreckage left behind.
Our system was created by human beings for the benefit of human beings. We do not exist to serve markets.
Wait, you mean the old 'Twilight Zone' episode about Martians landing and handing out booklets titled "To Serve Man" weren't
Martians at all? They were neoliberals?!? /s
Great rant. Fox is a bellwether of sorts, knowing where the public is going, and following for the ratings, imo.
Re: Tucker Carlson's epiphany: Well it'd be nice if the Republicans ascendancy from the 80s to Bush II marked the high water
tide of the Libertarian Future. I always hope they'd figure out that Free Market worship is idolatry and it's not a god that gets
you any results. Unless you have 'grace' (being born into a connected lineage, like the Vanderbilt or deVos noble houses.
More than 70 percent of French people support the "yellow vests," who have evoked broad sympathy from workers around the
world. But the established political parties and the union bureaucracies, totally integrated into the state and already furious
that the "yellow vests" have outflanked them, are violently hostile.
Re Medium piece on mental health care: none of that is new. I and my colleagues have been fighting those battles as psychotherapists
in community mental health since the 90s.
Everything to be concrete and measurable so once your goals are "operationalized" the treatment plan sounds more like marching
orders, not to mention being nonsensical:
"Client will achieve 25% reduction in depression as evidenced by daily crying spells reduced to 2x/wk and social interactions
increased from 0x/wk to 2x/wk"
Believe me, therapists for the elite don't take insurance because they know the paperwork requirements are bullshit.
Not to mention the records insurance require totally blows confidentiality. It took me several years to accept that there was
no way around making dual sets of notes, one in the official chart for purposes of compliance, and another handwritten one for
purposes of actual treatment. Sad!
HIPPAA btw is about portability, not privacy. Don't let 'em fool ya.
I'm not the one who has a problem with neo-liberalism, it's provided for me more than
adequately. Having spent a lot of time living overseas, it's provided ALL Australians with a
far better deal than a few billion others.
If you are too naive to see this, then maybe you need to try an alternative for a while.
It's quite ok, i'll be waiting for when the alternative fails (they always do) and I can come
back and pick off the assets from the carcus of that little experiment for less than a cent
in the dollar.
The dog eat dog economy simply represents our nature, it's who we are, we thrive under
libertarianism.
Po-faced, Libertarian BOLLOCKS.
Privatisation is sucker-farming.
Milking the punters, like ants milk aphids.
Farming them, like bellbirds do with leaf-bugs.
And even THAT is only part of the equation.
The fondest goal, the one which gives the management class hard-ons ?
Privatisation de-unionises their workforces.
It is quite strange that the biggest supporters of neo-liberal economics with its belief that
giving money to the rich will solve all our problems call themselves 'Christians'.
I can't remember when Jesus preached trickle down. I don't remember the bit where Jesus
said to treat those seeking asylum and fleeing violence like they are the scum of the earth.
I don't remember when Jesus said the poor needed a good kick in the guts while they are down
to motivate them to work harder. I don't remember when Jesus said we should cut funds from
the sick to balance the budget. I don't remember Jesus saying that if you bear false witness
often enough then you will fool enough of the people enough to keep power so you can look
after your corporate buddy buddies.
In fact, almost all of the politicians in the Coalition who proclaim to be 'Christian'
must have their own secret bible because nothing I have heard from the New Testament
justifies their actions.
Me, I'm an atheist and I have more care, consideration, ethics and compassion than the
entire collection of right wing bible bashers sitting in parliament today.
Thanks for this. We need more of these articles pointing out the bullshit behind this story
that the Coalition has been feeding the gullible peasantry with for over 30 years, sneering,
smirking and sniggering as truckloads of public money goes to private corporations. The money
received from selling off public assets has been shoved into private businesses who then feel
very free to charge like bulls.
It's a shame so many folk still fall for this bullshit meaning that their own families, work
colleagues and community get shafted through diminishing public services.
They used to tell me I was building a dream
And so I followed the mob
When there was earth to plow or guns to bear
I was always there right on the job
They used to tell me I was building a dream
With peace and glory ahead
Why should I be standing in line
Just waiting for bread?
Once I built a railroad, I made it run
Made it race against time
Once I built a railroad, now it's done
Brother, can you spare a dime?
Once I built a tower up to the sun
Brick and rivet and lime
Once I built a tower, now it's done
Brother, can you spare a dime?
Once in khaki suits, gee we looked swell
Full of that yankee doodle de dum
Half a million boots went sloggin' through hell
And I was the kid with the drum
Say, don't you remember, they called me Al
It was Al all the time
Say, don't you remember, I'm your pal
Buddy, can you spare a dime?
'This is more or less the definition of increased productivity and it is what ultimately
leads to improved living standards for everyone'
Lazy, neoliberal, supply-side economic guff. Neoliberals undermine government and
democracy and then scavenge on the wreckage. When does 'ultimately' begin for 'everyone'?
Never.
'Private companies provide the same service with much less labour'
Firing people is the answer? What a hardened realist you are. Must be great to be so
certain in your neoliberal convictions. Are you really telling us that every privatisation
has been a success?
These pieces of infrastructure have been built through generations of work and wise
investment - they are not any one government's to sell. It's just easier for a corrupt,
rudderless, feckless neoliberal shill to sell it than it is for them to to run it.
Can't even begin to address the characteristic Libertarian slyness in all that.
But I'll try.
"What you call neoliberalism was a set of responses to the failure of socialism or as Tony
Blair said 'what matters is what works'."
Incorrect.
What I--what the world--calls "Neoliberalism', is the corpse of Classical economics,
resurrected post-WW2 by Friedman and Hayek's 'Mont Pelerin Society. '
Why was it buried ?
Because during the Great Depression, its dogmatic insistence on continued austerity and wage
cuts only made things worse.
After all, in an economic slump, whats the worst thing you can do ?
Deprive people of whatever little purchasing power they have.
So, goodbye Classical economics.
After which, govts SPENT their societies out of slump, putting people to work.
(O, the horror ! O, the heresy !)
The public works of that era include Germany's autobahns and the US New Deal projects,
including the Tennessee Valley system and similar in Western States.
( O the horror ! O the heresy !)
Friedman, Hayek and the gang looked at those and post-WW2 programs of public benefit, such as
the UK's NHS and shat themselves. Typical fear-driven conservatives, they were convinced such
programs represented the thin end of the wedge which MUST end in imposition of Soviet-style
conditions.
What utter paranoid crap.
Their resurrected corpse of Classical economics ?.
THAT is what is 'Neoliberalism'.
Whether or not I call it so is immaterial.
Then, this lofty bit of finger-wagging assertion;
"This process of economic evolution is necessarily imperfect and incomplete...."
Your Lordship's overview is appreciated...
"....but currently leaves you free to own a computer, read news on-line, communicate using
the internet (maybe using NBN?) and express your views freely. "
Sez who ?
You ?
Besides, the only one talking about that old bogey, "socialism" is you.
Because its a conveniently perjorative label, eh ?
Pretty infantile, though.
"Anybody who doesn't agree with EVERYTHING I say, must be a 'socialist.' And they can't
play with my toys."
PS 'Adam', why do LIbertarians always project a Superiority Complex ?
Why are the buggers always so PLEASED WITH THEMSELVES ?
Neoliberalism = Socialism for the Rich - Capitalism for the Poor.
Politics needs reform, plain & simple. Fed ICAC and Integrity Commission is a good
start but it's not enough. The rules have to change too. Major decisions like privatising
services or tax handouts to the rich, shouldn't by law be allowed to get through parliament
or the senate unless the claims being made to justify them are quantifiable &
demonstrated to be in the National Interest. Currently politicians have no obligation to do
either.
e.g. claiming that jobs will be created if Penalty rates are cut = there's no way to
quantify such a BS claim and Doug Cameron got them to admit that in Senate Estimates. Even so
they were allowed to lie through their teeth and impose it anyway with no requirement to
prove their BS claims. This corporate tax handout = once again they claim it will lead to
more wealth to average Australians and more jobs but it can't be quantified or guaranteed via
regulation so it's all bullshit. The rich will hoard the wealth & kick Australians in the
guts as usual. That's what they've always done and always will do. Privatisation of
electricity..what a crock of shit. They claimed it would create competition and drive down
prices. What's happened? The complete opposite but politicians KNOW they're not accountable
and therein 'lies' the problem. The shortsheeting of the original NBN, = yet another lie.
They've totally crippled Australia's ability to compete in a digital age and completely
screwed regional 2nd tier cities and towns in terms of growth. As far as the National
interest is concerned the shortsheeting of the NBN is the complete opposite. Even so they
were allowed to bastardise that too without any accountability whatsoever. Australians need
to start demanding political reform so these bastards are accountable to the people.
Neoliberalism is just the academic name for the political ideology of greed, corruption, self
interest, self entitlement, corporate welfare, inequality, user pays, and poverty is your
fault.
Do you see any contradiction between privatised electricity and socialised stadiums?
Neoliberalism explains it all. Corruption in politics means that only profitable assets
are privatised. Stadiums lose money, so are kept in private hands as corporate welfare for
the various billionaire team owners and TV networks.
I love Richard Denniss! What a brilliantly concise and yet well supported argument. Now we
just need someone who can say it in terms that will persuade unwilling voters to think
carefully about their vote. If they do think carefully they simply cannot return this
government to power, now that they're all revealed as nothing but crony capitalists.
I must admit that like many people I also thought neoliberalism was an ideology, but then
I couldn't understand why they were so inconsistent in their spending of 'tax-payers'
funds'.
From now on I'll be pointing out those inconsistencies with more confidence - armed with
Richard's incontrovertible points, and also by a closer reading of Canadian Kean Birch's
article:
[The term neoliberalism ] is used to refer to an economic system in which the
"free" market is extended to every part of our public and personal worlds.
And here's wikipedia's definition of crony capitalism:
Crony capitalism is an economy in which businesses thrive not as a result of
risks they take, but rather as a return on money amassed through a nexus between a business
class and the political class.
NB But there's a more explicit definition here, which I like much better:
Crony capitalism is a term describing an economy in which success in business
depends on close relationships between business people and government officials. It may be
exhibited by favoritism in the distribution of legal permits, government grants, special
tax breaks, or other forms of state interventionism.
Yes, we have a spot of bother, and I think that their name - Institute of Public Affairs - is
quite a misnomer.
The way these people operate is more akin to Opus Dei and many other 'secret societies'
that have another public face altogether.
Given that IPA's agenda is a private members wish list which has a huge impact on matters
of a broad public nature, it's rather akin to incest, and we know where the confusion between
Church and State takes us regarding separation of powers, exactly where we are right now .two
Royal Commissions that are joined at the hip, Institutional Responses to Child Sexual Abuse
(2013 – 2017) and our current horror show Misconduct in the Banking, Superannuation,
and Financial Services Industry which could for all intents and purposes be as long as
aforementioned.
Stay with me, as these are issues that relate to other 'energy' systems, namely money, sex
and power, and if we have any doubts as to how far this cancer has spread, a quick purview of
the following members ought to resolve it for you:
For the 70th Birthday big bash, we know that guests to the party were:
• Gina Rinehart
• Rupert Murdoch
• Tony Abbott
• George Pell - Australian Cardinal of the Roman Catholic Church
• Michael Kroger - President of the Victorian division of the Liberal Party of Australia
and former director of the IPA
• Mitch Fifield - Communications Minister
Think horizontal and vertical industries/associations and you begin to get the picture,
and that's before thinking about BCA and VECCI.
First, elect the other mob next time around. They're in the pockets of the multinationals and
the US alliance as well, but they're not quite as bad, yet. The next thing is a full-on
assault on mainstream media. The frontline of the revolution, if there is to be one, is the
media. No more guns or territorial claims, it's a battle for the mind. Education is the key.
The "Neolibs" attack education at every opportunity - teachers, curriculum, funding etc. etc.
but there's nothing wrong with education - the real problem is that the mainstream media
relentlessly, all day every day works to an agenda of dis-education, deliberately undermining
and destroying the work of our schools. They preach doubt and mistrust - of learning, facts,
truth, intelligence, pure science, art, music, culture, thoughtfulness, forbearance, empathy
and altruism. They teach us to monetise and gamble on everything. Their aim is to dumb
everyone down to the point where not only can't they read an analog clock or drive their own
car but become entirely dependent on the word of authority (of which they are the mouthpiece)
for a continued existence. Today, with our vast social platforms we can target their lies and
threats, one by one. Pick each one, attack it, viciously, loudly, risibly, with facts,
comedy, derision and invitations to dance. Spread it wide. Call them out at every
opportunity. Sneer them into oblivion. Mainstream media is the primary problem. That's what
must be destroyed.
No, regrettably they have not.
The neoliberalist 'mistake' has been going on for around 40 yrs now - it has proved a
relentless descent into inequality and austerity.
Chris Bowen
at the National Press Club : "...Labor will go to the next election:
Achieving budget balance in the same year as the government;
Delivering bigger cumulative budget surpluses over forward estimates as well as substantially
bigger surpluses over the ten year medium term; and
That the majority of savings raised from our revenue measures over the medium term will go
towards budget repair and paying down debt...."
Pure neoliberal economic poison that will create further hardship for our citizens, worsen
inequality and recess the economy yet further.
People have got to come to understand that the bigger surpluses Bowen speaks of are
federal tax collection surpluses; i.e. he intends to withdraw further spending capacity from
the private sector, all while the current account deficit already draws 3.5% GDP (~$30bn) a
yr from that same heavily indebted private sector.
This Bowen statement report
from the SMH : "The whiff of a surplus, not reaching at least 1 per cent of GDP until 2026-27, does not
adequately protect Australia against the potential roiling seas of international
uncertainty," he will say.
"Australia needs bigger surpluses, sooner than the government is scheduling.
"We can't afford to let the next four years go to waste in the efforts for a healthier, safer
budget surplus."
Absolute macroeconomic stupidity, arrogant, vandalous ideological madness.
When will the people come to their senses and stop supporting such socially destructive
errant neoliberal economic alchemy?
Just look at the Citizens Assembly overseeing the law change in the recent Irish referendum.
Worked a treat, cause those involved wanted to find the bvest alternative, rather than
feather their own nest.
It is indeed important to make the distinction between the ideology of neoliberalism - the
ideology of private enterprise is good, and public spending is bad - and the operational
system of crony capitalism - the game of mates played by government and the special
interests.
And it is certainly equally important to call out the monumental hypocrisy involved in the
government's application of the ideology's set of rules to the powerless and public and the
government's application of corrupt practice rules to the special interests.
The system is destroying the egalitarian character of Australia and fanning the flames of
nativist authoritarianism here.
But what's even more dangerous is the fundamental dishonesty that the system necessitates,
and the alienating influence it has - on top of the growing economic inequality.
The system has destroyed the economic and environmental viability and sustainability of
the planet on which human civilization depends.
What is becoming increasingly clear to more and more of the public is that - simple put-
the system cannot be allowed to go on as it has been proceeding because it threatens the
future of civilization on earth.
Change is imperative now. However, how that will unfold is unclear, as well as, the toll
the destruc5turing system will take.
What is clear is that a great restructuring must happen - and soon.
In Christian tradition, the
love of money is condemned as a sin primarily based on texts
such as Ecclesiastes 5.10 and
1 Timothy 6:10. The Jewish and
Christian condemnation relates to avarice
and greed rather than
money itself. Christian texts (scriptures) are full of
parables and use easy to understand subjects, such as money, to convey the actual message, there are further parallels in
Solon and
Aristotle,[1]
and Massinissa-who ascribed love of
money to Hannibal and the
Carthaginians.[2].
While certain political ideologies, such as
neoliberalism, assume and promote the view that the behavior that capitalism fosters in individuals is natural to humans,[2][3]
anthropologists like
Richard Robbins
point out that there is nothing natural about this behavior - people are not naturally dispossessed to accumulate wealth and
driven by wage-labor
Neoliberalism abstract the economic sphere from other aspects of society (politics, culture, family etc., with any political
activity constituting an
intervention into the natural process of the market, for example) and assume that people make rational exchanges in the sphere
of market transactions. In reality rational economic exchanges are actually heavily influenced by pre-existing social ties and
other factors.
Under neoliberalism both the society and culture revolve around business activity (the accumulation of capital). As such,
business activity and the "free market" exchange (despite the fact that "free market" never existed in human history) are often
viewed as being absolute or "natural" in that all other human social relations revolve around these processes (or should exist to
facilitate one's ability to perform these processes
Notable quotes:
"... Conwell equated poverty with sin and asserted that anyone could become rich through hard work. This gospel of wealth, however, was an expression of Muscular Christianity and understood success to be the result of personal effort rather than divine intervention. [5] ..."
"... They criticized many aspects of the prosperity gospel, noting particularly the tendency of believers to lack compassion for the poor, since their poverty was seen as a sign that they had not followed the rules and therefore are not loved by God ..."
According to historian Kate Bowler , the prosperity gospel was formed
from the intersection of three different ideologies: Pentecostalism , New Thought , and "an American gospel of
pragmatism, individualism, and upward mobility". [4]
This "American gospel" was best exemplified by Andrew Carnegie 's Gospel of Wealth and Russell Conwell 's famous sermon
"Acres of Diamonds", in which Conwell equated poverty with sin and asserted that anyone could
become rich through hard work. This gospel of wealth, however, was an expression of Muscular Christianity
and understood success to be the result of personal effort rather than divine intervention.
[5]
... ... ...
In 2005, Matthew
Ashimolowo , the founder of the largely African
Kingsway International Christian Centre in southern England, which preaches a "health and
wealth" gospel and collects regular tithes, was ordered by the Charity Commission to repay money he had
appropriated for his personal use. In 2017, the organisation was under criminal investigation
after a leading member was found by a court in 2015 to have operated a Ponzi scheme between 2007 and 2011, losing or
spending £8 million of investors' money. [43]
36]Hanna Rosin of The Atlantic argues that
prosperity theology contributed to the housing bubble that caused the
late-2000s
financial crisis . She maintains that home ownership was heavily emphasized in prosperity
churches, based on reliance on divine financial intervention that led to unwise choices based
on actual financial ability. [36]
... ... ...
Historian Carter
Lindberg of Boston University has drawn parallels
between contemporary prosperity theology and the medieval indulgence trade .
[69] Coleman notes that several pre–20th century Christian movements in the
United States taught that a holy lifestyle was a path to prosperity and that God-ordained hard
work would bring blessing. [16]
... ... ...
In April 2015, LDS apostle
Dallin H. Oaks
stated that people who believe in "the theology of prosperity" are deceived by riches. He
continued by saying that the "possession of wealth or significant income is not a mark of
heavenly favor, and their absence is not evidence of heavenly disfavor". He also cited how
Jesus differentiated the attitudes towards money held by the young rich man in Mark
10:17–24, the good Samaritan, and Judas Iscariot in his betrayal. Oaks concluded this
portion of his sermon by highlighting that the "root of all evil is not money but the love of
money". [90]
In 2015, well known pastor and prosperity gospel advocate Creflo Dollar launched a
fundraising campaign to replace a previous private jet with a $65 million Gulfstream G650.
[91] On the August
16, 2015 episode of his HBO
weekly series Last
Week Tonight , John Oliver satirized prosperity
theology by announcing that he had established his own tax-exempt church, called Our Lady of
Perpetual Exemption . In a lengthy segment, Oliver focused on what he characterized as the
predatory conduct of televangelists who appeal for repeated gifts from people in financial
distress or personal crises, and he criticized the very loose requirements for entities to
obtain tax exempt status as churches under U.S. tax law. Oliver said that he would ultimately
donate any money collected by the church to Doctors Without Borders .
[92]
In July 2018, Antonio Spadaro and Marcelo Figueroa, in the Jesuit journal La Civilità
Cattolica , examined the origins of the prosperity gospel in the United States and
described it as a reductive version of the American Dream which had offered
opportunities of success and prosperity unreachable in the Old World . The authors distinguished the
prosperity gospel from Max
Weber 's Protestant
ethic , noting that the protestant ethic related prosperity to religiously inspired
austerity while the prosperity gospel saw prosperity as the simple result of personal faith.
They criticized many aspects of the prosperity gospel, noting particularly the tendency of
believers to lack compassion for the poor, since their poverty was seen as a sign that they had
not followed the rules and therefore are not loved by God . [93][94]
"... The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt. And, of course, its loans famously come with strings attached: adopt a free-market economy, or strengthen the one you have, kissing goodbye to the Big State. ..."
"... Yet, the irony is painful. Neoliberal ideology insists that states are too big and cumbersome, too centralized and faceless, to be efficient and responsive ..."
"... The problem is that the ruthless sentimentalists of neoliberalism like to tell themselves – and anyone else who will listen – that removing the dead hand of state control frees the individual citizen to be entrepreneurial and productive. Instead, it places the financially powerful beyond any state, in an international elite that makes its own rules, and holds governments to ransom. That's what the financial crisis was all about ..."
"... Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they avoid their taxes, because they can, because they are more powerful than governments. ..."
"... The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who came up with that theory , did not agree that economic activity alone was enough to keep humans decent and civilised. ..."
The crash was a write-off, not a repair job. The response should be a wholesale reevaluation of the way in which wealth
is created and distributed around the globe
he IMF's limited admission of guilt over the Greek bailout is a start, but they still can't see the global financial system's
fundamental flaws, writes Deborah Orr.
The International Monetary Fund has admitted that some of the decisions it made in the wake of the 2007-2008 financial crisis
were wrong, and that the €130bn first bailout of Greece was "bungled". Well, yes. If it hadn't been a mistake, then it would have
been the only bailout and everyone in Greece would have lived happily ever after.
Actually, the IMF hasn't quite admitted that it messed things up. It has said instead that it went along with its partners in
"the Troika" – the European Commission and the European Central Bank – when it shouldn't have. The EC and the ECB, says the IMF,
put the interests of the Eurozone before the interests of Greece. The EC and the ECB, in turn, clutch their pearls and splutter with
horror that they could be accused of something so petty as self-preservation.
The IMF also admits that it "underestimated" the effect austerity would have on Greece. Obviously, the rest of the Troika takes
no issue with that. Even those who substitute "kick up the arse to all the lazy scroungers" whenever they encounter the word "austerity",
have cottoned on to the fact that the word can only be intoned with facial features locked into a suitably tragic mask.
Yet, mealy-mouthed and hotly contested as this minor mea culpa is, it's still a sign that financial institutions may slowly be
coming round to the idea that they are the problem. They know the crash was a debt-bubble that burst. What they don't seem to acknowledge
is that the merry days of reckless lending are never going to return; even if they do, the same thing will happen again, but more
quickly and more savagely. The thing is this: the crash was a write-off, not a repair job. The response from the start should have
been a wholesale reevaluation of the way in which wealth is created and distributed around the globe, a "structural adjustment",
as the philosopher
John Gray has said all along.
The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt. And, of
course, its loans famously come with strings attached: adopt a free-market economy, or strengthen the one you have, kissing goodbye
to the Big State.
Yet, the irony is painful. Neoliberal ideology insists that states are too big and cumbersome, too centralized and faceless,
to be efficient and responsive. I agree.
The problem is that the ruthless sentimentalists of neoliberalism like to tell themselves – and anyone else who will listen
– that removing the dead hand of state control frees the individual citizen to be entrepreneurial and productive. Instead, it places
the financially powerful beyond any state, in an international elite that makes its own rules, and holds governments to ransom. That's
what the financial crisis was all about. The ransom was paid, and as a result, governments have been obliged to limit their
activities yet further – some setting about the task with greater relish than others. Now the task, supposedly, is to get the free
market up and running again.
But the basic problem is this: it costs a lot of money to cultivate a market – a group of consumers – and the more sophisticated
the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy, cultured,
law-abiding and financially secure people – people who expect to be well paid themselves, having been brought up believing in material
aspiration, as consumers need to be.
So why, exactly, given the huge amount of investment needed to create such a market, should access to it then be "free"? The neoliberal
idea is that the cultivation itself should be conducted privately as well. They see "austerity" as a way of forcing that agenda.
But how can the privatization of societal welfare possibly happen when unemployment is already high, working people are turning to
food banks to survive and the debt industry, far from being sorry that it brought the global economy to its knees, is snapping up
bargains in the form of busted high-street businesses to establish shops with nothing to sell but high-interest debt? Why, you have
to ask yourself, is this vast implausibility, this sheer un-sustainability, not blindingly obvious to all?
Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon
and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they
avoid their taxes, because they can, because they are more powerful than governments.
And further, those who invest in these companies, and insist that taxes should be low to encourage private profit and shareholder
value, then lend governments the money they need to create these populations of sophisticated producers and consumers, berating them
for their profligacy as they do so. It's all utterly, completely, crazy.
The other day a health minister,
Anna Soubry
, suggested that female GPs who worked part-time so that they could bring up families were putting the NHS under strain. The
compartmentalised thinking is quite breathtaking. What on earth does she imagine? That it would be better for the economy if they
all left school at 16? On the contrary, the more people who are earning good money while working part-time – thus having the leisure
to consume – the better. No doubt these female GPs are sustaining both the pharmaceutical industry and the arts and media, both sectors
that Britain does well in.
As for their prioritising of family life over career – that's just another of the myriad ways in which Conservative neoliberalism
is entirely without logic. Its prophets and its disciples will happily – ecstatically – tell you that there's nothing more important
than family, unless you're a family doctor spending some of your time caring for your own. You couldn't make these characters up.
It is certainly true that women with children find it more easy to find part-time employment in the public sector. But that's a prima
facie example of how unresponsive the private sector is to human and societal need, not – as it is so often presented – evidence
that the public sector is congenitally disabled.
Much of the healthy economic growth – as opposed to the smoke and mirrors of many aspects of financial services – that Britain
enjoyed during the second half of the 20th century was due to women swelling the educated workforce. Soubry and her ilk, above all
else, forget that people have multiple roles, as consumers, as producers, as citizens and as family members. All of those things
have to be nurtured and invested in to make a market.
The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone
is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who
came up with that theory , did not agree
that economic activity alone was enough to keep humans decent and civilised.
Governments are left with the bill when neoliberals demand access to markets that they refuse to invest in making. Their refusal
allows them to rail against the Big State while producing the conditions that make it necessary. And even as the results of their
folly become ever more plain to see, they are grudging in their admittance of the slightest blame, bickering with their allies instead
of waking up, smelling the coffee and realising that far too much of it is sold through Starbucks.
This is an attractive but idealistinc notion, because the person destiny often is shaped by
forces beyond his control. Like Great Depression or WWII. The proper idea is that the society as
a whole serves as a "social security" mechanism to prevent worst outcomes. At the same time
neoliberalism accept bailout for financial sector and even demand them for goverment.
@dmckm - Nobody is owed a good living in this world. That's what freedom means: one is free
to chose the best way to make a living. Are you saying that by forcing people to pay you
something they don't want to is freedom?
No market is 'Free'. Free markets do not exist. Markets are there for those with a vested
interest. i.e. the banksters. Note the growth of Hedge funds or slush funds for the rich.
Neoliberalism like Bolshevism is based on brainwashing and propaganda. In this case by
bought by financial elite and controlled by intelligence agencies MSM.
Notable quotes:
"... Neoliberalism? This is not just a financial agenda. This a highly organized multi armed counterculture operation to force us, including Ms Orr [unless she has...connections] into what Terence McKenna [who was in on it] termed the `Archaic Revival'. That is - you and me [and Ms Orr] - our - return to the medieval dark ages, if we indeed survive that far. ..."
"... The conscious and intelligent manipulation of the organised habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are moulded, our tastes formed, our ideas suggested, largely by men we have never heard of. ..."
"... A free market larger than a boot fair has never existed. A market can never have power, it's just a market after all. It's the people in the market that have power... or some of them... the few... have it disproportionately compared to others, and straight away the market isn't free. ..."
"... It's only even approximately free when properly regulated, but that's anathema to market fundamentalists so they end up with a market run for the benefit of vested interests that they will claim is "free" until their dying breath. ..."
"... Power belongs with democratically elected governments, not people in markets responsible only to themselves. Amazing that people still think as you do after all that's happened. ..."
@taxhaven - I love this "free markets" expression, but can we really have free markets please
then? This means that no taxpayer money is to be spent to bail out the capitalist bankers
when things so sour.
It also means that there is completely free movement of labor so I as an employer should
be able to hire anyone I like for your job and pay the wage that the replacement is willing
to take i.e. tough luck to you if the person is more qualified and is willing to work for
less but does not have the work visa because in free markets there will be no such things as
work permits.
Neoliberalism has spawned a financial elite who hold governments to ransom
Neoliberalism? This is not just a financial agenda. This a highly organized multi
armed counterculture operation to force us, including Ms Orr [unless she has...connections]
into what Terence McKenna [who was in on it] termed the `Archaic Revival'. That is - you and
me [and Ms Orr] - our - return to the medieval dark ages, if we indeed survive that
far.
The same names come up time and time again. One of them being, father of propaganda,
Edward Bernays.
Bernays wrote what can be seen as a virtual Mission Statement for anyone wishing to bring
about a "counterculture." In the opening paragraph of his book Propaganda he wrote:
".. The conscious and intelligent manipulation of the organised habits and opinions
of the masses is an important element in democratic society. Those who manipulate this
unseen mechanism of society constitute an invisible government which is the true ruling
power of our country. We are governed, our minds are moulded, our tastes formed, our ideas
suggested, largely by men we have never heard of.
This is a logical result of the way in which our democratic society is organised. Vast
numbers of human beings must cooperate in this manner if they are to live together as a
smoothly functioning society. In almost every act of our daily lives, whether in the sphere
of politics or business, in our social conduct or our ethical thinking, we are dominated by
the relatively small number of persons who understand the mental processes and social
patterns of the masses.
It is they who pull the wires which control the public mind..."[28]
Bernays' family background made him well suited to "control the public mind." He was the
double nephew of psychoanalysis pioneer Sigmund Freud. His mother was Freud's sister Anna,
and his father was Ely Bernays, brother of Freud's wife Martha Bernays.
about being permitted to engage in voluntary exchange of goods and services with others,
unmolested.
And if we ever had that, would it make the ideal society?
A free market larger than a boot fair has never existed. A market can never have power,
it's just a market after all. It's the people in the market that have power... or some of
them... the few... have it disproportionately compared to others, and straight away the
market isn't free.
It's only even approximately free when properly regulated, but that's
anathema to market fundamentalists so they end up with a market run for the benefit of vested
interests that they will claim is "free" until their dying breath.
Power belongs with democratically elected governments, not people in markets responsible
only to themselves. Amazing that people still think as you do after all that's happened.
3 hours ago At one company
I interviewed nine times. Figured if they have this difficult of a time making a decision
I'll lose my mind working there and accepted a position elsewhere.
J 3 hours ago Google
wasn't the only company with excessive reliance on the school and GPA for new hires. It was
and might still be very common for technology companies to use this on the assumption that
a high GPA in school means high performance in the real world. My former company had a 3.7
minimum GPA on a four point scale just to be considered for an interview. I would
frequently get candidates from my manager to interview and evaluate. I found many of the
high performers lacked the ability to generalize concepts and skills that could be used
across a wide breadth of technologies. Instead they tended to apply a concept to a specific
subject and learn/create skills that would only work in that one area. When it came time to
move to development of newer technologies the skills they had learned would not transfer
and they would start the learning process all over. After talking to a comp sci professor
friend it made sense why this was happening. It has a lot to do with how schools
compartmentalize their teaching. The tend to be lessons and labs teaching a single concept
and nothing is done to teach the kids how to take that as a generalization that can be
applied across many areas. Due to this I found I ended up with better coworkers with
somewhat lower performing students as they appeared to be better at applying concepts in a
broad manner and more.
F 3 hours ago An
interview is not just about a company interviewing a prospective employee, but the employee
interviewing the company. If you interview me more the 3 times, you're done. As a company
you need to get your stuff together.
p 3
hours ago If some company needs more than 3 interviews to hire someone, then they are too
indecisive, tedious and flaky to bother with.
These practices are "interesting". And people still wonder why there are so many deadly amok
runs at US companies? What do they expect when they replace old and experienced workers with
inexperienced millenials, who often lack basic knowledge about their job? Better performance?
This will run US tech companies into the ground. This sort of "American" HR management is
gaining ground here in Germany as well, its troubling. And on top they have to compete against
foreign tech immigrants from middle eastern and asian companies. Sure fire recipe for social
unrest and people voting for right-wing parties.
I too was a victim of IBM's underhanded trickery to get rid of people...39 years with IBM,
a top performer. I never got a letter telling me to move to Raleigh. All i got was a phone
call asking me if i wanted to take the 6 month exception to consider it. Yet, after taking the
6 month exception, I was told I could no longer move, the colocation was closed. Either I find
another job, not in Marketing support (not even Marketing) or leave the company. I received no
letter from Ginni, nothing. I was under the impression I could show up in Raleigh after the
exception period. Not so. It was never explained....After 3 months I will begin contracting
with IBM. Not because I like them, because I need the money...thanks for the article.
dropped in 2013 after 22 years. IBM stopped leading in the late 1980's, afterwards it
implemented "market driven quality" which meant listen for the latest trends, see what other
people were doing, and then buy the competition or drive them out of business. "Innovation that
matters": it's only interesting if an IBM manager can see a way to monetize it.
That's a low standard. It's OK, there are other places that are doing better. In fact, the
best of the old experienced people went to work there. Newsflash: quality doesn't change with
generations, you either create it or you don't.
Sounds like IBM is building its product portfolio to match its desired workforce. And of
course, on every round of layoffs, the clear criterion was people who were compliant and
pliable - who's ready to follow orders ? Best of luck.
I agree with many who state the report is well done. However, this crap started in the early
1990s. In the late 1980s, IBM offered decent packages to retirement eligible employees. For
those close to retirement age, it was a great deal - 2 weeks pay for every year of service
(capped at 26 years) plus being kept on to perform their old job for 6 months (while
collecting retirement, until the government stepped in an put a halt to it). Nobody eligible
was forced to take the package (at least not to general knowledge). The last decent package
was in 1991 - similar, but not able to come back for 6 months.
However, in 1991, those offered the package were basically told take it or else. Anyone
with 30 years of service or 15 years and 55 was eligible and anyone within 5 years of
eligibility could "bridge" the difference.
They also had to sign a form stating they would not sue IBM in order to get up to a years
pay - not taxable per IRS documents back then (but IBM took out the taxes anyway and the IRS
refused to return - an employee group had hired lawyers to get the taxes back, a failed
attempt which only enriched the lawyers).
After that, things went downhill and accelerated when Gerstner took over. After 1991,
there were still a some workers who could get 30 years or more, but that was more the
exception. I suspect the way the company has been run the past 25 years or so has the Watsons
spinning in their graves. Gone are the 3 core beliefs - "Respect for the individual",
"Service to the customer" and "Excellence must be a way of life".
could be true... but i thought Watson was the IBM data analytics computer thingy... beat two
human players at Jeopardy on live tv a year or two or so back.. featured on 60 Minutes just
around last year.... :
IBM's policy reminds me of the "If a citizen = 30 y.o., then mass execute such, else if they
run then hunt and kill them one by one" social policy in the Michael York movie "Logan's
Run."
From Wiki, in case you don't know: "It depicts a utopian future society on the surface,
revealed as a dystopia where the population and the consumption of resources are maintained
in equilibrium by killing everyone who reaches the age of 30. The story follows the actions
of Logan 5, a "Sandman" who has terminated others who have attempted to escape death, and is
now faced with termination himself."
"... Bankers, agro-business elites, commercial mega owners, manufacturing, real estate and insurance bosses and their financial advisers, elite members of the 'ruling class', have launched a full-scale attack on private and public wage and salary workers, and small and medium size entrepreneurs (the members of the 'popular classes'). The attack has targeted income ,pensions, medical plans, workplace conditions, job security, rents, mortgages, educational costs, taxation,undermining family and household cohesion. ..."
"... Big business has weakened or abolished political and social organizations which challenge the distribution of income and profits and influence the rates of workplace output. In brief the ruling classes have intensified exploitation and oppression through the 'class struggle' from above. ..."
"... The United States witnessed the ruling class take full control of the state, the workplace and distribution of social expenditures. ..."
"... The upsurge of the popular class struggle was contained and confined by the center-left political elite, while the ruling class marked time, making business deals to secure lucrative state contracts via bribes to the ruling center-left allied with the conservative political elite . ..."
"... The big business ruling class learned their lessons from their previous experience with weak and conciliating neo-liberal regimes. They sought authoritarian and, if possible rabble rousing political leaders, who could dismantle the popular organizations, and gutted popular welfare programs and democratic institutions, which previously blocked the consolidation of the neo-liberal New Order. ..."
"... The term "invidious distinction" was coined by Thornstein Veblen in his seminal "The Theory of the Leisure Class", in which Veblen argues that one of the primary human motivations is to evoke envy in our fellows. ..."
"... "Popular" class struggles need to be seen for what they are; temporary expedients whereby one set of rulers uses the populace for their own ends and against their competitors. ..."
"... Too many people get suckered into supporting "popular" movements and sometimes do gain temporary benefits, but when their handlers get what they want, the fun and games are over. ..."
Bankers, agro-business elites, commercial mega owners, manufacturing, real estate and
insurance bosses and their financial advisers, elite members of the 'ruling class', have
launched a full-scale attack on private and public wage and salary workers, and small and
medium size entrepreneurs (the members of the 'popular classes'). The attack has targeted
income ,pensions, medical plans, workplace conditions, job security, rents, mortgages,
educational costs, taxation,undermining family and household cohesion.
Big business has weakened or abolished political and social organizations which challenge
the distribution of income and profits and influence the rates of workplace output. In brief
the ruling classes have intensified exploitation and oppression through the 'class struggle'
from above.
We will proceed by identifying the means, methods and socio-political conditions which have
advanced the class struggle from above and, conversely, reversed and weakened the class
struggle from below.
Historical Context
The class struggle is the major determinant of the advances and regression of the interests
of the capitalist class. Following the Second World War, the popular classes experienced steady
advances in income, living standards, and work place representation. However by the last decade
of the 20 th century the balance of power between the ruling and popular classes
began to shift, as a new 'neo-liberal' development paradigm became prevalent.
First and foremost, the state ceased to negotiate and conciliate relations between rulers
and the working class: the [neoliberal] state concentrated on de-regulating the economy,
reducing corporate taxes, and eliminating labor's role in politics and the division of profits
and income.
The concentration of state power and income was not uncontested and was not uniform in all
regions and countries. Moreover, counter-cyclical trends, reflecting shifts in the balance of
the class struggle precluded a linear process. In Europe, the Nordic and Western European
countries' ruling classes advanced privatization of public enterprises, reduced social welfare
costs and benefits, and pillaged overseas resources but were unable to break the state funded
welfare system. In Latin America the advance and regression of the power, income and welfare of
the popular class, correlated with the outcome of the class and state struggle.
The United States witnessed the ruling class take full control of the state, the
workplace and distribution of social expenditures.
In brief, by the end of the 20 th century, the ruling class advanced in assuming
a dominant role in the class struggle.
Nevertheless, the class struggle from below retained its presence, and in some places,
namely in Latin America, the popular classes were able to secure a share of state power –
at least temporarily.
Popular Power: Contesting the Class Struggle from Above
Latin America is a prime example of the uneven trajectory of the class struggle.
Between the end of World War Two and the late 1940's, the popular classes were able to
secure democratic rights, populist reforms and social organization. Guatemala, Argentina,
Uruguay, Brazil, Mexico, Venezuela were among the leading examples. By the early 1950's with
the onset of the US imperialist 'cold war', in collaboration with the regional ruling classes
launched a violent class war from above, which took the form of military coups in Guatemala,
Peru, Argentina, Venezuela and Brazil. The populist class struggle was defeated by the US
backed military- business rulers who, temporarily imposed US agro-mineral export economies.
The 1950's were the 'golden epoch' for the advance of US multi-nationals and Pentagon
designed regional military alliances. But the class struggle from below rose again and found
expression in the growth of a progressive national populist industrializing coalition, and the
successful Cuban socialist regime and its followers in revolutionary social movements in the
rest of Latin America throughout the 1960's.
The revolutionary popular class insurgency of the early 1960's was countered by the ruling
class seizure of power backed by military-US led coups between 1964-1976 which demolished the
regimes and institutions of the popular classes in Brazil (1964), Bolivia (1970), Chile (1973),
Argentina (1976) , Peru (1973) and elsewhere.
Economic crises of the early 1980s reduced the role of the military and led to a 'negotiated
transition' in which the ruling class advanced a neo-liberal agenda in exchange for electoral
participation under military and US tutelage.
Lacking direct military rule, the ruling class struggle succeeded in muting the popular
class struggle by co-opting the center-left political elites. The ruling class did not or could
not establish hegemony over the popular classes even as they proceeded with their neo-liberal
agenda.
With the advent of the 21 st century a new cycle in the class struggle from below
burst forth. Three events intersected: the global crises of 2000 triggered regional financial
crashes, which in turn led to a collapse of industries and mass unemployment, which intensified
mass direct action and the ouster of the neo-liberal regimes. Throughout the first decade of
the 21 st century, neo-liberalism was in retreat. The popular class struggle and the
rise of social movements displaced the neo-liberal regimes but was incapable of replacing the
ruling classes. Instead hybrid center-left electoral regimes took power.
The new power configuration incorporated popular social movements, center-left parties and
neo-liberal business elites. Over the next decade the cross-class alliance advanced largely
because of the commodity boom which financed welfare programs, increased employment,
implemented poverty reduction programs and expanded investments in infrastructure.
Post-neoliberal regimes co-opted the leaders of the popular classes, replaced ruling class
political elites but did not displace the strategic structural positions of the business ruling
class..
The upsurge of the popular class struggle was contained and confined by the center-left
political elite, while the ruling class marked time, making business deals to secure lucrative
state contracts via bribes to the ruling center-left allied with the conservative political
elite .
The end of the commodity boom, forced the center-left to curtail its social welfare and
infrastructure programs and fractured the alliance between big business leaders and center-left
political elites. The ensuing economic recession facilitated the return of the neo-liberal
political elite to power.
The big business ruling class learned their lessons from their previous experience with weak
and conciliating neo-liberal regimes. They sought authoritarian and, if possible rabble rousing
political leaders, who could dismantle the popular organizations, and gutted popular welfare
programs and democratic institutions, which previously blocked the consolidation of the
neo-liberal New Order.
"The rightist rhetoric turns against itself as its followers engage in invidious
distinctions ."
Interesting. You don't see Veblen's "invidious distinction" trotted out very often these
days which is a pity. More the pity that it is misused in quote above. It's probably
uncharitable to take cheap shots at the article, which is a beautiful, anti-fa inspired,
fairytale history of the modern age. I just wish more care would be used for Marxist and
non-marxist socialist phrases such as "class struggle" and "invidious distinction" because it
impossible to detest them adequately when they are improperly deployed.
The term "invidious distinction" was coined by Thornstein Veblen in his seminal "The
Theory of the Leisure Class", in which Veblen argues that one of the primary human
motivations is to evoke envy in our fellows. Veblen thought that because all value is
subjective/arbitrary, it's quite reasonable to assume that the most efficient value signal is
that which creates the most envy in other men. A man's social standing is therefore
efficiently established by status symbols that invoke envy such as a Rolex or a Mercedes. The
peculiar consequence of this is that often, men desire a thing like a Rolex because other men
want one, even up to the point when the object lacks any utility whatsoever other than signaling wealth, which itself is defined as having things that others want. Invidious
distinction is therefore best evidenced through conspicuous consumption, however nearly all
actions that do not have subsistence as their aim are undertaken to gain social standing or
signal social standing by invoking envy.
Thus the quote above could be rewritten to be "The rightist rhetoric turns against
itself as its followers engage in non-subsistence activities" which is kind of dumb. If
the author is prognosticating that the authoritarian new order will turn on itself, it'd be
nice to know have a more substantive explanation than "non-subsistence activities". Moreover,
if the authoritarian new order is to shed it's "shock troops" in exchange for "meritocrats"
it'd be nice to know why. That's my 2 cents, but I'm curious to know what others think of
this curious tale!
The corruption of upwardly mobile middle-class rabble rousers will disillusion their
voluntary followers. Arbitrary police and military repression usually extends to extortion
and intimidation beyond the drug slums to the middle and working-class neighborhoods.
Also, the rise of AI, data mining, and complex algorithms, as well as the proliferation of
electronic devices that record and analyze our private spaces is a pillar of the new order.
Essentially, we are being watched by machines.
People need to reject the material order. Spiritual awakening is the key.
Revolutionaries will find new ways to defeat these technology-based tactics. Dogwhistling,
communication on a personal level (rather than by mass media or the internet), and
old-fashioned tribalism should help. Also, leaderless resistance can play a role. Weaknesses
will be found in the crumbling edifice, and many hands can chisel separately.
Infiltration and sabotage can also be applied.
Possibly unrelated, but maybe thought-provoking:
Consider the man they just arrested for the mail bomb scare. Reportedly, this person was a
career criminal with drug dealing and grand theft on his record and he was caught in
possession of a white van with decals on it depicting his targets. This man is a caricature
of a Trump supporter, ready-made for the cable news broadcast. Does anyone else see the
absurdity of it? Can this guy be for real?
The authoritarian New Order usually begins to decline through 'internal rot' –
uber- profiteering and flagrant abuse of work.
" However sustaining their advance is conditional on dynamic economic growth "
You cannot fool all people all the time.
Our Dutch Rutte governments now for some ten years have told us that the economy is growing,
alas the average Dutchman by now knows that 'there are lies, big lies, and statistics', in
other words, it may well be that the economy is growing, but the average Dutchman does not
see his buying power increased.
On the contrary, those that work have a more or less constant buying power, those that do not
work, for whatever reason: cannot find a job, permanent illness, retired, see quite well how
their material position deteriorates steadily.
The alliance of big globalized business and big Governments is an unbearable burden for most
of the populations. Since the 70`s you have to work more and more and to study more and more for less and
less
I foresee that if this continue in the next 20 years millions and millions of people will
die of marginalization, of hunger , misery and grief .
This is the most important problem governments, and in the wider sense humanity is
encountering.
The pendulum is incessantly swinging from center to right and than reverses from right to
left.
Marx theories are totally one sided and do not solve anything. Extreme swing to the left
brought at start enthusiasm of the working classes and for certain time progress of the
humanity was phenomenal. But in time the progress did stop and population become lethargic
and progress become stagnation leading to depression. Similar thing happens when pendulum is
swinging to the right.
Eventually the purchasing power of the population diminishes to the size when crisis of the
system is inevitable.
Most important task of the governments is to control the economy that the extent of the
swings are small as possible.
@Anon Things seem to have improved in Asia since I first went abroad in 2000. In the US,
on the other hand, life seems to have gotten more and more difficult.
If you had told me in 1993 when I left home that Gen Y of age 30 would live at home and
that entire families of white people would be homeless or that MBA's would have to work in
Bistros at age 25 I would have said you're crazed.
The odd thing in the US is that it is the middle-class seems to have gotten hit the worst.
The white underclass and blacks have always had it hard and poor. Much of the time they
deserve it because they have babies at 19 and don't go to college. But the destruction of the
middle-class whites is quite phenomenal.
It is unbearable for the middle-class. The underclass does not care. Big governments tend
to be corrupt, so money talks. If you live in the ghetto or the trailer park you have no expectations anyhow. You were
not going to be a great citizen anyhow. But for the middle-class things will be shocking.
I doubt that such a thing ever occurred to any substantial degree. "Popular" class
struggles need to be seen for what they are; temporary expedients whereby one set of rulers
uses the populace for their own ends and against their competitors.
Too many people get suckered into supporting "popular" movements and sometimes do gain
temporary benefits, but when their handlers get what they want, the fun and games are over.
The author noted the concept, saying,
Between the end of World War Two and the late 1940's, the popular classes were able to
secure democratic rights, populist reforms and social organization. [but then began]
bullying of traditional allies
No "will be" about it. You noted it in your comment #10 and my observations agree,
But the destruction of the middle-class whites is quite phenomenal.
The assault on the middle class has been taking place for decades and many people have
been feeling it although most apparently still hope for some Messiah, and many of them
apparently think either Hillaryena or the Trumpster was it. Where they get their faith I'll
never know.
@jilles dykstra Same thing in Spain, and in most of western Europe I would say . The macroeconomy is going well for the chosen ones , and the microeconomy is going very bad for
most of the population .
Much of the time they deserve it because they don't go to college.
Wrong.
Schooling in the USA for some time been nothing more than babysitting and brainwashing and
that's by design. Completing college nowadays is mainly for immature, dependent losers
especially since many of them will be burdened with a non-marketable degree and debt for
decades and in any case, the majority will wind up as wage slaves anyway. The way to go now
is to learn a trade, especially one that a person can practice independently and with low
capital, and get to work, but the window for even that seems to be fast closing too.
If one has the talent (rare) sales can still be a good road to relative independence with
no "collitch" needed.
@Jeff Stryker "If you live in the ghetto or the trailer park you have no expectations
anyhow. You were not going to be a great citizen anyhow."
"But for the middle-class things will be shocking."
Spot on, Jeff. I see remnants of the onetime middle class around me. People with a degree or advanced degree, people with
identifiable special skills (accountancy, engineering) who guard their expertise as would a 15th century guild worker, people
with decent table manners...
Then their Fortune 500 company kicks them out of their corporate featherbed, they spend a
year or two or more discovering their specialized skills are worth half of what they'd
thought, and when they land a job, they're expected to cook the books or sign off on dodgy
products, acting as designated corporate fall guys in the event of an investigation.
When I was in university there was no Leftist programming. People were
there to become engineers, IT specialists, doctors, nurses, businessmen, accounting.
You maybe had to take an "African-American studies" course but that was just to get enough
credits to graduate. Also, by the time most people went to college (when I did from 93-98) they were adults
with opinions. Sales is a diminishing field now with the internet.
@jim jones A shrewd observation is my immediate reaction. Most likely true of the
organised institutional left which, when it's old product no longer sells doesn't want to
declare bankruptcy and shut up shop.
"Government exists to spend. The purpose of government is to serve the general welfare of the
citizens, not just the military-industrial complex and the financial class. Didn't we have a
stimulus, oh, eight years ago? It was tiny and has not been entirely spent. As Yellen
implied, we need more spending of the non-military kind (what Barney Frank memorably called
"weaponized Keynesianism" doesn't stimulate)."
This is what has been missing for over 40 years in the US, government's role in the
economy. When any politician brings up the fact that it's time we used fiscal policy as it
was designed, neoliberals have a socialism meltdown. Both parties have been taken over by the
Kochtopus, The libertarian fascist ideology that hides behind the term "neoliberalism". The
ultimate goal of this zombie ideology that was thoroughly discredited in 2008 but continues
to roam the earth is to replace nations with privately owned cities. This experiment was
going on in Honduras, following the 2009 coup, until it was finally ended by a SC ruling that
it was unconstitutional.
"In a libertarian society, there is no commons or public space. There are property
lines, not borders. When it comes to real property and physical movement across such real
property, there are owners, guests, licensees, business invitees and trespassers – not
legal and illegal immigrants." ~ Jeff Deist, president of the Mises Institute
This is the struggle – the struggle to maintain public space on a planet that was
never meant to be owned in the first place.
"All the leading economic indicators are great to healthy ... Homelessness is worse than I
have ever seen but I do not see any Latino or Asian homeless people. It is nearly 100% white
or African Americans. Most appear to be drugged out losers."
A perfect example of what b meant when he said that the only people suffering are the
poor. Meaning that nobody cares about them and, often because they are prevented from doing
so, they rarely vote. And when they do vote there aren't any candidates to vote for.
The last sentence just about sums neo-liberals up: most of the homeless are informed, are
'drugged out losers.'
So that's OK is it? Ever wonder why they are drugged out? Or what the rules were in the game
they lost?
"As these contrasts show, capitalism has undergone enormous changes in the last two and a half centuries. While some of Smith's
basic principles remain valid, they do so only at very general levels.
For example, competition among profit-seeking firms may still be the key driving force of capitalism, as in Smith's scheme.
But it is not between small, anonymous firms which, accepting consumer tastes, fight it out by increasing the efficiency in
the use of given technology.
Today, competition is among huge multinational companies, with the ability not only to influence prices but to redefine technologies
in a short span of time (think about the battle between Apple and Samsung) and to manipulate consumer tastes through brand-image
building and advertising."
AaronB, your observations are always insightful and interesting. I wonder if you believe
in freewill at all, even in "insignificant" matters because time and sequence are all
important and such trivial events set up the really big ones in our lives.
"Human beings, in their thinking, feeling and acting are not free but as causally bound
as the stars in their motions." – Albert Einstein.
"... By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... Squeezed: Why Our Families Can't Afford America ..."
"... You will not do as well as your parents ..."
"... Life is a struggle to keep up. Even if you achieve something, you will live in fear of losing it. America is not your land: it belongs to the ultra-rich. ..."
"... The Vanishing Middle Class ..."
"... Capital in the Twenty-First Century ..."
"... Global Wealth Report ..."
"... Professed as a right for individual freedom and empowerment, in reality it serves to suppress disobedience with shame. If you earn like shit -- it's gotta be because YOU are shit. Just try harder. Don't you see those OTHER kids that did well! ..."
"... I think one crucial thing that has to change is the culture of extreme individualisation. ..."
"... die Plutonomisten und Bolshewisten! ..."
"... That the article brings "fear of robots" into the discussion is a tell that the writer does not want to mention that it is the competition from others in the world wide labor force that depress USA wages. ..."
"... We have been commodified since before we were even born, to the point where opportunities for what Lave and Wenger would call "legitimate peripheral participation" in the kinds of work that yield real, humane, benefits to our communities are scant to nonexistent for most of us. Something has gone deeply awry in this core social function at the worst possible time in human history. ..."
"... That was a wonderful post, very moving, thank you. These kind of testimonies are very important because they show the real human cost of neoliberalism. Neoliberalism is truly a death cult. Please find an alternative to alcohol. Music, art, nature, etc. ..."
"... At least you are self aware. Most people are not. As for the Ship of Status, let it sink. Find a lifeboat where you feel comfortable and batten down for the Roaring (20)40s yet to come. Once you find something to work for, the bad habits will lose much of their hold on you. As long as you don't slide into alcoholism, you have a chance. ..."
"... Neoliberalism, the economic policy that is private sector "free market" driven, giving the owners of capital free, unfettered reign. Created by libertarians like Fredrich von Hayek and Milton Friedman, they sold it to the nation but failed to mention that little peccadillo about how privatization of government would usher in economic fascism. ..."
"... "An extreme form of laissez-faire individualism that developed in the writings of Hayek, Friedman and Nozick they are also referred to as libertarians. They draw on the natural rights tradition of John Locke and champion's full autonomy and freedom of the individual." ..."
"... What they meant was ECONOMIC freedom. They despise social freedom (democracy) because civil, labor, health, food safety, etc., rights and environmental protections put limits on their profits. ..."
"... The "maximizing shareholder value" myth turns people into psychopaths . The entire neoliberal economic policy of the past 40 years is based on the false assumption that self-interest is the driving evolution of humanity. We're not all psychopaths, turns out. We're social beings that have mainly used cooperation to get us through these thousands of years of existence. ..."
"... "If the IMF is to shake its image as an inward-looking, out-of-touch boys club, it needs to start taking the issue seriously. The effect of the male dominance in macroeconomics can be seen in the policy direction of the organisation: female economists are more likely to be in favour of Government-backed redistribution measures than their male counterparts. ..."
"... Of course, the parochial way in which economics is perceived by the IMF, as nothing more than the application of mathematical models, is nothing new. In fact, this is how mainstream economics frequently is taught in universities all over the world. Is it any wonder that the IMF has turned out as it is?" ..."
"... "Economics students are forced to spend so much time with this complex calculus so that they can go to work on Wall St. that there's no room in the course curriculum for the history of economic thought. ..."
"... So all they know about Adam Smith is what they hear on CNN news or other mass media that are a travesty of what these people really said and if you don't read the history of economic thought, you'd think there's only one way of looking at the world and that's the way the mass media promote things and it's a propagandistic, Orwellian way. ..."
"... The whole economic vocabulary is to cover up what's really happening and to make people think that the economy is getting richer while the reality is they're getting poorer and only the top is getting richer and they can only get rich as long as the middle class and the working class don't realize the scam that's being pulled off on them." ..."
"... "I often joke with my fellow country neighbors that it costs a hundred bucks to simply leave the house. It's not a joke anymore. At this point those still fighting for a paltry 15.00 should include a hundred dollar per day walk out your front door per diem." ..."
"... This is a stark and startling reality. This reality is outside the framework of understanding of economic struggle in America that is allowed by the corporate neoliberal culture/media. ..."
"... As the Precariat grows, having watched the .1% lie, cheat and steal – from them, they are more likely to also lie, cheat and steal in mortgage, employment and student loan applications and most importantly and sadly, in their dealings with each other. Everybody is turning into a hustler. ..."
"... Economics was always far too dangerous to be allowed to reveal the truth about the economy. ..."
"... "The labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers." ..."
"... Capitalism had two sides, the productive side where people earned their income and the parasitic side where the rentiers lived off unearned income. The Classical Economists had shown that most at the top of society were just parasites feeding off the productive activity of everyone else. ..."
"... The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between "earned" and "unearned" income and they conflated "land" with "capital". They took the focus off the cost of living that had been so important to the Classical Economists to hide the effects of rentier activity in the economy. ..."
"... The landowners, landlords and usurers were now just productive members of society again. It they left banks and debt out of economics no one would know the bankers created the money supply out of nothing. Otherwise, everyone would see how dangerous it was to let bankers do what they wanted if they knew the bankers created the money supply through their loans. ..."
"... The cost of living = housing costs + healthcare costs + student loan costs ..."
"... An unexpected consequence of globalization is that a lot of people see how thing are done, elsewhere. ..."
"... Part of me doesn't feel sorry at all for the plight of middle-class Americans. When times were good they were happy to throw poor and working-class people under the bus. I remember when the common answer to complaints about factory closings was "you should have gotten an education, dummy." Now that the white-collar middle class can see that they are next on the chopping block they are finding their populist soul. ..."
The children of America's white-collar middle class viewed life from their green lawns and
tidy urban flats as a field of opportunity. Blessed with quality schools, seaside vacations and
sleepover camp, they just knew that the American dream was theirs for the taking if they hit
the books, picked a thoughtful and fulfilling career, and just, well, showed up.
Until it wasn't.
While they were playing Twister and imagining a bright future, someone apparently decided
that they didn't really matter. Clouds began to gather -- a "dark shimmer of constantly
shifting precariousness," as journalist Alissa Quart describes in her timely new book "
Squeezed:
Why Our Families Can't Afford America ."
The things these kids considered their birthright -- reputable colleges, secure careers, and
attractive residences -- were no longer waiting for them in adulthood.
Today, with their incomes flat or falling, these Americans scramble to maintain a semblance
of what their parents enjoyed. They are moving from being dominant to being dominated. From
acting to acted upon. Trained to be educators, lawyers, librarians, and accountants, they do
work they can't stand to support families they rarely see. Petrified of being pushed aside by
robots, they rankle to see financial titans and tech gurus flaunting their obscene wealth at
every turn.
Headlines gush of a humming economy, but it doesn't feel like a party to them -- and they've
seen enough to know who will be holding the bag when the next bubble bursts.
The "Middle Precariats," as Quart terms them, are suffering death by a thousand
degradations. Their new reality: You will not do as well as your parents . Life is
a struggle to keep up. Even if you achieve something, you will live in fear of losing it.
America is not your land: it belongs to the ultra-rich.
Much of Quart's book highlights the mirror image of the downwardly mobile middle class Trump
voters from
economically strained regions like the Midwest who helped throw a monkey wrench into
politics-as-usual. In her tour of American frustration, she talks to urbanites who lean liberal
and didn't expect to find themselves drowning in debt and disappointment. Like the
falling-behind Trump voters, these people sense their status ripped away, their hopes
dashed.
If climbing up the ladder of success is the great American story, slipping down it is the
quintessential tragedy. It's hard not to take it personally: the ranks of the Middle Precariat
are filled with shame.
They are somebodies turning into nobodies.
And there signs that they are starting to revolt. If they do, they could make their own mark
on the country's political landscape.
The Broken Bourgeoisie
Quart's book takes a sobering look at the newly unstable bourgeoisie, illustrating what
happens when America's off-the-rails inequality blasts over those who always believed they
would end up winners.
There's the Virginia accountant who forks over nearly 90% of her take home pay on care for
her three kids; the Chicago adjunct professor with the disabled child who makes less than
$24,000 a year; and the California business reporter who once focused on the financial
hardships of others and now faces unemployment herself.
There are Uber-driving teachers and law school grads reviewing documents for $20 an hour --
or less. Ivy Leaguers who live on food stamps.
Lacking unions, church communities and nearby close relatives to support them, the Middle
Precariats are isolated and stranded. Their labor has sputtered into sporadic contingency: they
make do with short-term contracts or shift work. (Despite the much-trumpeted low unemployment
rate, the New York Times
reports that jobs are often subpar, featuring little stability and security). Once upon a
time, only the working poor took second jobs to stay afloat. Now the Middle Precariat has
joined them.
Quart documents the desperate measures taken by people trying to keep up appearances,
relying on 24/7 "extreme day care" to accommodate unpredictable schedules or cobbling together
co-living arrangements to cut household costs. They strain to provide things like academic
tutors and sports activities for their kids who must compete with the children of the wealthy.
Deep down, they know that they probably can't pass down the cultural and social class they once
took for granted.
Quart cites a litany of grim statistics that measure the quality of their lives, like the
fact that a middle-class existence is now 30% more expensive than it was twenty years ago, a
period in which the price of health care and the cost of a four-year degree at a public college
nearly doubled.
Squeezed is especially detailed on the plight of the female Middle Precariat, like
those who have the effrontery to procreate or grow older. With the extra burdens of care work,
pregnancy discrimination, inadequate family leave, and wage disparities, (not to mention sexual
harassment, a subject not covered), women get double squeezed. For women of color, often
lacking intergenerational wealth to ease the pain, make that a triple squeeze.
The Middle Precariat in middle age is not a pretty sight: without union protection or a
reliable safety net they endure lost jobs, dwindled savings, and shattered identities. In one
of the saddest chapters, Quart describes how the pluckiest try reinvent themselves in their 40s
or 50s, enrolling in professional courses and certification programs that promise another shot
at security, only to find that they've been scammed by greedy college marketers and deceptive
self-help mavens who leave them more desperate than before.
Quart notes that even those making decent salaries in the United States now see themselves
barred from the club of power and wealth. They may have illiquid assets like houses and
retirement accounts, but they still see themselves as financially struggling. Earning $100,000
sounds marvelous until you've forked over half to housing and 30% to childcare. Each day is one
bit of bad luck away from disaster.
"The spectacular success of the 0.1 percent, a tiny portion of society, shows just how
stranded, stagnant, and impotent the current social system has made the middle class -- even
the 10 percent who are upper-middle class," Quart writes.
Quart knows that the problems of those who seem relatively privileged compared many may not
garner immediate sympathy. But she rightly notes that their stresses are a barometer for the
concentration of extreme wealth in some American cities and the widening chasm between the very
wealthy and everybody else.
The Dual Economy
The donor-fed establishment of both political parties could or would not see this coming,
but some prescient economists have been sounding the alarm.
In his 2016 book The Vanishing Middle Class ,
MIT economist Peter Temin detailed how the U.S. has been
breaking up into a "dual economy" over the last several decades, moving toward a model that
is structured economically and politically more like a developing nation -- a far cry from the
post-war period when the American middle class thrived.
In dual economies, the rich and the rest part ways as the once-solid middle class begins to
disappear. People are divided into separate worlds in the kinds of jobs they hold, the schools
their kids attend, their health care, transportation, housing, and social networks -- you name
it. The tickets out of the bottom sector, like a diploma from a first-rate university, grow
scarce. The people of the two realms become strangers.
French economist Thomas Picketty provided a stark formula for what happens capitalism is
left unregulated in his 2015 bestseller, Capital in the Twenty-First
Century . It goes like this: when the rate of return on the investments of the wealthy
exceeds the rate of growth in the overall economy, the rich get exponentially richer while
everyone becomes poorer. In more sensible times, like the decades following WWII, that rule was
mitigated by an American government that forced the rich pay their share of taxes, curbed the
worst predations of businesses, and saw to it that roads, bridges, public transit, and schools
were built and maintained.
But that's all a fading memory. Under the influence of political money, politicians no
longer seek a unified economy and society where the middle class can flourish. As Quart
observes, the U.S. is the richest and also the most unequal country in the world, featuring the
largest wealth inequality gap of the two hundred countries in the Global Wealth Report
of 2015.
Who is to Blame?
Over and over, the people Quart interviews tend to blame themselves for their situation --
if only they'd chosen a different career, lived in another city, maybe things wouldn't have
turned out this way. Sometimes they point the finger at robots and automation, though they
arguably have much
more to fear from the wealthy humans who own the robots.
But some are waking up to the fact it is the wealthy and their purchased politicians who
have systematically and deliberately stripped them of power. Deprivations like paltry employee
rights, inadequate childcare, ridiculously expensive health care, and non-existent retirement
security didn't just happen . Abstract words like deregulation and globalization
become concrete: somebody actually did this to you by promoting policies that leave you high
and dry.
As Quart indicates, understanding this is the first step to a change of consciousness, and
her book is part of this shift.
Out of this consciousness, many individuals and organizations are working furiously and
sometimes ingeniously to alter the negative trajectory of the Middle Precariat. Quart outlines
proposals and developments like small-scale debt consolidation, student debt forgiveness,
adequately subsidized day care, and non-traditional unions that could help.
America also has a track record of broad, fundamental solutions that have already proven to
work. Universal basic income may sound attractive, but we already have a program that could
improve the lot of the middle class if expanded: Social Security.
Right now, a worker stops having to pay Social Security tax on any earnings beyond $128,400
-- a number that is unreasonably low because the rich wish to keep it so. Just by raising that
cap, we could the lower the retirement age so that Americans in their 60s would not have greet
customers at Walmart. More opportunities would open up to younger workers.
The Middle Precariat could be forgiven for suspecting that the overlords of Silicon Valley
may have something other than altruism in mind when they tout universal basic income. Epic tax
evaders, they stand to benefit from pushing the responsibility for their low-paid workers and
the inadequate safety net and public services that they helped create onto ordinary
taxpayers.
Beyond basic income lies a basic fact: the American wealthy do not pay their share in taxes.
In fact, American workers pay
twice as much in taxes as wealthy investors. That's why infrastructure crumbles, schools
deteriorate, and sane health care and childcare are not available.
Most Americans realize that inequality has to be challenged through the tax code: a
2017 Gallup poll shows that the majority think that the wealthy and corporations don't pay
enough. Politicians, of course, ignore this to please their donors.
And so the Middle Precariat, like the Trump voters, is getting fed up with them.
From Depressed to Energized
Quart astutely points out that income inequality is being written into the law of the land.
Funded the efforts of billionaires like the Koch brothers, politicians have
altered laws and constitutions across the country to cement the dual economy through
everything from restricting voting rights to defunding public education.
Several Middle Precariats in Squeezed have turned to independent or renegade
candidates like Bernie Sanders who offer broad, substantial programs like debt-free college and
universal health care that address the fissures in their lives. They are listening to
candidates who are not afraid to say that markets should work for human beings, not the other
way around.
If Donald Trump's political rise "can be understood as an expression of the gulf between
middle-class citizens and America's ruling classes," as Quart observes, then the recent surge
of non-establishment Democratic candidates, especially democratic socialists, may be the next
phase of a middle class revolt.
Recent surprise victories in Pennsylvania and New York in the Democratic primaries by female
candidates openly embracing democratic socialism, including Alexandria Ocasio-Cortez, who
bested Democratic stalwart Joe Crowley by running for Congress on a platform of free Medicare
and public college tuition for all, may not be the blip that establishment Democrats hope. In
New York, democratic socialist Julia Salazar is looking to unseat long-time state senator
Martin Dilan. Actress
Cynthia Nixon , running against New York Governor Andrew Cuomo, has just proclaimed herself
a democratic socialist and promises to raise taxes on the rich and boost funding for public
schools. Michelle Goldberg recently announced in the New York Times that "
The Millenial Socialists are Coming ," indicating the intense dislike of traditional
politics in urban centers. These young people do not think of things like debt-free college or
paid family leave as radical: they see it done elsewhere in the world and don't accept that it
can't be done in America.
Historically, the more affluent end of the middle class tends to identify with and support
the wealthy. After all, they might join their ranks one day. But when this dream dies, the
formerly secure may decide to throw their lot in with the rest of the Precariats. That's when
you have the chance for a real mass movement for change.
Of course, people have to recognize their common circumstances and fates. The urban denizens
of New York and San Francisco have to see what they have in common with middle class Trump
voters from the Rust Belt, as well as working class Americans and everybody else who is not
ultra-rich.
If the growing ranks of Precariats can work together, maybe it won't take a natural
catastrophe or a war or violent social upheaval to change America's unsustainable course of
gross inequality. Because eventually, something has to give.
I think one crucial thing that has to change is the culture of extreme
individualization.
Professed as a right for individual freedom and empowerment, in reality it serves to
suppress disobedience with shame. If you earn like shit -- it's gotta be because YOU are
shit. Just try harder. Don't you see those OTHER kids that did well!
Part of the blame is on New Age with it's quazi-buddhist narrative: basically, everything
is perfect, and if you don't feel it that way, it's because you are tainted with envy or
weakness.
Thus what is in fact a heavily one-sided battle -- is presented as a natural order of
things.
I believe we need a new framework. A sort of mix of Marx and Freud: study of the
subconscious of the social economy. The rich not just HAPPEN to be rich. They WANT to be
rich. Which means that in some way they NEED others to be poor.
Of course, I'm generalizing. And some rich are just really good at what they do. These
rich will indeed trickle down, they will increase the well-being of people. But there are
others. People working in insurance and finance. And as their role in the economy grows -- as
does their role in politics, their power. They want to have more, while others would have
less.
But behind it all are not rational thoughts, not efficiency, but psychological trauma,
pain of the soul. Without addressing these matters, we will not be able to change the
world.
I'm sorry if my thoughts are somewhat fragmented. It's just something I've been thinking
of a lot since I started reading NC, discovering MMT and heterodox approaches in general.
The problem is the perception the Democratic Party is reliable as a partner. The culture
wasn't a problem in 2008 when the Democratic candidate was perceived as wanting to raise
taxes, pass universal health care, and end the wars.
====Part of the blame is on New Age with it's quazi-buddhist narrative: basically,
everything is perfect, and if you don't feel it that way, it's because you are tainted with
envy or weakness.
That's where I first heard of this theoretical link. I think that it's flat out right and
post-WWII psycho-babble has seeped into society in pernicious ways (along with everything
else, breakdown of nuclear family, etc). Unfortunately, can't prove it like Euclid.
"A sort of mix of Marx and Freud"– the " Frankfurt School " is a start, with the
realization of "the culture industry" as force majeure in the "heavily one-sided
battle." And ditto recommendation of "The Century of the Self."
Responding to Sergey P: I think one crucial thing that has to change is the culture of extreme
individualisation.
There are really only two alternatives to individualism. There is Durkheim-ian "society,"
in which we are all in this together – interdependent. I think this is still an
appropriate lens for a lot of smaller cities and communities where people really do still
know each other and everyone wants the community to thrive. And, of course, it is the only
way to think about human society nested inside a finite Earth. But it can only work on a
larger scale through mediating "institutions" or "associations." All the evidence shows,
consistent with the piece, that precariousness by itself weakens social institutions –
people have less time and money to contribute to making them work well.
And then there is Marx-ian "class." Which is to say, we are not all individuals but we are
not all of one group. There are different groups with different interests and, not
infrequently, the interests of different groups are opposed – what is good for one is
bad for another – and if power is unequal between groups (either because some groups as
groups have more power than others or because individuals with more power all have the same
group affinity), then powerful groups will use that power to oppress others. In that case,
the only remedy is to try to systematically empower the weak and/or disempower the strong.
This also requires collective action – institutions, associations, government –
and it is again noted that our collective institutions, most notably unions, have been
seriously weakened in the last 40-60 years.
The real world doesn't always fit into neat categories. Trump's America First is an appeal
to the "society" of USAmerica. Maybe there will be some improvements for working people. But
the argument in the piece, perhaps not as clearly stated as I would like, is that the
interests of the (former) middle class – as a class – have diverged from the
interests of the upper class. Changing that equation requires collective action.
Naturally one must quote the great Frank Herbert from his novel Dune:
"Once men turned their thinking over to machines in the hope that this would set them
free. But that only permitted other men with machines to enslave them."
'We already have a program that could improve the lot of the middle class if expanded:
Social Security.'
Never mind expanding it -- even the existing Social Security program is less than 20%
funded, headed for zero in 2034 according to its trustees. Scandalously, these trustees owe
no fiduciary duty to beneficiaries. Old Frank wanted pensioners to be forever dependent on
his D party. How did that work out for us?
Take a look at the transmittal letter for the 2018 trustees report, released last month.
Two public trustee positions are "VACANT," just as they were in last year's transmittal
letter:
Just above these blank spaces is the signature of one Nancy Berryhill, "Acting
Commissioner of Social Security." But wait --
On March 6, 2018, the Government Accountability Office stated that as of November 17,
2017, Berryhill's status violated the Federal Vacancies Reform Act, which limits the time a
position can be filled by an acting official; "[t]herefore Ms. Berryhill was not authorized
to continue serving using the title of Acting Commissioner after November 16." Berryhill
declared, "Moving forward, I will continue to lead the agency from my position of record,
Deputy Commissioner of Operations."
By June 5th, Berryhill was still impersonating the Acting Commissioner, legally or
not.
Summing up, even the trustees' one-page transmittal letter shows that Social Security is
treated as a total and complete Third World joke by the US federal government.
Yeah, yeah. Gubmint can't do nuthin' rite. How about we take our government back from the
plutocrats and set SS on solid footing again. There are no impediments other than the will of
the people to use our power. Now that the Boomers are moving off all sorts of things, like
'thinking', and 'logic', will become prevalent again.
Never mind expanding it -- even the existing Social Security program is less than 20%
funded, headed for zero in 2034 according to its trustees. Scandalously, these trustees owe
no fiduciary duty to beneficiaries. Old Frank wanted pensioners to be forever dependent on
his D party. How did that work out for us?
Correct, then the system will eventually be totally reliant on taxes coming in. According
to 2011 OASDI
Trustees Report
Beginning in 2023, trust fund assets will diminish until they become exhausted in 2036.
Non-interest income is projected to be sufficient to support expenditures at a level of 77
percent of scheduled benefits after trust fund exhaustion in 2036, and then to decline to
74 percent of scheduled benefits in 2085
The benefits are never going to go completely away, the benefits will decrease if nothing
is done. Things can be done to change this, such as an increasing the the cap on earnings,
raising new revenues, etc. This is not exactly an "end of the world" scenario for SSI.
Also, no one complained when the excess SSI tax collected "Social security trust fund" was
used to keep interest rates down by purchasing Government bonds.
The whole tax angle is a complete red herring. Raising the cap is not the answer.
FICA is "the most regressive tax" the country imposes. Eliminating FICA altogether, doing
away with the "trust fund" and the pretense that SS is not the government taking care of it's
elderly citizens but is workers taking care of themselves, is the answer. If the emphasis in
Quart's book on the rise of a new democratic socialism means anything, it means reconciling
with the notion that it is OK for the government to take measures to ensure the welfare of
the people. Pay-as-you-go SS can become simply the re-assumption of our collective
responsibility to take care of our own, as a society, not as individuals.
I would be fine with that if I could trust the Federal government to do the right thing.
The problem is that we have too many people invested in the system, and I don't trust the
Federal government to not screw people over in a new system. You know what will happen, they
will set up a two tiered system where people over a certain age will keep their benefits, and
the new people will get a system that is completely crapified or means tested.
Well-put The only way to eliminate the constant refrain of "but SS is (insert blithering
comment on entitlement spending), is to shift resources to people rather than armies for the
SuperRich.
So we should just ignore the fact that our own Govt has "borrowed" $2.8 Trillion, at
least, from the SS Trust Fund so far and can't (won't) pay it back?
This "borrowing" should be illegal and I believe that "Old Frank" would be rolling in his
grave if he knew that would happen.
And I sincerely doubt his intentions were to get SS on the books in order to keep us
beholden to the Dem Party. And if that were true it is obvious that his party doesn't agree.
If they did they wouldn't be assisting in gutting the program.
The whole concept of creating and maintaining a multi-trillion dollar "trust fund" was
irrevocably flawed. When the surplus payroll taxes were "invested" in government bonds, they
entered the government's general fund and were promptly spent. The money is gone. That's why
it's on the books as a debt owed to the Social Security administration. There are no actual
assets behind the fund. It's just one part of the government owing money to another part of
the government.
However, what would the alternative have been? Investing in the crap shoot known as the US
stock market? No thanks. Or setting the funds aside in a bank account, where they would cease
circulating through the economy? That wouldn't have worked either, as all dollars in
circulation would have eventually ended up there, causing massive deflation.
None of these are workable. We should have gone on a strictly pay-as-you-go basis. If
payroll taxes generated more revenue than was necessary, we should have cut payroll taxes
and/or raised benefits. And if they fall short, we should raise payroll taxes and/or cut
benefits.
Today, we cover about 95% of benefits with payroll taxes. The remainder comes from "trust
fund redemptions", where general fund monies are given to the SSA to cover the shortfall.
Given that our government is already running a deficit, this means more borrowing (or
money-printing, depending on how you look at things).
When the "trust fund" is depleted, but SSA will lack the legal authority to claim any more
general fund monies, but it would be quite easy for Congress to change the rules to simply
state that "any SSA shortfall will be covered by the general fund". And I predict they will
do so in 2034, as it would take less than a month of constituents complaining about reduced
benefits to force even the strictest of deficit hawks to cave.
Or maybe they'll get creative and instead raise rates on the interest that the trust fund
earns. Right now it's a 3% rate, but if Congress were to double or triple it, the trust fund
would last much longer. [As would the debt owed to the SSA.] Heck, if they multiplied the
interest rate by a factor of 11, then they could theoretically dispense with payroll taxes
entirely. Right?
Yes, SS has contributed NOT ONE PENNY to the deficit and the reason it accumulated a
surplus was so people could collect later. Now, they want to say that old surplus shouldn't
count. That's thievery.
tired old tripe and how much is the US military funded? I can answer that for you. It's
ZERO. 0% funded! Take your heterodox BS to a bunch of freshman impressionables – it is
only tolerated here because you are a fine writer and interesting as hell and know almost all
there is about economic liberalism.
Wow. So let's go full SSCodex for a bit and push this trend out to the limit.
While the unwashed masses remain a market for big Ag, big Pharma, big Auto, big (online)
Retail, and a few others, it seems like the predatory 'fund' segment of the FIRE elite has
moved on to devouring larger prey (capitalist autophagy?). The unbankable precariat are
beneath their notice now, like pennies on the sidewalk.
So in that case, the 1% of the 0.1% has evolved beyond 'exploitation' in any Marxist
sense. It is now indifferent to the very life or death of the precariat, at home or abroad,
still less their security or advancement. It needs them neither for consuming nor producing,
nor for building ziggurats.
(Just so long as the pitchforks aren't out – but that's what the credentialed minion
20% is for. And drones).
Here Disposables, have some more plastic and painkillers. Be assured the Alphas will be
live tweeting the Pandemic, or Chicxulub 2.0, from Elon's luxury robot-serviced survival
capsules (oh, you thought those were for use on Mars? Silly rabble!)
It's like that DKs mosh pit classic: "Uncounted millions whisked away / the rich will have
more room to play"
[I exaggerate, of course, for illustration. Slightly.]
I think you can extend this analysis to the current U.K. Conservative Party. Commentators
have started to notice that the Brexiteer wing of the party seems completely impervious to
claims Brexit will harm the economy. Are the Tories no longer the natural party of British
business, they ask?
Using your logic, we can say that a fund-interest-dominated Tory party simply has no
interest in or need for the "ordinary" bits of the British business community anymore. What
it wants are shorting and raiding opportunities, and from that vantage point a catastrophic
Brexit is very attractive. Put these interests in coalition with a voter base largely living
on guaranteed incomes and retirement funds of one sort or another and you have the surreal
spectacle of an entire governing party and its supporters who are no longer anchored to the
"real" economy at all. Yes, it's an exaggeration but it's an exaggeration that explains a few
things, I think.
You both need to read the 2005 leaked Citigroup "plutonomy memo", if you haven't yet. Very
bright minds called it a decade ago, that the global economy isn't even an economy any longer
in any traditional sense. This is part one: https://delong.typepad.com/plutonomy-1.pdf
Great link. From page one, Citigroup thinks the global imbalance is a great opportunity.
Nothing new here. For years I've been reading about stock and futures manipulations–and
vulture capitalists–that cause people to die or kill themselves. The rich don't care;
they see it as a way to make more money. And then you wonder why I've been talking revolution
for years as well?
Answer: Add the US wasting its blood and cash meddling in other countries' affairs.
"honest friendship with all nations-entangling alliances with none." bueller ?
Ironic as multilateralist/globalist/fan of US interventions George Soros supposedly
provided some of the seed money for the Institute for New Economic Thinking.
I just want to not die earlier than necessary because I can't afford health care. I'd also
like to stop worrying that I'll spend my golden years homeless and starving because of some
disaster headed my way. I gave up on status a long time ago, and am one of those mentioned
who has little pity for the top 10%.
Sounds like a good book. I shall have to pick it up from my library, since buying new
books is a stretch.
Nearly all income growth in the United States since the 1970s has gone into income
obtained by the rich other than wages and salaries, like capital gains, stock options,
dividends, partnership distributions, etc. To capture overall economic growth to which the
entire society has contributed, Social Security benefits should be tied to economic growth,
smoothed for the business cycle. If people believe benefit increases require tax increases,
the tax should be applied to all earnings, not just salary/wages. Raising the $128,400 cap on
income subject to SS taxes would thus increase taxes on the lower rungs of the upper middle
class but not really address the problem.
I apologise in advance for being blunt and oversimplifying the matter, but at the end of
the day, (in my very humble and possibly uninformed opinion) nothing short of a mass
beheading would work. The 0.1% doesn't really seem, uh, willing to let go of their often
ill-gotten billions, and when they do (i.e. charities and such), they often end up being some
kind of scam. I refuse to believe that the Zuckerberg-types operate their foundations out of
genuine philanthropy. Acquisitions and mergers like Disney buying Fox or Bayer gobbling up
Monsanto don't contribute anything to the well-being of the 99% either, and I think that's
and understatement.
If there's going to be some kind of revolution, it needs to happen before the logical
conclusion of rampaging capitalism. the OCP-type megacorp with its own private army. And, if
there indeed is a revolution, what's next?
Case in point: as a public school teacher who has been opposing so-called education reform
for two decades, I can assure you that the "venture/vulture philanthropy" model that infests
the education world has absolutely nothing to do with improving education, and everything to
do with busting the teachers unions, privatizing the schools and turning them into drilling
grounds for training young people to accept the subordination, surveillance, tedium and
absurdity that awaits them in the workplace. For those lucky enough to have jobs.
As a result of this phenomena, I periodically suggest a new term on the education blogs I
post on: "Malanthropy:" the process of of using tax exempt, publicly subsidized entities to
directly and indirectly support your financial and political interests, but which are harmful
to the public good"
Clear and compelling analysis, although still a little MMT challenged. About to turn 70, I
vividly remember living through a sudden sea change in American capitalism. In the late
1970s/early 80s, whatever undercurrents of patriotism and humanitarianism that remained
within the postwar economy (and had opened the space for the middle class) evaporated, and
almost overnight we were living in a culture without any sense of balance or proportion, a
virulent and violent mindset that maxed out everything and knew not the meaning of enough.
Not only the business world but also the personal world was infected by this virus, as
ordinary people no longer dreamed of achieving a healthy and stable family life but rather
became hellbent to "succeed" and get rich. Empathy, compassion, and commitment to social
justice was no longer cool, giving way to self-interest and self-promotion as the new
"virtues." Men, of course, led the way in this devolution, but there was a time in the 90s
when almost every other woman I knew was a real estate agent. I touched upon a small
male-oriented piece of this social devolution in an essay I wrote several years ago: Would
Paladin Have Shot Bin Laden? For those who might be intrigued, here's the link:
What was needed was a Wyatt Earp, not a Paladin ( https://www.youtube.com/watch?v=tgvxu8QY01s
). His standard procedure in the old West was to use his Colt revolver to pistol-whip an
offender. Short, sharp and effective.
But then again there was no way that Bin Laden was ever going to be taken prisoner. That bit
on his resume as being a contractor for the CIA was a bit embarrassing after all.
I remember the 50's and even under the hue of bright eyes saw that people were just as
hell bent to 'get ahead' in their careers as now and that competing with 'the Joneses' in
every crude way imaginable was the rage.
Perhaps more precise to say that in the early '80s, Capitalism reached a tipping point
where gravity overcame thrust and virtues with latent vice became vices with the optics of
virtue. That and the fact that the right actors always seem available -as if out of thin air,
but in reality very much part of cause and effect – for a given state of entropy.
No doubt what was somewhat latent in postwar American capitalism became obscenely blatant
in or around the Reagan era. It was all there before, of course, in former times like the
Gilded Age. But in the midsize, now rustbelt city I grew up in and continue to live in, the
upper middle class of my childhood and youth–the doctors, lawyers, corporate exec's,
etc.–lived a few blocks away from my working class neighborhood, had nicer homes, drove
caddys instead of chevys, and so forth, but their kids went to school with us working class
kids, went to the same movies and dances, hung out in the same places, and all of us,
generally, young and old, lived in essentially the same world. For example, my uncle, a
lawyer, made maybe 3 times what my dad, a factory clerk, made. THAT was the split between the
middle and upper middle class back then, at least in a fairly typical Midwestern city. THAT
was what drastically and suddenly changed in the late 70s/early 80s and has only intensified
thereafter.
Terrific article, but with so many "missing" words (words left out)–too many to
list, gratis–you make it a serious challenge to consider sharing with literate friends
on social media. Seriously, doesn't anyone re-read their work before "posting?"
Well, at least the missing words in this piece don't make sentences unintelligible. I've
seen that happen before.
It's such a shame for authors to put so much work time and effort into their articles, but
then allow the lack of an editor or final read-through to tarnish the entire work.
One thing that strikes me – a generation ago the talking-point robots of the right
could decry "socialized medicine" and all those people supposedly dying while waiting for an
operation in foreign, "socialized medicine" places. And they could largely get away with it
because relatively few people had personal acquaintances outside their own area.
But now, anyone active in social media probably can interact freely with people all over
the world and appreciate how pathetic things really are in the US.
I read on a sports-related forum where an English guy had been watching Breaking Bad and
commented offhand that he was amazed at the cost of medical treatment for Mr. White. This
turned into a discussion between Brits and Yanks about the NHS. And person after person
chimed in "yeah, NHS is not perfect but this kind of thing could never happen here." And you
saw the Americans – "yeah, our health care system really is a disgrace."
I'm not a big fan of the social media Borg in general, but here at least seems to be a
good effect. It might over time enable more people to wake up as to how jacked up certain
things are here.
I'd like to declare us a completely divided, conquered people.
In the last few weeks I've visited with many old friends all of them suffering in silence.
Each and every one falling further behind, on the brink of disaster, if not already there. No
matter their credentials, many highly credentialed with multiple degrees and or highly
experienced in several fields. All with ridiculously high work ethics. All feel maintaining
personal integrity is costing them an ability to 'get ahead'.
Many of these friends have multiple jobs, no debt, no car payment, some have insurance
which is killing them, medical bills which bury them if they ever have so much as basic
health issues, and they are thrifty, from the clothes they wear to the amount of rent they
commit themselves. And yet 'staying afloat', is but a dream trumped by guilt and
isolationism.
I often joke with my fellow country neighbors that it costs a hundred bucks to simply
leave the house. It's not a joke anymore. At this point those still fighting for a paltry
15.00 should include a hundred dollar per day walk out your front door per diem.
A couple months back I gave my camper to an old acquaintance who had no record, found
himself homeless after being falsely accused of a crime and locked up for two months. And
another friend with full time management position, just gave up her apartment to move into a
tent in another friends back yard. Both of these people are bright, hard working, mid
forties, white, family peeps with great children. The very kind this article addresses.
The noose tightens and people are committing desperate acts. There is no solidarity. No
vision of a way out of this.
Watch a ten dollar parking ticket bring a grown man to terror in their eyes. And he
brought in a thousand bucks last week, but has been texting his landlord about past due rent
all afternoon.
I feel like I'm on the brink of a million episodes of " Falling Down ".
I don't think the 0.1% wanted to build a society like this, it is just the way the math
works. Somewhere around 1980 the integrity of the US was lost and it became possible for the
owning class to divorce themselves from their neighbors and arbitrage labor around the world.
Computers and telecommunications made it possible to manage a global supply chain and
Republicans changed the tax rules to make it easier to shut down businesses and move them
overseas.
A different way to view this: as the wealthy earn profits they can use some of their cash
to modify the rules to their benefit. Then they gain more cash which allows them to influence
voters and politicians to modify the rules even more in their favor.
If people organized they could change the rules in their favor, but that rarely happens.
We used to have unions (imperfect though they were) which lobbied for the working class.
I think the 1980s was when I found out my wealthy cousins, who owned a clothing factory in
Georgia, had moved it to–get ready for this–Borneo! And of course they are
Republicans.
The collective decisions to pull up the drawbridge, and a lot middle-class people have
supported these decisions are the major reason why there is a housing crisis and
higher-education is so expensive.
A lot of people, especially middle-class people, come out with pitchforks every time a new
housing development is proposed, screaming about how they don't want "those people" living
near them and will vehemently oppose anything that isn't single-family homes which has
resulted in the housing supply lagging behind demand, thus affordability issues.
These same people over the years have decided that tax-cuts are more important than
adequately funding higher education, so higher education has become a lot more expensive as
state support has dwindled.
As the saying goes you made you bed, now you get to sleep in it. Unfortunately so does the
younger generation who may not have anything to do with the horrible decision making of the
past.
The article stated Americans are "Petrified of being pushed aside by robots".
Maybe I associate with the wrong people, but I don't know any who fear being pushed aside
by robots.
But I do know of someone who was being laid off from a tech firm and was finding his job
moved overseas.
The deal management presented was, "you can leave now, with your severance package, or get
two more weeks pay by training your replacement who will be visiting from overseas."
He trained the new worker for the two weeks.
The American worker is being hit, not by robots, but by outsourcing to other countries and
by in-sourcing of labor from other countries.
Robots are expensive and will be avoided if a human can do the job cheaply enough.
That the article brings "fear of robots" into the discussion is a tell that the writer
does not want to mention that it is the competition from others in the world wide labor force
that depress USA wages.
In the USA, we are witnessing labor arbitrage encouraged by both parties and much of the
media as they push USA wages toward world wide levels.
But not for the elite wage earners who gain from this system.
Agreed. The kind of pink collar and barely white collar employees this piece was focused
on are not presently threatened by "robots". They are threatened by outsourcing and wage
arbitrage.
That the article brings "fear of robots" into the discussion is a tell that the writer
does not want to mention that it is the competition from others in the world wide labor force
that depress USA wages.
You may have a point there, and you are spot on that the vast bulk of job-loss is due to
job migration and import of cheaper labor. But regardless of the writer's intent or simple
laziness, don't be too fast to poo-poo the effect of Robots.
One problem is that we tend to measure job loss and gain without reference to the actual
job loosers and the fact that re-training for them may well be impossible or completely
ineffective or, at the very minimum, often extremely painful. So while automation may provide
as many new jobs as it takes away old ones, that is cold comfort indeed to the worker who
gets left behind.
Another, is that the fear of massive job loss to Robots is almost certainly warranted even
if not yet fully materialized.
When the "Steel Wave" of robot workers comes ashore, I'll be near the head of the queue to
join the "Robo Luddites." If the owners of the robot hordes won't pay a fair share of the
costs of their mechanominions worker displacement activities, then they should be made to pay
an equivalent share in heightened "Production Facility Security Costs." Ford Motors and the
River Rouge plant strike comes to mind.
See: http://98937119.weebly.com/strike-at-the-river-rouge-plant-1941.html
It'd be great to be right there with you on that fateful day, Ambrit :-) (And I've even
got my gun with the little white flag that pops out and has "Bang!" written on it, all oiled
up and ready to go). I suspect however that it will be a silent D Day that probably took
place some time ago.
Hard Briexit looks to be baked in the cake
Global Warming disaster looks to be baked in the cake
Water wars look to be baked in the cake.
Massive impoverishment in developed and so called third world nations alike and insane 'last
gasp' looting looks to be baked in the cake
[ ]
Why would all manner of robots, the ones too tiny to see along with human looking ones and
giant factories that are in reality themselves robots be the exception?
We'd be facing robots, so that flag would have to go "Bang" in binary code. (Might even
work. While they are trying to decipher the flag, we can switch their tubes of graphite
lubricant with tubes of carborundum.)
When the technologically capable humans have all died off, will the robots perish likewise
for lack of programmers?
"Robots" are software programs, do-it-yourself online appointments, voice recognition,
"press 1 now." What's the point of retraining? All you're good for is to make sure the plug
is in the wall.
The act of training the overseas replacement could become an act of sabotage. Think of the
ways that one could train the replacement to do the job incorrectly, more slowly than
necessary, or not at all.
In a lot of cases that doesn't require much 'intentional' effort. But the lure of cheap
labor seems to conquer all. I've seen software companies take loss after loss on off-shore
development team screw ups until they finally get it right. I even saw one such company go
out of business trying rather than just calling it quits and going back to what was left of
their core developers.
As I approach 40, having only realized in recent years that the constant soul-ache I've
lived with my whole life is not some inherent flaw in my being, but a symptom of a deeply ill
society, I desperately wish I could share in the glimmer of hope at the end of this post.
But I cannot. What drives me to despair is not the fragile, corrupt, and unsustainable
social/political/economic system we're inheriting; nor is it the poisoned and increasingly
harsh planet, nor the often silent epidemic of mental and emotional anguish that prevents so
many of us from becoming our best selves. I retain great faith in the resilience and
potential of the human spirit. And contrary to the stereotypes, I think my generation and
those who have come after are often more intellectually and emotionally mature than our
parents and grandparents. At the very least, we have a powerful sense of irony and highly
tuned BS detectors.
What drives me to despair is so pathetically prosaic that I want to laugh and cry all at
once as I type this. To put it as simply as I know how, a core function of all functional
human societies is apprenticeship, by which I mean the basic process whereby deep knowledge
and skills are transferred from the old to the young, where tensions between tradition and
change are contested and resolved, and where the fundamental human need to develop a sense of
oneself as a unique and valuable part of a community can flourish.
We have been commodified since before we were even born, to the point where opportunities
for what Lave and Wenger would call "legitimate peripheral participation" in the kinds of
work that yield real, humane, benefits to our communities are scant to nonexistent for most
of us. Something has gone deeply awry in this core social function at the worst possible time
in human history.
Sympathies from a fellow traveler – your experience sounds similar to mine. I'm a
little older and in my 20s I avoided getting a 'real' job for all the reasons you describe.
When I hit my 30s and saw what some of the guys who had been hanging out in the bar too long
looked like, and decided I ought to at least try it and see how it would go.
"Some quirk of my psychology means doing those things creates an irresistible urge in me
to slowly poison myself with alcohol and tobacco."
I think those things and drugs are conscience oblivators. Try gardening. Touch the earth.
Grow actual food. Not hemp. Back away from the education racket. Good luck. Quit the poison.
That was a wonderful post, very moving, thank you. These kind of testimonies are very
important because they show the real human cost of neoliberalism. Neoliberalism is truly a
death cult. Please find an alternative to alcohol. Music, art, nature, etc.
Thank you for sharing your compelling story. As someone who could be your mother, it is
painful to me not only that this is your experience, but that you are so acutely aware of it.
No blinders. Hence, I guess, the need for alcohol.
You write beautifully. Hope is hard to come by sometimes.
At least you are self aware. Most people are not.
As for the Ship of Status, let it sink. Find a lifeboat where you feel comfortable and batten
down for the Roaring (20)40s yet to come. Once you find something to work for, the bad habits
will lose much of their hold on you. As long as you don't slide into alcoholism, you have a
chance.
Life was kinder just 40 years ago, not perfect but way more mellow than it is today. Kids
were listening to Peter Frampton and Stevie Wonder, not punk, grunge, rap and industrial
music. What changed? Neoliberalism, the economic policy that is private sector "free market"
driven, giving the owners of capital free, unfettered reign. Created by libertarians like Fredrich von Hayek and Milton Friedman, they sold it to the nation but failed to mention that
little peccadillo about how privatization of government would usher in economic fascism.
"An extreme form of laissez-faire individualism that developed in the writings of
Hayek, Friedman and Nozick they are also referred to as libertarians. They draw on the
natural rights tradition of John Locke and champion's full autonomy and freedom of the
individual."
What they meant was ECONOMIC freedom. They despise social freedom (democracy) because
civil, labor, health, food safety, etc., rights and environmental protections put limits on
their profits.
The "maximizing shareholder value" myth turns people into psychopaths
. The entire neoliberal economic policy of the past 40 years is based on the false assumption
that self-interest is the driving evolution of humanity. We're not all psychopaths, turns
out. We're social beings that have mainly used cooperation to get us through these thousands
of years of existence.
There's nothing wrong with wanting government to protect the public sector from predatory
capitalists. Otherwise, society's value system turns upside down sick people are more valued
than healthy violent are more valued to fill up the prison factories war becomes a permanent
business a filthy, toxic planet is good for the oil industry a corporate governance with no
respect for rights or environmental protections is the best capitalism can offer?
Thanks, but no thanks.
The easily manipulated right are getting the full assault. "Run for your lives! The
democratic socialists want to use the government bank for everyone, not just the 1%!!
They understand how the
economy really works and see through our lies!! Before you know it, everyone will be
enjoying a better quality of life! AAAAGHHH!!"
"If the IMF is to shake its image as an inward-looking, out-of-touch boys club, it
needs to start taking the issue seriously. The effect of the male dominance in macroeconomics
can be seen in the policy direction of the organisation: female economists are more likely to
be in favour of Government-backed redistribution measures than their male
counterparts.
Of course, the parochial way in which economics is perceived by the IMF, as nothing
more than the application of mathematical models, is nothing new. In fact, this is how
mainstream economics frequently is taught in universities all over the world. Is it any
wonder that the IMF has turned out as it is?"
Michael Hudson, as usual, was right:
"Economics students are forced to spend so much time with this complex calculus so
that they can go to work on Wall St. that there's no room in the course curriculum for the
history of economic thought.
So all they know about Adam Smith is what they hear on CNN news or other mass media
that are a travesty of what these people really said and if you don't read the history of
economic thought, you'd think there's only one way of looking at the world and that's the way
the mass media promote things and it's a propagandistic, Orwellian way.
The whole economic vocabulary is to cover up what's really happening and to make
people think that the economy is getting richer while the reality is they're getting poorer
and only the top is getting richer and they can only get rich as long as the middle class and
the working class don't realize the scam that's being pulled off on them."
Unfettered Fire and funemployed: deeply appreciate your lengthy and heartfelt posts. It's
a terribly small thing, but I have a suggestion to make that always helps me to feel a bit
better about things or should I say to feel a bit better about the possibility of things. If
you're game, and haven't already done so, search for the following free online book:
"Equality" by Edward Bellamy. Then do no more than read the introduction and first chapter
(and slightly into the second) to absorb by far the finest Socratic dialogue ever written
about capitalism, socialism, and the only nonviolent way to move from the former to the
latter–a way wide open to us, theoretically, right now. I know that's a hell of a
qualifier.
Why do modern intellectuals insist on inventing euphemisms for already known definitions?
The middle precariat is merely another term for the petty bourgeoisie. While they may have
possessed economic benefits like pensions and owned minuscule amounts of financial assets
they were never the dominant ruling class. Their socioeconomic status was always closer in
their livelihoods to the working class. After the working class was effectively being
dismantled starting in the 1970s, it has become the petty bourgeoisie's turn to be
systematically impoverished.
This is the primary economic development of our era of late capitalism. The question is,
what does it mean to be American if this country is no longer a land of opportunity?
Because the 'known definitions' do not apply anymore.
The middle has more in common with those below than those above. And here is the scary
reason: everyone is to be preyed upon by the wealth extractors who dominate our
politics/economy -- everyone. There is no social or educational allegieance, there is only a
resource to be ruthlessly plundered, people and their ability to earn and secure.
The so-called precariat lacks any sense of class consciousness and as a consequence are
incapable of any kind of solidarity. Nor do they perceive any predatory behavior in the
economic system. If the article is to be believed they blame themselves for their plight.
These traits which include the admiration and imitation of the rich are the hallmarks of the
petty bourgeoisie.
This disagreement over semantics is an example of the shallowness and superficiality of
new ideas. Marx already predicted that they'd be unceremoniously thrown into the underclass
in later stages of economic development at any rate.
The BigMedia & BigPols ignore the Type 1 Overqualified Underemployed cohort. Perhaps
hopefully someone like the new Rep Alexandria Ocasio-Cortez will discuss it, her recently
being of this cohort as an economist by degree working as a bartender. Instead we have
examples of BigMedia/BigPol crying about "STEM worker shortage" where there already are
countless underemployed STEM workers working Uber-ish type McJobs.
Afaict the only occupations (mostly) immune to Type 1 Overqualified Underemployment risk
here in Murica are medical pros: physicians/dentists/pharmacists & possibly nurses.
Otherwise there are stories of PhD Uber drivers, MBA strippers, & lawyers working Apple
store retail, especially in the first few years post 2008-GFC but still present now. In other
words, the US labor market "new economy" is resembling "old economy" of Latin America or
Russia (proverbial physicist selling trinkets on the Trans-Siberia railway).
"I often joke with my fellow country neighbors that it costs a hundred bucks to simply
leave the house. It's not a joke anymore. At this point those still fighting for a paltry
15.00 should include a hundred dollar per day walk out your front door per diem."
This is a stark and startling reality. This reality is outside the framework of
understanding of economic struggle in America that is allowed by the corporate neoliberal
culture/media.
As the Precariat grows, having watched the .1% lie, cheat and steal – from them, they
are more likely to also lie, cheat and steal in mortgage, employment and student loan
applications and most importantly and sadly, in their dealings with each other.
Everybody is turning into a hustler.
As to dealings with institutions, this comment is apt.
I think this came from NC comments a couple of weeks ago. Apologies for not being able to
attribute it to its author:
"Why should the worker be subservient to the employer? Citizens owe NO LOYALTY, moral or
legal, to a someone else's money making enterprise. And that enterprise is strictly a product
of signed commercial legal documents. Commercial enterprise has no natural existence. It is a
man-made creation, and is a "privilege", not a "right"; just as a drivers license is a
privilege and not an absolute right."
Economics was always far too dangerous to be allowed to reveal the truth about the
economy. The Classical economist, Adam Smith, observed the world of small state, unregulated
capitalism around him.
"The labour and time of the poor is in civilised countries sacrificed to the
maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury
by the labour of his tenants. The moneyed man is supported by his extractions from the
industrious merchant and the needy who are obliged to support him in ease by a return for the
use of his money. But every savage has the full fruits of his own labours; there are no
landlords, no usurers and no tax gatherers."
How does this tie in with the trickledown view we have today?
Somehow everything has been turned upside down.
The workers that did the work to produce the surplus lived a bare subsistence
existence. Those with land and money used it to live a life of luxury and leisure.
The bankers (usurers) created money out of nothing and charged interest on it. The bankers
got rich, and everyone else got into debt and over time lost what they had through defaults
on loans, and repossession of assets.
Capitalism had two sides, the productive side where people earned their income and the
parasitic side where the rentiers lived off unearned income. The Classical Economists had
shown that most at the top of society were just parasites feeding off the productive activity
of everyone else.
Economics was always far too dangerous to be allowed to reveal the truth about the
economy.
How can we protect those powerful vested interests at the top of society?
The early neoclassical economists hid the problems of rentier activity in the economy by
removing the difference between "earned" and "unearned" income and they conflated "land" with
"capital". They took the focus off the cost of living that had been so important to the
Classical Economists to hide the effects of rentier activity in the economy.
The landowners, landlords and usurers were now just productive members of society
again. It they left banks and debt out of economics no one would know the bankers created the
money supply out of nothing. Otherwise, everyone would see how dangerous it was to let
bankers do what they wanted if they knew the bankers created the money supply through their
loans.
The powerful vested interests held sway and economics was corrupted. Now we know what's wrong with neoclassical economics we can put the cost of living back
in.
Disposable income = wages – (taxes + the cost of living)
Employees want more disposable income (discretionary spending).
Employers want to pay lower wages for higher profits
The cost of living = housing costs + healthcare costs + student loan costs + food
+ other costs of living
The neoliberals obsessed about reducing taxes, but let the cost of living soar. The economists also ignore the debt that is papering over the cracks and maintaining
demand in the economy. This can never work in the longer term as you max. out on debt.
> These young people do not think of things like debt-free college or paid family leave
as radical: they see it done elsewhere in the world and don't accept that it can't be done in
America.
An unexpected consequence of globalization is that a lot of people see how thing are done,
elsewhere.
Part of me doesn't feel sorry at all for the plight of middle-class Americans. When times
were good they were happy to throw poor and working-class people under the bus. I remember
when the common answer to complaints about factory closings was "you should have gotten an
education, dummy." Now that the white-collar middle class can see that they are next on the
chopping block they are finding their populist soul.
At the end of the day we need to have solidarity between workers but this is a good
example of why you should never think that you are untouchable and why punching down is never
a good political strategy. There will always be somebody more powerful than you and after
they are done destroying the people at the bottom you will probably be next.
Not only "An economic system that rewards psychopathic personality traits has changed our
ethics and our personalities", it crushes the will to resist presenting psychopathic dictate in
forms that make it difficult. Such as performance reviews waterboarding or putting individual in
the way too complex and self-contradictory Web of regulations.
Notable quotes:
"... An economic system that rewards psychopathic personality traits has changed our ethics and our personalities. ..."
"... Bullying used to be confined to schools; now it is a common feature of the workplace. This is a typical symptom of the impotent venting their frustration on the weak – in psychology it's known as displaced aggression. There is a buried sense of fear, ranging from performance anxiety to a broader social fear of the threatening other. ..."
"... Constant evaluations at work cause a decline in autonomy and a growing dependence on external, often shifting, norms. This results in what the sociologist Richard Sennett has aptly described as the "infantilisation of the workers". Adults display childish outbursts of temper and are jealous about trivialities ("She got a new office chair and I didn't"), tell white lies, resort to deceit, delight in the downfall of others and cherish petty feelings of revenge. This is the consequence of a system that prevents people from thinking independently and that fails to treat employees as adults. ..."
"... Our society constantly proclaims that anyone can make it if they just try hard enough, all the while reinforcing privilege and putting increasing pressure on its overstretched and exhausted citizens. An increasing number of people fail, feeling humiliated, guilty and ashamed. We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to choose outside the success narrative is limited. Furthermore, those who fail are deemed to be losers or scroungers, taking advantage of our social security system. ..."
"... The current economic system is bringing out the worst in us. ..."
An economic system that rewards psychopathic personality traits has changed our ethics
and our personalities.
Thirty years of neoliberalism, free-market forces and
privatisation have taken their toll, as relentless pressure to achieve has become normative. If
you're reading this sceptically, I put this simple statement to you: meritocratic neoliberalism
favours certain personality traits and penalises others.
There are certain ideal characteristics needed to make a career today. The first is
articulateness, the aim being to win over as many people as possible. Contact can be
superficial, but since this applies to most human interaction nowadays, this won't really be
noticed.
It's important to be able to talk up your own capacities as much as you can – you know
a lot of people, you've got plenty of experience under your belt and you recently completed a
major project. Later, people will find out that this was mostly hot air, but the fact that they
were initially fooled is down to another personality trait: you can lie convincingly and feel
little guilt. That's why you never take responsibility for your own behaviour.
On top of all this, you are flexible and impulsive, always on the lookout for new stimuli
and challenges. In practice, this leads to risky behaviour, but never mind, it won't be you who
has to pick up the pieces. The source of inspiration for this list? The psychopathy checklist
by Robert Hare , the best-known specialist
on psychopathy today.
This description is, of course, a caricature taken to extremes. Nevertheless, the financial
crisis illustrated at a macro-social level (for example, in the conflicts between eurozone
countries) what a neoliberal meritocracy does to people. Solidarity becomes an expensive luxury
and makes way for temporary alliances, the main preoccupation always being to extract more
profit from the situation than your competition. Social ties with colleagues weaken, as does
emotional commitment to the enterprise or organisation.
Bullying used to be confined to schools; now it is a common feature of the workplace.
This is a typical symptom of the impotent venting their frustration on the weak – in
psychology it's known as displaced aggression. There is a buried sense of fear, ranging from
performance anxiety to a broader social fear of the threatening other.
Constant evaluations at work cause a decline in autonomy and a growing dependence on
external, often shifting, norms. This results in what the sociologist Richard Sennett has
aptly described as the "infantilisation of the workers". Adults display childish outbursts of
temper and are jealous about trivialities ("She got a new office chair and I didn't"), tell
white lies, resort to deceit, delight in the downfall of others and cherish petty feelings of
revenge. This is the consequence of a system that prevents people from thinking independently
and that fails to treat employees as adults.
More important, though, is the serious damage to people's self-respect. Self-respect largely
depends on the recognition that we receive from the other, as thinkers from Hegel to Lacan have shown. Sennett comes
to a similar conclusion when he sees the main question for employees these days as being "Who
needs me?" For a growing group of people, the answer is: no one.
Our society constantly proclaims that anyone can make it if they just try hard enough,
all the while reinforcing privilege and putting increasing pressure on its overstretched and
exhausted citizens. An increasing number of people fail, feeling humiliated, guilty and
ashamed. We are forever told that we are freer to choose the course of our lives than ever
before, but the freedom to choose outside the success narrative is limited. Furthermore, those
who fail are deemed to be losers or scroungers, taking advantage of our social security
system.
A neoliberal meritocracy would have us believe that success depends on individual effort and
talents, meaning responsibility lies entirely with the individual and authorities should give
people as much freedom as possible to achieve this goal. For those who believe in the fairytale
of unrestricted choice, self-government and self-management are the pre-eminent political
messages, especially if they appear to promise freedom. Along with the idea of the perfectible
individual, the freedom we perceive ourselves as having in the west is the greatest untruth of
this day and age.
The sociologist Zygmunt Bauman neatly summarised the paradox
of our era as: "Never have we been so free. Never have we felt so powerless." We are indeed
freer than before, in the sense that we can criticise religion, take advantage of the new
laissez-faire attitude to sex and support any political movement we like. We can do all these
things because they no longer have any significance – freedom of this kind is prompted by
indifference. Yet, on the other hand, our daily lives have become a constant battle against a
bureaucracy that would make Kafka weak at the knees. There are regulations about everything,
from the salt content of bread to urban poultry-keeping.
Our presumed freedom is tied to one central condition: we must be successful – that
is, "make" something of ourselves. You don't need to look far for examples. A highly skilled
individual who puts parenting before their career comes in for criticism. A person with a good
job who turns down a promotion to invest more time in other things is seen as crazy –
unless those other things ensure success. A young woman who wants to become a primary school
teacher is told by her parents that she should start off by getting a master's degree in
economics – a primary school teacher, whatever can she be thinking of?
There are constant laments about the so-called loss of norms and values in our culture. Yet
our norms and values make up an integral and essential part of our identity. So they cannot be
lost, only changed. And that is precisely what has happened: a changed economy reflects changed
ethics and brings about changed identity. The current economic system is bringing out the
worst in us.
Panic attacks, anxiety attacks, nervous breakdowns, depression, suicidal thoughts alienation,
cancers, withdrawal are all symptoms of the de-humanizing aspects of a market-driven life. In
its worst forms it manifests periodically in mass shootings at strangers. So what do people
do to cope? Drugs, pain killers, shrinks, alcohol, potato chips and soda. They then develop
obesity, diabetes and heart diseases and cancers. How to save a human species terminally
intoxicated with technology and enslaved by the market while the inner spirit is running
empty may not be possible given the advanced nature of the disease.
...what?
You fail to really acknowledge that time and again we've failed to exercise constrain within
the capitalist models. The the meritorious are often inadequately rewarded - when any person
in work cannot afford to home and feed themselves and their family then a reasonable balance
has not been struck - in that sense at no time in history has capitalism functioned
adequately.
To suggest that socialism is anti-human is to ignore how and why as a species we formed
societies at all, we come together precisely because there is a mutual benefit in so doing;
to help another is to help oneself - the model itself fails to operate in practice for the
same reason that capitalism does - the greed of the power holder.
You reserve your sharpest barbs for socialism, but at least within the socialist agenda
there is a commitment to the protection of the citizen, whoever they are, even the
'unmerited' as you describe them - a capitalist's paraphrase for 'those that create no
value'.
The socialist at least recognises that whilst the parent may be 'unmerited' their
dependants should be entitled to receive equality of opportunity and protection from the
'law-of-the-jungle' i.e., the greed of others.
The ability to generate wealth, simply by already having wealth and therefore being able
to thrive off the labour of others carries little merit as far as I can tell and does indeed
create the soul-crushing command-and-control empires of the capitalism that millions around
the world experience daily.
Neoliberalism is indeed a huge self-serving con and ironically the Thatcher/Regan doctrine
which set out to break the status quo and free the economy from the old elitist guard has had
exactly the opposite effect.
Capitalism cannot differentiate between honest competition and cheating. Since humans will
cheat to win, capitalism has become survival of the worst not the best.
The bottom line is the basic human condition prizes food, shelter, sex, and then goes
directly to greed in most modern societies. It was not always that way, and is not that way
in ever fewer societies. As it is, greed makes the world go around.
In capitalistic societies greed has been fed by business and commerce; in communist
societies it has been "some pigs are more equal then others"; and in dictatorships or true
monarchies (or the Australian Liberal Party) there is the born to rule mentality where there
are rulers and serfs.
Nobody ever seems to address the paradox of the notion of an absolute free market: that
within a free market, those who can have the freedom to exploit do exploit, thereby thus
eliminating the freedom of the exploited, which thence paradoxically negates the absoluteness
of the free market. No absolute freedom truly exist in a free market.
As such, the free market is pipe dream - a con - to eliminate regulations and create
economic freedoms only where they benefit the elite. The free market does not exist, is
impossible, and therefore should cease to be held as the harbinger of a progressive socio
economic reality.
If we are to accept the Christian assumption that we, humans, are all self-serving and
acquisitive, then we must, therefore, negate the possibility of an absolutely "free" market,
since exploitation is a naturally occurring byproduct of weak-strong interactions.
Exploitation negates freedom, and therefore, it must be our reality, as it is in all peoples'
best interests, to accept directly democratic regulations as the keystone to any market.
It sounds very like the Marxist critique of capital. And similarly, points to real problems,
but doesn't seek evidence for why such a sick situation not only persists, but is so popular
- except by denigrating 'the masses'.
Surely what is particular about our time, about industrialisation generally, is the
fragmenting of long term social structures, and orientation around the individual alone. It
seems to me the problem of our times is redeveloping social structures which balance the
individual and the socials selves, as all not merely stable but thriving happy creative
societies, have always done.
Their propaganda is the same- an obsessive hatred of the state in any form, a semi-religious
belief in the power of the individual operating in the free-market to solve humanity's ills.
Granted, they aren't social libertarians, but then, in the US, libertarians don't seem to
be either.
Pretty typical that the assumption is the Marx "nailed it" and any dissenters are
just "scared".
I'm scared by it too, as I said, it's a sensible fear of change. The question remains. What
if Marx's analysis, just the analysis, is broadly correct? What if markets really are the
road to ruination of our planet, morality and collective welfare in roughly the way that he
explained?
It's not a trivial question, and clearly the current economic orthodoxy has failed to
explain some recent little problems we've been having, while Marx explains how these problems
are structurally embedded and only to be expected. It is intellectual cowardice to
compulsively avoid this, in my view. Better minds than ours have struggled with it.
So beware of the fallacious argument from authority - 'You are stupid while I am
axiomatically very clever, because I say so, hence I must be correct and you must shut it.'
It goes nowhere useful, though we are all prone to employing it.
But it is not 'sixth form' thinking, surely, to consider these problems as being worth
thinking about in a modern context. It is a plain fact that Stalinism didn't work as planned.
We know it, but it doesn't make the problems it was intended to solve disappear to say
so.
If you believe human nature can be changed by enforcing your interpretation of Marx's
road to human freedom (a quasi-religious goal) you condemn millions to starvation,
slaughter, gulags, misery etc.
Please read what I actually wrote about that. I'm not remotely quasi-religious, nor do I seek
to enforce anything. My intention is only to expose a particularly damaging mythology. The
extent of my crimes is persuasion as a prelude to consensual change before necessity really
bites us all.
Markets conjure up the exact forms of misery you describe. Totalitarians of the right are
highly undesirable too. I am against totalitarians, as are you, but an admirer of Marx's
work. Do I fit into your simplistic categories? Does anyone? The freedoms we are permitted
serve the market before they serve people. Markets are a social construct, as is capital,
that we can choose to modify or squash. A child starving in a slum for lack of
competitiveness, for its inability to serve the interests of capital, is less abstract
perhaps.
The thing about selfishness and a brutal form of dog eat dog capitalism.
You see, it is a truth axiomatic that we human beings, as all living beings, are
fundamentally selfish. We have to be in order to survive, and excel, and advance and
perpetuate.
It is not theory but hard biology. You breathe for yourself, eat for yourself, love for
yourself, have a family for yourself and so on. People are most affected and hurt if
something happens to something or someone who means something to them personally. This is why
concepts such as religion and nationality have worked so well, and will continue to even if
they evolve in different ways, for they tap into a person's conception of theirself. Of their
identity, of their self-definition. People tend to feel worse if something bad happens to
someone they know than to a stranger; people tend to feel less bad when something happens to
a cockroach than to a dog, simply because we relate better to dogs than to insects...So even
our compassion is selfish after a fashion.
Capitalism and Socialism are two ends of the the same human spectrum of innate and
hardwired selfishness. One stresses on the individual and the other on the larger group. It's
always going to be hard to find the right balance because when you vest excessive power in
any selfish ideology, it will begin to eat into the other type of selfishness..
The world revolves around competing selfishnesses...
The global economy is based upon wasting lives and material resources.
Designer landfill is no longer an option and neo-liberalism, which places importance of
the invention called money over that of people (which is a dehumanising process), was never
an option.
It is time for the neo-liberal fake politicians (that is 99.99% of them) to take up
politics.
It really is, as ever since it is only another word for change, time for revolution.
By extension, moving away from a system the shuns those who 'fail' people would be
emotionally better off, and with the removal of the constant assessment and individualistic
competition, people may feel better able to relate to one another. This would imply that
healthy communities would be more likely to flourish, as people would be less likely to
ignore those on lower income or of 'lower status'.
Move to what system? What system would achieve this?
Whether you agree or not, it is pretty clear what was being said.
Of course it's clear. George and his followers dislike market based systems. It couldn't
be clearer. Even when the subject has little to do with the market, George and his followers
always blame it for everything that is wrong with this world. That's pretty much the whole
point of this article.
What's never clear is what alternative George and his followers propose that wouldn't
result in all of the same flaws that accompany market driven systems. How can they be so sure
some of those problems won't be worse? They always seem a bit sketchy, which is remarkable
given the furor with which they relentlessly critique the market. We are told of alternatives
concepts painted in the broadest of brushes, rich with abstract intangible idealism, but
lacking in any pragmatism. We are invited to consider the whole exercise simply as
academically self-indulgent navel gazing by the priviledged overeducated minority that
comprise much of the Guardian's readership. It's quite disappointing. This article correctly
details much of the discontent in the world. But this isn't a revelation. Where are the
concrete ideas that can actualy be implemented now? frontalcortexes at least makes a stab at something a bit more practicle than a 17
paragraph esoteric essay citing ancient Greek.
One of the worst thing is that the winners in the market race are showered with things which
are fundamentally valueless and far in excess of what they could consume if they weren't,
while bare necessities are withheld from the losers.
Half the population prefers a politics that is racist and unethical, that demonises the poor
and idolises the rich, that eschews community and embraces amoral individuality. These people
don't care about the economic inconsistencies of neo-liberalism, they are far more attracted
to the divisive societal aspects of free market fundamentalism.
Like Joe Hockey, Rinehart saw the problem of inequality as having more to do with the
character of the poor than with the rules of the game:
They don't "see" it this way. They just say they see it this way to perpetuate that
inequality. They know that their wealth depends on the labour of the other 95-99%.
To keep us all working and voting for their lackeys, they make promises of wealth if you
are a persistent hard worker, never mentioning that the entire game depends on only a tiny
minority ever reaching the top. No, the real people holding them back are those who don't
work hard. Who don't contribute to the game. They're the ones to blame for why you're not
levelling up. The true scapegoats.
Victim blaming is a classic neo-con tactic, they seek to deflect from the impact of their
heartless policies by demonising the victims, from the unemployed and those stuck in the
welfare cycle to refugees trapped in offshore detention, indefinitely . We've all seen how
appalling their commentary can get, from Abbott and Hockey's "lifters and leaners" to Gina
Mineheart's "two dollars a day" & "spend less time drinking or smoking and socialising"
they show just how out touch they are. They honestly believe that people can lift themselves
out of poverty if only they "spent more time working", ignoring the fact that many are
working two jobs just to stay ahead.
Seems that on planet RWNJ there are more than 24 hours in a day..
Half the population need welfare to survive.
1% have 90% of all the toys in the sandpit and won't share. They feel that they are entitled
to all the toys.
This piece is well worth the reading particularly in light of the trashing of society's
values we see played out in Trump's America. However, the writer's definition of
"ideology " as a "system of ideas and ideals" even though it accords with the
OED's, fails to take into account the current pernicious influence of the ideologue who
distorts "ideology" into the "rationalisation of a suppression" as Joseph Dunne
noted in his book, " Back to the Rough Ground" .
This is the most apt description of the modus operandi of today's neoliberalists - the
justifying of their project to maximise wealth accumulation in their own self-interest by
promoting the propaganda that we are powerless cogs in the machine of the
economy , slaves to the whim of the omnipotent market, rather than active
agents who wish to contribute to a flourishing society .
Neoliberalism idealises competition against each other to ensure the
rights of the few, by suppressing our capacity to take
responsibility together through cooperation and collaboration with each
other.
This classic divide and conquer tactic will prevail only as long as we permit
it.
I'm a conservative and I have an good economics degree. I have to say though that I don't
understand neoliberalism at all.
As a example, when I was doing economics it was made very clear to me that natural
monopolies (such as electricity and water) cannot be made into a competitive market (rather
like trying to put lipstick on a pig). Similarly oligopolies introduce opportunities for
price manipulation (e.g. the banks). The neoliberal mantra that "markets are always right" is
just rubbish. Markets work well only when certain criteria are met.
Secondly, the right of workers to collectively bargain is fundamental to a well
functioning market economy. Labour is one of the inputs to production and the workers have a
right to a proper return on their labour. Individual workers have no real bargaining power
and can only act collectively through unions.
Finally, the related casualisation of the workforce is a disaster for workers and the
long-term interests of the economy. The stagnation of wages (and inflation) is one of the
products of this strong trend to casualisation (my blood boils when I hear of examples of
wage theft affecting vulnerable workers).
Income inequality is a product of a capitalist system. However, when the distribution of
wealth becomes very badly skewed (such as in the USA) then the political system starts to
break down. Trump was a beneficiary of this flawed income distribution. All Hillary Clinton
was promising was "more of the same". In short, Bernie Sanders was right.
Walter Schadel, in his book, The Great Leveler (see below), points to the role of income
inequality in driving revolutions and disruptions. There are lessons in this book for our
current crop of politicians both on the left and the right.
In reply to several commenters, who have questioned why "neoliberalism" is not simply
another name for the political expression/ambitions of the greed of the rich-and-powerful,
aka conservatism.
Although it serves the purposes of the rich-and-powerful rather well, I think
"neoliberalism" as a rhetorical engine and set of ideas is the ideology of the 9.9%, the
chattering classes of professionals and bureaucrats who need a cover story for their own
participation in running the world for the benefit of the 0.1% These are the people who need
to rationalize what they do and cooperate and coordinate among themselves and that's a
challenge because of their sheer numbers.
If you try to examine neoliberalism as a set of aims or values or interests, I think you
miss the great accomplishment of neoliberalism as a mechanism of social cooperation.
Neoliberalism says it aims at freedom and social welfare and innovation and other good
things. If neoliberalism said it aimed to make the richest 0.1% richer at the expense of
everyone else, it would provoke political opposition from the 99% for obvious reasons.
Including opposition from the 9.9% whom they need to run things, to run the state, run the
corporations.
Not being clear on what your true objectives are tends to be an obstacle to organizing
large groups to accomplish those objectives. Being clear on the mission objective is a
prerequisite for organizational effectiveness in most circumstances. The genius of
neoliberalism is such that it is able to achieve a high degree of coordination in detail
across large numbers of people, institutions, even countries while still professing aims and
values to which few object. A high degree of coordination on implementing a political policy
agenda that is variously parasitical or predatory on the 90%.
You can say this is just hypocrisy of a type the rich have always engaged in, and that
would be true. The predatory rich have always had to disguise their predatory or parasitical
activity, and have often done so by embracing, for example, shows of piety or philanthropy.
So, neoliberalism falls into a familiar albeit broad category.
What distinguishes neoliberalism is how good it is at coordinating the activities of the
9.9% in delivering the goods for the 0.1%. For a post-industrial economy, neoliberalism is
better for the mega-rich than Catholicism was for the feudalism of the High Middle Ages. I do
not think most practicing neoliberals among the 9.9% even think of themselves as
hypocrites.
"Free markets" has been the key move, the fulcrum where anodyne aims and values to which
no one can object meet the actual detailed policy implementation by the state. Creating a
"market" removes power and authority from the state and transfers it to private actors able
to apply financial wealth to managing things, and then, because an actual market cannot
really do the job that's been assigned, a state bureaucracy has to be created to manage the
administrative details and financial flows -- work for the 9.9%
As a special bonus, the insistence on treating a political economy organized in fact by
large public and private bureaucracies as if it is organized by and around "markets"
introduces a high degree of economic agnatology into the conventional political rhetoric.
[This comment sounded much clearer when I conceived of it in the shower this morning. I am
sorry if the actual comment is too abstract or tone deaf. I will probably have to try again
at a later date.]
It is difficult to ignore the cross-cultural parallels prompted by the growth of
neoliberalism, an economic and moral philosophy in which sociologist Zygmunt Bauman notes, "the
responsibilities for resolving the quandaries generated by vexingly volatile and constantly
changing circumstances is shifted onto the shoulders of individuals -- who are now expected to
be 'free choosers' and to bear in full the consequences of their choices" (Bauman
2007:3–4). Bauman essentially argues that neoliberalism's deceptively seductive offer of
increased individual choice comes at a heavy price, rendering individuals more and more
vulnerable.
Neoliberal economic policies have increasingly impacted individual lives throughout
the world through the unprecedented untethering of workers and the workplace so that those in
positions of power and privilege have less direct contact with or responsibility for those who
work at the lowest levels of the same industry. Such new labor practices are a constant
reminder to workers that they are expendable, easily replaced, and thus not in a position to
negotiate the terms and conditions under which their labor is carried out.
Such vulnerability is even more pronounced for those who already inhabit the margins of
social life because of their poverty or other forms of social exclusion. This is particularly
true for situations wherein particular types of state-endorsed socioeconomic inequalities
create a larger pool of feminized labor that is typically lower paid, less respected, and less
able to u
"... The general idea has been to isolate Russia and to make it so hard for anyone to defend Russia. This extends to the media. Whereas lots of articles on Russia and Syria were open to comments in the Guardian and lots of people write and disagree with the constant propaganda it is now rare to have these open to comment. Any questions is always dominated by anti Russia and anti SAG rhetoric. ..."
"... It is a constant psyop that is gathering momentum. I am sure the use of nerve agent is a not so subtle way of linking Russia with what is supposedly happening in Syria. ..."
"... But as we know that the supposed use of chemical weapons is a series of false flags then the same may apply here. ..."
"... So thanks to to the toxic tory blatant propaganda it's now an accepted fact in US Democrats minds that it was the Russians wot done it as they push for tougher sanctions against Russia. ..."
"... just remember it was the usa/uk under bush/blair that had all the info needed to attack iraq in 2003 so much for any lesson learned in any of that, or this at present the political class remain in the gutter serving the military-financial-energy complex of course these special interest groups would have it no other way as war=money what's a few dead people to get in the way of making a killing off the next war, or preparation for war? i heard porton down was given a few $ in the past day or two as well lets keep those chemists busy ..."
I agree with you. But there is more, much more. There was an 8 part drama series on the. BBC called McMafia showing how criminality
including arms and narcotics and so on, is closely linked to the Russian state. Then there was a series of very superficial BBC
programmes, one on Putin as a new Tsar (sic) and the other on the elections with a spotlight on Navalny. Radio 4 is constantly
almost daily talking about Russian aggression and of course there is the vilification of Russian athletes and the drugs.
The general idea has been to isolate Russia and to make it so hard for anyone to defend Russia. This extends to the media.
Whereas lots of articles on Russia and Syria were open to comments in the Guardian and lots of people write and disagree with
the constant propaganda it is now rare to have these open to comment. Any questions is always dominated by anti Russia and anti
SAG rhetoric.
It is a constant psyop that is gathering momentum. I am sure the use of nerve agent is a not so subtle way of linking Russia
with what is supposedly happening in Syria.
But as we know that the supposed use of chemical weapons is a series of false flags then the same may apply here.
"The sanctions today are a grievous disappointment, and fall far short of what is needed to respond to that attack on our democracy,
let alone deter Russia's escalating aggression, which now includes a chemical weapons attack on the soil of our closest ally,"
Adam Schiff, the top Democrat on the House intelligence committee said in a statement.
So thanks to to the toxic tory blatant propaganda it's now an accepted fact in US Democrats minds that it was the Russians
wot done it as they push for tougher sanctions against Russia.
There might just be an answer to the cui bono question somewhere in there. Just maybe, but I'm not rushing to judgement!
just remember it was the usa/uk under bush/blair that had all the info needed to attack iraq in 2003 so much for any lesson
learned in any of that, or this at present the political class remain in the gutter serving the military-financial-energy complex
of course these special interest groups would have it no other way as war=money what's a few dead people to get in the way of
making a killing off the next war, or preparation for war? i heard porton down was given a few $ in the past day or two as well
lets keep those chemists busy
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery
and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television
and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked
staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy,
the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses
that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust
scrutiny.
This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined
as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize
the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.
Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business
lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the
economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded.
Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore
implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these
platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit
information collected on companies using its services to undermine them as competitors.
This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive
aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two
potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying
common carrier obligations and duties.
"This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"
. In the IT job markets such postings are often called purple squirrels
Notable quotes:
"... In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero ..."
"... That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population. ..."
"... The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is. ..."
Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism,
with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it,
the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and
sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There
is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."
The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better)
politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the
population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world
phenomenon" here in the US runs deep.
perfect stranger:
"Religion is just as vulnerable to corporate capture as is the government or the academy."
This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a
tool.
Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in
the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.
DownSouth:
perfect stranger,
Religion, just like human nature, is not that easy to put in a box.
For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative
enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary
spirit.
Examples:
•Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King
Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist,
which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?
perfect stranger:
Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from
Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.
You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights.
In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of
enslavement.
In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral
people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral"
and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent
of dividing by zero
DownSouth:
Rex,
I agree.
Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes,
beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."
That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I
suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany
in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.
The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access
to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast,
primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media,
the mass minority is made to appear to be much larger than it really is.
The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say:
"See what a huge upwelling of popular support I am responding to."
JTFaraday:
Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they
are literally and inherently unemployable so that they underestimate and under-sell themselves.
This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment
problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted
to think we should address it politically.
That's where I see this blame the unemployed finger pointing really getting traction these days.
attempter:
I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.
I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse
to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and
we should refuse to let argument range beyond them.
The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full
opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without
it.
psychohistorian:
I am one of those long term unemployed.
I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component
design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom
going back to WEYCOS.
I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance
with the "there is no problem here, move on now" approach.
Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state
of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties
in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to
hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as
defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could
be a current component in a rational labor policy but I digress.
I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.
So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have
more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from
other who may need it more .why set up a society where we have to compete as such for mere existence???????
One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused,
not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required
public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education.
I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided
folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able
to evolve as needed within public focus .IMO.
Ishmael:
Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies
I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting
edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several
years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight
here.
First, most good positions have gate keepers who are professional recruiters. It is near impossible to get
by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing
for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked
at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest
consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior
positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE
firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very
successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters
are incompetent.
Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked
me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went
nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above
the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but
I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed
very assured of myself."
Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember
a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible.
My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use
to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand
for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of
consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that
said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that
no one wants to talk about." CEO do not want any challenges in their organization.
Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These
people are insecure and do not want more senior and experienced people above them and than has resulted in people older than
45 not finding positions.
Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of
the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick
with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time
commented to me, "Your average consulting gig runs longer than our average placement."
With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites
have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism
to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the
client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically
intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment
but I tell people what and where to do it so does that make me a parasite.
Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually
starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their
staff can do and I am not a threat.
I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never
get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where
I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.
Lidia:
Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed
he was lying about his skills and work history.
Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is
not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple
squirrel).
Hosswire
Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves.
I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more
proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach"
people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed,
or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.
I did it because the client, as Yves said, wanted people who were literally in the same job description already.
My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they
looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious.
Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact
that you get to write that piece of paper yourself.
Ishmael:
Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault.
Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to
look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.
I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive
as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on
a winner.
Mannwich:
As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you
nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived
safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars.
What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job
stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view
of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly
doesn't?
Ishmael:
Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the
absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years.
In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired
from outside the orgnanization. Companies want loyalty from an employee but offer none in return.
The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once)
where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that
person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).
Ishmael:
Birch:
The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of
our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers
secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to
them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then
this charade continues inslaving everyone.
This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments
will not let collapse while the blood sucking vampires suck the life out of the assets.
On the other hand, govt is not the answer. Govt is too large and accomplishes too little.
kevin de bruxelles:
The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived
slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be
some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a
similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact
that someone survived the layoffs provides a form social proof for their workplace abilities.
On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise
that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass
immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel
and these two policies will be overturned. We still have a few years to go before this happens.
davver:
Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce
some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require
less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really
contributing to that increase in productivity or is it the machines and methods I created?
Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the
business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel
like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because
they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?
Escariot:
I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting
designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three
years. Now I say out of work, I mean out of our trained and experienced fields.
We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company
and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line
going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck,
which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment,
housing, etc.
Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health
insurance? Retirement accounts? not so much.
Mickey Marzick:
Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you
drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing
in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and
production were concentrated there and workers could STOP production.
Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands
surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception
not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified
this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican.
And I suspect this pattern existed elsewhere. But it is changing too
In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has
always existed in this country. It's a constant reminder for those still working that you could be next – cast out into
the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology
in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against
those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The
"oppressed" very often internalize the value system of the oppressor.
As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that
the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the
prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with
nowhere to else to go.
It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the
Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against
the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this
strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation
of class consciousness among white ethnic industrial workers.
Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere
[SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide
phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.
White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization
of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this
ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate
America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.
Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in
action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended
to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way
before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission
without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence
of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!
FULL and GAINFUL EMPLOYMENT are the ultimate labor power.
Eric:
It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have
a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health
care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody
gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!
James:
Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people
with the right skills"
In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert
in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.
Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it
seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that
currently exists in the USA.
This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing
fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy
the national demand.
The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited
access to labor.
The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers
looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)
I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment.
It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member
or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions?
Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like
Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point,
I certainly hope it does
damien:
It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know
that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and
the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every
bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.
You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired,"
fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced
from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security,
and security of any sort undermines social control.
youniquelikeme:
You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position
and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.
This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming.
The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much
longer.
Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and
out eventually find the courage to fight back and by then, it is usually not with words.
down and out in Slicon Valley:
This is the response I got from a recruiter:
"I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12
months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship
you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "
I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued
a patent. Where do I sign up to gain skills required to find a job now?
Litton Graft :
"Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism
money can by.
Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the
Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.
I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and
get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work"
or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from
the poor to build fighter jets, write code or network an agency.
Hosswire:
I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to
get you hired, because I was lazy and didn't want to have to talk to someone else next.
So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an
email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.
Francois T :
The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly
that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"
Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here;
some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser
beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies
can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as
simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers.
Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to
execute well to begin with.
And guess what: qualified workers cost money, qualified workers urgently needed cost much more.
This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is
on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe
and India/China.
Kit:
If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt
but thats the way it is in the US today. Let me repeat that : Dead Meat.
I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company
had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my
wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living
hell.
At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash,
moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.
Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but
the experience (to get to this point) almost killed us.
I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't.
We were very lucky to survive intact.
Ming:
Thank you Yves for your excellent post, and for bringing to light this crucial issue.
Thank you to all the bloggers, who add to the richness of the this discussion.
I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the
massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and
trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.
Thank you. No rush of course.
Nexus:
There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed
in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here
are my experiences. Or alternatively the world can be viewed from a broader societal perspective.
In the context of labour there has always been an unequal confrontation between those that control capital and those that offer
their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political
economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics
branched off from political economy and has little value in explaining the real world as the complexity of the world has been
reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and
demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a
simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology.
This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation
of the modern state and the exercise of power and influence within society.
It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly
the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic
of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital
making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via
services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets,
etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders
(including management as shareholders).
The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments
it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of
the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised
in the US – it is not through the will of the people.
For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the
exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as
they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a
pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the
elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection
(health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated)
and out-sourcing/in-sourcing labour is also a representations of this.
The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to
extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has
become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the
goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer
underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since
the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and
pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as
there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to
meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of
in-source may take place as US labour costs will be on par with overseas labour pools.
It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and
the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that
was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital
investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to
the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital
changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex
and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.
S P:
Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was
too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep
up with demand.
It also treats the printing press as a necessary means to fight "deflation."
So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.
The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil
and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.
There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills
programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around
this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution
measures.
The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money,
and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for
everybody, making it fair in a universal sense.
Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of
D.C.
So this whole experiment called America will fail.
"... Seventy per cent of people born into the bottom quintile of income distribution never make it into the middle class, and fewer than ten per cent get into the top quintile. Forty per cent are still poor as adults. ..."
Upward mobility in the United States is largely an illusion ,
and the living standard for the middle class has hardly moved in decades; it has declined, if
anything, relative to progress in the 1960's.
Seventy per cent of people born into the bottom quintile of income distribution never
make it into the middle class, and fewer than ten per cent get into the top quintile. Forty
per cent are still poor as adults.
You are correct, though, that economics is immensely complicated and turns on
almost-infinite variables. People who don't like the way things are turning out often just
re-define the metrics, or pick a different set.
"... Amid the global financial crisis of 2008, a new chapter in the history of neoliberal globalization emerged. Simple assumptions about markets as pure and neutral arbiters of economic transactions faced new challenges from beyond the pages of economic history and sociology. ..."
"... The apparent triumph of global capitalism came into temporary question, and with it, the reigning economic paradigm of neoliberalism. ..."
"... The specter of the Occupy movement in 1011, with its sweeping critique of corporate power, took root in ways not seen in the United States since the 1999 World Trade Organization protests in Seattle. ..."
"... In response, proponents of neoliberalism heightened their demands for a market-governed society, further tax cuts, deregulation, trade liberalization, and more. From the GOP and Tea Party's politics of austerity arose a fresh defense of free market politics in the United States, as well as a rcinvigorated denial of class as a structuring force in US society. These social tensions persist even as neoliberalism, as an ideology and a model for institutional restructuring, exhibits remarkable resilience. ..."
"... From the early 1980s onward, it provided the basic policy framework for "structural adjustment" in the global south, for "rescuing" the welfare state in the global north, and as a vision for a global economy unbound from centrally planned markets, dying industries, or rent-seeking interest groups. ..."
"... One cornerstone of this paradigm that remains mostly unchallenged among political elites is the principal of "free trade." Broadly speaking, neoliberalism and free trade have provided the ideological framework for most reciprocal trade agreements since the early 1980s, when President Reagan initiated a wave of new trade policies in February 1982 during a speech to the Organization of American States (OAS). ..."
"... This formulaic discourse of free markets, free trade, and personal liberty - hallmark features of Reagan's popular rhetoric - also captured what would later be acknowledged as core principles of an incipient neoliberal ideology that promised a restoration of US economic hegemony (Mudge 2008). Domestically and internationally, neoliberal trade proposals were generally presented in tandem with calls for privatization, deregulation, and a reduction in the size of government spending as a share of GDP. ..."
"... Was it the fever pitch of a new' policy ideology acted out by government partisans and policy makers committed to its mantra? Or did the very economic actors benefitting from market liberalization act politically and concertedly to unleash it? And if so, did this coordinated corporate political campaign arise from a reorganized and newly emboldened economic class, or simply through ad hoc alignments created by shared organizational interests? Specifically, can we detect class political signatures on the wave of free trade policies, like the CBI, the North American Free Trade Agreement (NAFTA), or the World Trade Organization (WTO), that erected the institutional framework of neoliberal globalization? 6 ..."
"... We believe that our approach, rooted in the "elite studies" and "power structure" research traditions, expands (and, in some areas, corrects) conventional explanations of neoliberal trade and globalization that emphasize market, institutional, and ideological factors, while neglecting to incorporate a concept of class political action ..."
Amid the global financial crisis of 2008, a new chapter in the history of neoliberal
globalization emerged. Simple assumptions about markets as pure and neutral arbiters of
economic transactions faced new challenges from beyond the pages of economic history and
sociology.
The apparent triumph of global capitalism came into temporary question, and with it, the
reigning economic paradigm of neoliberalism. From the left wing of US politics, a newly
invigorated discourse of class and income inequality began to challenge corporate power with
calls for greater accountability on Wall Street. The specter of the Occupy movement in
1011, with its sweeping critique of corporate power, took root in ways not seen in the United
States since the 1999 World Trade Organization protests in Seattle.
In response, proponents of neoliberalism heightened their demands for a market-governed
society, further tax cuts, deregulation, trade liberalization, and more. From the GOP and Tea
Party's politics of austerity arose a fresh defense of free market politics in the United
States, as well as a rcinvigorated denial of class as a structuring force in US society. These
social tensions persist even as neoliberalism, as an ideology and a model for institutional
restructuring, exhibits remarkable resilience.
Neoliberalism - which promises to efficiently generate wealth while disciplining states and
bureaucracies with market forces - took shape over the course of decades. As a kind of
governing philosophy, it has been offered, variously, as a remedy for economic stagnation,
bureaucratic bloat, corruption, inflation, and more (Bourdieu 1999; Mirowski and Plehwe 2009;
Mudge 2008). From the early 1980s onward, it provided the basic policy framework for
"structural adjustment" in the global south, for "rescuing" the welfare state in the global
north, and as a vision for a global economy unbound from centrally planned markets, dying
industries, or rent-seeking interest groups.
One cornerstone of this paradigm that remains mostly unchallenged among political elites
is the principal of "free trade." Broadly speaking, neoliberalism and free trade have provided
the ideological framework for most reciprocal trade agreements since the early 1980s, when
President Reagan initiated a wave of new trade policies in February 1982 during a speech to the
Organization of American States (OAS). There, Reagan unilaterally called for a Caribbean
Basin Initiative (CBI) that would "make use of the magic of the marketplace of the Americas, to
earn their own way toward self-sustaining growth" (quoted in Polanyi-Levitt 1985: 232)/
This formulaic discourse of free markets, free trade, and personal liberty - hallmark
features of Reagan's popular rhetoric - also captured what would later be acknowledged as core
principles of an incipient neoliberal ideology that promised a restoration of US economic
hegemony (Mudge 2008). Domestically and internationally, neoliberal trade proposals were
generally presented in tandem with calls for privatization, deregulation, and a reduction in
the size of government spending as a share of GDP. 5
Although a large and varied group of economists, policy wonks, and government leaders
supported the general principles of neoliberal globalization, the "market fever" of the 1980s
did not spread simply because certain individuals espoused free trade and domestic
deregulation. The fact that many of these noncorporate actors assume a central role in many
popular and academic accounts of this era does not reduce the many empirical problems with this
view.
In particular, the problem with this "triumphant" vision of neoliberal history is the manner
in which the very engines of capital behind the market mania - globalizing corporations appear
as liberated historical agents acting out their market freedoms, not as class political actors
foisting new institutional realities on the world. We contest this prevailing view and instead
ask who liberated, or in Blyth's (2001) terminology, "disembedded," these markets from national
social and political institutions?
Was it the fever pitch of a new' policy ideology acted out by government partisans and
policy makers committed to its mantra? Or did the very economic actors benefitting from market
liberalization act politically and concertedly to unleash it? And if so, did this coordinated
corporate political campaign arise from a reorganized and newly emboldened economic class, or
simply through ad hoc alignments created by shared organizational interests? Specifically, can
we detect class political signatures on the wave of free trade policies, like the CBI, the
North American Free Trade Agreement (NAFTA), or the World Trade Organization (WTO), that
erected the institutional framework of neoliberal globalization? 6
The answer to these questions and, in particular, the role of class agency within these
macroeconomic shifts, is not simply a question of whether one likes Karl Marx or Adam Smith.
Notwithstanding the recent tendency to equate the mention of class with "class warfare," it is
our contention that removing class from accounts of recent economic history creates, at best, a
narrow and distorted perspective on this important era. The primary purpose of this book, then,
is to introduce and empirically validate a concept of class agency that deepens our
understanding of both the trade policy-making apparatus as well as the neoliberal globalization
"project" more generally.
We believe that our approach, rooted in the "elite studies" and "power structure"
research traditions, expands (and, in some areas, corrects) conventional explanations of
neoliberal trade and globalization that emphasize market, institutional, and ideological
factors, while neglecting to incorporate a concept of class political action .
Our general line of argument historicizes US trade policy and neoliberal globalization,
highlighting the active and at times contradictory processes that shape the state and class
relationships responsible for propelling institutions, like the WTO, into existence. Following
McMichael (2001: 207), we concur that globalization is best understood as a "historical project
rather than a culminating process." Treating neoliberal trade policies as part of a much larger
historical project - made and remade by collective actors - offers a more realistic and
empirically grounded framework for exploring the intersection of class and state actors in the
political articulation of globalization.
Whereas much of the literature on globalization assigns an important role to the economic
activity of multinational corporations, the force of their collective political agency in
pressuring states to ratify trade agreements and enact institutional reforms is mostly
attributed to narrow sectoral interests, like factor mobility', economies of scale, or various
industry-specific characteristics...
The idea the a scientist can be a gangster was probably first presented by
Sir Arthur Conan Doyle
in his famous Sherlock Holmes
detective stories. Neoliberalism just made this a reality. Mass production of "scientific gangsters"
is an immanent feature of neoliberalism.
Notable quotes:
"... By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense ..."
"... Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control that shows how most large manufacturing companies were initially run by engineers, then sales people, then finance people (as corporations came to be seen as bundles of assets as opposed to businesses). I think this transformation paralleled the rise of neoclassical economics. So, not so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's of manufacturing firms were still disproportionately engineers. ..."
"... a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile ..."
"... That means transforming business education, including the replacement of agency theory with innovation theory ..."
"... since gigantism is the norm, rather than family run farms in a mostly agrarian economy such failures are catastrophic. The linkage between these elephants tends to create systemic risk. Previously, failure was small and isolated. ..."
"... Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons, Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as an entity, many starved, but the mopes there at least still knew how to raise up edible crops and live on "less" and maybe do better collective response to that sharp peak on the entropy curve. Wonder how things might play out exceptionally, here in the Empire? ..."
"... It should be noted that Michael Jensen of HBS, one of the originators of the `maximize shareholder value' of corporate governance, is on some short lists for this year's not-exactly-the-Nobel Prize in Economics. ..."
The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense
In a new
INET paper
featured in the Financial Times , economist William Lazonick lays out a theory about how corporations
can work for everyone – not just a few executives and Wall Streeters. He challenges a set of controversial
ideas that became gospel in business schools and the mainstream media starting in the 1980s. He
sat down with INET's Lynn Parramore to discuss.
Lynn Parramore: Since the 1980s, business schools have touted "agency theory," a controversial
set of ideas meant to explain how corporations best operate. Proponents say that you run a business
with the goal of channeling money to shareholders instead of, say, creating great products or making
any efforts at socially responsible actions such as taking account of climate change. Many now take
this view as gospel, even though no less a business titan than Jack Welch, former CEO of GE, called
the notion that a company should be run to maximize shareholder value "the dumbest idea in the world."
Why did Welch say that?
William Lazonick: Welch made that statement in a 2009
interview
, just ahead of the
news that GE had lost its S&P Triple-A rating in the midst of the financial crisis. He explained
that, "shareholder value is a result, not a strategy" and that a company's "main constituencies are
your employees, your customers and your products." During his tenure as GE CEO from 1981 to 2001,
Welch had an obsession with increasing the company's stock price and hitting quarterly earnings-per-share
targets, but he also understood that revenues come when your company generates innovative products.
He knew that the employees' skills and efforts enable the company to develop those products and sell
them.
If a publicly-listed corporation succeeds in creating innovative goods or services, then shareholders
stand to gain from dividend payments if they hold shares or if they sell at a higher price. But where
does the company's value actually come from? It comes from employees who use their collective and
cumulative learning to satisfy customers with great products. It follows that these employees are
the ones who should be rewarded when the business is a success. We've become blinded to this simple,
obvious logic.
LP: What have these academic theorists missed about how companies really operate and perform?
How have their views impacted our economy and society?
WL: As I show in my new INET paper " Innovative Enterprise Solves the Agency Problem ," agency
theorists don't have a theory of innovative enterprise. That's strange, since they are talking about
how companies succeed.
They believe that to be efficient, business corporations should be run to "maximize shareholder
value." But as I have argued in
another recent INET paper , public shareholders at a company like GE are not investors
in the company's productive capabilities.
LP: Wait, as a stockholder I'm not an investor in the company's capabilities?
WL: When you buy shares of a stock, you are not creating value for the company -- you're just
a saver who buys shares outstanding on the stock market for the sake of a yield on your
financial portfolio. Public shareholders are value extractors , not value creators.
By touting public shareholders as a corporation's value creators, agency theorists lay the groundwork
for some very harmful activities. They legitimize "hedge fund activists," for example. These are
aggressive corporate predators who buy shares of a company on the stock market and then use the power
bestowed upon them by the ill-conceived U.S. proxy voting system, endorsed by the Securities and
Exchange Commission (SEC), to demand that the corporation inflate profits by cutting costs. That
often means mass layoffs and depressed incomes for anybody who remains. In an industry like
pharmaceuticals , the activists also press for extortionate product price increases. The higher
profits tend to boost stock prices for the activists and other shareholders if they sell their shares
on the market.
LP: So the hedge fund activists are extracting value from a corporation instead of creating it,
and yet they are the ones who get enriched.
WL: Right. Agency theory aids and abets this value extraction by advocating, in the name of "maximizing
shareholder value," massive distributions to shareholders in the form of dividends for holding shares
as well as stock buybacks that you hear about, which give manipulative boosts to stock prices. Activists
get rich when they sell the shares. The people who created the value -- the employees -- often get
poorer.
###p"downsize-and-distribute" -- something that corporations have been doing since the 1980s,
which has
resulted in extreme concentration of income among the richest households and the erosion of middle-class
employment opportunities.
LP: You've called stock buybacks -- what happens when a company buys back its own shares from
the marketplace, often to manipulate the stock price upwards -- the "legalized looting of the U.S.
business corporation." What's the problem with this practice?
WL: If you buy shares in Apple, for example, you can get a dividend for holding shares and, possibly,
a capital gain when you sell the shares. Since 2012, when Apple made its first dividend payment since
1996, the company has shelled out $57.4 billion as dividends, equivalent to over 22 percent of net
income. That's fine. But the company has also spent $157.9 billion on stock buybacks, equal to 62
percent of net income.
Yet the only time in its history that Apple ever raised funds on the public stock market was in
1980, when it
collected $97 million in its initial public offering. How can a corporation return capital to
parties that never supplied it with capital? It's a very misleading concept.
The vast majority of people who hold Apple's publicly-listed shares have simply bought outstanding
shares on the stock market. They have contributed nothing to Apple's value-creating capabilities.
That includes veteran corporate raider Carl Icahn, who raked in
$2 billion by holding $3.6 billion in Apple shares for about 32 months, while using his influence
to encourage Apple to do $80.3 billion in buybacks in 2014-2015, the largest repurchases ever. Over
this period, Apple, the most cash-rich company in history, increased its debt by $47.6 billion to
do buybacks so that it would not have to repatriate its offshore profits, sheltered from U.S. corporate
taxes.
There are many ways in which the company could have returned its profits to employees and taxpayers
-- the real value creators -- that are consistent with an innovative business model. Instead,
in doing massive buybacks, Apple's board (which includes former Vice President Al Gore) has endorsed
legalized looting. The SEC bears a lot of blame. It's supposed to protect investors and make sure
financial markets are free of manipulation. But back in 1982, the SEC bought into agency theory under
Reagan and came up with a rule that gives corporate executives a "safe harbor" against charges of
stock-price manipulation when they do billions of dollars of buybacks for the sole purpose of manipulating
their company's stock price.
LP: But don't shareholders deserve some of the profits as part owners of the corporation?
WL: Let's say you buy stock in General Motors. You are just buying a share that is outstanding
on the market. You are contributing nothing to the company. And you will only buy the shares because
the stock market is highly liquid, enabling you to easily sell some or all of the shares at any moment
that you so choose.
In contrast, people who work for General Motors supply skill and effort to generate the company's
innovative products. They are making productive contributions with expectations that, if
the innovative strategy is successful, they will share in the gains -- a bigger paycheck, employment
security, a promotion. In providing their labor services, these employees are the real value creators
whose economic futures are at risk.
LP: This is really different from what a lot of us have been taught to believe. An employee gets
a paycheck for showing up at work -- there's your reward. When we take a job, we probably don't expect
management to see us as risk-takers entitled to share in the profits unless we're pretty high up.
WL: If you work for a company, even if its innovative strategy is a big success, you run a big
risk because under the current regime of "maximizing shareholder value" a group of hedge fund activists
can suck the value that you've created right out, driving your company down and making you worse
off and the company financially fragile. And they are not the only predators you have to deal with.
Incentivized with huge amounts of stock-based pay, senior corporate executives will, and often do,
extract value from the company
for their own personal gain -- at your expense. As Professor Jang-Sup Shin and I argue in a forthcoming
book, senior executives often become value-extracting insiders. And they open the corporate coffers
to hedge fund activists, the value-extracting outsiders. Large institutional investors can use their
proxy votes to support corporate raids, acting as value-extracting enablers.
You put in your ideas, knowledge, time, and effort to make the company a huge success, and still
you may get laid off or find your paycheck shrinking. The losers are not only the mass of corporate
employees -- if you're a taxpayer, your money provides the business corporation with physical infrastructure,
like roads and bridges, and human knowledge, like scientific discoveries, that it needs to innovate
and profit. Senior corporate executives are constantly complaining that they need lower corporate
taxes in order to compete, when what they
really want is more cash to distribute to shareholders and boost stock prices. In that system,
they win but
the rest of us lose .
LP: Some academics say that hedge fund activism is great because it makes a company run better
and produce higher profits. Others say, "No, Wall Streeters shouldn't have more say than executives
who know better how to run the company." You say that both of these camps have got it wrong. How
so?
WL: A company has to be run by executive insiders, and in order to produce innovation these executives
have got to do three things:
First you need a resource-allocation strategy that, in the face of uncertainty, seeks to generate
high-quality, low-cost products. Second, you need to implement that strategy through training, retaining,
motivating, and rewarding employees, upon whom the development and utilization of the organization's
productive capabilities depend. Third, you have to mobilize and leverage the company's cash flow
to support the innovative strategy. But under the sway of the "maximizing shareholder value" idea,
many senior corporate executives have been unwilling, and often unable, to perform these value-creating
functions. Agency theorists have got it so backwards that they actually celebrate the virtues of
"
the value extracting CEO ." How strange is that?
Massive stock buybacks is where the incentives of corporate executives who extract value align
with the interests of hedge fund activists who also want to suck value from a corporation. When they
promote this kind of alliance, agency theorists have in effect served as academic agents of activist
aggression. Lacking a theory of the value-creating firm, or what I call a "theory of innovative enterprise,"
agency theorists cannot imagine what an executive who creates value actually does. They don't see
that it's crucial to align executives' interests with the value-creating investment requirements
of the organizations over which they exercise strategic control. This intellectual deficit is not
unique to agency theorists; it is inherent in their training in
neoclassical economics .
LP: So if shareholders and executives are too often just looting companies to enrich themselves
– "value extraction," as you put it – and not caring about long-term success, who is in a better
position to decide how to run them, where to allocate resources and so on?
WL: We need to redesign corporate-governance institutions to promote the interests of American
households as workers and taxpayers. Because of technological, market, or competitive uncertainties,
workers take the risk that the application of their skills and the expenditure of their efforts will
be in vain. In financing investments in infrastructure and knowledge, taxpayers make productive capabilities
available to business enterprises, but with no guaranteed return on those investments.
These stakeholders need to have representation on corporate boards of directors. Predators, including
self-serving corporate executives and greed-driven shareholder activists, should certainly not have
representation on corporate boards.
LP: Sounds like we've lost sight of what a business needs to do to be successful in the long run,
and it's costing everybody except a handful of senior executives, hedge fund managers, and Wall Street
bankers. How would your "innovation theory" help companies run better and make for a healthier economy
and society?
WL: Major corporations are key to the operation and performance of the economy. So we need a revolution
in corporate governance to get us back on track to stable and equitable economic growth. Besides
changing board representation, I would change the incentives for top executives so that they are
rewarded for allocating corporate resources to value creation. Senior executives should gain along
with the rest of the organization when the corporation is successful in generating competitive products
while sharing the gains with workers and taxpayers.
Innovation theory calls for changing the mindsets and skill sets of senior executives. That means
transforming business education, including the replacement of agency theory with innovation theory.
That also means changing the career paths through which corporate personnel can rise to positions
of strategic control, so that leaders who create value get rewarded and those who extract it are
disfavored. At the institutional level, it would be great to see the SEC, as the regulator of financial
markets, take a giant step in supporting value creation by banning stock buybacks whose purpose it
is to manipulate stock prices.
To get from here to there, we have to replace nonsense with common sense in our understanding
of how business enterprises operate and perform.
Owners come first!
That was the slogan of our former board chair. He didn't disclose to the employees that his compensation
was influenced mightily by how big the net income was. He did tell the employees that they were
well down the hierarchy, after Owners (capital O) and then vendors and then customers. His former
employees deserted in droves.
I'd say that maximizing long-term shareholder value is a great idea the problem is, as is so
often the case these days, short-term thinking.
Driving away a company's best employees makes that quarter's numbers look better, but destroys
long-term value. Same thing for so many other short-term, "I'll be gone, you'll be gone" strategies.
One step to fixing things – change the definition of long-term capital gains from the current
1 year to, say, 5 years. This "one simple trick" would fix everything from the carried interest
loophole to the abuses inherent in the current Wall Street gambling mentality.
We can talk about what is best in theory, but reality is just that, shareholders come first.
They control the board and the CEO and the CEO institutes the will of the shareholders down
into the business entities, determining the level of reinvestment in the business units and the
level of employee compensation. That will continue to be the case until the company goes bankrupt
at which point shareholders are entitled to nothing.
I agree with others that Jack Welch is saying what he is saying after the fact. Way too easy
to do.
>Welch had an obsession with increasing the company's stock price and hitting quarterly
earnings-per-share targets, but he also understood
Yeah so he talks a good game but when he had the reins – one of the most powerful men in the
world meekly (ok, that's a hilarious adjective when applied to Jack Welsh) followed the herd.
Or more accurately, found out where the herd was heading and got out in front of it. The true
sign of modern "leadership".
Or more accurately, found out where the herd was heading and got out in front of it.
The true sign of modern "leadership".
Reminds me of something i have read, supposedly a quite from some politician or other, going
to the tune of "i need to find out where the mob is going, so i can lead them there".
Welch's primary business strategy at GE was to exit every product market in which GE's market
share was not in the top two in the industry (selling them off or closing them down) and reallocate
resources to industries where GE was market dominant, often buying up the competition rather than
truly investing in innovation. A truly awful human being.
As I personally have always believed, Employees have more invested in their employers than
shareholders. Shareholders can sell quickly and have no loyalty. Employees do not enjoy such a
liquid "jobs market."
There also seems to be a turning point in companies, where they change the perception of the
customers form a group to be treasured, to a group who are to b exploited – change the relationship
so the customers become "marks."
I also believe there should be an almost automatic "break -up" provision for companies who
reach a certain market share.
Finally there should be one definition of income, and it should include Wages, Dividends, and
Capital Gains.
there should be an almost automatic "break -up" provision for companies who reach a certain
market share.
Yes, anti-trust enforcement would be nice. Hypothetical President Sanders might actually do
that. Real and hypothetical Presidents Bush, Obama, Romney, B. Clinton, H. Clinton, and Trump
have other priorities.
Sen Bernie Sanders sees right through the neoclassical fetters, blinders, and bullshit. He
recognizes how intellectually and economically stagnant and dangerous it is. He has the most powerful
conceptual, articulate grasp of economics that I've seen the past 40 years. He also, IIRC, had
MMTer Stephanie Kelton as an advisor, and had her advise the Senate Finance Committee. Also notable:
Sen Elizabeth Warren.
The other political operators that you mention are still in thrall to neoclassical assumptions.
They mistake 'takers' for 'makers' and are economically bamboozled. And it has worked out well
for all of them, on a personal basis, so it is not surprising that they don't see the problems.
Anyone actually trying to build an innovative business, OTOH, has to see through the bamboozlement
or else you're out of business pronto.
The class of humans that by inclination and opportunity become C-Suite and VC looters and "owners:"
did they precede the imprimatur of "economists" with their notions of price, value, and crossing
of curves, or did the "economists" do a Martin Luther, nail up a bunch of theses, and preach fire
and brimstone to turn the greedheads loose?
And was/is any other outcome for the species and the planet even possible?
Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control
that shows how most large manufacturing companies were initially run by engineers, then sales
people, then finance people (as corporations came to be seen as bundles of assets as opposed to
businesses). I think this transformation paralleled the rise of neoclassical economics. So, not
so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's
of manufacturing firms were still disproportionately engineers.
"most large manufacturing companies were initially run by engineers, then sales people,
then finance people"
The Lincoln Electric Company, which became famous for its "Incentive Management" program of
compensating employees, was a client of mine. Over three decades I saw it progress through precisely
those stages, and gradually lose every characteristic that had made the company unique.
This post was a genuine pleasure to read. Especially:
If you work for a company, even if its innovative strategy is a big success, you run a big
risk because under the current regime of "maximizing shareholder value" a group of hedge
fund activists can suck the value that you've created right out, driving your company down
and making you worse off and the company financially fragile .
And we've had a government by and for hedge fund managers for about the same amount of time
that we've had economic woes. One problem is that hedge funders like Romney, who actually don't
think about consumer product development, actually don't have to test and deploy products, bring
their bean-counter assumptions to business and make a hash of things. I mention Romney specifically,
because he presents himself to the world as a paragon of economic wisdom.
Romney has a prestigious business school background. Which makes me want to highlight this:
Innovation theory calls for changing the mindsets and skill sets of senior executives.
That means transforming business education, including the replacement of agency theory
with innovation theory .
Just a thought: "innovation theory," like MMT, is maybe just a tool set? "Innovation" includes
"autonomous combat devices," and CRSP-R, and nuclear weapons, and the F-35, and fracking, and
derivatives, and plastics, and charter schools, stuff and ideas that for some of us constitute
"value" are corporations as the category has grown to be, any more likely to "innovate" in the
areas of social improvements and possibilities, or stewardship of the planet, or close down the
toll stations and all the other rent collection scams and extortions they have "innovated" to
date? Or release their chokehold on "policy?"
Says the proponent: "Major corporations are key to the operation and performance of the economy.
So we need a revolution in corporate governance to get us back on track to stable and equitable
economic growth. Besides changing board representation, I would change the incentives for top
executives so they are rewarded for allocating corporate resources to value creation. Senior executives
should gain along with the rest of the organization when the corporation is successful in generating
competitive products while sharing the gains with workers and taxpayers." There seems to be so
much wrong and just more Biz-babble about this, one hardly knows where to start unpacking.
"Major corporations are key?" Really? Monsanto? GM? Bechtel? The Big Banks? And "back on track":
When has the political economy, writ small or large, ever been "on track to stability and equitable
growth," said "growth' itself seemingly one of the pathologies that's killing us? And who's going
to write the entries for the corporate senior executives' dance cards that will measure their
"success," in those feel-good categories?
But it's a good conversation piece, and maybe an opening into Something Better, however us
inherently mostly self-interested, self-pleasing omnivorous predators might define "better "
Badly run companies, naturally extinguish themselves. Unfortunately they take down their customers,
owners, vendors and employees in the process. But the government can step in and either save a
company that otherwise would die, or act as a crony corruption partner on behalf of a well connected
company. Same as it always was.
But since gigantism is the norm, rather than family run farms in a mostly agrarian economy
such failures are catastrophic. The linkage between these elephants tends to create systemic risk.
Previously, failure was small and isolated.
Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons,
Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as
an entity, many starved, but the mopes there at least still knew how to raise up edible crops
and live on "less" and maybe do better collective response to that sharp peak on the entropy curve.
Wonder how things might play out exceptionally, here in the Empire?
It should be noted that Michael Jensen of HBS, one of the originators of the `maximize
shareholder value' of corporate governance, is
on some short lists
for this year's not-exactly-the-Nobel Prize in Economics.
"... Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute for policy in the government sphere. Except very telling except when we're talking about funding the security state. ..."
"... The other is that the real power of markets is that in a real free market (not a Potemkin one) decisions are made often at the point where needs, information, incentives, and economic power come together. But where the large scale decisions the governments have to make, markets fail. Policy though doesn't. But Neoliberals hate policy. ..."
"... Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's. ..."
"... Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion. Somewhat similar to "Immaculate Conception" in Catholicism. ..."
"... In reality market almost by definition is controlled by government, who enforces the rules and punish for the transgressions. ..."
"... Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals talk about "free market, not "fair market". ..."
"... After 2008 few are buying this fairy tale about how markets can operate and can solve society problems independently of political power, and state's instruments of violence (the police and the military). This myths is essentially dead. ..."
"... Friedmanism is this sense a flavor of economic Lysenkoism. Note that Lysenko like Friedman was not a complete charlatan. Some of his ideas were pretty sound and withstood the test of time. But that does not make his less evil. ..."
Krugman's refusal to endorse fiscal stimulus unless the economy is at zero lower bound. That is
not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is
also worried about the debt.)
[ Only correct to a degree, economic weakness is recognized. ]
Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute
for policy in the government sphere. Except very telling except when we're talking about funding
the security state.
The other is that the real power of markets is that in a real free market (not a Potemkin one)
decisions are made often at the point where needs, information, incentives, and economic power
come together. But where the large scale decisions the governments have to make, markets fail. Policy
though doesn't. But Neoliberals hate policy.
Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy,
you destroy the ability to make profit and you get the 1970's.
likbez -> Gibbon1... , -1
Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion.
Somewhat similar to "Immaculate Conception" in Catholicism.
In reality market almost by definition is controlled by government, who enforces the rules
and punish for the transgressions.
Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals
talk about "free market, not "fair market".
After 2008 few are buying this fairy tale about how markets can operate and can solve society
problems independently of political power, and state's instruments of violence (the police and
the military). This myths is essentially dead.
But like Adventists did not disappear when the Second Coming of Christ did not occurred in
predicted timeframe, neoliberals did not did not disappeared after 2008 either. And neither did
neoliberalism, it just entered into zombie, more bloodthirsty stage.
The fact that even the term
"neoliberalism" is prohibited in the US MSM also helped. It is king of stealth ideology, unlike
say, Marxists, neoliberals do not like to identify themselves as such. The behave more like members
of some secret society, free market masons.
Friedmanism is this sense a flavor of economic Lysenkoism. Note that Lysenko like Friedman
was not a complete charlatan. Some of his ideas were pretty sound and withstood the test of time.
But that does not make his less evil.
And for those who try to embellish this person, I would remind his role in 1973 Chilean coup
d'état ( https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat
) and bringing Pinochet to power. His "Chicago boys" played a vital role in the events. This
man did has blood on his hands.
Of course, bringing a reign of terror to Chile was not why the CIA had sponsored him. The reason
he was there was to reverse the gains of the Allende social democracy and return control of the
country's economic and political assets to the oligarchy. Pinochet was convinced, through supporters
among the academics in the elite Chilean universities, to try a new series of economic policies,
called "neoliberal" by their founders, the economists of the University of Chicago, led by an
economist by the name of Milton Friedman, who three years later would go on to win a Nobel Prize
in Economics for what he was about to unleash upon Chile.
Friedman and his colleagues were referred to by the Chileans as "the Chicago Boys." The term
originally meant the economists from the University of Chicago, but as time went on, as their
policies began to disliquidate the middle class and poor, it took on a perjorative meaning. That
was because as the reforms were implemented, and began to take hold, the results were not what
Friedman and company had been predicting. But what were the reforms?
The reforms were what has come to be called "neoliberalism." To understand what "neoliberal"
economics is, one must first understand what "liberal" economics are, and so we'll digress briefly
from our look at Chile for a quick
"After years without result, with days to the deadline, Canada's negotiator, Simon
Reisman, who Chrystia Freeland recalls in the fond tones Hillary Clinton uses for Henry
Kissinger, walked. Why? Because the U.S. wouldn't agree to a "mechanism" that superceded U.S.
law. Ottawa was grim. Without a deal, we'd perish. The U.S. negotiator said: Canada needs a
"face-saving gesture." President Reagan told his team to get creative.
They did. They didn't replace the U.S.'s unilateral right to impose costs on Canadian
stuff with a neutral process to decide what's fair. They created a process to decide only
whether the U.S. was accurately enforcing its own rules. That left everything as it was but
called it dispute resolution."
"... By Thom Hartmann. a talk-show host and author of over 25 books in print.. Originally published at AlterNet . ..."
"... Yes. I thank Hartmann for pointing out the latest power grabs by our corporate masters. Still, his ignoring Clinton, Obama and the rest just puts him in with all the other political tribalists, who by their tribalism distract from the main problems – and their ultimate solutions. It's a class war, Thom, The Only War That Matters. ..."
"... I can disagree with you that this here republic is a democracy. ..."
"... Fair enough. The United States is no longer a representative democracy (and it was only that way occasionally in the past); it's currently an oligarchic plutocracy. But if we hope to regain any semblance of a representative democracy, we need to actively participate. There are many reasons why we've degenerated into a plutocracy, and one of those reasons is that people don't participate enough. ..."
"... "And anything that would make somebody not want to move here or start a company here is going to slow down our progress." ..."
"... The vast majority of the labor market is shifting gears to function as the servant class to the very rich. It is a painful transition as recent gains in labor rights are lost. ..."
"... The last 70 years was an aberration. It will not return, short of a major uprising. Given the state's security apparatus that prospect is extremely unlikely. ..."
"... And I do not agree with Thom's Indentured servitude meme; he gives no real examples, just generalities. I would submit that a neo-feudal system is the fact on the ground. The difference; a serf has land (and yes, he's attached to it), a house, and a modicum of freedom; as long as he takes care of his lord. ..."
"... All information is managed; and this includes the unemployment figures; pure fiction by the way. An indentured servant has work; 20 million(?) or more Usians have no work, and little hope of finding meaningful employment. ..."
"... The importance of this can not be underestimated; human dignity is at stake; we're a society brought up on the importance of being "gainfully" employed. Our society is being intentionally crushed to make us serfs in a neo-feudal society. ..."
"... 20+ years ago in Athens, GA, there was a local chicken place. Good food if you like that kind of thing. Come to find the employees who fried the chicken and worked the service counter were forbidden by the language of their "contracts" to quit for a dollar an hour more at another local restaurant. The first company didn't actually have the means to take its former employees to court, but they had the "right" to do so. Bill Clinton, neoliberal to his rotten core, was happily the president, feeling our pain. ..."
"... These days, even janitors are being required to sign non-compete clauses. When Krishna Regmi started work as a personal care aide for a Pittsburgh home health agency in 2015, he was given a stack of paperwork to sign. "They just told us, 'It's just a formality, sign here, here, here,' " he said. Regmi didn't think much of it. That is, until he quit his job nine months later and announced his decision to move to a rival agency -- and his ex-employer sued him for violating a noncompete clause Regmi says he didn't know he had signed. The agreement barred Regmi from working as a personal care aide at another home health agency for two years. ..."
"... In California, North Dakota and Oklahoma, the law says the agreements are unenforceable; judges will just throw them out. In other states, statutes and case law create a set of tests that the agreements must pass. In Oregon, for instance, they can only be enforced if workers have two weeks to consider them before taking a job, or if the worker gets a "bona fide advancement" in return, such as a raise. ..."
"... The author fails to point out that H1-B is also indentured servitude. ..."
"... The merging of corporate power with the state is called "fascism." This was described by both Benito Mussolini and FDR's vice-president Henry Wallace. But the term "fascism" isn't mentioned in the article. Importantly, fascists are sworn enemies of communism and socialism, and this is how they can be identified. ..."
"... The US is definitely getting more feudal. ..."
"... It's about bullying and intimidation. Like most bullies, the companies are cowards who would back down if challenged, because it would make little economic sense to sue minimum-wage ex-employees. They're relying on the employees being too cowed to call their bluff, so they choose to stay even if unhappy. ..."
"... Non-compete clauses sound like something that will create a hostile work force; that may not be so good for these companies. Articles like this make me think of "Space Merchants", an amusing science fiction satire on capitalism by Pohl and Kornbluth. ..."
"... Perhaps there are other options in responding to the types of abuse detailed in this post, in addition to the political action Thom Hartmann called for. One such action might be characterized as "Passive NonParticipation" with your brains, craftsmanship and know-how to the extent possible, yet still retain your job. ..."
Indentured servitude is back in a big way in the United States, and conservative
corporatists want to make sure that labor never, ever again has the power to tell big business
how to treat them.
Idaho
, for example, recently passed a law that recognizes and rigorously enforces
non-compete agreements in employment contracts, which means that if you want to move to a
different, more highly paid, or better job, you can instead get wiped out financially by
lawsuits and legal costs.
In a way, conservative/corporatists are just completing the circle back to the founding of
this country.
Indentured servitude began in a big way in the early 1600s, when the British East India
Company was establishing a
beachhead
in the (newly stolen from the Indians) state of Virginia (named after the "virgin queen"
Elizabeth I, who signed the charter of the BEIC creating the first modern corporation in 1601).
Jamestown (named after King James, who followed Elizabeth I to the crown) wanted free labor,
and the African slave trade wouldn't start to crank up for another decade.
So the company made a deal with impoverished Europeans: Come to work for typically 4-7 years
(some were lifetime indentures, although those were less common), legally as the property of
the person or company holding your indenture, and we'll pay for your transport across the
Atlantic.
It was, at least philosophically, the logical extension of the feudal economic and political
system that had ruled Europe for over 1,000 years. The rich have all the rights and own all the
property; the serfs are purely exploitable free labor who could be disposed of (
indentured
servants
, like slaves, were commonly whipped, hanged, imprisoned, or killed when they
rebelled or were not sufficiently obedient).
This type of labor system has been the dream of conservative/corporatists, particularly
since the "Reagan Revolution" kicked off a major federal war on the right of workers to
organize for their own protection from corporate abuse.
Unions represented
almost a third of American workers
when Reagan came into office (and, since union jobs set
local labor standards, for every union job there was typically an identically-compensated
non-union job, meaning about two-thirds of America had the benefits and pay associated with
union jobs pre-Reagan).
Thanks to Reagan's war on labor, today unions represent about 6 percent of the
non-government workforce.
But that wasn't enough for the acolytes of Ayn Rand, Ronald Reagan and Milton Friedman. They
didn't just want workers to lose their right to collectively bargain; they wanted employers to
functionally own their employees.
Prior to the current Reaganomics era, non-compete agreements were pretty much limited to
senior executives and scientists/engineers.
If you were a CEO or an engineer for a giant company, knowing all their processes, secrets
and future plans, that knowledge had significant and consequential value!company value worth
protecting with a contract that said you couldn't just take that stuff to a competitor without
either a massive payment to the left-behind company or a flat-out lawsuit.
But should a guy who digs holes with a shovel or works on a
drilling rig
be
forced to sign a non-compete? What about a person who flips burgers or waits tables in a
restaurant? Or the few factory workers we have left, since neoliberal trade policies have moved
the jobs of tens of thousands of
companies
overseas?
Turns out corporations are using non-competes to prevent even these types of employees from
moving to newer or better jobs.
America today has the lowest minimum wage in
nearly 50
years
, adjusted for inflation. As a result, people are often looking for better jobs. But
according to the
New York Times
,
about 1 in 5 American workers is now locked in with a non-compete clause in an employment
contract.
Before Reaganomics, employers didn't keep their employees by threatening them with lawsuits;
instead, they offered them benefits like insurance, paid vacations and decent wages. Large
swaths of American workers could raise a family and have a decent retirement with a basic job
ranging from manufacturing to construction to service industry work.
My
dad
was one of them; he worked 40 years in a tool-and-die shop, and the machinist's union
made sure he could raise and put through school four boys, could take 2-3 weeks of paid
vacation every year, and had full health insurance and a solid retirement until the day he
died, which continued with my mom until she died years later. Most boomers (particularly white
boomers) can tell you the same story.
That America has been largely destroyed by Reaganomics, and Americans know it. It's why when
Donald Trump told voters that the big corporations and banksters were screwing them, they voted
for him and his party (not realizing that neither Trump nor the GOP had any intention of doing
anything to help working people).
And now the conservatives/corporatists are going in for the kill, for their top goal: the
final destruction of any remnant of labor rights in America.
Why would they do this? Two reasons: An impoverished citizenry is a politically impotent
citizenry, and in the process of destroying the former middle class, the 1 percent make
themselves trillions of dollars richer.
The New York Times has done some great reporting on this problem, with an article
last
May
and a more
recent
piece
about how the state of Idaho has made it nearly impossible for many workers to escape
their servitude.
Historically, indentured servants had their food, health care, housing, and clothing
provided to them by their "employers." Today's new serfs can hardly afford these basics of
life, and when you add in modern necessities like transportation, education and child-care, the
American labor landscape is looking more and more like old-fashioned servitude.
Nonetheless, conservatives/corporatists in Congress and state-houses across the nation are
working hard to hold down minimum wages. Missouri's Republican legislature just made it illegal
for St. Louis to raise their minimum wage to $10/hour, throwing workers back down to $7.70.
More preemption laws
like this are on the books or on their way.
At the same time, these conservatives/corporatists are working to roll back health care
protections for Americans, roll back environmental protections that keep us and our children
from being poisoned, and even roll back simple workplace, food and toy safety standards.
The only way these predators will be stopped is by massive political action leading to the
rollback of Reaganism/neoliberalism.
And the conservatives/corporatists who largely own the Republican Party know it, which is
why they're
purging voting lists
, fighting to keep in place
easily hacked voting machines
, and throwing billions of dollars into think tanks,
right-wing radio, TV, and online media.
If they succeed, America will revert to a very old form of economy and politics: the one
described so well in Charles Dickens' books when Britain had "
maximum wage laws
" and "Poor Laws" to prevent a
strong and politically active middle class from emerging.
Conservatives/corporatists know well that this type of
neo-feudalism
is actually a very stable political and economic system, and one that's hard to challenge.
China has put it into place in large part, and other countries from Turkey to the Philippines
to Brazil and Venezuela are falling under the thrall of the merger of corporate and state
power.
So many of our individual rights have been
stripped
from us, so much of America's middle-class progress in the last century has been
torn from us
, while
conservatives wage a brutal and oppressive war on dissenters and people of color under the
rubrics of "security," "tough on crime," and the "war on drugs."
As a result, America has 5 percent of the world's population and 25 percent of the
world's prisoners
, more
than any other nation on earth, all while opiate epidemics are ravaging our nation. And what to
do about it?
Scientists have proven that the likelihood the desires of the bottom 90 percent of Americans
get enacted into law are now equal to statistical "
random
noise
." Functionally, most of us no longer have any real representation in state or
federal legislative bodies: they now exist almost exclusively to serve the very wealthy.
The neo-feudal corporate/conservative elite are both politically and financially committed
to replacing the last traces of worker power in America with a modern system of indentured
servitude.
Only serious and committed political action can reverse this; we're long past the point
where complaining or sitting on the sidelines is an option.
As both Bernie Sanders and Barack Obama regularly said (and I've closed my radio show for 14
years with), "Democracy is not a spectator sport."
Wait, no mention of the Clinton administration and those Rubin acolytes? I find that hard
to believe, those 8 years in the 90s were significant for today's outsized CEO pay and
incentives.
First-Term Reagan Baby approves this post. New Deal was under attack before FDR's body got
cold. Truman instead of Wallace in the VP slot in '44 was a dark day for humanity.
Then there is probation board / court bonds slavery. The slave is captured by the police,
then chained to debt and papers first by a bond and then later upon "early" release to a
probation officer. The slave has restrictions on his freedom by the probation orders, and
must make good the money owed the bondsman and the court ordered fines. The slaves work for
the benefit of the political and monied class who don't need to pay much if any tax burden
for all their government delivered goods thanks to this system of slavery.
Hartmann closes with, "As both Bernie Sanders and Barack Obama regularly 'Democracy is not
a spectator sport'." Hello Thom: Sanders has twisted himself with pretzel logic regarding
neoliberalism and Obama is a full-blown neoliberal (who you seem to forget admired Ronald
Reagan).
That sentence also caught my attention and reminded me of John Kennedy junior's George
magazine, marketing "politics as a lifestyle choice" and featuring Cindy Crawford on the
inaugural cover. Allied to the MSM's obsession with identity politics, as a neo-liberal and
neo-con driver of news, one is soon distracted from, if not disgusted with, what's going on.
Thank God for (the) Naked Capitalism (community).
Yeah like Obama cared about unions and workers' rights. What happened to EFCA? What
happened to the comfy shoes Obama said he would wear to walk with public sector workers in
Wisconsin? Obama never fought for workers but he fought like hell for the TPP even going on
Jimmy Fallon's show and slow jamming for it.
Obama is like the rest of the neoliberal Democrats. They think that unions and workers'
rights are anti-meritocratic. Unions are only good for money and foot soldiers during the
election. After the election they are basically told to get bent.
Yes thanks for mentioning the EFCA. I'm so old I remember when the Democrat party
campaigned hard on that – "If you give us back the majority in Congress blah blah blah
.". And as soon as they won said majority they never mentioned it again.
Yes. I thank Hartmann for pointing out the latest power grabs by our corporate masters.
Still, his ignoring Clinton, Obama and the rest just puts him in with all the other political
tribalists, who by their tribalism distract from the main problems – and their ultimate
solutions. It's a class war, Thom, The Only War That Matters.
One can disagree with Obama or Sanders about various issues, but democracy is definitely
not a spectator sport. People need to vote in both primary and general elections, and not
just in the big Presidential years. People need to vote in midterm primary and general
elections, as well as the elections in odd numbered years, if their states have such
elections.
They also need to actively support good candidates, and communicate their opinions to the
politicians who hold office. Periodically, people post comments about the futility of voting,
or they say that not voting is a way to send a message. Nonsense! Failure to participate is
not a form of participation, it's just a way of tacitly approving of the status quo.
Well I hope I can disagree with you that this here republic is a democracy. There isn't
even a party I can think of which operates democratically.
Supporting a good candidate is asking people to participate in spectator sport-like
activity. The people, party members, should determine a platform and the candidate/office
holder should be obligated to sell/enact/administrate it.
The rich tell their politicians/parties what to do so should the rest of us.
"
I can disagree with you that this here republic is a democracy.
"
Fair enough. The United States is no longer a representative democracy (and it was only
that way occasionally in the past); it's currently an oligarchic plutocracy. But if we hope
to regain any semblance of a representative democracy, we need to actively participate. There
are many reasons why we've degenerated into a plutocracy, and one of those reasons is that
people don't participate enough.
"Supporting a good candidate is asking people to participate in spectator sport-like
activity"
Sure, if people don't participate in the primary process, all they have to choose from in
the general election is a couple of tools of the oligarchs. They also need to do many of the
things in the quote from Howard Zinn that Alejandro provided.
"If democracy were to be given any meaning, if it were to go beyond the limits of
capitalism and nationalism, this would not come, if history were any guide, from the top. It
would come through citizen's movements, educating, organizing, agitating, striking,
boycotting, demonstrating, threatening those in power with disruption of the stability they
needed."–Howard Zinn
Great post, although I think it goes a little out of its way to ignore referencing
Democrats as an equal part of the problem, as they too are "conservative/corporatists". Party
politics is theater for the plebes, nothing more. These "people" have the same values and
desires.
Thank you to Lambert. Indentured labourers were also used by the French colonial ventures,
including Mauritius / Ile Maurice, known as Isle de France when under French rule from 1715
– 1810.
Many of the labourers lived alongside slaves and, later, free men and women. They also
intermarried, beginning what are now called Creoles in the Indian Ocean, Caribbean and
Louisiana. I am one of their descendants.
In 1936, my great grandfather and others, mainly Creoles, founded the Labour Party in
Mauritius. A year later, they organised the first strike, a general, which resulted in four
sugar factory workers being shot and killed at Union-Flacq sugar estate.
From what my
grandmother and her aunt and sister, all of whom used to knit banners and prepare food and
drink for the 1 May, and my father report, it's amazing and depressing to see the progress of
the mid-1930s to 1970s being rolled back
. It's also depressing to hear from so many, let's
call them the 10%, criticise trade unions and think that progress was achieved by magic.
Plutonium Kun wrote about that recently.
Thom – I agree with your outrage; however, the truth is that economically the US has
been broke since the 1970's and it doesn't matter. Nothing will change until our we have an
honest monetary system, and until unearned income is tax properly – the rich have
gotten richer and corporations have hijacked our government, whining about it does nothing,
this will go on until something breaks and then we will see what happens.
What is going on in Idaho? Why would the state politicians do such a thing? From the Idaho link which is the NY Times, reveals the real reason. Believe it or not.
"We're trying to build the tech ecosystem in Boise," said George Mulhern, chief
executive of Cradlepoint, a company here that makes routers and other networking equipment.
"And anything that would make somebody not want to move here or start a company here is going
to slow down our progress."
Alex LaBeau, president of the Idaho Association of Commerce and Industry , a trade
group that represents many of the state's biggest employers, countered: "This is about
companies protecting their assets in a competitive marketplace ."
Alex doesn't get irony. What price discovery? Where are economists on this? Why are they radio silent? To
paraphrase Franklin, a market, if you can keep it.
Again and again and again, we see narcissist lawyer/politicians doing stuff that is
completely demented, from a normal person's point of view. They will be gone in a few years,
but the idiotic laws remain.
Tech is neither here nor there in it, I mean they say being able to leave jobs easily was
a tech advantage in California where people could leave to start new businesses etc.. So I'm
not sure how tech actually lines up on it, and it's almost not the point, even when it does
good it's no substitute for an organization that really represents labor. It might be better
in California due to tech pressure, but probably mostly because it's a deep blue state, which
tends to make places slightly more tolerable places to live. Well as much as we're going to
get when what we really need is socialists in the legislature but nonetheless.
Yes these practices are slavery. Indentured servitude is almost too polite, but I get it's
more P.C..
It's not exactly the same as employee non-competition contracts, but remember the scandal
about the Silicon Valley companies that privately agreed not to hire each others' employees?
Here's one of the many articles about this:
I imagine that a few companies will move to Idaho to take advantage of the favorable legal
climate, and will leave even more quickly when they can't recruit the talent they need. Speaking as a Software Engineer, the only impact this new law has is to put Idaho at the
top of my list of "places I won't consider for relocation."
Mulhern is an idiot then because there is a fair amount of evidence that CA's lax
enforcement and very skeptical enforcement of non competes is an important factor on why
Silicon Valley has thrived. My sense is that this is purely to protect the status quo among
large local employers and nothing to do with growing the local ecosystem or smaller
firms. Good luck trying to recruit top-flight talent especially engineers/programmers to Boise
with most companies have a vigorous year or 2-year non-competes in place.
Ultimately, Idahoans will shoot themselves in the asses, never mind assets. I know
"ecosystem" is a bullshit tell but it's another word for network effects and the network is
short circuited by these laws.
Laws preventing an employee from leaving means there is less mixing of talent, making
everyone worse off. That's how we learn, getting in there and doing it, whatever it is, and
by moving to another employer you transfer and pick up knowledge and experience.
What makes it farcical, is that Big Co Management never envisions itself in their
employees shoes.
The vast majority of the labor market is shifting gears to function as the servant class
to the very rich.
It is a painful transition as recent gains in labor rights are lost.
Becoming a willing
supplicant and attaching oneself to a rich and powerful family is the best way to better
one's prospects.
The last 70 years was an aberration. It will not return, short of a major
uprising. Given the state's security apparatus that prospect is extremely unlikely.
Not a Thom Hartmann fanboy; he deals in glittering generalities and treats serious subject
matter in a deeply superficial manner.
Having been a Teamster in warehousing and metal trades; they were corrupt and in management's
pocket in those places I worked.
I'm a huge proponent for labor and the ideal of labor unions (as imagined by the wobblies);
not the reality on the ground today.
And I do not agree with Thom's Indentured servitude meme; he gives no real examples, just
generalities.
I would submit that a neo-feudal system is the fact on the ground. The difference; a serf has
land (and yes, he's attached to it), a house, and a modicum of freedom; as long as he takes
care of his lord.
Usian's are now, in fact, prisoners of war. Living in a broken system where voting no longer
counts; the very back bone of a democratic society. The "two" parties have merged into one
entity looking very much like the ouroboros (a snake eating its tail).
All information is managed; and this includes the unemployment figures; pure fiction by the
way.
An indentured servant has work; 20 million(?) or more Usians have no work, and little hope of
finding meaningful employment.
The importance of this can not be underestimated; human dignity is at stake; we're a society
brought up on the importance of being "gainfully" employed.
Our society is being intentionally crushed to make us serfs in a neo-feudal society.
20+ years ago in Athens, GA, there was a local chicken place. Good food if you like that
kind of thing. Come to find the employees who fried the chicken and worked the service
counter were forbidden by the language of their "contracts" to quit for a dollar an hour more
at another local restaurant. The first company didn't actually have the means to take its
former employees to court, but they had the "right" to do so. Bill Clinton, neoliberal to his
rotten core, was happily the president, feeling our pain.
And his own, courtesy of Newt
Gingrich et al.
Thank you, Rick. It was not just our pain that Clinton and Nootie were feeling. Speaking of Mr Bill, his family's role in Haiti, amongst other places reduced to penury,
should earn them a place in infamy.
he didn't suggest that, maybe that's what he meant, maybe somewhere else in his
communications he says that, but it's not in the article.
Yes a problem is people don't know where or even how to apply any sort of pressure to
change things
But one plus of these things being somewhat decided on the state level, is it is more
obvious how to go about change there than with the Fed gov where things seem almost hopeless,
try to elect people who stand against these policies for instance, easier done some places
than others of course, but
Occupy did make a difference, at least in how the public paying attention mostly to
broadcast news and the "important" newspapers were concerned. Young people, especially, began
to realize what they were up against in this corporatized economy where all the power went to
the wealthy.
I'll bet a lot of Occupiers actually began to understand just what Neoliberalism
meant!
And the amount of planning and effort the Obama WH spent organizing the Federal agencies
and state/local governments to shut down the Occupy encampments indicated to me just how much
they feared the effects of Occupy.
Well . . . Occupy was clearly making enough of a difference that the Obama Administration
worked with the 18 Democratic Party Mayors of 18 different cities to stamp it out with heavy
police stompout presence. The Zucotti clearout in NYC, for example, was just exactly the way
Obama liked it done.
People subject to politicians should begin a coordinated effort to use a common approach
to get the truth. Demand transparency, with all campaign contributions, lobbyist contacts,
voting records, committee memberships and such all in one place. Use that information to
provide a score to show the degree of voter representation. Not sure how that would work,
just brainstorming to try some new approach as current ones have failed.
These days, even janitors are being required to sign non-compete clauses. When Krishna Regmi started work as a personal care aide for a Pittsburgh home health
agency in 2015, he was given a stack of paperwork to sign. "They just told us, 'It's just a
formality, sign here, here, here,' " he said. Regmi didn't think much of it. That is, until he quit his job nine months later and
announced his decision to move to a rival agency -- and his ex-employer sued him for
violating a noncompete clause Regmi says he didn't know he had signed. The agreement barred
Regmi from working as a personal care aide at another home health agency for two years.
. . . . .
Bills in Maine, Maryland and Massachusetts would restrict noncompete agreements that
involve low-wage employees; New York Attorney General Eric Schneiderman, a Democrat, is
pushing for the same change in his state. Proposals in Massachusetts and Washington would
also restrict the agreements for other types of workers, such as temporary employees and
independent contractors.
Such bills face an uphill struggle, however, often because of stiff opposition from
business. "Non-compete agreements are essential to the growth and viability of businesses
by protecting trade secrets and promoting business development," the Maryland Chamber of
Commerce said in written testimony opposing a bill Carr introduced that would have voided
agreements signed by workers who earn less than $15 an hour. The bill passed the House in
February but died in the Senate.
. . . . . .
Some good news:
In California, North Dakota and Oklahoma, the law says the agreements are unenforceable;
judges will just throw them out. In other states, statutes and case law create a set of
tests that the agreements must pass. In Oregon, for instance, they can only be enforced if
workers have two weeks to consider them before taking a job, or if the worker gets a "bona
fide advancement" in return, such as a raise.
States have tightened up enforcement criteria in recent years, propelled by news
reports, Starr's research and encouragement from the Obama White House. In addition to
Illinois' law banning noncompete agreements for low-wage workers, last year Utah passed a
law that voided agreements that restricted workers for more than a year; Rhode Island
invalidated them for physicians; and Connecticut limited how long and in what geographic
area physicians can be bound.
Yet Starr's survey research suggests that tweaking the criteria may have a limited
effect on how often the agreements are signed. In California, where noncompete agreements
can't be enforced, 19 percent of workers have signed one, he said. In Florida, where the
agreements are easily enforced, the share is the same: 19 percent.
The merging of corporate power with the state is called "fascism." This was described by
both Benito Mussolini and FDR's vice-president Henry Wallace. But the term "fascism" isn't
mentioned in the article. Importantly, fascists are sworn enemies of communism and socialism,
and this is how they can be identified.
NC is one of the few blogs where I read the comments.- this was a good article until the
wtf comment at the end.
Great Britain in an 1833 Act of the Parliament of the United Kingdom abolished slavery
throughout the British Empire (with the exceptions "of the Territories in the Possession of
the East India Company" (how is that not surprising), Ceylon, now Sri Lanka, and Saint
Helena; the exceptions were eliminated in 1843). "Who ya gonna get to do the dirty work when
all the slaves are free?" Indentured servants from India – the biggest ethnic group in
British Guiana (now Guyana) are from India Indians.
The US is definitely getting more feudal.
while i dont disagree thats it not happening, it just seems extremely short sighted, as
without a large growing middle class, corporations are dooming them selves to lower income
(profits) in the long term. but then no one can really accuse corporations of having a long
term view
But perhaps the rich people hiding behind the corporate veil are motivated by class
sadism, not class greed. Perhaps they are ready to lose half what they have in order to
destroy both halves of what we have.
I don't see the problem. You're getting somewhere around minimum wage, and so a lawyer
wouldn't take you even if you knew how to find one suitable, which you don't.
So you look at your boss and say, "Sue me." What's the gut to do? Hire a lawyer? Use one
on staff? This is a civil case, so what damages is he claiming?
Then how's the judge going to look on this. Any judge I've known would be pissed livid to
get stuck with a bullcrap case like this. Imagine when every judge is looking at his docket
filled with this nonsense. How long before he starts slapping your boss with contempt?
We're sitting around complaining how bad our bosses are, bet we have another, must worse
problem. Employees have turned to wimps over their boss's every utterance. Here's a tip.
Probably a half and more of whatever is in you employment "contract" (it probably doesn't
even qualify legally as one) is either illegal or unenforceable. Pretend it isn't there.
And above all, STOP rolling over to these jerks. If your biggest problem is a non-compete
on a minimum wage contract, your world has already fallen apart. If your bosses problem is
that he thinks he needs them, his world is about to.
It's about bullying and intimidation.
Like most bullies, the companies are cowards who would back down if challenged, because it
would make little economic sense to sue minimum-wage ex-employees.
They're relying on the employees being too cowed to call their bluff, so they choose to stay
even if unhappy.
Non-compete clauses sound like something that will create a hostile work force; that may
not be so good for these companies. Articles like this make me think of "Space Merchants", an amusing science fiction satire
on capitalism by Pohl and Kornbluth.
The East India Company did not establish a foothold in Virginia! That was the Virginia
Company! This basic factual error mars an article that otherwise makes a very good point.
Perhaps there are other options in responding to the types of abuse detailed in this
post, in addition to the political action Thom Hartmann called for. One such action might be
characterized as "Passive NonParticipation" with your brains, craftsmanship and know-how to
the extent possible, yet still retain your job.
In the waning years of the Soviet Union, the mantra was "They pretend to pay us, and we
pretend to work." I suspect many American workers have already figured out the minimum amount
of work necessary to retain their jobs and incomes, hence the recent decline in one of the
"elite's" most cherished metrics, "productivity" (besides wealth concentration, of
course).
"... Trade liberalisation has been a significant driver of globalization over the past half century. However, global trade has slowed down in recent years. This column argues that globalization can also be driven by higher commodity prices can also drive, as commodities constitute a large fraction of global trade. This is reflected in trade volumes and commodity prices, which increased until around 2014 but have fallen since. However, commodity price-driven globalization implies lower living standards in advanced countries, as the higher commodity prices diminish the purchasing power of workers. ..."
"... See original post for references ..."
"... "His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing counties from adopting policies and institutions that they themselves have used." ..."
By Daniel Gros, Director of the Centre for European Policy Studies, Brussels. Originally published
at
VoxEU
Trade liberalisation has been a significant driver of globalization over the past half century.
However, global trade has slowed down in recent years. This column argues that globalization can
also be driven by higher commodity prices can also drive, as commodities constitute a large fraction
of global trade. This is reflected in trade volumes and commodity prices, which increased until around
2014 but have fallen since. However, commodity price-driven globalization implies lower living standards
in advanced countries, as the higher commodity prices diminish the purchasing power of workers.
Trade and international financial transactions have grown massively in recent decades. This phenomenon,
also called globalization, is often described as a 'mega-trend'. Business and political leaders never
tire of repeating that 'globalization' is the future, that it delivers more jobs and higher incomes.
However, more recently globalization seems to be in retreat-in 2015 trade actually fell, both in
absolute terms and relative to GDP. Does this mean globalization has gone into reverse (OECD 2016,
IMF 2015, 2016)?
In this column, I argue that the slogan 'globalization equals growth' is wrong. There is no general
economic theorem that links more trade to growth and other economic benefits. Economic theory implies
only that, under most circumstances, lower trade barriers will lead to more trade and more jobs.
The simplification, that more trade is thus always beneficial, is not warranted. If trade increases
for reasons other than the lowering of trade barriers, it is far from clear that this will benefit
everybody.
The distinction between globalization driven by lower trade barriers and increases in trade driven
by other factors is not just an academic point. It is the key to understanding why globalization
has become so unpopular in most advanced countries, and why the recent slowdown in trade is not something
to worry about.
What Drove 'Hyper-Globalization'?
The massive increase in trade flows over the last two decades has always been difficult to explain
with 'classic' causes, such as trade liberalisation lowering trade costs. Tariffs (and other trade
barriers) had of course been reduced radically in several stages in the 1960s, 70s, and 80s. However,
by the late 1990s the remaining tariffs were already rather low; and many non-tariff barriers (such
as the Multi Fibre Arrangement, which had seriously limited trade in textiles) had also been eliminated.
1
Transport costs of course fell with containerisation, but this improvement had yielded most of
its benefits by the late 1990s. Estimates of the overall cost of trade based on the ratio of CIF
prices (which incorporate transport costs) and FoB prices (which do not) actually suggest that transport
costs slightly increased over the last 20 years; before1995 they had fallen almost continuously (Baldwin
and Taglioni 2004). Figure 1 shows that transport costs have fallen again very recently, but that
this coincided with a slowdown of trade – the opposite of what one would expect.
Figure 1 Word transport costs
[Imports(CIF)/Exports(FoB]-1
How can one reconcile 'hyper-globalization' (Subramanian and Kessler 2013) with stagnating tariffs
and transport costs? Baldwin (2017) provides one answer. He argues that the key driver of globalization
today is the falling price of 'transporting' ideas, as opposed to the cost of moving goods.
This contribution provides an additional, maybe complementary, explanation-higher oil (and other
commodity) prices increase both trade volumes and transport costs for goods, but not ideas. The impact
of oil prices on transport costs is clear-fuel is an important element of overall transport costs.
A sharp increase in fuel prices can more than outweigh, at least in the short to medium run, the
costs savings due to containerisation. (Cosar and Demir 2017 also argue that most of the cost savings
from the latter have been realised.)
But the key point is that higher commodity prices also automatically create more trade, because
commodities constitute a large fraction of global trade.
An Illustrative Example
Assume that one tonne of steel and ten barrels of oil are needed to produce one car. In 2002-03,
that bundle of raw materials was worth around $800, or about 5% of the value of a car priced at $16,000.
This implies that during the early 2000s, industrialised countries had to export five cars for imports
of 100 bundles of these raw materials. By 2012–13, the value of the raw materials needed for one
car increased to about $2,000, now representing about 10% of the cost of a car (prices of cars had
gone up much less). Industrialised countries thus had to export 10 cars, double the previous quantity,
for the same amount of raw material imports.
This example shows that the value of trade would double if commodity prices double. There is thus
a direct link between the growth of trade and commodity prices. Increasing commodity prices lead
to more trade (globalization), whereas falling commodity prices have the opposite effect.
An immediate objection to this example is that it looks at the value of trade, but one also finds
that over the last decades the growth of trade in volume has exceeded that of the volume of real
growth. However, this excess growth in trade volume also follows in this example-an industrialised
country would need to double its exports in volume just to pay for an unchanged volume of raw material
imports.
Since food, fuels, and raw materials make up about a quarter of global trade, the huge price movements
in raw materials, especially energy, over the last few decades, must have had a big impact on aggregate
trade figures. The run up in commodity, and especially crude oil, prices until about 2014 drove hyper-globalization,
and the fall in prices since then has now reduced globalization. There is thus little need to look
for other explanations for the recent slowdown in trade.
Figure 2 illustrates this phenomenon with three lines, each of which show three variants of the
global trade/GDP ratio. The top-most line is just the ratio of total global exports to global GDP.
It is the one that shows most globalization-trade accounted for a little over 15% of GDP in 1995,
but 25% at the peak in 2007 (an increase of almost 10 percentage points).
The middle line shows global exports of manufacturing goods as a percentage of GDP. The difference
to the first line is, of course, trade in raw materials, which increased in value along with their
prices, as argued above. Trade in manufacturing goods shows much less globalization, having increased
from only 13% to 17.5% of global GDP.
The lowest line takes into account the fact that higher raw material prices also means that industrialised
countries have to export more manufacturing goods to pay for their more expensive raw material imports.
This last line, which could be called 'manufacturing trade net of payment for raw materials' shows
even less globalization, with the ratio relative to GDP going from 10.5% to 13.6% of global GDP (an
increase of only 3 percentage points, one third of the headline increase mentioned above).
Figure 2 World trade as a percentage of GDP
Source : Own calculations based on OECD and WTO data.
This decomposition of trade flows suggests that there has indeed been some globalization, but
it has been much less strong than the hyper-globalization one sees in the aggregate data. Moreover,
the recent fall in commodity prices can fully explain the fall in trade since 2014 with trade in
'net manufacturing' showing no 'de-globalization'.
But back during the heyday of hyper-globalization, no responsible politician dared to explain
that globalization driven by higher commodity prices would have different implications (for advanced
economies) than globalization driven by trade liberalisation-this new globalization meant lower living
standards in advanced countries as higher commodity prices diminished the purchasing power for OECD
workers. The widespread popular disenchantment with globalization can thus be easily explained-workers
in Europe and the US were told that more trade would make everybody better off. But in reality there
was no 'surplus' to be distributed, and workers just noticed a decline in their living standards.
2
But hype and exaggeration are sure ways to bring a valid cause into disrepute. This is what has
happened to globalization. The decades of gradual liberalisation of trade and capital flows that
followed post-war reconstruction fostered a resumption of global trade that was hugely beneficial.
However, at exactly the point when economic analysis would suggest that these gains from trading
more freely were largely exhausted, actual trade accelerated. This surge in trade was driven largely
by higher commodity prices and could not deliver higher living standards for workers in industrialised
countries.
A popular backlash was thus unavoidable and Donald Trump became its standard bearer. The political
consequences in Europe are also visible-the Brexit referendum, the difficulties in ratifying the
free trade agreement between the EU and Canada (CETA) and the stand-still in the negotiations on
the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US are all expressions
of this disenchantment with globalization.
What Could Be Done to Avoid Throwing the Baby Out With the Bath Water?
A first step would be to stop the overselling. CETA and TTIP would be useful to have, but the
economic benefits can only be of second order importance (and the potential damage feared by some
as well). A second step would be to look where there are still trade barriers whose removal could
bring significant welfare benefits. They are likely to be found in emerging markets, whose tariffs
and non-tariff barriers are still several times higher than those of the EU or the US. European trade
policy should thus concentrate on free trade deals with India or China, rather than the US.
Silly boy! What makes you think that Globalization was ever meant to grow "economies"? It was
never more than a means for mega-corporations to improve their bottom lines just another form
of arbitrage .
Globalization and the "free trade" it espoused were – in the words of economist Ha-Joon Chang
– tantamount to
ladder-kicking :
"His conclusions are compelling and disturbing: that developed countries are attempting
to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing
counties from adopting policies and institutions that they themselves have used."
Yes, it's surprising how most politicians and economists have missed this. Globalization was
always meant to grow corporate revenue in their home saturated markets. Their effects on their
home countries' welfare or their home country employees was not important.
Trump voters showed us otherwise.
Also, mergers are not about scale economies or some market benefits. Mergers and acquisitions
are about letting top execs ask for higher benefits.
Which corporations have "home countries?" Any more than "our" empire is any respecter of silly
old national boundaries. Nations were and are just springboards for "commercial interests "
https://www.librarything.com/work/73551
They're the substrates that made and make "legal" the giant falsehoods and frauds that are
corporate persons
Once upon a time, we older people learned about MNCs and their penchant for playing
countries off against one another. That seems so quaint in retrospect, given the more brazen behaviors
on offer. More recently, families give up citizenship to save some wealth and to hide some wealth.
To what kind of world are they running? When loyalty, duty and character become passé, then the
replacement characteristics are cause for alarm and disgust.
My overall takeway - Decisions by large corporations have huge consequences for the locals,
especially if their jobs swim overseas. Locals' feelings at some point, maybe years later, become
their votes and political opinions.
So if this is correct, Trump is the payback, greatly delayed. B Clinton's and Obama's politics
changed our economy and that in turn became the new politics.
So economics has become politics, and not for the better.
The widespread popular disenchantment with globalization can thus be easily explained-workers
in Europe and the US were told that more trade would make everybody better off. But in reality
there was no 'surplus' to be distributed, and workers just noticed a decline in their living
standards.2
There was a surplus alright. But even if promised to "everybody" it didn't go and wasn't intended
to go – to "everybody".
Workers without jobs not only can not enjoy the fruits of globalization (AKA lower prices by
employing the 'slave labor' of developing nations and raping and pillaging their environment).
Western workers can not pay into their (unlocked by resident politicians and oligarchs) 'Social
Security lock boxes'.
1. How come the huge run-up in commodities didn't translate to higher (measured) inflation?
The author even makes the point that car prices went up much less than steel and oil. (Also, the
doubling of oil and/or steel prices seems strange to me, as I thought neither had seen a big run-up
in this period.) Granted problems with measured inflation but clearly the bigger problem with
working class real wage growth was wage pressure, not inflation pressure.
2. The author seems to presume that trade must balance within countries: exports of cars must
double to pay for higher commodities costs. That certainly does not explain car exports from the
US (not to mention the lack of balanced trade). And I don't think it explains car exports from
Europe or Asia either, unless the argument is that higher commodities costs affected exchange
rates, lowering them for car exporters compared to commodities exporters. Nor would it seem to
explain Chinese exports, again unless there is some argument as to why China "needs" (in an economic,
not political, sense) to run a particular level of massive trade surplus.
3. The author completely ignores China's accession to the WTO in 2000, which some recent studies
have suggested was the primary driver for dramatic increases in China exports to US from that
point.
The lack of car inflation may be explained by the increase in the same period in
auto loan debt . If you can make a hefty profit off the loan interest and other service fees,
they you don't need to increase the base car price. There may even be a motivation to keep the
prices low, as the cheap sticker price gets the customers in the door, and it's not until they've
gone through the ringer with the salesman and loan guy that they realized they've been duped into
paying way more than advertised.
There are a lot of things said in this post that I don't get. [And is this guy really Director
of the Centre for European Policy Studies, Brussels? That's scary!]
This author explicitly equates trade with globalization and implicitly equates growth with
increases in GDP figures. I believe the term "globalization" covers much more than trade. I believe
it also includes the deliberate movement of production out of the U.S. [or out of Europe] to far-away
lands with cheaper labor and fewer annoying regulations. I believe it also includes an intent
to weaken labor and nation states.
I doubt that figures for GDP provide an adequate measure for growth and similarly doubt that
trade measured in terms of a currency provides an adequate measure for trade. Although I suppose
this way of measuring trade might support the assertion:
"But the key point is that higher commodity prices also automatically create more trade, because
commodities constitute a large fraction of global trade."
I don't know what that assertion really means given my bias against the measures this author
uses. In turn, this assertion leads to another odd assertion:
"This example shows that the value of trade would double if commodity prices double. There
is thus a direct link between the growth of trade and commodity prices. Increasing commodity prices
lead to more trade (globalization), whereas falling commodity prices have the opposite effect."
So using the authors terminology I have trouble with the assertion: "Globalization equals growth"
is wrong. If globalization means bigger trade numbers and growth means bigger GDP numbers and
if trade is a positive additive component of growth the assertion that globalization equals growth
- more clearly - that globalization increases growth seems a tautology. The author's slight of
hand correcting for "higher raw material prices" in the trade figures does not convince me of
the title assertion - and by this point in the argument the assertion - whether true or false
- is devoid of meaning for me.
As Thuto notes in a comment below the author assumes globalization driven by trade liberalization
is "somehow better" - I would say the author tacitly assumes globalization driven by trade liberalization
does equal growth - contribute to "true" growth. This leads to the author's conclusion that CETA
and TTIP might have some marginal benefits and might cause some marginal potential damage neatly
avoiding the non-trade issues in those deals - like the ISDS "investor-state dispute settlement"
and various intellectual property enhancements contained in the TTP. Given that globalization
by trade liberalization does grow GDP and assuming that growing GDP is a good thing for all parties
the author can conclude that "European trade policy should thus concentrate on free trade deals
with India or China, rather than the US."
We know how globalization's free trade deals with India or China benefited the US. Does this
author really desire similar benefits for Europe?
I'm with you Leftie. How inflation hardly appears in our hugely inflated western economies
is one of the greatest magic tricks. We all know food and clothing has got more expensive but
"inflation?" – not a hint.
I am guessing its like the paper gold market. We have the means to mis-price everything.
Conditions under which trade between nation-states is beneficial to both partners:
(1) Each nation exports goods which it has a competitive advantage in producing. Agricultural
products are the classic example.
(2) The profits from sale of such goods remain in the country of origin. Transfer of profits out
of the country of origin mean that the country is just a plantation run by absentee landlords.
(3) Trade between the nation-states must be balanced on both sides; i.e. exports and imports are
on the same scale.
(4) Both nation-states must have a condition of full employment.
(Ricardo 1817)
Only when conditions 2-4 are met will condition 1, the ideal situation, be realized. Now, globalization
of capital flows across nation-state borders (the key element of neoliberalism, or neocolonialism)
defeats this. Instead of trade between independent nation-states, what we have is the imperial
system – backed up by a $600 billion yearly military budget that is used to attack any entities
that refuse to go along with the program, by covert means such as destablization and ultimately
by military assault (as long as the target does not possess nuclear weapons, that is).
Furthermore, late 19th-century and 20th century economists have created a set of false assumptions
and theorems with no basis in reality to justify this kind of thing. Notions like 'utility', 'externalities',
and 'GDP' are just sloppy propaganda games; there are no 'general theorems' in economics that
have any solid basis in reality – the entire game of modern academic economic theory is nothing
but smoke and mirrors, whose primary function (as with Soviet economic theory and communism) is
to promote the ideology of investment capitalism, protecting shareholder interests in the corporate
system. If economists want to put their discipline on a sound physical and mathematical basis,
they should start by studying a real science like ecology in natural science departments. My own
opinion is that anything written by academic economists from the latter half of the 19th century
to the present can be discarded with no loss at all.
Instead, read an ecologist like Hutchinson, and think about how those real concepts (in which
there are no 'externalities') would apply to a study of human economic activity.
Globalization favored Mega Corporations and Multi-Nationals (+ their corporate share holders,
lenders) over the rest of the society including labor b/c global labor wage arbitrage!
Living standards went down for working blue collar ( and some white collar) in the West. There
was some 'patchy' RELATIVE increase in living standards of their middle class in some of the Countries,
like India!
Sad reality:
The CAPITAL is mobile but the LABOR is NOT!
The author seems to be arguing that globalization driven by trade liberalization is somehow
better and more palatable than globalisation driven by higher commodity prices. Yet history has
demonstrated that trade liberalization leads sooner or later to the transfer of manufacturing
capacity from high to low income countries, wiping out entire swathes of jobs in said high income
countries. So the argument that globalization driven by trade liberalization benefits workers
in rich countries is shaky at best and demonstrably false at worst
So much understanding of "what's wrong" (from the mopes' standpoint, of course) and so little
in the way of prescriptions for "what is to be done" about conditions as described Kind of like
Tomgram, from the more military- and foreign-adventurism corner of the blogspace
One might guess that we thinking people, with our perceptions and little debates about syntax
and the elements of political economy and composition skills, are maybe just tolerated by the
Blob, because we don't pose much of a challenge to oligarchy and hegemony And we vent off righteous
steam that might get up too much of a head, and also reinforce, via our perceptions of the massiveness
of "the problem," the futility of resistance to something so yuuuuge, all interlocking directorates
and self-licking incentives Small mice can sometimes avoid being crushed by the elephants' feet,
if they are quick and inoffensive.
One wonders where the notion that elephants fear mice, a stock item in comedy, came from
"... some one ought to do a study of/ a book on generic management ..."
"... I'm seeing a parallel to the Obama strategy of branding/looting. Corporate and government decay seem to be mirroring each other, and this new obsession among the intelligentsia with messaging over substance is a major component of that. ..."
"... This branding/looting/communications has been building since at least 1977 when undergraduate communication majors multiplied. It accelerated by 1982 when every corporate finance and law professor taught short term quarterly profit was the only responsibility of management. The combination could only lead to the current 'propaganda as responsible management' philosophy. ..."
some one ought to do a study of/ a book on generic management. it goes back a long way. i first
saw it in 1973 where i was working in boomingdale's food department. almost all the managers in
the store had worked their way up fom being staff members. in 1973 the board hired a young impressive-
looking harvard mba to oversee about a fifth of the departments. he was an energetic man who spent
one whole day throwing boxes around in the foof department stockroom to "show the stockmen how
to be more productive." after two years his section of the store was the only one to lose money,
but by then he had been hired by neiman marcus. in an even higher position.
the managerial class, useless and self-rewarding, is what every corrupt society needs.- endless
administrators in the college system, inventing tests for the teachers. red cross, whatever. the
destruction of substance and brains and heart. its replacement with ignorance and cluelessness.
what a society we're (not) building!
"The managerial class, useless and self-rewarding, is what every corrupt society needs."
The eloi will continue to become ever more useless, putting insane pressures on
the few remaining morlocks they allow to do all the work. Will robots save us? Not very
likely, since they will be used to further enrich the parasites above all.
The BBC is another good example of how managerialism has wrecked a not-for-profit corporation.
Until McKinsey infiltrated the place, the BBC didn't really have a "brand" to speak of; if it
considered its corporate identity at all, it was only in terms of how its output of programming
conveyed what it was supposed to be about as an organisation.
Then, it brought in the brand consultants to develop an image of what it thought it should
be. Nothing necessarily wrong with that. What caused the rot to set in was when the brand image
started to define the programming output. Was, the brand managers asked the producers and directors,
this-or-that programme compliant with the brand guidelines?
If the BBC's brand was not merely delivering communications which are honest and have integrity
but also now need to be "simple to understand", "completely neutral at all times" or "a balance
of positive as well as negative content" then you end up, as we largely have, with a lot of cosy-consensus
mediocrity and an institution which only serves its own internal vested interests.
I'm seeing a parallel to the Obama strategy of branding/looting. Corporate and government
decay seem to be mirroring each other, and this new obsession among the intelligentsia with messaging
over substance is a major component of that.
I'd say that this is also the reason it's impossible to get the government in order. The corporate
media is in bed with the corporate state, because patriotism, and most Americans are simply too
burned-out or drug-addled to question anything. And if people do sense something is wrong and
want a drastic change–well then there's Trump.
This branding/looting/communications has been building since at least 1977 when undergraduate
communication majors multiplied. It accelerated by 1982 when every corporate finance and law professor
taught short term quarterly profit was the only responsibility of management. The combination
could only lead to the current 'propaganda as responsible management' philosophy.
I don't know when the turning point was, but it had something to do with neoliberalism becoming
the "Washington Consensus" and the dogma that everything had to be "run like a business" became
universally accepted. I would guess about the Carter administration.
Wow -- It's an amazing story yet I should not be surprised. It's become a common theme throughout
American society. We have the usual suspects, greedy, self centered individuals looking out for
their interests, using the established modus operandi. Cut, slash and burn as many systems as
possible while painting over the truth with colorful, truth distorting logic while enriching your
self on the way.
An organization founded by Clara Barton in the 1880″s that has evolved into such a grab bag
of I want my share thinking is an American tragedy of epic proportions.
Funny timing. Just yesterday I was passed on the road in my area of NH by a Red Cross Hummer.
It as white all over and the doors emblazoned with the red cross. In tiny print toward the back
it said "donated by GM". Made me sick. Got me thinking about all of the mismanagement going back
decades.
Personally, I'll throw any charitable discretionary money I might have into the gutter before
I'd send a cent to the Red Cross. Took three strikes–but I'm done with them.
My father-in-law served in the SeaBees during WWII and initially influenced my dislike for the
organization. He reported how Red Cross care packages were "SOLD" rather than distributed to intended
service personnel. [Strike one!]
Much later the Twin Towers came down and I felt compelled to donate. When several weeks later
I heard officials talk about the amount of contributions received, and asked us to dig deeper–they
also revealed that they were setting aside (toward future disasters) at least half of donated
dollars. (Whether this was true I don't know–but the fact that it made it into public discussion
was not a skillful marketing ploy.) [Strike two!]
I then heard horror stories from local volunteers here on the (unaffected) part of the gulf
coast who dropped what they were doing to offer help and support to Hurricane Katrina victims
in myriad ways A veterinary friend–after describing the absolute chaos he encountered in the area–reported
that late one night, after a gut-wrenching and exhausting day, he walked into the Red Cross tent
for a cup of coffee. Not without paying for it–$1/cup–he was told. [Strike three!]
There are local charities still deserving of my small discretionary donations–so I won't truly
be throwing money into the gutter; but if my only choice was give to the RC or throw it away:
I'd throw it away.
Thanks for the article. I think further investigation would show that others charities–particularly
those like the American Diabetes Association (with which I'm familiar)– have adopted that same
managerialism model.
"The Marketers' Best Laid Plans Led to Declining Contributions"
This year, for the first time ever in my adult life, I did not sent a contribution to the Red
Cross. All the reasons listed in this excellent post went into my decision not to contribute.
I still feel bad about it, but I can't 'enable' continued bad management of the Red Cross.
This article proves yet again that by their words shall they be known. In this day and age
when almost everything from politics to education is being subsumed by business lingo, it's interesting
to see by the Red Cross example where it will all end up.
The Red Cross which depends on volunteers and donors gets master marketers and business expertise
and becomes "branded" as a business; helping others in distress becomes being efficient; preventing
and alleviating suffering becomes creating a profitable place where executives get mighty big
bonuses; the bottom-up organization becomes a top-down monolith; taking care of emergencies becomes
profit-making exercises; all in all, this Red Cross refurbishment reflects the society that we
have become–the 1% versus the 99%. When organizations are defined in financial and business terms,
there is no room for alleviating or preventing human suffering.
Crapification of "charities" abounds. I've lived in So CA at least part time since the '90s.
San Diegans don't have a lot of love for the San Diego Red Cross:
I stopped giving to the Red Cross a long time ago bc of mis-mangement of money and making sure
that the Big Wigs at the top get THEIRS first and screw everyone else. It's unfortunate, as this
organization probably does some good stuff, but it's priorities are not good.
I donate a certain amount every year, and I look very closely and carefully at the organizations
to whom I give my hard-earned dollars. Advise everyone else to do the same. There's a lot of "charities"
out there that exist primarily to enrich those at the top, and any good that's done for others
– whom the "charity" alleges to serve or support – is strictly incidental.
This is a great dissection of the decline at this august organization. Partners In Health is
an example of a charity worth supporting.
BTW, I found the Wikipedia bio of the Bonnie McElveen-Hunter very creepy. Looking at the website
of her company, Pace Communications, it took me awhile to figure out what they really do, which
seems to be something on par with publishing airline magazines. It really isn't clear why this
woman should have attained her power and status – e.g. trustee of the RAND Corporation? Really?
Seems emblematic of the rot at the top of the US elite.
Well publicized failures in the Hurricane Sandy response and the failure of their attempts
at increased revenues through price raises, "branding" and marketing aside, the ARC WAS in increasingly
dire straits when she took over. By many accounts centralizing things and closing many local branches
WAS a necessity, because cutting overhead was desperately needed in an organization that was loosing
large amounts of money every year. This is often that case with these "superstar managers," If
everything is working well the organization doesn't bring them on. But when an organization is
already floundering, the Boards look for a "superstar" that can "turn it around." It's a perfect
situation for these guys: (they're mostly men) If the company goes bankrupt, they say that it
was in worse shape than they thought and nobody could have saved it and it it DOES turn around
(often for completely exogenous reasons) they can take the credit.
The Washington Metropolitan Area Transit Authority, which runs the subways and buses in Washington
DC recently went through a protracted process of hiring a new director because there was a real
deep divide on the board between those who wanted a transit executive and those who wanted a "turnaround
specialist." They ended up with the latter and there's already talk about a "charm offensive"
to try and woo more riders
The Red Cross was bleeding red ink, partly because of less demand for blood products in surgery
(they sell the blood that gets donated) and partly because their labeling system was out of date,
which reduced demand compared to their competitors' products. This is something the ProPublica
article makes clear that isn't really referenced in the HCR post.
So the Red Cross brought in a generic marketer/manager who did what they do best–chopping off
employee heads while destroying what made the organization viable. The Red Cross isn't the kind
of non-profit that can survive the loss of goodwill in a community. And they still haven't addressed
the labeling problem.
Labeling these people generic managers or whatever is far too kind. The goal and driving force
of these people was to extract more money from those most in need of charity and assistance. These
people are shitty human beings, so call them what they are. The changes that they have wrought
within the Red Cross organization has deprived countless suffering peoples of the good will and
needed services that would have been provided by this organization BUT FOR THESE ASSHOLES.
Charities are not businesses. Charities, by definition, plan to GIVE things or services to
others, not sell them, not to make profit. Putting profit loving Randians, possessed with the
goal of using corporate profit taking methods, in charge of a charity is like putting "arsonists
for profit" in charge of the fire department. The people that suffer are those that NEED charity,
be it in the form of shelter, services, goods, or information, and we, as a society, are diminished.
Sacrificing the Red Cross on the alter of conservative economic ideology is tragic.
I have to bring up the post 911 witchhunt by fox news on the red cross too.
That seemed to the the turning point, or near it.
"you mean not all of our donations are going to NYC?"
With Bill Oreilly yelling and throwing spittle at the TV cameras, a change had to be made.
I'm sure more than a few of his budddies, who are very Professional Managers, were first in the
door.
It's just another part of the planned destruction of any sort of locally based ability or lobby.
years ago i worked for a marketing firm that did a significant amount of work for the organizer
of the avon 3 day breast cancer walks and the amount of money wasted on frivolous items and activities
made me sick. really opened my eyes about charities and how greed and fraud can be rampant in
the least expected places. don't think i can get any more cynical abt the world at this point
:(
There is not enough money in the world to pay McGovern a bonus that would make up for what
she has done to the RC. Perhaps a 1000 year stint in a max security prison would be a start though.
In the source article mentioned above (
https://www.propublica.org/article/the-corporate-takeover-of-the-red-cross ) we see century+
old organization established with a charter for public service disaster relief, being marketed
as a revenue stream with a potential for mass returns based upon the "brand" quality of saving
peoples lives in catastrophic events. The article is part and parcel with how private interests
have been dominated by profit driven incentives even in the most sacred trust areas of the public
domain of non-profit charities essentially built on the back of American volunteers. How AT&T
crony capital took over this organization and adopted it for their own monetary interest is not
just a story of lost vision but of totally perverted revision gone off track from its founding
purpose.
But make no mistake about it, this is only the tip of the iceberg where private asset stealth
is involved in milking and bilking the public trust. the medical Institutions generally across
the country have been insidiously going the same perverted path dependent way of revenue streaming
as health and wealth as the definition of healthy relief.
"... "Isn't it great that we have someone that really has had that business expertise in developing and working with a brand and recognizing the power of it ?" ..."
"... Local officials were furious. They say the Red Cross showed up lacking basic supplies such as Band-Aids, portable toilets, and tarps to protect against the rain. Instead the group's volunteers handed out Red Cross-branded bags of items that weren't urgently needed like lip balm and tissues. ..."
"... ' McGovern has fired almost all of the trained and experienced volunteers and staff, ' Maxwell told ProPublica, replacing them 'with people who have absolutely no knowledge of what the Red Cross is or does in a disaster. Not only is she setting these people up to fail but she is compromising the service delivery that is so important to the clients.' ..."
"... The Red Cross Board of Governors , largely composed of well paid business managers (e.g., a former Vice Chairman of Goldman Sachs, a senior vice president of Eli Lilly, the chief financial officer of Home Depot, the executive vice president of Target), decided that a generic manager using a managerialist approach could cure the organization's perceived ills. The new CEO, who lacked any obvious experience or training relevant to the Red Cross mission, hired her former cronies at AT&T and Fidelity as managers. The new team cut costs, laid off employees, centralized management, and focused on marketing. The apparent results were fewer, less experienced, upset staff; fewer volunteers; declining interest in public health training products; and worsening disaster response. ..."
The American Red Cross is a storied non-profit organization. It provides disaster relief, provides
a major part of the US blood supply, and has important public health teaching functions, such as
teaching cardio-pulmonary resuscitation (look
here ). Nonetheless, its operations
have become increasingly controversial. ProPublica has been
investigating them for years
. The latest ProPublica report, entitled "The Corporate Takeover of the Red Cross," showed how
this renowned organization has suffered under generic management/
managerialism
, providing another case study showing how bad generic management and mangerialism are for health
care and public health.
We have frequently posted about what we have called
generic management
, the
manager's
coup d'etat , and
mission-hostile management. Managerialism wraps these concepts up into a single package. The
idea is that all organizations, including health care organizations, ought to be run people with
generic management training and background, not necessarily by people with specific backgrounds or
training in the organizations' areas of operation. Thus, for example, hospitals ought to be run by
MBAs, not doctors, nurses, or public health experts. Furthermore, all organizations ought to be run
according to the same basic principles of business management. These principles in turn ought to
be based on current
neoliberal dogma
, with the prime directive that short-term revenue is the primary goal (sometimes in the for-profit
sphere called the shareholder value principle, look
here .)
The ProPublica article showed how the leadership of the American Red Cross was given over to generic
managers; how they ran the organization based on generic business management principles; and how
the results were bad for the organization's mission. I will address each point with quotes from the
article, and add the commentary that was lacking in a straight investigative journalistic report.
The New CEO is a Generic Manager who Specialized in Marketing
Gail McGovern became Red Cross CEO in 2008. Her academic background was in the "quantitative sciences."
Her first job was as a computer programmer. Then,
McGovern climbed steadily through the ranks at AT&T. By the mid-1990s, she was head of the company's
consumer markets division .
Next,
McGovern left AT&T in 1998, then spent four years at Fidelity Investments, where she was promoted
to be the head of the retail mutual fund and brokerage business. Then came six years as a marketing
professor at Harvard Business School....
On the other hand, she apparently had no specific experience, training or expertise relating
to the mission of the Red Cross, and specifically no experience, training or expertise in public
health, health care, blood banking, or disaster relief.
She Believes in the Primacy of Marketing
Her academic writings spell out her theory of corporate leadership. 'In many organizations, marketing
exists far from the executive suite and boardroom,' she and her coauthors wrote in the Harvard
Business Review. Companies that make this mistake are doomed to 'low growth and declining margins.'
One could argue that perhaps in the long run, a good product that sells itself might be better for
a manufacturing firm than a temporarily persuasive marketing campaign. Even so,
the mission of the Red Cross
is not first to grow and make more money, or even to sell products, but instead it is
The American Red Cross prevents and alleviates human suffering in the face of emergencies
by mobilizing the power of volunteers and the generosity of donors.
She was Hired by the Red Cross to Promote Generic Management with Emphasis on Marketing.
Ms McGovern was hired at a time when the dogma that business managers ought to run everything
was becoming very prominent.
McGovern, selected after a global search by a headhunting firm, was seen as a candidate who
would bring private-sector methods to the nonprofit.
"Isn't it great that we have someone that really has had that business expertise in developing
and working with a brand and recognizing the power of it ?" [Red Cross Board Chairwoman Bonnie]
McElveen-Hunter told the Washington Post at the time.
Note that the Chairwoman of the Board of Governors herself was
a wealthy Republican donor appointed by President George W. Bush in 2004
According to Wikipedia
, she is a businesswoman whose undergraduate degree was in business, who worked for Bank of America
and then founded Pace Communications, and who also has no discernable experience or expertise in
health care, public health, or disaster relief.
The ProPublica article did not suggest that Ms McElveen-Hunter or anyone else really thought through
how a generica manager practicing managerialism would actually benefit the mission of the Red Cross.
The CEO Recruited Other Generic Managers
Furthermore,
As part of her effort to run the Red Cross more like a business, McGovern recruited more than
10 former AT&T executives to top positions. The move stirred resentment inside the organization,
with some longtime Red Cross hands referring to the charity as the 'AT&T retirement program.'
Again, one would expert a generic manager to feel most comfortable amongst others of her ilk. Again,
any consideration of whether running the Red Cross "more like a business" would improve its success
as a charity was not evident. The New Generic Managers Relied on Generic Management Dogma
They Established Centralized Control
The work of the Red Cross was traditionally done by local chapters. The new generic managers sought
to decrease their independence from "corporate." So,
Each of the Red Cross' more than 700 chapters had its own bank account, tracked its own volunteers,
and ran its own computer system. McGovern hoped to realize considerable savings by consolidating
these back-office functions, creating what she dubbed 'One Red Cross.'
The notions that different chapters might face different challenges, and hence that flexible local
control might do better addressing these challenges than would centralized top-down command were
not apparently considered.
They Cut Costs, Particularly Through Cutting Employee Benefits and Laying Them Off
and hence tried to enhance short-term revenue:
She also got to work cutting costs : there was a round of layoffs ; she killed the charity's generous
pension program and to employees' retirement accounts.
Also,
When McGovern was hired as CEO, there were over 700 Red Cross chapters across the country. Today,
there around 250, though some former chapter offices stayed open even as they were folded into other
chapters. The Red Cross declined to say how many offices it closed.
Over the course of McGovern's tenure, the number of paid employees fell from around 36,000 to
around 23,000 and the Red Cross today spends several hundred million dollars less a year than it
did in 2008. (Most of the staff cuts were from local chapters, not the blood business, though the
Red Cross declined to provide a breakdown.)
They Focused on Marketing and Public Relations
Early on,
consolidated, powerful, breathtaking marketing .'
a brand to die for ,' she often said.
In addition,
The Red Cross' chief of fundraising, a former colleague of McGovern's from Fidelity, told the
assembled officials that the organization should attract far more than the $520 million in donations
it was bringing in annually. ' Strength of brand ,' his PowerPoint said, 'justify results in
range.'
Also, CEO McGovern chose Jack McMaster to run the public health training operation, praising McMaster
to Red Cross staff as a master marketer and a trusted former colleague [at AT&T].
This suggests that McGovern placed far more priority on hiring "master marketers" than finding trustworthy
leaders. Of course, a CEO who is mainly a professional marketer may see marketing as central to whatever
organization she is running. The notion that the Red Cross had such a wonderful brand because it
used to do wonderful things did not apparently occur to the new generic marketers. Furthermore, the
notion that even "master marketing" may not hide the undermining of the organization's mission also
did not occur.
They Suppressed Opinions They Did Not Want to Here
As discontent among staff rose (see below), leading to anguish expressed on social media,
critical posts later disappeared from the Facebook page. Moderator Ryan Kaltenbaugh reminded participants
that the group was intended to be ' a POSITIVE forum sharing ideas, stories, pictures, links,
videos and more across our great country.'
' [P]lease (please) refrain from posting your negative personal views
To a leadership obsessed with marketing, appearance may have seemed to be everything. Yet again,
suppressing the bad news does not make what generated it disappear.
They Paid Themselves Very Well
We have often discussed
how executive compensation in health care now seems to rise beyond any level that could be justified
by the executives' actions and performance. A central problem with managerialism seems to be
that now top managers can virtually set their own pay. Thus, they have
become value
extractors, more focused on their own enrichment than their organizations' ultimate success.
The ProPublica article did not explicitly discuss executive compensation except after the failure
of the expansion plans by the "master marketer" McMaster,
Amid layoffs in the division last year, bonuses given to McMaster and his team raised eyebrows
within the Red Cross, a former headquarters official said.
In a statement, the Red Cross said the bonuses were appropriate because the division hit 'strategic
milestones' including establishing 'a national tele-service platform and national sales and service
delivery models.'
Regardless, the division failed to reach its real goal, expansion of its business.
Furthermore, there is evidence that during the reign of McGovern, the top managers as a group have
been very well paid, especially given that they were running a charity whose good works are largely
supported by contribuations and the taxpayers. We
noted in a 2011 post that
In 2009, then CEO Gail McGovern received over a million in total compensation, $1,032,022 to be
exact. Its President for Biomedical Services got $850,489. Its Executive VP for Biomedical Services
got $596,309. Twelve other executives got more than $250,000. Of those, ten got more than $350,000.
Since then, while Ms McGovern's compensation has actually declined, the number of very well paid
managers has actually grown. According to the organization's
latest
available IRS Form 990 filing, for 2013, Ms McGovern had total compensation of over $597,000,
and 15 managers had total compensation over $250,000, of these, 10 were over $400,000.
So despite all the problems afflicting the Red Cross (see below, and the larger ProPublica series),
the top managers still managed to pay themselves very well.
The Results were Bad
The Marketers' Best Laid Plans Led to Declining Contributions
McMaster laid out how the CPR unit would attract more customers while at the same time
hiking prices for classes and training materials in CPR, swimming, and babysitting. He believed
the Red Cross brand justified higher prices than were being charged around the country.
'We thought if we raised prices, American Heart [Association] would probably raise prices,
and life would be good,' McGovern said at a 2013 employee town hall meeting, referring to the
Red Cross' competitor in the CPR class business. 'Didn't happen.'
Also,
'A halfway competent market analysis would have told you that the bulk of our business was in
selling to small businesses who viewed us as a business expense,' recalled one former chapter
executive director. 'When the massive price increases arrived, it was too much and customers bailed.'
This illustrates that the generic managers did not even achieve their business goal, increasing sales
and increasing revenue. What did they care, though, if the bonuses still rolled in?
Centralized Control, Benefit Cuts, Layoffs, and the Marketing Focus Wounded Employee Morale and
Discouraged Volunteers. Those who push generic management practices often seem blind to their adverse
effects. So, many of those who taught classes - including volunteers who did the work for free -
quit after being turned off by headquarters'
poor communication .
Also,
But much like the organization's paid staff, many of its volunteers appear deeply disillusioned
. An internal survey obtained by ProPublica found volunteers around the country had a satisfaction
rate of 32 percent this year - down 20 points from last year.
Furthermore, driving the alienation, longtime employees and volunteers say, is a gulf that has opened
up between McGovern's executive suite and the rank and file who have spent decades in the mission-focused
nonprofit world.
She has surrounded herself with a tight-knit group of former telecom colleagues, they say. 'They're
all people from the period when AT&T imploded,' said one former senior official. ' The priorities
seem to be a reflection of what that team is comfortable with: sales and marketing .'
An internal assessment previously
reported
by ProPublica and NPR said national headquarters' focus on image slowed the delivery of relief
aid during Hurricane Isaac and Superstorm Sandy. Officials engaged in '
diverting assets for public relation purposes ,' according to the assessment.
Layoffs and Cutback Reduced Capacity to Respond to Disasters
One example was the response in West Virginia
In West Virginia, where several chapters have been shuttered, emergency management officials said
the group's response to recent disasters has been anemic . After a recent water shortage caused
by a chemical leak, the charity declined to provide any help to residents, the
Register-Herald of Beckley reported . Local officials described that as business as usual
for the charity. When a tornado hit in the southern part of the state, the Red Cross' inadequate
response left scores of victims without enough food , according to the newspaper.
Another was the response in northern California,
In Northern California last year, the Red Cross shuttered the
Napa County chapter and laid off disaster relief staff, according to an
presentation. Then, in September, a drought-fueled fire swept through the area, consuming more
than 75,000 acres and 1,200 homes.
Because of the issues with the Red Cross' shelter , nearly all of 1,000 displaced people at
the Napa County Fairgrounds - including the elderly, new mothers and children, and anyone with
a pet - ended up sleeping outside in tents, cars or RVs . The problems were first
reported by the Press Democrat newspaper.
Also,
Local officials were furious. They say the Red Cross showed up lacking basic supplies such
as Band-Aids, portable toilets, and tarps to protect against the rain. Instead the group's volunteers
handed out Red Cross-branded bags of items that weren't urgently needed like lip balm and tissues.
The Red Cross responders were inexperienced and, according to residents, not enough of them
spoke Spanish, the language of many of the fire victims.
In general, as told by former Red Cross volunteer Becky Maxwell, a self-described "die-hard Red
Cross person for 25 years," who quit after becoming increasingly frustrated,
' McGovern has fired almost all of the trained and experienced volunteers and staff, ' Maxwell
told ProPublica, replacing them 'with people who have absolutely no knowledge of what the Red
Cross is or does in a disaster. Not only is she setting these people up to fail but she is compromising
the service delivery that is so important to the clients.'
Summary
The
Red Cross Board of Governors , largely composed of well paid business managers (e.g., a former
Vice Chairman of Goldman Sachs, a senior vice president of Eli Lilly, the chief financial officer
of Home Depot, the executive vice president of Target), decided that a generic manager using a managerialist
approach could cure the organization's perceived ills. The new CEO, who lacked any obvious experience
or training relevant to the Red Cross mission, hired her former cronies at AT&T and Fidelity as managers.
The new team cut costs, laid off employees, centralized management, and focused on marketing. The
apparent results were fewer, less experienced, upset staff; fewer volunteers; declining interest
in public health training products; and worsening disaster response.
Thus, once again,
generic managers
and managerialism
have laid low a formerly proud charity. Unfortunately, this one also happens to have vital public
health and disaster relief roles that have now been severely compromised.
Based on previous experience, it should come as no surprise that generic managers who do not know
much or care much about public health and health care, and who rely on a one-size fits all management
dogma uninformed by the public health or health care context or public health or health care values
will end up undermining patients' and the public's health.
The real surprise is that the generic managers have up to now had no problem maintaining the
managers'
coup d'etat , that is, their iron grip on the leadership of most public health and health care
organizations.
To prevent our ongoing downward spiral, we need to reverse the managers' coup d'etat, and return
leadership to those who understand health and health care, support their values, and are willing
to be accountable for doing so.
Great post - clarifies why I am seeing the increasingly generic promotion/fund-raising communication
"relationships" from many non-profit and advocacy groups lately. -Paul Rowan
I'm afraid Shkreli is not really a typical generic manager, and certainly not typical of the
CEO of a big pharma (or other health care) corporation.
Shkreli is a small time player.
Also, he is basically a hedge fund guy, and I don't believe there is any love lost between
big corporate CEOs and hedgies. Finally, Shkreli was willing to say out loud what most big corporate
managers would not: it's all about the money.
"'No one wants to say it, no one's proud of it, but this is a capitalist society, a capitalist
system and capitalist rules,' he said in an interview at the Forbes Healthcare Summit this month.
'And my investors expect me to maximize profits, not to minimize them or go half or go 70 percent
but to go to 100 percent of the profit curve.'"
So I wouldn't be surprised if the big-time managerialists are cheering now that he was arrested.
They can use his arrest to pretend that regulation and law enforcement are tough, and that the
big-time managers don't have impunity. Furthermore, they can claim that he was just the rare bad
apple.
However, a reader of this blog can see the problems are systemic. See in particular:
Researchers at the University of Washington have published a
study that finds a 9.4% decline in hours of work for low wage
workers, earning under $19 an hour. Trouble is the study
doesn't appear to take account of wage bracket creep so the
hours of workers making just under $19 an hour a year ago
just vanish when they get a raise to above $19 an hour.
The EPI, Peter Dorman and Sandwichman have all weighed in with
criticisms. But in all likelihood this seriously flawed study
will become an urban legend "proving" that a higher minimum
wage is bad for poor people.
Minimum Wage Increases, Wages, and Low-Wage Employment:
Evidence from Seattle
By Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van
Inwegen, Jacob Vigdor, and Hilary Wething
This paper evaluates the wage, employment, and hours
effects of the first and second phase-in of the Seattle
Minimum Wage Ordinance, which raised the minimum wage from
$9.47 to $11 per hour in 2015 and to $13 per hour in 2016.
Using a variety of methods to analyze employment in all
sectors paying below a specified real hourly rate, we
conclude that the second wage increase to $13 reduced hours
worked in low-wage jobs by around 9 percent, while hourly
wages in such jobs increased by around 3 percent.
Consequently, total payroll fell for such jobs, implying that
the minimum wage ordinance lowered low-wage employees'
earnings by an average of $125 per month in 2016. Evidence
attributes more modest effects to the first wage increase. We
estimate an effect of zero when analyzing employment in the
restaurant industry at all wage levels, comparable to many
prior studies.
Research like that ought not be published, timeline used is
too short to be reliable or valid and in all probability they
used data skewed from limited sources.
Seattle's Minimum Wage Experience 2015-16
By Michael Reich, Sylvia Allegretto, and Anna Godoey
Abstract
This brief on Seattle's minimum wage experience represents
the first in a series that Center on Wage and Employment
Dynamics will be issuing on the effects of the current wave
of minimum wage policies-those that range from $12 to $15.
Upcoming CWED reports will present similar studies of
Chicago, Oakland, San Francisco, San Jose and New York City,
among others. The timing of these reports will depend in part
upon when quality data become available. We focus here on
Seattle because it was one of the early movers.
Seattle implemented the first phase of its minimum wage
law on April 1, 2015, raising minimum wages from the
statewide $9.47 to $10 or $11, depending upon business size,
presence of tipped workers and employer provision of health
insurance. The second phase began on January 1, 2016, further
raising the minimum to four different levels, ranging from
$10.50 to $13, again depending upon employer size, presence
of tipped workers and provision of health insurance. The tip
credit provision was introduced into a previously no tip
credit environment. Any assessment of the impact of Seattle's
minimum wage policy is complicated by this complex array of
minimum wage rates. This complexity continues in 2017, when
the range of the four Seattle minimum wages widened, from $11
to $15, and the state minimum wage increased to $11.
We analyze county and city-level data for 2009 to 2016 on
all employees counted in the Quarterly Census of Employment
and Wages and use the "synthetic control" method to
rigorously identify the causal effects of Seattle's minimum
wage policy upon wages and employment. Our study focuses on
the Seattle food services industry. This industry is an
intense user of minimum wage workers; if wage and employment
effects occur, they should be detectable in this industry. We
use county level data from other areas in Washington State
and the rest of the U.S. to construct a synthetic control
group that matches Seattle for a nearly six year period
before the minimum wage policy was implemented. Our methods
ensure that our synthetic control group meets accepted
statistical standards, including not being contaminated by
wage spillovers from Seattle. We scale our outcome measures
so that they apply to all sectors, not just food services.
Our results show that wages in food services did
increase-indicating the policy achieved its goal-and our
estimates of the wage increases are in line with the lion's
share of results in previous credible minimum wage studies.
Wages increased much less among full-service restaurants,
indicating that employers made use of the tip credit
component of the law. Employment in food service, however,
was not affected, even among the limited-service restaurants,
many of them franchisees, for whom the policy was most
binding. These findings extend our knowledge of minimum wage
effects to policies as high as $13.
How a Rising Minimum Wage Affects Jobs in Seattle
By NOAM SCHEIBER
Three years ago, Seattle became one of the first
jurisdictions in the nation to embrace a $15-an-hour minimum
wage, to be phased in over several years.
Over the past week, two studies have purported to
demonstrate the effects of the first stages of that increase
- but with starkly diverging results.
The first study, by a team of researchers at the
University of California, Berkeley, supports the conclusion
of numerous studies before it, that increasing the minimum
wage up to a level that is about half or less of an area's
typical wage leads to at most a small reduction in
employment.
That roughly describes Seattle, which first increased its
minimum wage to $11 an hour from $9.47 for large businesses
in April 2015, then to $13 an hour for many of those
businesses in January 2016. (Small businesses, and large ones
that provide health insurance for workers, had lower
increases.)
The Berkeley study focused on the restaurant industry
because of the high proportion of restaurant workers who are
paid the minimum wage. It found that for every 10 percent
that the minimum wage rose, wages in the industry rose nearly
1 percent, and that there was no discernible effect on
employment.
By contrast, the second study, which a group of
researchers at the University of Washington released on
Monday, suggests that the minimum wage has had a far more
negative effect on employment than even skeptics of
minimum-wage increases typically find. (Neither study has
been formally peer-reviewed.)
The University of Washington authors held one significant
advantage over other economists studying the issue: detailed
data on hours and earnings for workers affected by the
increase.
This data allowed the researchers to measure the effects
of the minimum wage on workers in all industries rather than
relying on restaurants as a stand-in, a common technique. It
also allowed them to measure a change in hours worked, a
potentially more complete indication of the effect of a
minimum-wage increase than the employee head count that many
studies use....
Real Labor Productivity increases can be the result of
increased work intensity
Shrewd redesign of tasks
Or
Use of additional or better technical systems
[Taxes may go up but lower costs than private insurance could give many people a net savings.]
............
We will describe the single payer system in Canada, because Canada is physically close and close in values to those of
U.S. citizens.
Canada provides free medical services through private entities. The government sets federal standards to assure quality
of care. The individual's health remains confidential between a person and his or her physician. In each Canadian province,
each doctor submits the insurance claim against the provincial insurer. The person who gets healthcare does not get involved
in billing and reclaim.
The Canadian government keeps advertising at a minimum. Costs are paid through funding from income taxes. There are
no deductibles on basic health care and co-pays are kept extremely low. Provinces issue a health card to each individual
who enrolls and everyone receives the same level of care. There is no variety of plans because all essential basic care
is covered, including maternity and infertility problems. Dental and vision care may or may not be covered depending
on the Province. Some provinces provide private supplemental plans for patients who desire private rooms if hospitalized.
Cosmetic surgery and some elective surgery are generally not covered. These can be paid out-of-pocket or through private
insurers. One's health coverage is not affected by loss or change of jobs, as long as premiums are up to date. There
are no lifetime limits or exclusions for pre-existing conditions.
Canadians chose their family physician (called a general practitioner or GP). If the person wants to see a specialist,
the GP will make a referral. The median wait time to see a specialist physician is a month. The median wait time for
diagnostic services such as MRI and CAT scans is two weeks. The median wait time for surgery is four weeks.
Pharmaceutical medications are covered by public funds for the elderly or indigent, or through employment-based private
insurance. The Canadian government negotiates drug prices with suppliers to control costs.
Physician incomes in Canada rose initially after the single payer system was implemented. A reduction in physician
salaries followed, many fearing this would be a long-term result of government-run healthcare. However, by the beginning
of the 21st century, medical professionals were again among Canada's top earners.
The main thing to notice is that Canada's healthcare cost to its GDP is 11 percent whereas the U.S. cost is 17 percent
of the GDP.
"... It is not becoming involuntarily unemployed that is devastating. It is the loss of income security that sucks. I was laid off 6/16/2015, but I was 66 years and 2 months old having earned 37 years of service credit in our defined benefits pension plan and then granted an additional 6 years pension service credit by virtue of taking my severance benefits in the form of enhanced retirement. ..."
"... I had wanted to work six more years so I could take survivor benefit and still have a sufficient retirement income, but the severance package allowed me that freedom instead. ..."
"... There is no such thing as free trade. At best, there are treaties which successively approximate free trade. The problem comes in with who negotiates these agreements, the agreements largely addressing the concerns of those selected to do so, while ignoring the concerns of those not selected to do so. Which is the entire problem. Capital is selected; labor is not. ..."
"... So who ends up liking these things? Capital. Who ends up not liking them? Labor and environment. Duh? Is this really that hard to figure out? ..."
"... "Free trade" (whatever that is) is not necessarily fair trade. Free trade is a slogan special interest use to protect their capture of trade profits. Fair trade would be the attempt to manage trade such that the maximum number of winners is produced. ..."
David Glasner (I cut quite a bit -- the original is more than twice as long):
What's so Great about Free Trade? : Free trade is about as close to a sacred tenet as can
be found in classical and neoclassical economic theory. ... Despite the love and devotion that
the doctrine of free trade inspires in economists, the doctrine ... has never been popular among
the masses. ...
The key to understanding that disconnect is, I suggest, the way in which economists have been
trained to think about individual and social welfare, which, it seems to me, is totally different
from how most people think about their well-being. In the standard utility-maximization framework,
individual well-being is a monotonically increasing function of individual consumption, leisure
being one of the "goods" being consumed, so that reductions in hours worked is, when consumption
of everything else is held constant, welfare-increasing. Even at a superficial level, this seems
totally wrong. ...
What people do is a far more important determinant of their overall estimation of how well-off
they are than what they consume. When you meet someone, you are likely, if you are at all interested
in finding out about the person, to ask him or her about what he or she does, not about what he
or she consumes. Most of the waking hours of an adult person are spent in work-related activities.
... It seems to me that what matters to most people is the nature of their relationships with
their family and friends and the people they work with, and whether they get satisfaction from
their jobs or from a sense that they are accomplishing or are on their way to accomplish some
important life goals. ...
Moreover, insofar as people depend on being employed in order to finance their routine consumption
purchases..., the unplanned loss of their current job would be a personal disaster, which means
that being employed is the dominant – the overwhelming – determinant of their well-being. Ordinary
people seem to understand how closely their well-being is tied to the stability of their employment,
which is why people are so viscerally opposed to policies that, they fear, could increase the
likelihood of losing their jobs.
To think that an increased chance of losing one's job in exchange for a slight gain in purchasing
power owing to the availability of low-cost imports is an acceptable trade-off for most workers
does not seem at all realistic. Questioning the acceptability of this trade-off doesn't mean that
... in principle, the gains from free trade are[n't] large enough to provide monetary compensation
to workers who lose their jobs, but I do question whether such compensation is possible in practice
or that the compensation would be adequate for the loss of psychic well-being associated with
losing one's job, even if money income is maintained. ...
The psychic effects of losing a job (an increase in leisure!) are ignored by the standard calculations
of welfare effects in which well-being is identified with, and measured by, consumption. And these
losses are compounded and amplified when they are concentrated in specific communities and regions...
The goal of this post is not to make an argument for protectionist policies, let alone for
any of the candidates arguing for protectionist policies. The aim is to show how inadequate the
standard arguments for free trade are in responding to the concerns of the people who feel that
they have been hurt by free-trade policies or feel that the jobs that they have now are vulnerable
to continued free trade and ever-increasing globalization. I don't say that responses can't be
made, just that they haven't been made.
The larger philosophical or methodological point is that ... economic theory can tell us that
an excise tax on sugar tends to cause an increase in the price, and a reduction in output, of
sugar. But the idea that we can reliably make welfare comparisons between alternative states of
the world when welfare is assumed to be a function of consumption, and that nothing else matters,
is simply preposterous. And it's about time that economists enlarged their notions of what constitutes
well-being if they want to make useful recommendations about the welfare implications of public
policy, especially trade policy.
The happiness literature on the impact of involuntary unemployment on happiness is quite large,
with people like David Blanchflower having played important roles. An offhand summary is that
becoming involuntarily unemployed is indeed one of the events that is most devastating to the
happiness of most people, with only a few events worse, including having one's spouse die or being
thrown in jail.
It is not becoming involuntarily unemployed that is devastating. It is the loss of income
security that sucks. I was laid off 6/16/2015, but I was 66 years and 2 months old having earned
37 years of service credit in our defined benefits pension plan and then granted an additional
6 years pension service credit by virtue of taking my severance benefits in the form of enhanced
retirement.
I had wanted to work six more years so I could take survivor benefit and still have a sufficient
retirement income, but the severance package allowed me that freedom instead.
With firms no longer offering defined benefits pension plans then we need to expand social
security into a full income pension plan. We need to increase unemployment benefits as well. Once
we have paid for that then the plutocrats will find that they are better off paying US workers
to make stuff since all their global price arbitrage profits have been clawed back.
I think this is an important factor. It is certainly the case that a certain level of consumption
increases happiness, but beyond a fairly moderate level, I do not think it actually adds much.
Another important factor is having something meaningful to do with your time. For most people,
that is work. Boredom is a serious problem among the retired.
We have more then just skill crushing, job experience crushing. Impacts of domestic production
erasing imports. We have the implied competition on wages. Of import threats
Economists largely ignore distribution of benefits, focusing on efficiency and the 'total good.'
How that total good is divvied up is largely irrelevant to them, unless the populace gets testy.
In fact, most people would be better off if the economy were slightly smaller but distributed
much more evenly. Economists just can't seem to wrap their heads around that concept.
[Not sure which this that you are agreeing with. So, let's say that income security means a
roof over are heads and food to eat for the whole family. Then there is this boredom thingy. With
a little acreage and a sound mind and body then staying occupied, productive (in some manner of
speaking - a rose is a rose is a rose), and happy is a piece of cake. A tenement room with nothing
but a TV would be death sentence for me. If not for money then I would never have needed to work
for someone else. I see good honest work to do everywhere I look.]
He came close but he missed the major point. SECURITY.
What do most people see as their life goal? To raise a family. How long does it take? Decades.
Flexibility isn't a boon - it is a disaster for most people.
If you only look at a static picture of the world (which is the traditional view of economists)
how can you possibility see this?
"He came close but he missed the major point. SECURITY..."
[Too bad. As I was reading this I was liking it so much that it had already elevated my former
opinion of David Glasner, technically elegant, all the way up to topically relevant and possibly
even socially astute, but from what you say then I must put a hold on that socially astute. I
guess I had better read the entire article before I begin to comment further.]
You are correct. Glasner missed the point on security, so he also missed the point that if
income is maintained then that would cover the lion's share of well being. Glasner is correct
that money is not everything, just as consumption is not everything, but that really does come
down to just how much money that we are talking about. I worked a long time contributing into
a traditional pension plan. I took great pride in my work, but I have not missed my job or felt
inadequate because of the lack of that purpose for a minute since I was laid off on 6/16/2015.
That's because between my social security and pension incomes then I can still make my mortgage
payments and all my other bills and due to my reduced expenses on payroll taxes, clothes, and
gas have more money left over for landscaping and other home projects than I did when I was working.
If I was eating cat food or living under a bridge then I would be feeling much worse about having
been laid off.
There is no such thing as free trade. At best, there are treaties which successively approximate
free trade. The problem comes in with who negotiates these agreements, the agreements largely
addressing the concerns of those selected to do so, while ignoring the concerns of those not selected
to do so. Which is the entire problem. Capital is selected; labor is not. (Neither much is
environmental.)
So who ends up liking these things? Capital. Who ends up not liking them? Labor and environment.
Duh? Is this really that hard to figure out?
[Sure there is. Anne complains about this as well. But a large part of maintaining plutocracy
within the framework of a democratically electoral republic is the copious use of misleading euphemisms.
We all know what they really mean, or at least all of us here reading and commenting at EV know
what they mean. My guess is that unemployed workers in the rustbelt know what they mean as well.
Republicans talk about being free all of the time, but what they really are is just cheap.
There is nothing free in life. Most people know this intuitively. There are choices and consequences.
One consequence of the overuse of "free trade" is the emergence of fair trade. As far as I can
tell the rebranding will hardly put a dent in the arbitrage profits. ]
The United States benefits and historically has benefitted by being one large trading block.
Increases in wealth are linked to improvements in transportation even today.
One stumbling block in international trade is the restriction on movement of labor. This is
a huge problem for the EU. Another problem is distribution of the profits from trade. How much
should be captured by private interests and how much should go to the public good. Should some
profits from trade be returned from one country to another? This is often done through severance
taxes or export fees.
"Free trade" (whatever that is) is not necessarily fair trade. Free trade is a slogan special
interest use to protect their capture of trade profits. Fair trade would be the attempt to manage
trade such that the maximum number of winners is produced.
It seems to me that a couple of obvious points are being missed.
1) The "gains from free trade" argument is simply that under conditions of trade, more "stuff"
will be produced than under conditions of autarky, so theoretically there will be more available
for everyone. That says nothing about how those gains are distributed, i.e., there will be individual
winners and losers. In practice, those gains never seem to actually get redistributed so it's
impossible to say everyone is made better off.
2) What is the root cause of comparative advantage? The textbooks tell us - differences in
initial factor endowments, technology, and tastes. What does that mean in a world where a company
in a developed company can pick up its capital (and implicitly, technology) and move it to a lesser
developed country with cheaper labor, because capital is far more mobile than labor, in order
to produce goods to supply its home market (where tastes differ)?
Glasner did not really miss your point # 1, but he muddled the message a bit over the benefits
of redistribution. Almost everyone, but especially those trained in economics, seems to miss your
point #2. The most basic premise of comparative advantage has long been broken by technology,
but the fiction of that old saw serves the price arbitrage motives of capital so well that it
has been preserved in amber like the fossilized bug it is.
"Free trade" has produced some of the most contentious political debates of our times. In a
famous April 2000 article in the New Republic (*), economist Joseph Stiglitz argued, "Economic
policy is today perhaps the most important part of America's interaction with the rest of the
world. And yet the culture of international economic policy in the world's most powerful democracy
is not democratic." During the Bush years, economic policy received far less attention in political
discussion than before; the use of military force took center stage. However, the trade and development
debate went on, and it continues to affect fundamental questions of global poverty, inequality,
and opportunity. Under a new Democratic administration-or under a Republican administration that
demotes the neocons in favor of the more traditional, realist foreign policy establishment-it
is likely that economic policy will again become the most important part of America's interaction
with the world. And it is likely that it will remain profoundly undemocratic.
The injustices of neoliberal trade policy and the hypocrisy of U.S. stances in international
negotiations have produced an upheaval in multilateral institutions like the WTO, and this has
helped to transform the debate about the global economy. But trade is also an important domestic
issue. Today, trade policy plays an important role in the battle for the soul of the Democratic
Party.
One of the major accomplishments of the Clinton administration was to move to the fore of the
Party a faction led by the centrist, corporate-friendly Democratic Leadership Council. Working
with pro-"free trade" Republicans, Clinton and the DLC made passing the North American Free Trade
agreement (NAFTA) in 1993 and approving U.S. entry into the World Trade Organization (WTO) in
1994 into bipartisan crusades. The coalition in favor of corporate globalization was always tenuous,
however. In recent years, especially as the Bush administration implemented an increasing belligerent
foreign policy, the "free trade" coalition has frayed. ...
What I Learned at the World Economic Crisis
By Joseph Stiglitz
Next week's meeting of the International Monetary Fund will bring to Washington, D.C., many
of the same demonstrators who trashed the World Trade Organization in Seattle last fall. They'll
say the IMF is arrogant. They'll say the IMF doesn't really listen to the developing countries
it is supposed to help. They'll say the IMF is secretive and insulated from democratic accountability.
They'll say the IMF's economic "remedies" often make things worse--turning slowdowns into recessions
and recessions into depressions.
And they'll have a point. I was chief economist at the World Bank from 1996 until last November,
during the gravest global economic crisis in a half-century. I saw how the IMF, in tandem with
the U.S. Treasury Department, responded. And I was appalled.
The global economic crisis began in Thailand, on July 2, 1997. The countries of East Asia were
coming off a miraculous three decades: incomes had soared, health had improved, poverty had fallen
dramatically. Not only was literacy now universal, but, on international science and math tests,
many of these countries outperformed the United States. Some had not suffered a single year of
recession in 30 years.
But the seeds of calamity had already been planted. In the early '90s, East Asian countries
had liberalized their financial and capital markets--not because they needed to attract more funds
(savings rates were already 30 percent or more) but because of international pressure, including
some from the U.S. Treasury Department. These changes provoked a flood of short-term capital--that
is, the kind of capital that looks for the highest return in the next day, week, or month, as
opposed to long-term investment in things like factories. In Thailand, this short-term capital
helped fuel an unsustainable real estate boom. And, as people around the world (including Americans)
have painfully learned, every real estate bubble eventually bursts, often with disastrous consequences.
Just as suddenly as capital flowed in, it flowed out. And, when everybody tries to pull their
money out at the same time, it causes an economic problem. A big economic problem.
The last set of financial crises had occurred in Latin America in the 1980s, when bloated public
deficits and loose monetary policies led to runaway inflation. There, the IMF had correctly imposed
fiscal austerity (balanced budgets) and tighter monetary policies, demanding that governments
pursue those policies as a precondition for receiving aid. So, in 1997 the IMF imposed the same
demands on Thailand. Austerity, the fund's leaders said, would restore confidence in the Thai
economy. As the crisis spread to other East Asian nations--and even as evidence of the policy's
failure mounted--the IMF barely blinked, delivering the same medicine to each ailing nation that
showed up on its doorstep.
I thought this was a mistake....
William
Getting fired from your job is one of the most stressful events one can experience in life.
Two psychiatrists once conducted a study to attempt to discover how stressful various events
were. They did a massive survey of 5000 people.
Losing your job was calculated to be a 47/100. To compare, having your home foreclosed on was
a 30 and the death of a close friend was a 37. The only things more stressful than losing your
job were things regarding beginning or ending a marriage, and going to prison.
It's understandable why most people are very, very risk averse when it comes to job loss.
See: Holmes TH, Rahe RH (1967). "The Social Readjustment Rating Scale". J Psychosom Res 11
(2): 213–8.
"... Pick up an introductory textbook of economics and your chances of finding an objective assessment of a system of this kind are very low indeed. Instead, what you'll find between the covers is a ringing endorsement of free trade, usually in the most propagandistic sort of language. Most likely it will rehash the arguments originally made by British economist David Ricardo, in the early 19th century, to prove that free trade inevitably encourages every nation to develop whatever industries are best suited to its circumstances, and so produces more prosperity for everybody. Those arguments will usually be spiced up with whatever more recent additions appeal to the theoretical tastes of the textbook's author or authors, and will plop the whole discussion into a historical narrative that insists that once upon a time, there were silly people who didn't like free trade, but now we all know better. ..."
"... There's a rich irony here, because not much more than a century ago, a healthy skepticism toward the claims of free trade ideology used to be standard in the United States. At that time, Britain filled the role in the world system that the United States fills today, complete with the global empire, the gargantuan military with annual budget to match, and the endless drumbeat of brushfire wars across what would one day be called the Third World, and British economists were accordingly the world's loudest proponents of free trade, while the United States filled the role of rising industrial power that China fills today, complete with sky-high trade barriers that protected its growing industries, not to mention a distinctly cavalier attitude toward intellectual property laws. ..."
"... Free trade is simply one of the mechanisms of empire in the age of industrialism, one part of the wealth pump that concentrated the wealth of the globe in Britain during the years of its imperial dominion and does the same thing for the benefit of the United States today. Choose any other mechanism of empire, from the web of military treaties that lock allies and subject nations into a condition of dependence on the imperial center, through the immense benefits that accrue to whatever nation issues the currency in which international trade is carried out, to the way that the charitable organizations of the imperial center-missionary churches in Victoria's time, for example, or humanitarian NGOs in ours-further the agenda of empire with such weary predictability: in every case, you'll find a haze of doubletalk surrounding a straightforward exercise of imperial domination. It requires a keen eye to look past the rhetoric and pay attention to the direction the benefits flow. ..."
"... Follow the flow of wealth and you understand empire. That's true in a general and a more specific sense, and both of these have their uses. In the general sense, paying attention to shifts in wealth between the imperial core and the nations subject to it is an essential antidote to the popular sort of nonsense-popular among tame intellectuals such as Thomas Friedman ..."
"... Free trade is only fair if all nations in the agreement start from the same point. If you choose not to invest in development, that's your own lookout, but don't complain if you end up under the de facto control of the one who did. ..."
Regarding Kirill's post about that shibboleth of contemporary economics, free trade.
Pick up an introductory textbook of economics and your chances of finding an objective
assessment of a system of this kind are very low indeed. Instead, what you'll find between the
covers is a ringing endorsement of free trade, usually in the most propagandistic sort of language.
Most likely it will rehash the arguments originally made by British economist David Ricardo, in
the early 19th century, to prove that free trade inevitably encourages every nation to develop
whatever industries are best suited to its circumstances, and so produces more prosperity for
everybody. Those arguments will usually be spiced up with whatever more recent additions appeal
to the theoretical tastes of the textbook's author or authors, and will plop the whole discussion
into a historical narrative that insists that once upon a time, there were silly people who didn't
like free trade, but now we all know better.
What inevitably gets omitted from the textbook is any discussion, based in actual historical
examples, of the way that free trade works out in practice That would be awkward, because in the
real world, throughout history, free trade pretty consistently hasn't done what Ricardo's rhetoric
and today's economics textbooks claim it will do. Instead, it amplifies the advantages of wealthy
nations and the disadvantages of poorer ones, concentrating capital and income in the hands of
those who already have plenty of both while squeezing out potential rivals and forcing down wages
across the board. This is why every nation in history that's ever developed a significant industrial
sector to its economy has done so by rejecting the ideology of free trade, and building its industries
behind a protective wall of tariffs, trade barriers, and capital controls, while those nations
that have listened to the advice of the tame economists of the British and American empires have
one and all remained mired in poverty and dependence as long as they did so.
There's a rich irony here, because not much more than a century ago, a healthy skepticism
toward the claims of free trade ideology used to be standard in the United States. At that time,
Britain filled the role in the world system that the United States fills today, complete with
the global empire, the gargantuan military with annual budget to match, and the endless drumbeat
of brushfire wars across what would one day be called the Third World, and British economists
were accordingly the world's loudest proponents of free trade, while the United States filled
the role of rising industrial power that China fills today, complete with sky-high trade barriers
that protected its growing industries, not to mention a distinctly cavalier attitude toward intellectual
property laws.
One result of that latter detail is that pirate editions of the Encyclopedia Britannica were
produced and sold by a number of American firms all through the 19th century. Most of these editions
differed from their British originals in an interesting way, though. The entry for "Free Trade"
in the original editions repeated standard British free-trade economic theory, repeating Ricardo's
arguments and dismissing criticisms of free trade out of hand; the American editors by and large
took the trouble to replace these with entries critiquing free trade ideology in much the same
terms I've used in this post. The replacement of pro- with anti-free trade arguments in these
pirate editions, interestingly enough, attracted far more denunciation in the British press than
the piracy itself got, which shows that the real issues were tolerably well understood at the
time.
When it comes to free trade and its alternatives, that level of understanding is nowhere near
so common these days, at least in Britain -I've long suspected that businessmen and officials
in Beijing have a very precise understanding of what free trade actually means, though it would
hardly be to their advantage just now to talk about that with any degree of candor. In the West
even those who speak most enthusiastically about relocalization and the end of corporate globalism
apparently haven't noticed how effectively tariffs, trade barriers, and capital controls foster
domestic industries and rebuild national economies-or perhaps it's just that too many of them
aren't willing to consider paying the kind of prices for their iPods and Xboxes that would follow
the enactment of a reasonable tariff, much less the prices that would be required if we had the
kind of trade barriers that built the American economy and could build it again, and bluecollar
First World workers were paid First World wages to make them.
Free trade is simply one of the mechanisms of empire in the age of industrialism, one part
of the wealth pump that concentrated the wealth of the globe in Britain during the years of its
imperial dominion and does the same thing for the benefit of the United States today. Choose any
other mechanism of empire, from the web of military treaties that lock allies and subject nations
into a condition of dependence on the imperial center, through the immense benefits that accrue
to whatever nation issues the currency in which international trade is carried out, to the way
that the charitable organizations of the imperial center-missionary churches in Victoria's time,
for example, or humanitarian NGOs in ours-further the agenda of empire with such weary predictability:
in every case, you'll find a haze of doubletalk surrounding a straightforward exercise of imperial
domination. It requires a keen eye to look past the rhetoric and pay attention to the direction
the benefits flow.
Follow the flow of wealth and you understand empire. That's true in a general and a more
specific sense, and both of these have their uses. In the general sense, paying attention to shifts
in wealth between the imperial core and the nations subject to it is an essential antidote to
the popular sort of nonsense-popular among tame intellectuals such as Thomas Friedman, at
least, and their audiences in the imperial core-that imagines empire as a sort of social welfare
program for conquered nations. Whether it's some old pukka sahib talking about how the British
Empire brought railroads and good government to India, or his neoconservative equivalent talking
about how the United States ought to export the blessings of democracy and the free market to
the Middle East or the former Soviet Union it's codswallop, and the easiest way to see that it's
codswallop is to notice that the price paid for whatever exports are under discussion normally
amounts to the systematic impoverishment of the subject nation.
Free trade is only fair if all nations in the agreement start from the same point. If you
choose not to invest in development, that's your own lookout, but don't complain if you end up
under the de facto control of the one who did. But when a highly-developed nation espouses
a free trade agreement with a nation that is just starting, it should be fairly easy to forecast
who will come out ahead on the deal.
Did you uhhh write that yourself? Because it's pretty awesome.
I agree with Mark, your comment is great. Especially when you mention that these matters were
much more clear to the general public a century ago, than they are now.
This is what List wrote (National System):
It is a very common clever device that when anyone has attained the summit of greatness,
he kicks away the ladder by which he has climbed up, in order to deprive others of the means of
climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and
of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors
in the British Government administrations. Any nation which by means of protective duties and
restrictions on navigation has raised her manufacturing power and her navigation to such a degree
of development that no other nation can sustain free competition with her, can do nothing wiser
than to throw away these ladders of her greatness, to preach to other nations the benefits of
free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error,
and has now for the first time succeeded in discovering the truth.
"... The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market. Both ideas have far-reaching implications. The claim that every organisation - whether it is a mining company, a hospital, a school, a professional association or a charity - must be structured according to a single model, conforming to a single set of legislative requirements, not so long ago would have seemed bizarre, but is now largely taken for granted. The principle of the market has become the solitary, or dominant, criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment to critical reflection, have become displaced and devalued. Indeed, the latter are viewed as quaint anachronisms with less importance and meaning than formal procedures or standards that can be readily linked to key performance indicators, budget end points, efficiency markers and externally imposed targets. ..."
"... Originally conceived as a strategy to manage large and increasingly complex organisations, in the contemporary world, no aspect of social life is now considered to be exempt from managerialist principles and practices. Policies and practices have become highly standardised, emphasising market-style incentives, devolved budgets and outsourcing, replacement of centralised budgeting with departmentalised user-pays systems, casualisation of labour, and an increasingly hierarchical approach to every aspect of institutional and social organisation. ..."
"... The managerial class is the universal class Hegel wrote about. It is the enemy of the productive classes, the agricultural and the industrial. Perhaps managers are like the eunuchs in former empires, grabbing power without production, always zealous that no idea will threaten their standing. ..."
"... Pick any empire on the verge of collapse in history and you'll find terrifying parallels to America today. I think all failing empires/societies must follow roughly similar trajectories on their way to oblivion. ..."
"... The creation of "professional managers" was not simply shaped by market fundamentalism but also by the progressive movement itself. Robert H. Wiebe's book "The Search for Order: 1877-1920, does a remarkable job of detailing this process. ..."
"... The trajectory runs from local autonomy once being the heart of American democracy, to the incremental erosion of the autonomy of community, to the supposedly necessary regulatory, managerial needs of urban-industrial life. and finally to the creation of flexible administrative devices that tended to encourage the creation of professional managers(in both the public and private sectors) and the increasing centralization of authority. ..."
Posted on
October 29, 2015 by
Lambert Strether
Lambert here: As we dig deeper into the health care system, concepts like those expressed in
this article will become increasingly useful. The patterns identified by Poses here remind me of
the university, which is also being eaten alive by a bloated and parasitical administrative layer.
By
Roy
Poses , MD, Clinical Associate Professor of Medicine at Brown University, and the President of
FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the
Health Care Renewal website
I just found an important article that in the June, 2015 issue of the Medical Journal of Australia(1)
that sums up many of ways the leadership of medical (and most other organizations) have gone wrong.
It provides a clear, organized summary of "managerialism" in health care, which roughly rolls up
what we have called
generic management
, the
manager's
coup d'etat , and aspects of
mission-hostile management into a very troubling but coherent package. I will summarize the main
points, giving relevant quotes.
Recent Developments in Business Management Dogma Have Gravely Affected Health Care
Many health practitioners will consider the theory of business management to be of obscure
relevance to clinical practice. They might therefore be surprised to learn that the changes that
have occurred in this discipline over recent years have driven a fundamental revolution that has
already transformed their daily lives, arguably in perverse and harmful ways.
these changes have by and large been introduced insidiously, with little public debate, under
the guise of unquestioned 'best practice'.
See our previous discussions of the
anechoic effect
, how discussion of facts and ideas that threaten what we can now call the managerialist power
structure of health care are not considered appropriate for polite conversation, or public discussion.
Businesses are Now Run by Professional Managers, Not Owners
The traditional control by business owners in Europe and North America gave way during the
19th century to corporate control of companies. This led to the emergence of a new group of professionals
whose job it was to perform the administrative tasks of production. Consequently, management became
identified as both a skill and a profession in its own right, requiring specific training and
based on numerous emergent theories of practice.
Among these many vicissitudes, a decisive new departure occurred with the advent of what became
known as neoliberalism
in the 1980s (sometimes called Thatcherism because of its enthusiastic adoption by the Conservative
government of Margaret Thatcher in the United Kingdom). A reaction against Keynesian economic
policy and the welfare state, this harshly reinstated the regulatory role of the market in all
aspects of economic activity and led directly to the generalisation of the standards and practices
of management from the private to the public sectors. The radical cost cutting and privatisation
of social services that followed the adoption of neoliberal principles became a public policy
strategy rigorously embraced by governments around the world, including successive Liberal and
Labor governments in Australia.
Note that this is a global problem, at least of English speaking developed countries. The article
focuses on Australia, but we have certainly seen parallels in the US and the UK. Further, note that
we have discussed this concept, also termed market fundamentalism or economism.
Managerialism Provides a One-Size Fits All Approach to the Management of All Organizations,
in Which Money Becomes the Central Consideration
The particular system of beliefs and practices defining the roles and powers of managers in
our present context is what is referred to as managerialism. This is defined by two basic tenets:
(i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory
principle is the market. Both ideas have far-reaching implications. The claim that every organisation
- whether it is a mining company, a hospital, a school, a professional association or a charity
- must be structured according to a single model, conforming to a single set of legislative requirements,
not so long ago would have seemed bizarre, but is now largely taken for granted. The principle
of the market has become the solitary, or dominant, criterion for decision making, and other criteria,
such as loyalty, trust, care and a commitment to critical reflection, have become displaced and
devalued. Indeed, the latter are viewed as quaint anachronisms with less importance and meaning
than formal procedures or standards that can be readily linked to key performance indicators,
budget end points, efficiency markers and externally imposed targets.
Originally conceived as a strategy to manage large and increasingly complex organisations,
in the contemporary world, no aspect of social life is now considered to be exempt from managerialist
principles and practices. Policies and practices have become highly standardised, emphasising
market-style incentives, devolved budgets and outsourcing, replacement of centralised budgeting
with departmentalised user-pays systems, casualisation of labour, and an increasingly hierarchical
approach to every aspect of institutional and social organisation.
We have frequently discussed how professional
generic managers
have taken over health care (sometimes referred to as the
manager's
coup d'etat .) We have noted that
generic managers
often seem ill-informed about if not overtly
hostile to the values of health care professionals and the missions of health care organizations.
Very Adverse Effects Result in Health Care and Academics
In the workplace, the authority of management is intensified, and behaviour that previously
might have been regarded as bullying becomes accepted good practice. The autonomous discretion
of the professional is undermined, and cuts in staff and increases in caseload occur without democratic
consultation of staff. Loyal long-term staff are dismissed and often humiliated, and rigorous
monitoring of the performance of the remaining employees focuses on narrowly defined criteria
relating to attainment of financial targets, efficiency and effectiveness.
The principles of managerialist theory have been applied equally to the public and the private
sectors. In the health sector, it has precipitated a shift in power from clinicians to managers
and a change in emphasis from a commitment to patient care to a primary concern with budgetary
efficiency. Increasingly, public hospital funding is tied to reductions in bed stays and other
formal criteria, and all decision making is subject to review relating to time and money. Older
and chronically ill people become seen not as subjects of compassion, care and respect but as
potential financial burdens. This does not mean that the system is not still staffed by skilled
clinicians committed to caring for the sick and needy; it is rather that it has become increasingly
harder for these professionals to do their jobs as they would like.
In the university sector, the story is much the same; all activities are assessed in relation
to the prosperity of the institution as a business enterprise rather than as a social one. Education
is seen as a commodity like any other, with priority given to vocational skills rather than intellectual
values. Teaching and research become subordinated to administration, top-down management and obsessively
applied management procedures. Researchers are required to generate external funding to support
their salaries, to focus on short-term problems, with the principal purpose being to enhance the
university's research ranking. The focus shifts from knowledge to grant income, from ideas to
publications, from speculation to conformity, from collegiality to property, and from academic
freedom to control. Rigid hierarchies are created from heads of school to deans of faculties and
so on. Academic staff - once encouraged to engage in public life - are forbidden to speak publicly
without permission from their managers.
The article provided a case study of the apparent demise of the Royal Australasian College of
Physicians as a physician led organization, leading to alleged emphasis on "extreme secrecy and 'commercial
in confidence," growth of conflicts of interest, risk aversion on controversial issues. When members
of the organization called for a vote to increase transparency and accountability, the hired management
apparently sued their own members.
Authors' Summary
Whether the damage done to the larger institutions - the public hospitals and the universities
- can be reversed, or even stemmed, is a bigger question still. The most that can be said is that
even if the present, damaging phase of managerial theory and practice eventually passes, its destructive
effects will linger on for many years to come.
My Summary
I now believe that the most important cause of US health care dysfunction, and likely of global
health care dysfunction, are the problems in leadership and governance we have often summarized (leadership
that is ill-informed, ignorant or
hostile to the health care mission and professional values, incompetent, self-interested, conflicted
or outright criminal
or
corrupt
, and governance that lacks accountability, transparency, honesty, and ethics.) In turn, it appears
that these problems have been generated by the twin plagues of managerialism (
generic management
, the
manager's
coup d'etat ) and
neoliberalism
(market fundamentalism, economism) as applied to health care. It may be the many of the larger
problems in US and global society also can be traced back to these sources.
We now see our problems in health care as part of a much larger whole, which partly explains why
efforts to address specific health care problems country by country have been near futile. We are
up against something much larger than what we thought when we started
Health Care Renewal in 2005. But at
least we should now be able join our efforts to those in other countries and in other sectors.
Reference
1. Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM. The scourge of managerialism and the Royal
Australasian College of Physicians. Med J Aust 2015; 202: 519- 521. Link
here .
We have to leaven this dismal post with the 1980 live version of "Down Under" by Men at Work
The managerial class is the universal class Hegel wrote about. It is the enemy of the productive
classes, the agricultural and the industrial.
Perhaps managers are like the eunuchs in former empires, grabbing power without production, always
zealous that no idea will threaten their standing.
It is unfair to eunuchs to compare them to managers. The man who led the great Ming dynasty
naval journeys to SE Asia and Africa was a eunuch. The man credited with the invention of paper
was a eunuch attached to the Han Dynasty court.
Narses, one of the emperor Justinian's great generals,
was a eunuch.
He began his military career at the age of sixty and continued until he was murdered
by the then-emperor at the age of ninety-five.
(This post is the result of very quick checking
and memories of Robert Graves' wonderful book Count Belisarius. But I am mostly right.)
This comment completely misses the point of JLGC's excellent comment, and I refer you to the
opening chapters of the Romance of the Three Kingdoms for remedial reading. Its become striking,
at least to me, how much the developed western world is imitating the declines of the Chinese
dynasties.
Pick any empire on the verge of collapse in history and you'll find terrifying parallels to
America today. I think all failing empires/societies must follow roughly similar trajectories
on their way to oblivion.
Back in 1975 at my local technical college, I was fortunate enough to snag a part-time COBOL
programming job at the school. My colleagues and I noticed that several managers above the department
level had little to do but sit around in their offices. Periodically they would emerge to engage
some unlucky soul in dumb conversation. One of my co-workers summed it up admirably: "The more
they make, the less they do."
A couple years later while reading the Sunday paper job ads, I ran across this job title: Manager
of Management Development. A sign of very bad things to come.
I have to wonder if it's a coincidence that both healthcare and education are given as especially
notable victims of inappropriate/ineffective management
Because both healthcare and education are things that can best and primarily be done by and
for oneself. And there is overlap here: organic chemistry is a special case of molecular physics.
Regardless of how well instructors present it, there is a wealth of well understood information
on molecular physics (with a lot of special examination of organic chemistry), and so far the
bulk of that information remains easily available (although it's starting to disappear at an increasing
and alarming rate). I know that many will say, "there's a lot more to it than that!", but this
only indicates that they themselves have made no sustained effort to understand these matters.
It's not rocket science (which is, indeed, quite demanding).
I think the authors may somewhat overlook collateral (and undoubtedly mutually synergistic
with managerial phenomena) issues in the quality of teachers and doctors, which has also degraded
in a similar way, possibly for similar reasons. Rote learning increasingly replaces comprehension
in both fields. Inundated with unproven, and often unsound, commercial and theoretical dogma,
rudimentary performance is still possible, but results are mediocre. Excellence in these fields
requires patience, precision and and familiarity with underlying principles; "caring", bonhomie
and rote knowledge are admirable, but not viable substitutes.
Does it even make sense to pay to undertake courses in order to get a certificate of achievement?
From a commercial career perspective, certainly. But such a certificate is no sure guarantee of
skill. "Qualified" personnel are not necessarily capable. In a time of ever increasingly complex
systems and disciplines, capability is more needed than ever. The management sector is not the
only area where performance, and fulfillment of actual (in contrast to nominal) responsibility,
degrades.
For that matter, does it even make sense to have somebody undertake to diagnose your own health,
without detailed information about your diet, your regular environment, your physical history,
and any exceptions to these; information for which you yourself should be the best source? The
consulting physician enters at an immediate disadvantage, facing a significant information deficit;
it behooves individuals to become more proactive, especially when rudimentary diagnostic equipment
(sphygmomanometers, simple blood test kits, etc) and reference information (anatomical references,
drug chemistries and interactions, etc) are readily available. True, there are some thing's you
can't do yourself, surgery is surely a valuable skill and worthy of respect, but it has significant
limits as well (replacing a bad heart in an unhealthy body won't cure the body, etc).
Managerialism is a scourge, a calamity, a great threat; no argument from me. But it's not the
only problem we face, as a culture, and as an economy, of human beings, in these fields and others.
And the authors acknowledge this tangentially, but perhaps somewhat over-emphasize the impact
if managerialism on the ongoing degradation of these and other fields, at least by omission of
other evident and significant factors.
'Does it even make sense to pay to undertake courses in order to get a certificate of achievement?
From a commercial career perspective, certainly. But such a certificate is no sure guarantee of
skill. "Qualified" personnel are not necessarily capable'
I think in time there will be a move away from official credentialing toward companies and
organisations testing candidates – 'qualified' or not – themselves, with a professional or a dept
(depending on the size of the concern) whose job it is to sort the wheat from the chaff. They
would be in constant liaison with the various sections (and not just the heads) to keep abreast
of what skills and knowledge are required in appointees, and test candidates accordingly. The
net enables enterprising people too poor to afford expensive laurels to become as skilled and
knowledgeable and probably more flexible than those born with 'advantages'. The twin drivers of
this change will be, for the employers, the degradation of quality in 'qualified' applicants that
you refer to, and, for the employees, the debt peonage involved in becoming 'qualified'
'For that matter, does it even make sense to have somebody undertake to diagnose your own health,
without detailed information about your diet, your regular environment, your physical history,
and any exceptions to these; information for which you yourself should be the best source?'
Not to mention your genetic heritage yes, human variation is the big blind spot not just in
medicine but health generally. Almost nothing can be generalised, yet whole industries in health
and wellbeing rely on generalisation.
'The claim that every organisation - whether it is a mining company, a hospital, a school,
a professional association or a charity - must be structured according to a single model, conforming
to a single set of legislative requirements, not so long ago would have seemed bizarre, but is
now largely taken for granted. The principle of the market has become the solitary, or dominant,
criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment
to critical reflection, have become displaced and devalued'
'And, so, finally the floodgates were open. Nowadays, every expected income stream is a fair
candidate for capitalization. And since income streams are generated by social entities, processes,
organizations and institutions, we end up with the 'capitalization of every thing'. Capitalists
routinely discount human life, including its genetic code and social habits; they discount organized
institutions from education and entertainment to religion and the law; they discount voluntary
social networks; they discount urban violence, civil war and international conflict; they even
discount the environmental future of humanity. Nothing seems to escape the piercing eye of capitalization:
if it generates earning expectations it must have a price, and the algorithm that gives future
earnings a price is capitalization'
Does anybody have an idea of what changed in 1990 to lead to such a sudden jump in the management
overhead of health organizations? It must have been something crucial in the legal or economic
environment of the sector.
Start here:
https://kenhoma.wordpress.com/2014/04/30/how-many-mba-degrees-are-awarded-each-year/
It takes time to achieve a critical mass of MBA-wielding managers in order for group-think to
establish itself.
I'm not going to exhaust myself fact-checking this data, so if anyone finds better please correct
me and post it. Based on my own experience in a STEM field, this looks about right.
Sadistic Managerial 'teams' have existed too long in too many areas. my mother recently received
a notice on the door of her apartment, she's occupied for 5yrs. this letter was short and to the
point 'if you do not pay .23 (cents) before the end of the business day, you will vacate your
apartment'. mom, 81yro, called me in hysterics. i got to her apt. and immediately had to attend
to her racing heart and hyperventilating. i read the letter slowly and see where mom missed the
"you will voluntarily vacate your apartment".
after a few deep breaths, i hiked down to the den of smiling sadist offering coffee and cake.
they introduced themselves as the 'new management', when i asked how many of the group of 5 it
took to pull the 3yro .23 Cent delinquency i was assured by the head honcho, she was involved
with the entire process. i explained my CPA sister and myself, Corporate Analyst (stretch), were
off a few zero's and hadn't even bothered to account for the home office reconciliations.
back to 'healthcare/hospitals': "-owned hospitals. How many are there? Two hundred and thirty-eight
of them in the whole country (out of more than five thousand)–somewhere between four and five
percent of the total in the U.S. (numbers courtesy TA Henry from this excellent piece).
What are the issues?
Obamacare effectively bans doctors from owning hospitals in the U.S.
Those already in existence are grandfathered in under the law.
We know that doctor-owned hospitals have higher average costs–hence the rationale for banning
them under a law with the intent of "bending the cost curve."
In the most recent Medicare data (December 2012 report on "value-based purchasing"), doctor-owned
hospitals did well in terms of achieving quality milestones.
How well?
Really well. Physician-owned hospitals took nine out of the top ten spots in the country. And
in spite of their low relative number, forty-eight out of the top one hundred.
What's the secret sauce? Here's a little tidbit on the #1 ranked hospital from another excellent
piece on this issue:
The top one is Treasure Valley Hospital in Boise, Idaho, a 10-bed hospital that boasts a low
patient-to-nurse ratio and extra attention, right down to thank-you notes sent to each discharged
patient.
A 10-bed hospital? Thank you notes for each discharged patient? Sign me up to go there next
time I need hospital services.
Who cares? Well, we all should. Why?
It boils down to incentives.
When doctors own the hospitals, they stand to directly share in profits. If you're a doctor-owner,
and the hospital you both run and own is functioning at a high level, you think, "This is what
America is all about. Free enterprise. Why shouldn't I make more money if my hospital runs well?"
As a taxpayer, do I want government incentives going to hospitals that are privately owned
and known for cherry-picking insured patients?
Moreover, what does it say about public hospitals, or academic centers, that often see the
sickest, poorest, most vulnerable patients? Yes, their quality is measurably lower, according
to this data. But now, in spite of staying true to their core missions (serving the public) they're
being further penalized.
Is this just another case of the rich simply getting richer?
Maybe Obamacare's got it wrong. Maybe we should build upon the model of doctor-ownership and
turn over public hospitals to their workers. All of them. Let the nurses buy in. And the food
handlers. And the "environmental services" folks (i.e. custodial crews). Let's really let the
workers own the means of production. Then we can see where incentives get us."
http://www.kevinmd.com/blog/2013/05/doctor-owned-hospitals-rich-richer.html
Sister Act: Gov. Perry's Little-Known Sister is a Lobbyist for Lucrative Doctor-Owned Hospitals;
Milla Perry Jones is vice president of government relations at United Surgical Partners International,
an Addison, Texas company that runs hospitals and surgery centers co-owned by doctors. Sister
Jones works with trade groups to rebut claims that doctor-owned medical facilities inflate American
medical bills. Both Governor Perry and his sister have championed doctor-owned facilities in Texas
and Washington.
2006 federal report found that Medicare costs are 20 percent higher at doctor-owned orthopedic
surgical hospitals than at competing community hospitals. These studies typically do not determine
if the extra procedures are beneficial. The doctor-owned industry says it delivers superior care
and points to contradictory research that does not associate doctor ownership with higher costs.
doctor-owned facilities are money machines. A 2009 study found that Texas' doctor-owned hospitals
pumped $2.3 billion into the economy each year. The industry has had to use some of this money
to fend off political meddling. Heavily favoring Republicans, Perry Jones' United Surgical PAC
spent almost $250,000 on federal politicians from 2005 to 2010, according to the Center for Responsive
Politics. The New York Times reported that Doctors Hospital at Renaissance donors gave congressional
Democrats $1.3 million in that period, with then-House Speaker Nancy Pelosi visiting that hospital
in 2007. Surpassing the powerful Texas Medical Association, the Doctors Hospital's Border Health
PAC spent close to $4 million on Texas state elections from 2005 through 2010, becoming Texas'
13th largest PAC. Houston's doctor-owned North Cypress Medical Center pumped another $500,000
into Texas state races, ranking as Governor Perry's No. 5 donor in 2010.
In one of his last presidential ads, Rick Perry skewered Washington as a twisted place where,
"You can't say that Congressmen becoming lobbyists is a form of political corruption." United
Surgical, North Cypress and Doctors Hospital at Renaissance have paid federal lobbyists-including
ex-Congressman Tom Loeffler-almost $3 million since 2005. Joined by two Perry Jones-affiliated
trade groups, these same doctor-owned interests paid 24 Texas lobbyists-including U.S. Senator
John Cornyn's daughter-up to $3.4 million in that period. These lobbyists do not include Milla
Perry Jones, whose advocacy activities may not trigger Texas' registration requirements. (A Texas
lobbyist generally must register if she receives more than $1,000 a quarter for direct communications
with public officials).
http://www.texasobserver.org/obamacare-jags-rick-perrys-lobbyist-sister/
can you imagine the independent sadist managing these hospitals?
It's about confiscating public budgets – and, as such, it fits into the broader pattern of
privatized jail and war. When you have for-profit war, you never get any peace; there's no money
in it. For profit medicine is about sickcare and not healthcare. There's no profit in cure or
prevention, only treatment.
Sickness creates natural captive markets for rent-seeking monopolies and cartels to exploit.
Once you've got a disease there are only so many chemical options to treat it. Corporate America
is often actively blocking cheap treatments to steer patients toward patented medicine. See my
earlier comment about Pharmacy Benefit Managers. The recent epidemics of drug shortages aren't
a coincidence; they are engineered. It's only happening with cheap, effective, often public domain
chemicals (e.g., methotrexate, 2ml vials of MgSO4). This is by design. Rent-seekers confiscate
public goods like public domain chemicals and provide inferior, expensive, patented substitutes.
Some of these are baffling if you don't understand the recent breakthroughs in biochemistry.
When you take gel helminths (worms like whipworms) out of the body you get autoimmune diseases
like m.s. and crohn's. This has been clear for about ten years but have you heard about that research
from drug company-funded "patient" groups? When you feed people antibiotics that kill their gut
flora and sell people food stripped of necessary fiber to nourish said bacteria, you get inflammation
and insulin resistance – contributing to, sometimes outright causing, Alzheimer's, diabetes, autism,
atherosclerosis, cancer and polycystic ovaries, among many diseases. What news company wants to
tell the public the food companies in creating an addictive sugar-laden product by removing fiber
is also creating disease? Big Tobacco wasn't an anomaly. It's a pattern of regular conduct across
industries.
Patients are being tortured to death in this system.
Love the read. The quaint notion that the top employees in healthcare aren't in it for the
money still lingers in some corners of our society.
One quibble with using this quote
A reaction against Keynesian economic policy and the welfare state, this harshly reinstated
the regulatory role of the market in all aspects of economic activity and led directly to the
generalisation of the standards and practices of management from the private to the public
sectors.
It does not apply very well to the American context. Healthcare in the US context is all about
the welfare state. US taxpayers give more money to both medical and non-medical managers/administrators/specialists/etc.
than any other taxpayers in any other country on the planet. Markets play no role in the monstrosities
that have become our hospital franchises, drug dealers, and equipment peddlers. These corporations
(many of them 'nonprofit') are the anti-thesis of price takers in a competitive marketplace.
Health care in the US is a mess in more than one dimension. Many aspects of managerialism are
certainly a major problem contributing to increased costs and reduced quality. But there is an
aspect of "overconsumption" of health services as well. I put it in quotes because the framing
of "overconsumption" puts the blame on patients (as if they are "consumers"), rather than where
I think the blame truly belongs - health care providers and management.
The existing system is largely setup to pay by the number of procedures (easy to measure with
electronic health records) rather than the actual quality of care (not as easy to measure). Specialized
doctors and managers have an incentive to push for unnecessary procedures and clinical visits,
because it means they get paid more.
Perhaps the strongest evidence for doctors responding to these perverse incentives is the specializations
that doctors choose. Primary care specializations like family medicine, general practice, and
pediatrics are being decimated because these specializations are largely focused with preventative
or long-term care. As a result, the pay is substantially lower than other specializations that
perform many procedures. The evidence is that there is a critical shortage of doctors in these
primary care fields, especially in rural areas of the country. Doctors flock to specializations
that offer many procedures and consequently higher pay.
Smaal example of "wallet biopsy" structuring of "health care:" You have a lab test or MRI or
tissue biopsy done, under the "provider's" order. To be "given the results," even if normal or
benign, you have to " be seen in clinic." A nurse or paraprofessional may actually "give you your
results," but that will be billed as an office visit with the doctor. Don't want to pay f9r the
wallet biopsy? Fine, the doc doesn't "give you yor results." And if you find a more compassionate,
maybe even more skilled, provider? If there's a balance due on your account with the first, S/he
effectively has a "chart lien," like a lawyer's "file lien," on your very own personal medical
records.
And maybe that's "against the law," some places, but as always, where there's ño effective
remedy (sue the doctor or the corporation? No effective remedy), there's no right
My wife went through this with a "Chr8stoan" DO primary-care dude who discovered Mammon was
a more compelling god than YHWH, corporations and privatized his practice and got into peddling
"procedures" like in-office ablation of throat tissue to "cure apnea and snoring," and Trusting
Patient enrollment in drug trials for Bad Meds
Anyone who thinks clinicianscare all Albert Schweitzers needs to read "The House if God," learn
the real rules of practice, understand what a "GOMER" is, and hope you won't get the "buff and
turf" treatment. It's a hilarious book, but a check on the irrational exuberance that endows practitioners
of the calling art business of medicine with universal expectations of virtue
https://en.m.wikipedia.org/wiki/The_House_of_God
And Lambert, don't credit me with invention of that "wallet biopßy" phrase– it's a commonplace
in the business of medicine.
Why the vast majority of us humans will" never have nice things," like comity and empathy and
simple decency, 'cuz more than enough of us are "all too human."
Good read. Self-sustainability in all aspects of our lives is being usurped by un-free markets
created by rent seekers or their lackeys. There is no longer a desire for America to be the best
nation in the world because that would mean it's self-sustaining. And I'm not talking budgets.
I'm talking people running things instead of corporations. No longer does Buy American mean anything
– actually, it's been outlawed by our trade agreements. There is no drive among our leaders anymore
for America to be self-sustaining, which includes taking care of the least of us because we're
all in this together. Capitalism as practiced by corporations is dead, it just refuses to be buried.
Supported by the Fed handouts it's busy handing out crutches for the entities it's crippled –
which it then intends to kick the crutches out from under. Hilarious ehh? Universities, hospitals,
pharma, the post office you name it used to all be self-sustaining entities that people could
afford or that provided needed services at low prices and actually cared about people. Self-sustaining
to me means America having the best food, the best health care, the best education, the happiest
people and on and on – the shining city on the hill so to speak. Instead we get crapification
of everything we need and it's all for sale to the highest bidder who then crapifies everything
even more. It's a race to the bottom and the ultimate goal is a floor full of crutches and no
one left standing.
The medical association I use actually has a C-level job called "Chief Efficiency Officer".
Her latest was raising the bar for hospital referrals thus reducing insurance company costs and
increasing consumer (I have stopped saying patient) risk. The incentive is the insurance companies
are kicking back part of the extra profit. Another case of privatize profit – socialize cost since
the added cost to consumers is impossible to measure. If I can find the letter from the association
announcing (and attempting to rationalize) the change, I will email a copy to Lambert.
Worth a look: Matthew Stewart's The Management Myth . It discloses that the very foundations
of "scientific management" originating with Frederick Winslow Taylor were flawed. Taylor cooked
the results of his "scientific" experiments in getting more productivity from the workforce to
fit his theories. The first MBA - Penn's Wharton School - was founded on this con. Similar cons
were at the inception of the Harvard MBA.
The "MBA Mentality" - embodied by W, among others - says everything can be measured, and measurement
is what makes it real. Hence testing our students until their eyeballs bleed is now an endorsed
strategy to improve educational outcomes. No actual science supports this conclusion, but that
hasn't stopped the people who want to leave No Child Behind(tm).
Turns out, management is a liberal art! Who knew?!
"The particular system of beliefs and practices defining the roles and powers of managers in
our present context is what is referred to as managerialism. This is defined by two basic tenets:
(i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory
principle is the market. Both ideas have far-reaching implications. The claim that every organisation
- whether it is a mining company, a hospital, a school, a professional association or a charity
- must be structured according to a single model, conforming to a single set of legislative requirements, Originally
conceived as a strategy to manage large and increasingly complex organisations, in the contemporary
world, no aspect of social life is now considered to be exempt from managerialist principles and
practices."
This is an apt description of MARKET TOTALITARIANISM.
MBAs and project managers armed with their metric-driven spreadsheets in pursuit of "best practice"
– market lebensraum – speak the same language and spearhead this offensive against the welfare
state. A managerial elite devoted to the belief that the the market will set you free functions
much like the Waffen SS did in another regime with explicit totalitarian aspirations. The need
for concentration camps is not needed in this version of totalitarianism because "no aspect of
social life is exempt from managerialist principles and practices." The institutions of civil
society have been captured by this "weltanshuung/zeitgeist" and dissent is lost in the "nacht
und nebel" of the eternal present.
Herbert Marcuse [One Dimensional Man], Eric Fromm, [Escape From Freedom] and the Frankfurt
School broached the idea of what has evolved into "market totalitarianism" shortly after the Second
World War. Dismissed largely as a Marxist rant it did not garner much traction inside or outside
of academia, especially in this country. I suspect many of you are too young to be familiar with
this body of work – no fault of yours. Nevertheless, LIBERALISM 2.0 [aka neoliberalism] did not
capture the hearts and minds of the political classes until the 1970s signified by Ronald Reagan's
election in 1980. From then on it gathered steam and by the 1990s it was apparent that "market
totalitarianism" was on the rise, if not yet ascendant.
Orwellian concepts like "doublethink/doublespeak" resonated as the language employed in political
discourse became little more than smoke and mirrors. "Reform" signified a revamping of welfare
and criminal justice. It also has come to mean little more than slash-and-burn CUTS to programs
associated with the welfare state or their outright privatization under the rubric of "choice"
. Natural gas and electric rate "choice" programs exemplify this approach. Indeed, the two biggest
prizes – Social Security and Medicare – are subject to calls for "entitlement reform" by Republicans
and Democrats alike. That both programs have been internalized in the minds of many as "entitlements"
destined for "reform" testifies to this. The federal deficit matters now and the hysteria surrounding
it will likely be a primary talking point in the 2016 elections. The question of how will we pay
for the expansion of any program barring tax increases will become the retort by those opposed
to both, MMT notwithstanding.
The Great Recession has been portrayed as an anomaly or as a normal part of the business cycle
and precipitated some rethinking. But make no mistake about it, the market totalitarian impetus
in this country continues unabated. If anything, the monotheism of the market has accelerated
in some respects as "businesspersons" – Donald Trump and Carly Fiorina – from the private sector
now vie for the presidential nomination of the Republican Party. The very idea that business acumen/experience
is now of paramount importance in running this country – as a business – testifies to the pervasiveness
of market totalitarianism. It is now deep rooted in civil society.
Even here in Akron, there are plans to rename the University of Akron: the Ohio Polytechnic
University! Fans of Firesign Theater back in the day will recall the rivalry between "more science
high" and "commie-martyrs' high school! It would be funny in most circumstances. but who's laughing
now? Many a former rubber rat plan to vote for Trump!
I have come to the conclusion that "market totalitarianism" now has to run its course in this
country. The Achilles' heel of market totalitarianism may be how and where it stifles/smothers
innovation, subjugating research and development to market criteria in which the short term trumps
the long term. To the extent that dissent/conflict is fundamental to innovation and cannot be
confined to the laboratory, then resistance is NOT futile. It remains to be seen whether that
dissent can be co-opted or reappropriated indefinitely by market totalitarianism in this country
or not, yet alone outside of its borders.
Ban collective bargaining and the collective will suffer. If a government was allowed to negotiate
for the collective against the suppliers then maybe the outcome would be different. But as we
all know, letting the government co-ordinate and negotiate for the collective will make it worse
for some individuals so ..
The needs of the many do not(?) outweigh the needs of the few. Be it for healthcare, education
or?
"The Scourge of Managerialism" raised some profoundly important issues.
But its fundamental assumption " the traditional control by business owners in Europe and North
American gave way during the 19th century to corporate control of companies. This lead to the
emergence of a new group of professional whose job it was to perform the administrative tasks
of production"–is only half correct.
The creation of "professional managers" was not simply shaped by market fundamentalism but
also by the progressive movement itself. Robert H. Wiebe's book "The Search for Order: 1877-1920,
does a remarkable job of detailing this process.
The trajectory runs from local autonomy once being the heart of American democracy, to the
incremental erosion of the autonomy of community, to the supposedly necessary regulatory, managerial
needs of urban-industrial life. and finally to the creation of flexible administrative devices
that tended to encourage the creation of professional managers(in both the public and private
sectors) and the increasing centralization of authority.
Can any renewal of democracy begin without a dismantling of professional managerial authority
in both the market and the state?
Is a breakdown of centralized bureaucratic power (both public and private) a precondition for
democratic renewal?
"... We don't see this sort of bidding war for workers taking place in any major sector of the economy. While there may be a few occupations in a few areas where employers really are bidding up wages rapidly, this is not happening in most sectors of the labor market. ..."
"... The other reason we know the skills shortage story does not fit is that there is no noticeable increase in the length of the average workweek for any major group of workers. The story we would expect to see if companies could not hire more workers is that they would instead work their existing workforce more hours, paying them overtime if necessary. We don't see this happening on any large scale either. The length of the average workweek is actually slightly shorter now than it was two years ago. Here also, there is no major area of the economy in which are seeing lengthening workweeks in a manner that would be consistent with the skills shortage story.... ..."
The Skills Gap: Blaming Workers Rather than Policy
By Dean Baker
Last week Donald Trump visited a technical college in Wisconsin. He was accompanied by Wisconsin
Governor Scott Walker, several members of Congress, and top officials in his administration. The
theme was promoting apprenticeship programs that give workers job specific skills. Trump, along
with the rest of his contingent, bemoaned the fact that employers cannot find workers with the
skills they need. This theme was picked up by many in the media, including many who are not Republicans,
who argued that workers in the U.S. are not getting ahead because they lack the necessary skills.
The striking feature about this argument is how widely it gets repeated, even when the evidence
continually shows that it is not true. Just to be clear, it is good that U.S. workers get better
training. Other countries, most notably Germany and the Nordic countries, do a much better job
of training workers who do not get college degrees than the United States.
It is also true that any individual worker will almost certainly be better off in the labor
market if they could acquire more skills. Certainly the best advice to a young person completing
high school would be to try to go to college or alternatively to get the training needed to be
a physical therapist, dental hygienist, or some other moderately well-paying professional. Insofar
as the government can facilitate this education and training it will be good for both the workers
and the economy as a whole.
But that is very different from claiming that the main reason that millions of workers are
unemployed or out of the labor force is that they don't have the right skills. This claim is endlessly
put forward, in both the United States and elsewhere, even in contexts where it is obviously not
true.
The unemployment rate in the United States fell to 4.3 percent in May, so the claim that companies
may be having trouble finding qualified workers is more plausible now than earlier in the recovery.
But even now that the labor market is hugely stronger than at its low points in the Great Recession
there is still reason to question the skills shortage view.
First and foremost we are not seeing the sort of rapid wage growth that would be expected if
there were widespread skills shortage. This is a story where companies would like to expand their
business but are prevented from doing so because they can't find any workers with the skills they
need.
However there are always some workers somewhere who have the needed skills. Companies could
offer higher wages to lure workers away from competitors. Or, they can make a point of recruiting
in more distant areas and offering to pay travel and location expenses for workers.
We don't see this sort of bidding war for workers taking place in any major sector of the
economy. While there may be a few occupations in a few areas where employers really are bidding
up wages rapidly, this is not happening in most sectors of the labor market.
The other reason we know the skills shortage story does not fit is that there is no noticeable
increase in the length of the average workweek for any major group of workers. The story we would
expect to see if companies could not hire more workers is that they would instead work their existing
workforce more hours, paying them overtime if necessary. We don't see this happening on any large
scale either. The length of the average workweek is actually slightly shorter now than it was
two years ago. Here also, there is no major area of the economy in which are seeing lengthening
workweeks in a manner that would be consistent with the skills shortage story....
"... As a result of this protectionism, average pay for doctors is over $250,000 a year and more than $200,000 a year for dentists, putting the vast majority of both groups in the top 2.0 percent of wage earners. Their pay is roughly twice the average received by their counterparts in other wealthy countries, adding close to $100 billion a year ($700 per family per year) to our medical bill. ..."
"... We also have actively been pushing for longer and stronger patent and copyright protections. While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees at odds with free trade. And, they are very costly. Patent protection in prescription drugs will lead to us pay more than $440 billion this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion comes to almost $3,000 a year for every family in the country. ..."
"... It is also worth noting patent protection results in exactly the sort of corruption that would be expected from a huge government imposed tariff. (When patents raise the price of a drug by a factor of 100 or more, as is often the case , it is equivalent to a tariff of 10,000 percent.) The result is that pharmaceutical companies often make payoffs to doctors to promote their drugs or conceal evidence that their drugs are less effective than claimed or even harmful. ..."
"... Stop using the term "free trade" at all...when wall street bankers and hedge fund managers and the corporate media use the term "free trade", what they are really talking about is labor arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety and environmental standards. It usually means a nation without a democracy, run by either oligarchs or despots. ..."
"... Bbbbut patents are essential to allow top executives to extract half the annual expenditures of unprofitable corporations in compensation while still leaving a few pennies for "research". ..."
"... Fake news...about a reliable as a Democrat's promise that he's for the working folks. ..."
"... The "law" of supply and demand just does not apply in this field. That "law" also does not work in certain other areas where important conclusions are drawn from it - applying it is not a substitute for empirical evidence. ..."
The Washington Post and other major news outlets are strong supporters of the trade policy pursued
by administrations of both political parties. They routinely allow their position on this issue to
spill over into their news reporting, touting the policy as "free trade." We got yet another
example of this in the Washington Post today.
Of course the policy is very far from free trade. We have largely left in place the protectionist
barriers that keep doctors and dentists from other countries from competing with our own doctors.
(Doctors have to complete a U.S. residency program before they can practice in the United States
and dentists must graduate from a U.S. dental school. The lone exception is for Canadian doctors
and dentists, although even here we have left
unnecessary
barriers in place.)
As a result of this protectionism, average pay for doctors is over $250,000 a year and more
than $200,000 a year for dentists, putting the vast majority of both groups in the top 2.0 percent
of wage earners. Their pay is roughly twice the average received by their counterparts in other wealthy
countries, adding close to $100 billion a year ($700 per family per year) to our medical bill.
While trade negotiators may feel this protectionism is justified, since these professionals lack
the skills to compete in the global economy, it is nonetheless protectionism, not free trade.
We also have actively been pushing for longer and stronger patent and copyright protections.
While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees at
odds with free trade. And, they are very costly. Patent protection in prescription drugs will lead
to us pay more than $440 billion this year for drugs that would likely sell for less than $80 billion
in a free market. The difference of $360 billion comes to almost $3,000 a year for every family in
the country.
It is also worth noting patent protection results in exactly the sort of corruption that would
be expected from a huge government imposed tariff. (When patents raise the price of a drug by a factor
of 100 or more,
as is often the case , it is equivalent to a tariff of 10,000 percent.) The result is that pharmaceutical
companies often make payoffs to doctors to promote their drugs or
conceal evidence that their drugs are less effective than claimed or even harmful.
I was pleased to see that PBS looked into the matter of physician supply a few years ago..
They noted: "There are fewer physicians per person than in most other OECD countries. In 2010,
for instance, the US had 2.4 practicing physicians per 1000 people--well below the OECD average
of 3.1." They also noted that "US physicians get higher incomes than in other countries." They
didn't go so far as to note a cause-and-effect relationship here, a deliberate restriction of
supply going on, for purposes of raising MD incomes. But at least they were presenting the facts.
They even mentioned the $750 billion wasted each year by our health care system.. I expect
it's up to at least $3000 per person by now. And they suggested some good uses that so much money
could be put to (VA health care, state college education for all the 17- and 18-year-olds in the
country). I would like to add another use. If we were wasting less on overpriced health, more
people might be able to afford a little more leisure and recreation time. And this (especially
the recreation time) might lead to a lowering of our very high rates of obesity, diabetes and
prediabetes.
Physician density (as reported by CIA dot gov with dates) shows Canada with smaller ratio than
the U.S. but they still retain lower costs, and U.K. though higher by 10 or 15% has considerably
lower costs, and the U.S. has more specialists but they get higher incomes, and states with more
doctors have higher incomes.
We may need more doctors, especially general practitioners, and more medical schools since
8% of U.S. citizens are forced to train abroad already, but increased supply won't lower costs.
It is the medical system and not the supply of doctors that determines fees being charged, which
only amount to 10% of total costs. Cut their fees 30% and you still have a $1 trillion 1/3 cost
higher than other developed nations. Doctors are not the main cause of the dysfunctional system.
Look at what other countries do.
This bolsters my case, there is a high skills job shortage. Take 100,000 proposed increase
in doctors and give the jobs exclusively to foreign graduates, and you've robbed Americans of
needed jobs. College graduates only have a 2.5 percent unemployment rate because they take jobs
away from those without college. So lack of enough high skills jobs really hurts the working class
lower income groups with less formal education.
New argument, pay attention. No one would deny that a gap of 1 million jobs, or nearly 1% of
increased unemployment (really only .8% since there are 120 jobs), is enough to suppress wages,
induce slack in the economy, suppress growth, and possibly even create contraction or self sustaining
stagnation. Well a 100,000 new doctor jobs is only 1/10 of that amount. How important is that?
I would argue it's very important. 10 percent cause of any such serious effect as a 1 percent
rise in unemployment is nutty to dismiss. That's why we cheer when the unemployment drops even
.1 percent. You don't get the benefits of full employment until reach full employment, whether
1 percent away or .1 percent away. Really.
EPI
Even the Most Educated Workers Have Declining Wages
Feb 2015
Isn't 10 years and 1 million dollars too much for the average family practice physican to pay
to become a doctor. Reducing the cost of educating a doctor would be a better solution. Increasing
the use of midwives and nurse practicioners is another unexplored solution.
Stop using the term "free trade" at all...when wall street bankers and hedge fund managers
and the corporate media use the term "free trade", what they are really talking about is labor
arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety
and environmental standards. It usually means a nation without a democracy, run by either oligarchs
or despots.
As best I can see, neither NAFTA or any other "free trade" agreement mentions anything about
wages, or for that matter worker health and safety, or environmental standards. The only purpose
of NAFTA and TPP was to force trade partners to accept US patent and copyright protections as
the price of access to the lucrative US market.
Dean's argumen that just because we import cheap foreign labor to displace American workers
in the contruction and lawn-mowing and housekeeping labor markets, it's fair and justified to
import highly educated professionals seems wrong-headed to me. Are you talking about extending
H1B Visa categories to include doctors.
In my opinion the people behind the high cost of highly educated professions is the AMA, and
the universities and education trade associations---who set the standards for doctors and lawyers,
and are the ones demanding foreigners complete American educational standards to be permitted
to work in the USA
The truth is the exact opposite of what you report. The medical educational establishment favors
increased admissions. The AMA is another story, perhaps. In any event you need more medical schools
for more doctors, not lower standards or importing more than the already high 12% foreign medical
school graduates we recruit each year.
Our high standards are fine. But already 8% of US citizens train abroad for lack of medical
schools. Even if you don't favor more doctors, that in itself screams for more U.S. medical schools.
From the Association of American Medical Colleges
Tuesday, March 14, 2017
New Research Reaffirms Physician Shortage
Shortages Likely to Have Significant Impact on Patient Care
More corrections: H1B can already include doctors, though 60 percent are in tech. Trade agreements
were not about patents and copyright, they were about making it easier to do what they were already
doing. No surprise is you lower barriers to trade, your domestic industry suffers in competition
with cheaper goods. Unions opposed them to protect their jobs. Do you think the union officials
were geniuses and the economists were stupid? Or was it common sense exactly what would happen
and that it was just too convenient for economists not to favor trade, deregulation of banks,
lower taxes, derivative markets, hedge funds.
Sound like "fake news"---the educational establishment supports increasing admissions but if
the price of admission is 10 years and 1 million dollars, well....so the cost of entry they charge
is usually a barrier to entry.. Aside from that, there is the standards for admission are set
by the educational establishment...so between the two, what have you got? A contrived limit on
doctors. Oh, but apologists for the educational establishment like you keep repeating the PR/BS
line that universities and trade unions want to increase admissions to medical schools.
Next another one of your "facts" that sounds seriously contradictory...that trade agreements
make things "easier" to do what they were doing. HUH? What does that mean? Look none of the trade
agreements have anything to do with anything except patent and copyright protection. If a trading
partner accepts patent and copyright protection for their economy, they get access to the Us market
without trade barriers. Except for productts that receive public subsidies, like franken-food
and growth hormone treated meat. So a trading partner is forced to remove the barriers to entry
on things like the growth hormone raised beef to Japan, and genetically modified and subsidized
crazycorn to Mexico. Is that what you mean by "making things easier"....Sure it makes things "easier"---but
is that the point? Or do citizens from Japan have the right to prohibit meat raised with growth
hormones? Or do Mexican citizens have the right to prohibit genetically raised corn?
Look, "free trade" is a utopian fantasy, invented by a bunch of liars to sell something to
the US consumer that isn't good for him.
Why don't you try reading what people wrote before posting under their comment? I'm against
trade agreements and increased trade that undercuts American workers.
Maybe you should read even the most elementary news report on the effect of NAFTA and China's
entry into the WTO. Patent and copyright protections were neither the main motivation nor an important
effect. China pays little heed to any IP law anyway and their state efforts to coerce and steal
American technology are barely concealed.
Japan doesn't buy American due to cultural norms, American incompetence, and laziness, and
Japanese protectionist laws and regulations.
Most free traders have been Republicans, and most objections to free trade have come from the
Democrats and the left. Except for Trump Clinton reversal, Liberals (and unions) can claim the
high ground over conservatives when it comes to trade issues. This blog and Dean Baker consistently
decries the effects of international trade and trade agreements effects on the working class.
There is a shortage of medical schools, there is no shortage of qualified students, admissions
standards do not prevent medical student enrollment from increasing. Your comment is virtually
fact free.
You obviously hate education and unions and real news.
Expanding doctor supply without major changes to the insurance system is as likely to increase
overall healthcare costs as reduce them. In the world of healthcare, demand increases to meet
supply.
The country with the insurance and healthcare system closest to the US is probably Switzerland
with the exception that costs are controlled with a national fee for service scale (TARMED).
The Swiss estimate that each new private medical practice adds $536,000 per doctor to the nation's
overall healthcare spending. This is one of the main reasons the Swiss limit the number of new
medical practices and control doctor immigration to balance demand. The Swiss are concerned about
rising costs and the government is now proposing to reduce the allowable charges by specialists.
Those that are attracted to Baker's immigration proposal should ask what is the long term consequence
of relying on immigration to fill the doctor shortfall and/or control cost. In the short run there
may be some average income reduction for physicians with little or no change in total healthcare
costs (remember total cost equals average income times the larger number of doctors). Longer term,
it restricts domestic investment in expansion of healthcare training and that is a restriction
of opportunity for all Americans.
Bbbbut patents are essential to allow top executives to extract half the annual expenditures
of unprofitable corporations in compensation while still leaving a few pennies for "research".
'U.S. Pursues Selective Protectionism: Not Free Trade'
Oh absolutely - and I'm also really worried about these doctors... and the meat - the meat
- as if we can't export all of our meat to China - we for sure will need more doctors to operate
on all these oversized boobs which will grow if we have to eat all of our hormone meat by ourselves
- and you know how painful it is to carry these big boobs around?
And I happen to know this Plastic Surgeon who told me we need lots and lot more Plastic Surgeons
-(as Americans get older and older) - and perhaps - if your plan finally comes through - also
facelifts will get cheaper - as who wants to have her or his face done in a undeveloped country
-(even if it comes with a nice and long vacation)
So more power to y'a and you finally have completely convinced me and let's do it together!
There is no protectionism when it comes to doctors as they are well represented by immigrants
who make up 12% of doctors, including new doctors, comparing favorably to the near record 13.5%
U.S. immigrant population.
U.S. doctors don't make twice the salary of other developed countries, with their incomes running
about 40% to 60% for GPs and specialists respectively.
More doctors should be supplied by relieving the shortage of medical schools, even an extra
100,000 would help the working class stop getting bumped into unemployment by an overskilled work
force. Too many college graduates and not enough jobs, so they bump off those without. They get
2.5% unemployment, those without north of 5 or 7%.
This paper cited below clearly shows we do not pay our doctors twice the salary of other developed
countries. The figure is actually around 40% for those in general practice, 60% for specialists,
and largely because U.S. salaries overall are higher (in every occupation). When you look at the
comparative advantage a doctors salary in any country enjoys over the average salary in that country,
even that advantage largely disappears. See figure 2 on page 16 for general practitioners and
and figure 6 on page 21 for specialists.
"THE REMUNERATION OF GENERAL PRACTITIONERS AND SPECIALISTS IN 14 OECD COUNTRIES: WHAT ARE THE
FACTORS INFLUENCING VARIATIONS ACROSS COUNTRIES?"
Unlike Dean Baker's anti-labor, anti-working class stance that we should end any protection
against importing cheaper foreign labor to undercut wages, we should of course afford the same
protections to all occupations.
It is the Democrat Party politics that is behind the high cost of doctors and lawyers. Why
because the Educational establishment---the trade associattions and the universities themselves
are the ones limiting the admissions, and the ones demanding that all medical professioanls get
their education and qualifications through themselves...And we all know that is the universities,
the education trade unions and their lobbiest that are one of the most powerful constituencies
for the Democrat Party.
The truth is the exact opposite of what you report. The medical educational establishment favors
increased admissions.
From the Association of American Medical Colleges
Tuesday, March 14, 2017
New Research Reaffirms Physician Shortage
Shortages Likely to Have Significant Impact on Patient Care
Sound like a "fake newa"...so the educational establishment's official public relations read
BULL-TOSS position is to support increased admissions to medical school. Yet the same establishment
imposed the "barrier to entry" cost of obtaining a doctor ticket, 10 years and 1 million dollars.
And who the heck sets the admission standards for their precious schools that results in the high
rejection rate of applicants.
Fake news...about a reliable as a Democrat's promise that he's for the working folks.
The OECD article should be read by anyone interested in this. Figure 11 shows that the number
of physicians in the US is close to the OECD average - in fact the number of specialists is actually
less, but the US level of pay is higher. Of course there is also no correlation of pay with the
fraction of foreign doctors.
And despite the supposed shortage of GP's in the US their pay is still much less. The "law"
of supply and demand just does not apply in this field. That "law" also does not work in certain
other areas where important conclusions are drawn from it - applying it is not a substitute for
empirical evidence.
The comparison of physician pay would be better if done with the overall median rather than
average. Greater inequality in the US means that the average pay is greater than in the other
countries.
"... The entire spectrum of political thought from the neoliberal center to the reactionary right is really about setting up punitive systems of coercion and control. They hate the "losers" and want them punished. They really believe that the beatings should continue until morale improves, that if you make things unbearable people will pull themselves up by their bootstraps, and if they don't then they deserve all the cruelty that can be heaped upon them. ..."
"... The poor are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class. ..."
"... This is how totalitarian regimes operate and how they view the "brainiacs" of this World. Brainiacs are merely military assets to be deployed brutally against the enemy. Or, if the Brainiacs are perceived to be "Assets of the Enemy", they are targeted for destruction- First, Foremost and on the double! ..."
I used to think that much of modern conservatism was simply a misguided, wrong-headed alternative
attempt to formulate policies for the general welfare. Then I read Corey Robin's book The Reactionary
Mind and started reevaluating that presumption.
The entire spectrum of political thought from the neoliberal center to the reactionary
right is really about setting up punitive systems of coercion and control. They hate the "losers"
and want them punished. They really believe that the beatings should continue until morale improves,
that if you make things unbearable people will pull themselves up by their bootstraps, and if
they don't then they deserve all the cruelty that can be heaped upon them.
The poor are errant children who need to be molded. Conservatives may whine about the "nanny
state" but what they really want to see is either the negligent mommy state or the abusive daddy
state. They want to "help" the poor the way a drill instructor wants to help you learn to obey
and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes
this seems to be the motivating ideology of too much of the contemporary governing class.
IMO, Parise (an economist) is following a well-worn "playbook".
(1) Identify the group targeted for liquidation. (Roma, Jew, kulak, Aborigine, American
Indian, American Deplorables .)
(2) Recruit insider scientists/intellectuals to to "discover" that the targeted group is
sub-normal cognitively (unworthy of Life).
(3) Have a Noble Cause that requires Tough Action by Determined Leaders (Collectivization,
Racial Purity, Bringing Christian Values, Saving the Planet .)
(4) Proceed, as Stalin would say, to "break the eggs to make the omelette". (Democide).
This is the "unpleasant cleansing" that, however disturbing, must be done for the "greater
good".
It is happening, as I speak, in the beautiful little town that I grew up in, on the banks of
the Ohio River, in Southern Ohio. (drugs and hopelessness)
Seventy-five years ago, it happened to my Jewish forebears in Belarus. Three hundred years
ago my Minqua (Iroquois) forbears were destroyed by this murderous rationalization.
This sort of article is not an exchange of ideas, but rather a crafted assault on a vulnerable
group of humanity (in this case, the Poor)
Thank you Yves for bringing this to our attention!
This last century, Scientists, Intellectuals, Academics, and Religious Leaders have been viewed
as Powerful Military Assets, or Military Threats by totalitarian regimes. They have been used
to progress the goals of regimes. (The Nazi Doctors of Auschwitz)
Or, if they question the regime, they are the first to be rounded up, jailed or murdered.
The Khmer Rouge immediately murdered anybody who wore glasses or had soft hands.(Intellectuals).
When the Soviet Union invaded Latvia, Lithuania and Estonia in 1940, the first thing the NKVD
did was round up local Scientists, Intellectuals, Academics, Religious Leaders and Cultural Leaders
and deport them to the Gulags or, more likely, kill them.
The Nazis behaved in exactly the same way with the Cultural leadership of Poland, Czechoslovakia,
Yugoslavia ..
This is how totalitarian regimes operate and how they view the "brainiacs" of this World.
Brainiacs are merely military assets to be deployed brutally against the enemy. Or, if the Brainiacs
are perceived to be "Assets of the Enemy", they are targeted for destruction- First, Foremost
and on the double!
I believe that we have a naive view of "experts"; imagining benign, tweed coated/skirted, helpful,
good-hearted, "Good Will Hunting" types. Thanks Hollywood!
Crocodile tears of WaPO staff... Who fully supported implementation of Washington consensus that
robbed the nations in favor of international companies... this was a new mass scale economic rape of
the Western countries and it was especially brutal in xUSSR area.
Nobel-winning economist Angus Deaton argues against giving aid to poor countries
It sounds kind of crazy to say that foreign aid often hurts, rather than helps, poor people
in poor countries. Yet that is what Angus Deaton, the newest
winner of the Nobel Prize in economics , has argued.
Deaton, an economist at Princeton University who studied poverty in India and South Africa
and spent decades working at the World Bank, won his prize for studying how the poor decide to
save or spend money. But his ideas about foreign aid are particularly provocative. Deaton argues
that, by trying to help poor people in developing countries, the rich world may actually be corrupting
those nations' governments and slowing their growth. According to Deaton, and the economists who
agree with him, much of the
$135 billion that the world's most developed countries spent on official aid in 2014 may not
have ended up helping the poor.
Angus Deaton (LARRY LEVANTI/AFP/Getty Images)
The idea of wealthier countries giving away aid blossomed in the late 1960s, as the first humanitarian
crises reached mass audiences on television. Americans watched through their TV sets as
children starved to death in Biafra, an oil-rich area that had seceded from Nigeria and was now
being blockaded by the Nigerian government, as Philip Gourevitch
recalled
in a 2010 story in the New Yorker. Protesters
called on
the Nixon administration for action so loudly that they ended up galvanizing the largest nonmilitary
airlift the world had ever seen. Only a quarter-century after Auschwitz, humanitarian aid seemed
to offer the world a new hope for fighting evil without fighting a war.
There was a strong economic and political argument for helping poor countries, too. In the
mid-20th century, economists widely believed that the key to triggering growth -- whether in an
already well-off country or one hoping to get richer -- was pumping money into a country's factories,
roads and other infrastructure. So in the hopes of spreading the Western model of democracy and
market-based economies, the United States and Western European powers encouraged foreign aid to
smaller and poorer countries that could fall under the influence of the Soviet Union and China.
The level of foreign aid distributed around the world
soared from the 1960s
, peaking at the end of the Cold War, then dipping before rising again.
Live
Aid music concerts raised public awareness about challenges like starvation in Africa, while
the United States launched major,
multibillion-dollar aid initiatives . And the World Bank and advocates of aid aggressively
seized on research that claimed that foreign aid led to economic development.
Deaton wasn't the first economist to challenge these assumptions, but over the past two decades
his arguments began to receive a great deal of attention. And he made them with perhaps a better
understanding of the data than anyone had before. Deaton's skepticism about the benefits of foreign
aid grew out of his research, which involved looking in detail at households in the developing
world, where he could see the effects of foreign aid intervention.
"I think his understanding of how the world worked at the micro level made him extremely suspicious
of these get-rich-quick schemes that some people peddled at the development level," says Daron
Acemoglu, an economist at MIT.
The data suggested that the claims of the aid community were sometimes not borne out. Even
as the level of foreign aid into Africa soared through the 1980s and 1990s, African economies
were doing worse than ever, as the chart below, from
a paper
by economist Bill Easterly of New York University, shows.
William Easterly, "Can Foreign Aid Buy Growth?"
The effect wasn't limited to Africa. Many economists were noticing that an influx of foreign aid
did not seem to produce economic growth in countries around the world. Rather, lots of foreign aid
flowing into a country tended to be correlated with lower economic growth, as this chart from a paper
by Arvind Subramanian and Raghuram
Rajan shows.
The countries that receive less aid, those on the left-hand side of the chart, tend to have higher
growth -- while those that receive more aid, on the right-hand side, have lower growth.
Raghuram G. Rajan and Arvind Subramanian, "Aid and Growth: What Does the Cross-Country Evidence Really
Show?"
Why was this happening? The answer wasn't immediately clear, but Deaton and other economists argued
that it had to do with how foreign money changed the relationship between a government and its people.
Think of it this way: In order to have the funding to run a country, a government needs to collect
taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount
of control over their government. If leaders don't deliver the basic services they promise, the people
have the power to cut them off.
Deaton argued that foreign aid can weaken this relationship, leaving a government less accountable
to its people, the congress or parliament, and the courts.
"My critique of aid has been more to do with countries where they get an enormous amount of aid
relative to everything else that goes on in that country," Deaton said in an interview with Wonkblog.
"For instance, most governments depend on their people for taxes in order to run themselves and provide
services to their people. Governments that get all their money from aid don't have that at all, and
I think of that as very corrosive."
It might seem odd that having more money would not help a poor country. Yet economists have long
observed that countries that have an abundance of wealth from natural resources, like oil or diamonds,
tend to be more unequal, less developed and more impoverished, as the chart below shows. Countries
at the left-hand side of the chart have fewer fuels, ores and metals and higher growth, while those
at the right-hand side have more natural resource wealth, yet slower growth. Economists postulate
that this "natural resource curse" happens for a variety of reasons, but one is that such wealth
can strengthen and corrupt a government.
Like revenue from oil or diamonds, wealth from foreign aid can be a corrupting influence on weak
governments, "turning what should be beneficial political institutions into toxic ones," Deaton writes
in his book "The Great Escape: Health, Wealth, and the Origins of Inequality." This wealth can make
governments more despotic, and it can also increase the risk of civil war, since there is less power
sharing, as well as a lucrative prize worth fighting for.
Deaton and his supporters offer dozens of examples of humanitarian aid being used to support despotic
regimes and compounding misery, including in Zaire, Rwanda, Ethiopia, Somalia, Biafra, and the Khmer
Rouge on the border of Cambodia and Thailand. Citing Africa researcher Alex de Waal, Deaton writes
that "aid can only reach the victims of war by paying off the warlords, and sometimes extending the
war."
He also gives plenty of examples in which the United States gives aid "for 'us,' not for 'them'"
– to support our strategic allies, our commercial interests or our moral or political beliefs, rather
than the interests of the local people.
The United States gave aid to Ethiopia for decades under then-President Meles Zenawi Asres, because
he opposed Islamic fundamentalism and Ethiopia was so poor. Never mind that Asres was "one of the
most repressive and autocratic dictators in Africa," Deaton writes.
According to Deaton, "the award for sheer creativity" goes to Maaouya Ould Sid'Ahmed Taya, president
of Mauritania from 1984 to 2005. Western countries stopped giving aid to Taya after his government
became too politically repressive, but he managed to get the taps turned on again by becoming one
of the few Arab nations to recognize Israel.
Some might argue for bypassing corrupt governments altogether and distributing food or funding
directly among the people. Deaton acknowledges that, in some cases, this might be worth it to save
lives. But one problem with this approach is that it's difficult: To get to the powerless, you often
have to go through the powerful. Another issue, is that it undermines what people in developing countries
need most -- "an effective government that works with them for today and tomorrow,"
he writes .
The old calculus of foreign aid was that poor countries were merely suffering from a lack of money.
But these days, many economists question this assumption, arguing that development has more to do
with the strength of a country's institutions – political and social systems that are developed through
the interplay of a government and its people.
There are lot of places around the world that lack good roads, clean water and good hospitals,
says MIT's Acemoglu: "Why do these places exist? If you look at it, you quickly disabuse yourself
of the notion that they exist because it's impossible for the state to provide services there." What
these countries need even more than money is effective governance, something that foreign aid can
undermine, the thinking goes.
Some people believe that Deaton's critique of foreign aid goes too far. There are better and worse
ways to distribute foreign aid, they say. Some project-based approaches -- such as financing a local
business, building a well, or providing uniforms so that girls can go to school -- have been very
successful in helping local communities. In the last decade, researchers have tried to integrate
these lessons from economists and argue for more effective aid practices.
Many people believe that the aid community needs more scrutiny to determine which practices have
been effective and which have not. Economists such as Abhijit Banerjee and Esther Duflo, for example,
argue for creating
randomized control trials that allow researchers to carefully examine the development effects of
different types of projects -- for example, following microcredit as it is extended to people in
poor countries.
These methods have again led to a swell in optimism in professional circles about foreign aid
efforts. And again, Deaton is playing the skeptic.
While Deaton agrees that many development projects are successful, he's
critical of claims that these projects can be replicated elsewhere or on a larger scale. "The
trouble is that 'what works' is a highly contingent concept," he said in an interview. "If it works
in the highlands of Kenya, there's no reason to believe it will work in India, or that it will work
in Princeton, New Jersey."
The success of a local project, like microfinancing, also depends on numerous other local factors,
which are harder for researchers to isolate. Saying that these randomized control trials prove that
certain projects cause growth or development is like saying that flour causes cake, Deaton writes
in his book. "Flour 'causes' cakes, in the sense that cakes made without flour do worse than cakes
made with flour – and we can do any number of experiments to demonstrate it – but flour will not
work without a rising agent, eggs, and butter – the helping factors that are needed for the flour
to 'cause' the cake."
Deaton's critiques of foreign aid stem from his natural skepticism of how people use -- and abuse
-- economic data to advance their arguments. The science of measuring economic effects is much more
important, much harder and more controversial than we usually think, he told The Post.
Acemoglu said of Deaton: "He's challenging, and he's sharp, and he's extremely critical of things
he thinks are shoddy and things that are over-claiming. And I think the foreign aid area, that policy
arena, really riled him up because it was so lacking in rigor but also so grandiose in its claims."
Deaton doesn't argue against all types of foreign aid. In particular, he believes that certain
types of health aid – offering vaccinations, or developing cheap and effective drugs to treat malaria,
for example -- have been hugely beneficial to developing countries.
But mostly, he said, the rich world needs to think about "what can we do that would make lives
better for millions of poor people around the world without getting into their economies in the way
that we're doing by giving huge sums of money to their governments." Overall, he argues that we should
focus on doing less harm in the developing world, like selling fewer weapons to despots, or ensuring
that developing countries get a fair deal in trade agreements, and aren't harmed by U.S. foreign
policy decisions.
Deaton also believes that our attitude toward foreign aid – that developed countries ought to
swoop in and save everyone else – is condescending and suspiciously similar to the ideas of colonialism.
The rhetoric of colonialism, too, "was all about helping people, albeit about bringing civilization
and enlightenment to people whose humanity was far from fully recognized," he has written.
Instead, many of the positive things that are happening in Africa – the huge adoption in cell
phones over the past decade, for example – are totally homegrown. He points out that, while the world
has made huge strides in reducing poverty in recent decades, almost none of this has been due to
aid. Most has been due to development in countries like China, which have received very little aid
as a proportion of gross domestic product and have "had to work it out for themselves."
Ultimately, Deaton argues that we should stand aside and let poorer countries develop in their
own ways. "Who put us in charge?" he asks.
"... "Struggling " is a far better term if we need a category for distressed citizens. Jobless of course leaves out The huge Category of low wage short hours households. Liberals want to help, want to be charitable, but the real social blight is lack of opportunity to make a decent living thru wage work ..."
"... Safety nets are not necessary if opportunity provides alternatives. More jobs more hours ..."
"... And instead we curb the jobs and hours expansion rate because we refuse to socialize even in part the pricing mechanism ..."
"... That was war time and we "tolerated" rations and price boards for the war effort ..."
"... A similar sense of urgency however can be instilled if leading circles embrace the effort ..."
"... We moved from the landed aristocracy to the landed gentry. Democracy still remains to be seen in full light of day, even relatively representative. ..."
"... Distribution system of US/EU capitalism has failed. [It is a ] systemic plunder* it passed ..."
"... Well yeah, but that is the best that we can get with largely unanswerable elites in charge of everything. Patronizing triangulation is the natural modus operandi for republican politics under a system of dollar democracy and arcane rules of compartmentalized representation. Sure, pure democracy is too cumbersome, but would a rough approximate of representativeness be too much to ask? ..."
I hate the the use of word "THE POOR " by liberal politicians It's like deplorable It's an insult
"Struggling " is a far better term if we need a category for distressed citizens. Jobless
of course leaves out The huge Category of low wage short hours households. Liberals want to help,
want to be charitable, but the real social blight is lack of opportunity to make a decent living
thru wage work
Wage rates and hours
Households cope with this blight. They struggle tinline and hold on to some happiness in the
Jeffersonian use of the word happiness
Most people are complicated and Thomas Jefferson was no exception. The better part of him was
associated with James Maddison and largely came from Thomas Paine.
But TJ had far too many personal problems to be held up like a saint. To be fair his time was
well before even a faint glimmer of effective democracy during the dawn of the modern quasi-electorally
appointed republic, an institution designed to emphasize property rights economic and political
efficacy over inherited bloodlines.
We moved from the landed aristocracy to the landed gentry. Democracy still remains to be
seen in full light of day, even relatively representative.
Well yeah, but that is the best that we can get with largely unanswerable elites in charge
of everything. Patronizing triangulation is the natural modus operandi for republican politics
under a system of dollar democracy and arcane rules of compartmentalized representation. Sure,
pure democracy is too cumbersome, but would a rough approximate of representativeness be too much
to ask?
"... "The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits." ..."
"... Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries). ..."
"... Moreover, team Trump is consistently misguided with their unilateral approach to this problem of trade imbalances. As long as foreign capital continues to flow freely into the US from surplus countries, absorbing less from Germany simply implies absorbing more excess savings from somewhere else. ..."
"... Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries). ..."
"... At this point, the growing group of economists who recognize the importance of these international imbalances are pointing towards the capital flows themselves as the force behind persistent trade deficits. ..."
"... "King suggests that the best solution is for deficit countries to get together with surplus countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth." That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust, repeat") that's been so repeatedly damaging to countries across the globe." ..."
So, at a meeting in Brussels yesterday, President Trump appears to have told leaders of the
European Union that "the Germans are bad, very bad." I'll let those with foreign diplomatic chops
figure out how to clean that up-and good luck: When I plug the Spiegel Online headline-"Die Deutschen
sind böse, sehr böse"-into Google translator, it spits back: "The Germans are evil, very evil."
I'll handle the economics, which actually are interesting. When Trump talks about trade, he
sometimes gets a piece of it right, and it's often a piece about which establishment politicians
and the economists that support them are in denial: Germany's trade surplus of over 8 percent
of GDP really is a problem for the other countries with whom they trade.
That's not just my view. Both Ben Bernanke and more recently, Lord Mervyn King, former governor
of the Central Bank of England, have expressed serious concerns about the impact of Germany's
large trade surplus on other countries.
But here are two things that I'm sure Trump misunderstands. First, Germany is not manipulating
its currency to build its surplus. Instead, it's the single currency of the Eurozone that's the
culprit. Germany is the economic powerhouse of the region, with stronger growth and production
practices than its Eurozone partners. Thus, if it's currency could float, it would surely appreciate,
but it can't, so its goods are underpriced in export markets relative to those countries' exports.
Second, as I'll get to in a moment, it's not clear what Germany should do about it.
In many posts, I've explained that, contrary to conventional wisdom, including the pushback
I've already heard from German EU ministers, trade imbalances are not always benign, nor do they
represent efficient markets at work. King stresses the damage of currency misalignments, as well
as the fundamental arithmetic of global trade. Since trade must balance on a global scale, one
country's trade surplus must show up as other countries' deficits. When a country like Germany
produces so much more than it consumes (runs a trade surplus), other countries must consume more
than they produce (run trade deficits). And when the magnitudes get this large as a share of GDP-Germany's
surplus hit a record 8.6 percent of GDP last year-the damage to other nations can be severe.
Bernanke in 2015:
"The fact that Germany is selling so much more than it is buying redirects demand from
its neighbors (as well as from other countries around the world), reducing output and employment
outside Germany at a time at which monetary policy in many countries is reaching its limits."
Bernanke's last point is key. When economies are percolating along at full employment, trade
deficits can, in fact, be benign. But unemployment in the Eurozone is still 9.5 percent, which
combines Germany's 3.9 percent with Spain's 18.2 percent, Greece's 23.5 percent, Italy's 11.7
percent, and so on. Germany's massive surplus has cribbed labor demand from those high unemployment
countries, but neither the fiscal nor monetary authorities in these nations have undertaken adequate
counter-cyclical policies ("why not?" is a good question having to do with constraints of the
monetary union and austerity economics).
To be clear, even at full employment, large, persistent trade deficits-which again, are the
flipside of large, persistent surpluses-can be problematic. Here in the US, they've hurt our manufacturers
and their communities, a fact that Trump exploited in the election. And one can, of course, see
similar political dynamics in the weaker parts of European economies.
Trade deficits have also contributed to asset bubbles. They must be financed with borrowed
capital, and such flows from surplus countries were clearly associated with our housing bubble
in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about
(weak demand, even in mature recoveries).
At this point, the growing group of economists who recognize the importance of these international
imbalances are pointing towards the capital flows themselves as the force behind persistent trade
deficits. This is an important insight because it belies the simple solution we tend to hear from
the mainstream: if only you'd save more, your trade deficit would shrink. But if other countries
persist in exporting their savings to us, short of capital controls to block those flows, our
trade deficit will also persist.
What could/should Germany do to be more of team player, spreading demand to others instead
of hoarding it? The usual recommendation, made by Bernanke, is to take their excess savings and
invest them at home, say through more public infrastructure or some other sort of fiscal stimulus.
But King makes the good point that since Germany is already pretty much at full employment-recall
their 3.9 percent unemployment rate–they may be disinclined to take this advice.
King suggests that they should instead do something to raise the value of their exchange rate
(appreciate their currency), but here again, it's not obvious how, as a member of the currency
union, they're supposed to go about that.
Surely, the solution Trump intimated-a big tariff on German exports into the US-wouldn't work.
For one, such actions invite retaliation, and not only do many of us want to tap the consumer
benefits of our robust global supply chains, but Germany has factories here that employ a lot
of people making cars and other equipment. That's welcome investment.
Moreover, team Trump is consistently misguided with their unilateral approach to this problem
of trade imbalances. As long as foreign capital continues to flow freely into the US from surplus
countries, absorbing less from Germany simply implies absorbing more excess savings from somewhere
else.
King suggests that the best solution is for deficit countries to get together with surplus
countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth."
That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust,
repeat") that's been so repeatedly damaging to countries across the globe. Perhaps that would
be a motivator for our trading-partner countries, though the longer Trump's out there on the road,
the harder it's getting to imagine such forward-looking international coordination.
I too have suggested that President Trump should convene such a commission, but sadly, I'm
not the Jared he listens to. In the meantime, he should check out Google Translator before he
mouths off.
Christopher H. said... May 27, 2017 at 09:25 AM
Krugman:
"This has only minor spillovers to the United States - maybe Germany's unhelpful role
has contributed a bit to our trade deficit, but this is basically an intra-Europe issue."
Bernstein:
"To be clear, even at full employment, large, persistent trade deficits-which again, are
the flipside of large, persistent surpluses-can be problematic. Here in the US, they've hurt
our manufacturers and their communities, a fact that Trump exploited in the election. And one
can, of course, see similar political dynamics in the weaker parts of European economies.
Trade deficits have also contributed to asset bubbles. They must be financed with borrowed
capital, and such flows from surplus countries were clearly associated with our housing bubble
in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks
about (weak demand, even in mature recoveries).
At this point, the growing group of economists who recognize the importance of these
international imbalances are pointing towards the capital flows themselves as the force behind
persistent trade deficits.
This is an important insight because it belies the simple solution we tend to hear from
the mainstream: if only you'd save more, your trade deficit would shrink. But if other countries
persist in exporting their savings to us, short of capital controls to block those flows, our
trade deficit will also persist."
Paine -> Christopher H.... May 27, 2017 at 02:10 PM
Nonsense. We can force Germany to build more cars here. In fact we can tell the German MNCs
to build all their north American cars here. Including parts and accessories. German MNCs have
no patriotic urge we couldn't subvert with market threats. Or Japanese MNCs for that matter. Push
back ?
Sorry we are the global market of choice we shut you out and you decline to secondary status.
Violate the code of MNCs liberty to jump borders at will ?
Now that is a horse of a darker shading
Christopher H. said... May 27, 2017 at 09:22 AM
Krugman:
"Yet Germany's huge trade surpluses are a problem * - which has nothing to do with trade policy."
Macro policy is sort of trade policy as Bernstein points out above. Instead of this neoliberal
ideal of a free market in international trade without trade policy or government interference,
we really need governments to manage trade, or at least manage their macro with trade policy in
mind.
As Bernstein suggest:
"King suggests that the best solution is for deficit countries to get together with surplus
countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth."
That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust,
repeat") that's been so repeatedly damaging to countries across the globe."
In the 1980s, the dollar was getting too strong until governments managed trade and currency
policy via the Plaza Accords which brought the dollar down. It was trade policy.
It wasn't policy to change savings rates or something that the mainstream economists focus
on.
Christopher H. -> to pgl... May 27, 2017 at 10:41 AM
"The exchange rate value of the dollar versus the yen declined by 51% from 1985 to 1987. Most
of this devaluation was due to the $10 billion spent by the participating central banks.[citation
needed] Currency speculation caused the dollar to continue its fall after the end of coordinated
interventions. Unlike some similar financial crises, such as the Mexican and the Argentine financial
crises of 1994 and 2001 respectively, this devaluation was planned, done in an orderly, pre-announced
manner and did not lead to financial panic in the world markets. The Plaza Accord was successful
in reducing the U.S. trade deficit with Western European nations but largely failed to fulfill
its primary objective of alleviating the trade deficit with Japan."
Since the coordinated actions of central banks led to the devaluation of the dollar and reduction
of the trade deficit, I'd say it was currency and trade policy as well.
"The justification for the dollar's devaluation was twofold: to reduce the U.S. current account
deficit, which had reached 3.5% of the GDP, and to help the U.S. economy to emerge from a serious
recession that began in the early 1980s."
Valletti, who is also a Professor of Economics at the Imperial College Business School and the University of Rome Tor Vergata,
discussed the EC's investigation into the Facebook-WhatsApp merger during the panel. Facebook, he said, had "lied" to European regulators
about its ability to absorb WhatsApp's user data, but the larger issue was market definition.
"Would the decision on the merger have changed had the Commission known that information at the time?" asked Valletti, who joined
theEC in 2016. "At the time, the Commission defined the relevant market as non-search advertising. This is a huge market. In that
ocean, even Facebook doesn't have a lot of market power. If instead the market definition had been, for instance, advertising on
social networks, [it's]likely theywould have concluded that Facebook would have been dominant in that particular market, and that
integrating that useful information from [WhatsApp] could have enhanced its market power." Valletti also stressedthe importance of
having individual-level data when discussing issues like competition at the advertising market, and not just looking at market shares.
Pasquale and Taplin, meanwhile, criticized U.S. antitrust authorities, with Taplin saying that digital platforms have "done very
well because they have a certain regulatory capture" and Pasquale remarkingthat "U.S. antitrust policy is rapidly becoming a pro-trust
policy."
As an example of this "pro-trust" policy, Pasquale cited the FTC's lawsuit against online
contact lens retailer 1-800 Contacts
. 1-800 Contacts was sued by the FTC last yearfor having reached agreements with 14 other online contact lens sellers that they
would not advertise to customers who had searched for 1-800 Contacts online."You would imagine that given the power of these [companies],
and given the activity in Europe and many other nations, our enforcers would be extremely concerned about these platforms. They are-they're
concerned about little companies hurting the platforms," he said.
The FTC, added Pasquale, had pursued the 1-800 Contacts case aggressively. "I'm not here to comment on the merits of this case,
but I think that the choice of this enforcement target speaks volumes. What does it say? It says that if small firms arebeing exploited
or hurt by a big digital behemoth, or think [they]are, don't try in any way to coordinate or maintain your independence. What you
should do is all combine and merge and become a giant, say, contacts firm. In the media, they should all combine and merge and maybe
all be bought by Comcast, so that then they can negotiate with Google in a way that they are relatively of the same size and power.
That's the pro-trust message we're getting under current non-enforcement U.S. antitrust policy."
"Blinder: Why, After 200 Years, Can't Economists Sell Free Trade?" From yesterday.
B/C so-called 'Free Trade' favor one group over another. Fair Trade should be the basis for
'Free Trade.'
American Economists are not smart enough to comprehend the "basis" and instead focus on numbers
which are clearly skewed to favor trade and which ignore the effects on those that DO NOT gain
in such deals.
Maybe it would help if Economists thought in metaphors.
Try thinking about music. There are all sorts of genres. Within each some are great and some
are horrible, i.e., a vast variety of degrees of what is great and what is not.
"Maybe it would help if Economists thought in metaphors..."
[Essentially that is what economists already do, although the term most often used is a different
form of abstraction than a metaphor or colloquial meme. Economists think in terms of stylized
facts.]
In social sciences, especially economics, a stylized fact is a simplified presentation of an
empirical finding.[1] A stylized fact is often a broad generalization that summarizes some complicated
statistical calculations, which although essentially true may have inaccuracies in the detail...
*
[When it comes to sorting out the beneficiaries from the losers, then the common measurement
of all things economic is money. Money aggregates is what economists look at in all those stylized
facts. So, the people with the most money naturally matter more in economics.
However, the devil is in the details. Just like Bluefin tuna do not benefit from a higher price
for Bluefin tuna in the short run (nor long run either unless caused by a drastic fall in quota
and catch rather than stock depletion) and fisherman of Bluefin tuna do not benefit from a higher
price of Bluefin tuna in the long run (as they still won't make enough to save and invest adequately
to protect against fishery collapse) and sushi bars don't benefit and sushi eaters do not benefit
then maybe lose-lose is more likely than win-win in economics. But if you were an economists and
said that then you would be out of a job.
Environmental economics makes a lot more sense than monetized economics if we are worried about
the future and quality of life for everyone, but economist do not worry about the future because
"In the end we are all dead" before it becomes time to pay the environmental piper. Besides environmental
economics places much more focus on distribution than wealth and GDP, whereas monetized economics
is just the opposite. So, financialize and securitize to your heart's content because we are on
the path to global destruction.]
RE: Growth, import dependence, and war in the context of international trade
Roberto Bonfatti, Kevin O'Rourke 26 May 2017
Classical models suggest that shifts in the balance of power can lead to conflict, where the
established power has the incentive to trigger war to deter the threat to its dominance. This
column argues that this changes if international trade is taken into account. Industrialisation
requires the import of natural resources, potentially leading a smaller nation to trigger war
either against a resource-rich country or the incumbent nation. The model can help explain the
US-Japanese conflict of 1941 and Hitler's invasion of Poland, and has implications for US-Chinese
relations today...
[I am not buying into ANY of THESE narratives regarding the risks of geopolitical instability
attributable to increased levels of global economic integration, but I do really like how the
authors pose these narratives which all fly in the face of the old saw about global economic integration
ushering in a sustained period of world peace.
Indeed globalization has never stopped warring before. It did not prevent WW-I. Yes, there
was lots of world trade before container ships and the free movement of capital. Container ships
and the free movement of capital just lowered the cost of extended supply chains such that international
wage arbitrage made greater global integration profitable for owners of capital well after most
other comparative advantages of international competition had become moot.
Global economic integration via the international settlement of accounts regime under the gold
standard was a principle cause of the Great Depression which in turn greatly exacerbated "The
Economic Consequences of the Peace." The Versailles Treaty was a "Carthaginian peace" Keynes convincingly
argued and it did indeed lead to WW-II with Germany in the grips of the Great Depression fitfully
reasserting its self determination.
I do not even believe that war poses the greatest risk to geopolitical instability in the current
century. The H-bomb has done a lot to limit the severity of international hostility even if it
has done nothing to reduce the frequency since the end of the Cold War.
The role of the greatest risks to geopolitical instability in the current century I expect
to be filled by various supply side and demand side shocks delivered by the unnatural events of
Nature under its present climate change regime. Floods, draughts, typhoons, and even earthquakes
(yep - both rising ocean and melting glaciers are unsteadying the steady pressure of Earthly masses
on its tectonic plates - recipe for earthquakes second only to asteroids) all continue to be both
more frequent and more severe. In an integrated global economy any catastrophe of economic significance
in one country (or more) is not only propagated in its economic effects to all of its trading
partners around the world, but those effects become magnified as the integration between those
trading partners reverberate the effects. This is globalization's economic shock multiplier effect.
Falling tides wreck all boats. This century is still young, but fortunately enough for me that
I am not.]
It is drying up outside now after two days of rain and no one has slapped me with the other side
of this story yet. So, I will have to slap myself while I am still conveniently at hand to answer
the challenge.
If not for globalization then worldwide poverty would likely be the greatest risk to geopolitical
instability in the current century instead of climate change, which would also make climate change
even more deadly and difficult to deal with. However, globalization in its present degree and
form was the chosen rather than only possible means of turning the tide against global poverty.
First off, the major emerging economies were each capable of doing quite a lot on their own and
a lot more with just a little help in the form of capital and technology. It was the choice of
the west to engage in private trade rather than foreign aid to achieve these ends. That choice
came about because corporations have a greater control of western governments than western governments
have control of corporations. Corporations seeded that choice both through their own generosity
to the campaigns of politicians and via a public relations campaign against giving foreign aid
to those people. Corporations preferred to just give those people our jobs and skip the middle
man, the taxpayer.
"... Neoliberal economics denies that for real economic agents networks are of primary important. ..."
"... I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication. ..."
Free trade works with he assumption that the winners share their profits with the losers, creating
a win-win or at least win-no lose scenario. However, the same people who preach free trade tend
to suggest to "reform" the welfare state, a.k.a. annihilating it, eliminating the very assumption
that makes free trade supposedly a pareto improvement.
Plus economists only argue with money and commodities. Free trade moves jobs abroad, destroying
lifes and communities. This non-monetary cost is not included in the models that prove the advantages
of free trade.
In terms Blinder might understand: "Alan, if you let me murder you, I will give each of your
children and grandchildren $10,000. That's money they wouldn't otherwise receive. You're cool
with that, right?"
"Free trade works with he assumption that the winners share their profits with the losers,
creating a win-win or at least win-no lose scenario"
Nonsense. Free trade, local or international, is about trading labor for labor. There are no
winners or losers. Economies must be zero sum. A free trade means neither you nor I do AAA nothing
for the other that puts us at a disadvantage. Since Reagan made free lunch economics cool, most
economists reject labor as the core of the economy.
Free lunch economics seeks to eliminate labor from the economy as a purely burdensome cost.
Instead, free lunch economics worships money with no connection to labor. But money is, at its
core, simply a proxy for labor. But with free lunch economists constantly rejecting labor as a
burden to be cut and eliminated, trade increasingly becomes about monopoly power and rents, but
that requires eliminating free trade.
The problems with trade in the US is free lunch economists have justified and given authority
to trade US property, land, assets away in exchange for labor by Asians who needed assets to develop.
Assets like fossil fuels, iron ore, etc.
Milton Friedman argued that we Americans become wealthier getting labor produced consumption
goods in exchange for giving them our property in a frequently cite 1978 lecture. Ie, he advanced
the idea that labor is not what trade is about.
Yet, you will never find an economist describing the advantage of free trade by saying nation
one's capitalists make its workers unemployed in order to have nation two's workers do all the
work.
That's the wonder of free lunch economics. Describe free trade in terms of trading labor. Then
immediately argue that it's better to trade, not labor, but assets for labor, making workers in
both nations better off....
The rhetoric is clever, and liberals grew lazy and failed to think about the flaws in free
lunch economics of Friedman, et al, since.
After 200 years it has finally gotten to the point where free trade promoters are having trouble
selling their snake oil. The biggest problem is that 'free' trade isn't free at all. It is a series
of deals heavily negotiated on behalf of the industries that benefit from them...labor, indigenous
groups, and environmentalists are nowhere to be found at the negotiating table...only multinational
corporations hoping to get a free lunch...or as close to it as possible...in return for the gobs
of money they invested in Democrats and Republicans.
Sad that it has taken 200 years to figure this out.
Workers love to screw themselves because they believe they will keep getting high wages even if
they pay every other worker low wages. Do you complain that food prices are too low resulting
in food workers being paid too little?
If you are not calling for higher food prices, then you better believe food workers want your
wages slashed so the price of what you produce for them can be afforded by someone making $15,000
a year.
No one forces any American worker to buy Chinese made goods, or any import. Instead, US workers
kill their own jobs paying prices that are too low to be produced by US workers.
But not even Bernie calls for higher prices paid by all workers so US workers can produce everything
at good 60s era union wage levels. Food was more expensive then. Clothing more expensive. Vacations
like those many take today were very expensive, so vacations then were spartan: visiting relatives,
or camping in government parks or staying at a cabin with an outhouse and no electricity.
Maybe economists could sell free trade if they were not standing if front of what looks like a
concrete prison wall fidgeting with their microphone.
I find it mildly amusing that economists who believe in rational expectations and rational
consumers cannot understand why people are too stupid to get free trade. Experience cognitive
dissonance much?
Only an economist who does not understand business would say that it does not pay to advertise
a book before it's out.
I have an idea what's wrong with ration expectations theory that falls out of work I've done on
self organizing radio networks.
One of the biggest problems when trying to reason about these networks if that the actual nodes
have very limited information about the layout of the network. It's vital to take that into account
when developing strategies for maintaining the network without having a central controller.
I find that people have a really really hard time letting go over an over-all mental model
of what is happening and way. Turns out none of the information that the nodes have is totally
unambiguous. It's always ambiguous and limited and poorly sampled.
That's the central problem with the rational expectations model right there. In real life the
actors do not have anything close to sufficient, well sampled, unambiguous information to work
off of. Even if they did, cognitive load is an issue.
Real life actors tend to punt and work on developing trusted economic associations with other
economic actors. My experience is this takes years to develop. Yet neoliberals don't place any
value on those trusted networks and work to destroy them because they see them as inefficient.
It is worse than that. Economists don't have a model that works, but they assume that each and
every actor in the market does. That is a crazy assumption.
Places are created by import substitution. Free trade makes import substitution harder. That means
places like cities, states and even nations, have found it increasingly difficult to be somewhere
as opposed to some trading post or colony. People like to live somewhere as opposed to nowhere.
Shouldn't ignore 170 years of Western protectionism which led to wealth, followed by 30 years
of total destruction under free trade ,
May 25, 2017 at 07:55 PM
Economists need to study history. They needed to be told about East Asia and should travel around
the destroyed cities of the US. Economists should let the people of Detroit how wonderful things
have gone since the US abandoned protectionism in the early 1970s.
There is a whole lot of truth in your comment. Economists (and policy makers) should look at East
Asian countries and really take into account how export focused economies HAVE managed to improve
the standard of living of their citizens so greatly. And they have managed that- and it is a very
good thing overall. But it has had costs for many here in the US who were not in a position to
bear those costs and there has not been any nearly adequate attempt to help them bear those costs.
Economists should sell free trade in Youngstown, Camden, Cleveland, East St. Louis - tell them
the world was terrible in the 1950s when the US had high tariffs ,
May 25, 2017 at 08:18 PM
Economists should host the next AEA ｍｅｅｔｉｎｇ ｉｎ Yｏｕｎｇｓｔｏｗｎ．
Free trade, like free markets, are both tools of the neoliberal agenda moreso than sound principles
applicable to the real world.
Markets with few or no rules and enforcement to prevent the strong and well connected from
victimizing others resides the fundamental assumption that people are naturally rational and with
the character of angels.
Anyone who has ever driven on a freeway knows that this assumption representative a fatal error.
"Free trade, like free markets, are both tools of the neoliberal agenda moreso than sound principles
applicable to the real world."
Exactly -- The key word here is "tools". They are used as a tools of achieving specific, pretty
nefarious goals.
What is interesting is that neoliberals redefined the meaning of "free" as "unregulated" and
pushed to use it in this "double" meaning, instead of the proper word "fair".
Neoliberals never use the term "fair trade". That's Anathema to them.
That redefinition is actually pretty subtle and pretty devious. Really Orwellian semantic trick.
Compare with "The Ministry of Truth, which concerned itself with news, entertainment, education,
and the fine arts. The Ministry of Peace, which concerned itself with war. The Ministry of Love,
which maintained..."
As Reason once commented in this blog: "I'm beginning to hate the word free".
There is no free trade - only negotiated and regulated trade and dominant nations always get
better terms.
Foreign nations are very suspicious if, for example, the USA reps talk about "free trade" ;-)
Historically GB was the promoter. In this case, free trade was simply one of the mechanisms
of empire in the age of industrialism, one part of the wealth pump that allows to concentrate
the wealth of the globe in Britain during the years of its imperial dominion. Manufactured good
carried huge premium in price. For example, they completely destroyed textile industry in India
to eliminate competition. Opium wars is another good example here.
It's role is pretty similar for the United States today. In a very interesting way it is combined
with "debt slavery" for the most of that nations on the globe.
Kind unique combination, typical for neoliberalism.
It also exists within the web of military treaties that lock allies and vassal nations into
a condition of dependence on the imperial center, as well as enforce the dominant currency in
which international trade is carried out.
It requires a keen eye to look at the history and pay attention to the direction in which the
benefits of "free trade" flow.
But in reality the USA has very little to do with "free trade". The USA practices "selective
protectionism" hypocritically disguised as "free trade".
"... We also have actively been pushing for longer and stronger patent and copyright protections.
While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees
at odds with free trade. And, they are very costly.
Patent protection in prescription drugs will lead to us pay more than $440 billion this
year for drugs that would likely sell for less than $80 billion in a free market. The difference
of $360 billion comes to almost $3,000 a year for every family in the country. ..."
"... Stop using the term "free trade" at all...when wall street bankers and hedge fund managers
and the corporate media use the term "free trade", what they are really talking about is labor
arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety
and environmental standards. It usually means a nation without a democracy, run by either oligarchs
or despots. ..."
I never said that - the word I hated was "freedom", because it has been badly abused (and it is
often not clear what it is). Freedom is only ever relative (i.e. you can't increase one aspect
of freedom without impingement of another in some way). That is not the same as the adjective
"free" - which not an concept relating to a universal state - I know what free entry to a museum
is.
reason : Reply Thursday, March 23, 2017 at 02:20 AM , March 23, 2017 at 02:20 AM
Is the question "Are there Benefits from Free Trade" - different from the question "Are
there Benefits from Trade"? What work is word "free" doing here - and what does it even mean?
I'm beginning to hate the word "free". It is so vague and so often misused that I'm
beginning to think it should just be banned. It is a hindrance to communication.
Phillip Mirowski challenged the left to directly attack and defeat the neoliberal belief that
markets are information processors that can know more than any person could ever know and solve
problems no computer could ever solve. [Prof. Philip Mirowski keynote for 'Life and Debt' conference
https://www.youtube.com/watch?v=I7ewn29w-9I
]
Sorry for the long quote - I am loathe to attempt to paraphrase Hayek
"This is particularly true of our theories accounting for the determination of the systems
of relative prices and wages that will form themselves on a wellfunctioning market. Into the
determination of these prices and wages there will enter the effects of particular information
possessed by every one of the participants in the market process – a sum of facts which in
their totality cannot be known to the scientific observer, or to any other single brain. It
is indeed the source of the superiority of the market order, and the reason why, when it is
not suppressed by the powers of government, it regularly displaces other types of order, that
in the resulting allocation of resources more of the knowledge of particular facts will be
utilized which exists only dispersed among uncounted persons, than any one person can possess.
But because we, the observing scientists, can thus never know all the determinants of such
an order, and in consequence also cannot know at which particular structure of prices and wages
demand would everywhere equal supply, we also cannot measure the deviations from that order;
nor can we statistically test our theory that it is the deviations from that "equilibrium"
system of prices and wages which make it impossible to sell some of the products and services
at the prices at which they are offered."
[Extract from Hayek's Nobel Lecture]
This just hints at Hayek's market supercomputer idea - I still haven't found a particular writing
which exposits the idea - so this will have to do.
Sorry - another quote from the Hayek Nobel Lecture [I have no idea how to paraphrase stuff
like this!]:
"There may be few instances in which the superstition that only measurable magnitudes can be
important has done positive harm in the economic field: but the present inflation and employment
problems are a very serious one. Its effect has been that what is probably the true cause of
extensive unemployment has been disregarded by the scientistically minded majority of economists,
because its operation could not be confirmed by directly observable relations between measurable
magnitudes, and that an almost exclusive concentration on quantitatively measurable surface
phenomena has produced a policy which has made matters worse."
I can't follow Hayek and I can't follow Jason Smith. The first quote above sounds like a "faith
based" theory of economics as difficult to characterize as it is to refute. The second quote throws
out Jason Smith's argument with a combination of faith based economics and a rejection of the
basis for Smith's argument - as "scientistically minded."
I prefer the much simplier answer implicit in Veblen and plain in "Industrial Prices and their
Relative Inflexibility." US Senate Document no. 13, 74th Congress, 1st Session, Government Printing
Office, Washington DC. Means, G. C. 1935 - Market? What Market? Can you point to one? [refer to
William Waller: Thorstein Veblen, Business Enterprise, and the Financial Crisis (July 06, 2012)
[https://archive.org/details/WilliamWallerThorsteinVeblenBusinessEnterpriseAndTheFinancialCrisis]
It might be interesting if Jason Smith's information theory approach to the market creature
could prove how the assumed properties of that mythical creature could be used to derive a proof
that the mythical Market creature cannot act as an information processor as Mirowski asserts that
Hayek asserts. So far as I can tell from my very little exposure to Hayek's market creature it
is far too fantastical to characterize with axioms or properties amenable to making reasoned arguments
or proofs as Jason Smith attempts. Worse - though I admit being totally confused by his arguments
- Smith's arguments seem to slice at a strawman creature that bears little likeness to Hayek's
market creature.
The conclusion of this post adds a scary thought: "The understanding of prices and supply and
demand provided by information theory and machine learning algorithms is better equipped to explain
markets than arguments reducing complex distributions of possibilities to a single dimension,
and hence, necessarily, requiring assumptions like rational agents and perfect foresight." It
almost sounds as if Jason Smith intends to build a better Market as information processor - maybe
tweak the axioms a little and bring in Shannon. Jason Smith is not our St. George.
But making the observation that there are no markets as defined makes little dint on a faith-based
theory like neoliberalism, especially a theory whose Church encompasses most university economics
departments, most "working" economists, numerous well-funded think tanks, and owns much/most of
our political elite and so effectively promotes the short-term interests of our Power Elite.
"... Warren, who first made the argument, was speaking out against the idea that calling for higher taxes on the rich constitutes class warfare, saying: There is nobody in this country who got rich on his own-nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did. ..."
"... This is a fundamentally Polanyian point about the embeddedness of markets in society, and the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally as rebuttals to certain libertarian notions of how economies should work, which may be one reason that certain Democrats sometimes sound like Polanyi. ..."
"... But Polanyi also helps explains some of the tensions within the Democratic Party. One of the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been between a social-democratic and a "progressive" but market-friendly vision of addressing social problems. Take, for example, health care. Sanders proposes a single-payer system in which the government pays and health care directly, and he frames it explicitly in the language of rights: "healthcare is a human right and should be guaranteed to all Americans regardless of wealth or income." ..."
"... Sanders here offers a straightforward defense of decommodification -- the idea that some things do not belong in the marketplace-that is at odds with the kind of politics that the leadership of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus that tends to dominate coverage. ..."
"... Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. From the point of view of the community as a whole, socialism is merely the continuation of that endeavor to make society a distinctively human relationship of persons. ..."
"... Sanders's particular notion of a political revolution-in which people use democracy to change the rules governing our national political economy-is very Polanyian. Polanyi's socialism has a certain modern appeal when the more traditionally Marxist idea of having the state seize the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's relevance for today lies in his arguments that markets need to be subjected to democratic control, that human beings resist being transformed fully into commodities, and a fully realized market society is both impossible, undesirable, and at odds with genuine liberty and freedom. ..."
Not at all. Democrats have taken up Polanyian arguments in response to many of the market-fundamentalist
notions that the Tea Party has helped to circulate in recent years. The most notable example might
be President Obama and Elizabeth Warren's "you didn't build that" faux-controversy from 2011 and
2012. Warren, who first made the argument, was speaking out against the idea that calling
for higher taxes on the rich constitutes class warfare, saying:
There is nobody in this country who got rich on his own-nobody. You built a factory out there?
Good for you. But I want to be clear. You moved your goods to market on the roads the rest of
us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because
of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding
bands would come and seize everything at your factory -- and hire someone to protect against this
-- because of the work the rest of us did.
This is a fundamentally Polanyian point about the embeddedness of markets in society, and
the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally
as rebuttals to certain libertarian notions of how economies should work, which may be one reason
that certain Democrats sometimes sound like Polanyi.
But Polanyi also helps explains some of the tensions within the Democratic Party. One of
the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been
between a social-democratic and a "progressive" but market-friendly vision of addressing social
problems. Take, for example, health care. Sanders proposes a single-payer system in which the
government pays and health care directly, and he frames it explicitly in the language of rights:
"healthcare is a human right and should be guaranteed to all Americans regardless of wealth or
income."
Clinton, meanwhile, describes affordable health care as a right. Clinton also wants higher
education to remain a market commodity, because she says that if the government paid, it would
needlessly be giving a free ride to the children of the wealthy and the upper-middle class. Clinton's
reasoning appeals to ideas of market efficiency, while Sanders, in stating that "Education should
be a right, not a privilege," appeals to ideas of community beyond markets.
Sanders here offers a straightforward defense of decommodification -- the idea that some
things do not belong in the marketplace-that is at odds with the kind of politics that the leadership
of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus
that tends to dominate coverage.
Whether or not Sanders has read Polanyi-similar language about economic and social rights was
also present in FDR's New Deal, which Sanders argues is the basis of his brand of socialism-Polanyi's
particular definition of socialism sounds like one Sanders would share:
Socialism is, essentially, the tendency inherent in an industrial civilization to transcend
the self-regulating market by consciously subordinating it to a democratic society. It is the
solution natural to industrial workers who see no reason why production should not be regulated
directly and why markets should be more than a useful but subordinate trait in a free society.
From the point of view of the community as a whole, socialism is merely the continuation of that
endeavor to make society a distinctively human relationship of persons.
Sanders's particular notion of a political revolution-in which people use democracy to
change the rules governing our national political economy-is very Polanyian. Polanyi's socialism
has a certain modern appeal when the more traditionally Marxist idea of having the state seize
the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's
relevance for today lies in his arguments that markets need to be subjected to democratic control,
that human beings resist being transformed fully into commodities, and a fully realized market
society is both impossible, undesirable, and at odds with genuine liberty and freedom.
Sanders's campaign has shown that a political platform favoring decommodification and a retreat
from the extremes of society's subordination to markets has deep appeal. The future of the party
does not belong to Bernie Sanders himself, but the Karl Polanyi Democrats are here to stay.
This is the second in a series of projected posts that try to look at the Trump administration
and right wing populism through the lens of different books (the first – on civil society – is
here). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European
exile intellectual – Karl Polanyi.
"... Warren, who first made the argument, was speaking out against the idea that calling for higher taxes on the rich constitutes class warfare, saying: There is nobody in this country who got rich on his own-nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did. ..."
"... This is a fundamentally Polanyian point about the embeddedness of markets in society, and the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally as rebuttals to certain libertarian notions of how economies should work, which may be one reason that certain Democrats sometimes sound like Polanyi. ..."
"... But Polanyi also helps explains some of the tensions within the Democratic Party. One of the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been between a social-democratic and a "progressive" but market-friendly vision of addressing social problems. Take, for example, health care. Sanders proposes a single-payer system in which the government pays and health care directly, and he frames it explicitly in the language of rights: "healthcare is a human right and should be guaranteed to all Americans regardless of wealth or income." ..."
"... Sanders here offers a straightforward defense of decommodification -- the idea that some things do not belong in the marketplace-that is at odds with the kind of politics that the leadership of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus that tends to dominate coverage. ..."
"... Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. From the point of view of the community as a whole, socialism is merely the continuation of that endeavor to make society a distinctively human relationship of persons. ..."
"... Sanders's particular notion of a political revolution-in which people use democracy to change the rules governing our national political economy-is very Polanyian. Polanyi's socialism has a certain modern appeal when the more traditionally Marxist idea of having the state seize the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's relevance for today lies in his arguments that markets need to be subjected to democratic control, that human beings resist being transformed fully into commodities, and a fully realized market society is both impossible, undesirable, and at odds with genuine liberty and freedom. ..."
Not at all. Democrats have taken up Polanyian arguments in response to many of the market-fundamentalist
notions that the Tea Party has helped to circulate in recent years. The most notable example might
be President Obama and Elizabeth Warren's "you didn't build that" faux-controversy from 2011 and
2012. Warren, who first made the argument, was speaking out against the idea that calling
for higher taxes on the rich constitutes class warfare, saying:
There is nobody in this country who got rich on his own-nobody. You built a factory out there?
Good for you. But I want to be clear. You moved your goods to market on the roads the rest of
us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because
of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding
bands would come and seize everything at your factory -- and hire someone to protect against this
-- because of the work the rest of us did.
This is a fundamentally Polanyian point about the embeddedness of markets in society, and
the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally
as rebuttals to certain libertarian notions of how economies should work, which may be one reason
that certain Democrats sometimes sound like Polanyi.
But Polanyi also helps explains some of the tensions within the Democratic Party. One of
the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been
between a social-democratic and a "progressive" but market-friendly vision of addressing social
problems. Take, for example, health care. Sanders proposes a single-payer system in which the
government pays and health care directly, and he frames it explicitly in the language of rights:
"healthcare is a human right and should be guaranteed to all Americans regardless of wealth or
income."
Clinton, meanwhile, describes affordable health care as a right. Clinton also wants higher
education to remain a market commodity, because she says that if the government paid, it would
needlessly be giving a free ride to the children of the wealthy and the upper-middle class. Clinton's
reasoning appeals to ideas of market efficiency, while Sanders, in stating that "Education should
be a right, not a privilege," appeals to ideas of community beyond markets.
Sanders here offers a straightforward defense of decommodification -- the idea that some
things do not belong in the marketplace-that is at odds with the kind of politics that the leadership
of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus
that tends to dominate coverage.
Whether or not Sanders has read Polanyi-similar language about economic and social rights was
also present in FDR's New Deal, which Sanders argues is the basis of his brand of socialism-Polanyi's
particular definition of socialism sounds like one Sanders would share:
Socialism is, essentially, the tendency inherent in an industrial civilization to transcend
the self-regulating market by consciously subordinating it to a democratic society. It is the
solution natural to industrial workers who see no reason why production should not be regulated
directly and why markets should be more than a useful but subordinate trait in a free society.
From the point of view of the community as a whole, socialism is merely the continuation of that
endeavor to make society a distinctively human relationship of persons.
Sanders's particular notion of a political revolution-in which people use democracy to
change the rules governing our national political economy-is very Polanyian. Polanyi's socialism
has a certain modern appeal when the more traditionally Marxist idea of having the state seize
the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's
relevance for today lies in his arguments that markets need to be subjected to democratic control,
that human beings resist being transformed fully into commodities, and a fully realized market
society is both impossible, undesirable, and at odds with genuine liberty and freedom.
Sanders's campaign has shown that a political platform favoring decommodification and a retreat
from the extremes of society's subordination to markets has deep appeal. The future of the party
does not belong to Bernie Sanders himself, but the Karl Polanyi Democrats are here to stay.
This is the second in a series of projected posts that try to look at the Trump administration
and right wing populism through the lens of different books (the first – on civil society – is
here). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European
exile intellectual – Karl Polanyi.
"... Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. ..."
"... More broadly, fascism, like socialism, was rooted in a market society that refused to function' (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom. ..."
"... Mark Blyth's book, Great Transformations ..."
"... they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven't been gutted, but they have been greatly weakened. ..."
"... As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich. ..."
"... Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them. ..."
"... Review of International Political Economy ..."
"... The problem, they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable. ..."
"... Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise. ..."
"... If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and neglected book on money, Frozen Desire ..."
"... Lots of mentions of "society" there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby the economy has ceased to be a national economy but "society" has largely remained within borders. ..."
"... Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors. ..."
"... Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades). ..."
"... I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the "supine response" of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs). ..."
"... Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment. ..."
"... A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy. ..."
"... A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion. ..."
"... The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable - really that uncertainty ..."
"... I crossed this bridge myself in 2008. Trump's supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. ..."
by Henry on May 1, 2017 This is the second in a series of projected
posts that try to look at the Trump administration and right wing populism through the lens of different
books (the first – on civil society – is
here ). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European
exile intellectual – Karl Polanyi.
Karl Polanyi's key book, The Great Transformation
has enjoyed a big revival in the last decade. This
Dissent article by Patrick Iber and Mike Konczal provides a great summary. Their article – from
last year – was intended primarily to frame a discussion of differences between Hillary Clinton and
Bernie Sanders. However, as Iber and Konczal suggest in passing, Polanyi would not have been surprised
by Trump. Why not? In part, because Polanyi offers a macro-level account of the changing relationship
between society and economy, and how efforts to free the economy from the embrace of social relations
become self-undermining.
In Polanyi's argument, the economy is 'socially embedded.' This means that economic transactions
and relationships aren't separate from society – they are part of it. Efforts to free the market
from society and make it self-regulating are not only utopian, but are likely to have disastrous
consequences. For Polanyi, the liberal market societies that sprung up in countries such as Britain
in the eighteenth and nineteenth centuries, and spread across the world, are not rooted in some natural
propensity to 'truck, barter and exchange one thing for another.' Instead, they are an unnatural
extrusion – the result of a doomed effort to separate out the market from the society that constitutes
it, turning nature and social relations like labour into artificial commodities to be bought, sold
and exchanged.
This is rooted in Polanyi's understanding of economic history, which discusses other ways in which
the economy has worked (an aside: a substantial portion of the work of the Nobel prize winning economist
Doug North can be read as an extended
effort to prove Polanyi wrong ). It also leads to his famous (among social scientists) argument
about the 'double movement.' Polanyi argues that efforts to disembed markets from their social supports
leads to a backlash from 'Society,' which looks to re-embed market relations within a social context.
This effort to re-embed social relations can take both benign and malign forms. Polanyi was a
social democrat. He wanted to roughly map out a set of social protections that could restrain the
harmful effects of markets, effectively re-embedding them within a set of social protections. Yet
his book was first published in 1944, and he was equally concerned with the malign ways in which
Society might re-embed markets. He saw the economic crises of the 1930s as a product of disembedded
markets and the gold standard. This led to direct political confrontations between workers – immiserated
by lower wages and capitalists who had "built industry into a fortress from which to lord the country"
(p.235). Economic and political paralysis provided ideal conditions for fascism to succeed: "Fear
would grip the people, and leadership be thrust upon those who offered an easy way out at whatever
ultimate price" (p. 236).
Polanyi believed that fascism had little to do with the outcomes of World War I, and depended
for success more on the sympathies of the powerful than on any true mass movement. At least
as important as an actual fascist movement "were the spread of irrationalist philosophies, racialist
esthetics, anticapitalist demagogy, heterodox currency views, criticism of the party system, widespread
disparagement of the 'regime' or whatever was the name given to the existing democratic set-up" (p.238).
More broadly, fascism, like socialism, was rooted in a market society that refused to function'
(p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way
to re-embed markets within social structures, albeit at the cost of human freedom.
Thus, for Polanyi, the key challenge was to re-embed markets in society in a healthy rather than
pernicious fashion. This would involve social protections and the restoration of the primacy of society
over the economic system, so that "the market system would no longer be self-regulating" (p. 251).
Governments would cooperate more, while retaining the freedom to organize their national life as
they wanted, rather than being strangled by the need to maintain an artificial currency standard.
The valuable aspects of liberal society – specifically, the civil liberties, private enterprise and
wage system which sprung up from nineteenth century liberalism – would have to be maintained through
persistent efforts to ensure that every move to strengthen society be accompanied by a move to strengthen
individual freedom.
Polanyi's arguments provided many post World War II social democrats with a set of intellectual
tools to understand and justify the world that was being created. They suggested that European social
democracy, rather than being a way station on the path to true revolution, was an end-state, and
arguably a more attractive end-state than exemplars of post-revolutionary society such as the USSR
and China. In domestic politics, national governments instituted the welfare state and other social
protections. In international politics, scholars such as John Ruggie
argued in
the 1980s that the post World War II economic order provided a kind of 'embedded liberalism'
of the kind recommended by Polanyi.
They also provide, potentially a diagnosis of what has gone wrong since the 1980s. Embedded liberalism
is dead, and neo-liberalism has triumphed in its place. Mark Blyth's book, Great Transformations , is an explicit
updating of Polanyi. It documents how intellectuals and business leaders brought through an intellectual,
social and economic transformation, deliberately intended to undermine embedding institutions, and
reinstitute market freedoms in their place. The world of the last twenty years has seen an extraordinary
transformation. International markets do not any more have an equivalent of the gold standard (although
the
euro served quite well in its place in the European Union), yet they create their own disciplining
apparatuses that subordinate national economies to international markets. Traditional social protections
haven't been gutted, but they have been greatly weakened.
As Piketty and others have documented, the benefits of globalization have flowed, to a vastly
disproportionate extent, to those who were already rich.
Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed
out, leaving working class people exposed to uncertain and often miserable futures. Just like the
nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers
and members of the lower middle class find themselves exposed to an unrestrained market, that seems
intent on ripping out the social bulwarks that used to protect them.
Hence, a straightforward Polanyian account of Trump and right wing populism would explain
it as a backlash to the renewed efforts of market liberals (or neoliberals in market parlance) to
free the economy from the social restraints that make it bearable for human beings. It would argue
that we are again seeing a 'double movement,' as right wing populist politicians take advantage of
popular anger to restore a social and moral order which may look appalling to liberal eyes, but which
reinstitutes (or, at least, claims to reinstitute) much desired social protections.
Fred Block and Peggy Somers
provided such an account a couple of years ago, where they foresaw the threat of resurgent right
wing populism. Their analysis is worth quoting in extenso
Polanyi argued that the devastating effects on society's most vulnerable brought on by market
crises (such as the Great Depression in the 1930s) tends to generate counter movements as people
struggle to defend their livelihoods, their neighborhoods, and their cultures from the destructive
forces of marketization. The play of these opposing dynamics is the double movement, and it always
involves the effort to remobilize political power to tame the apparent over-extension of market
forces. The great danger Polanyi alerts us to, however, is that mobilizing politics to protect
against markets run wild is just as likely to be reactionary and conservative, as it is to be
progressive and democratic. Whereas the American New Deal was Polanyi's example of a democratic
counter movement, fascism was the classic instance of a reactionary counter-movement; it provided
protection to some while utterly destroying democratic institutions.
This helps us to understand the tea party as a response to the uncertainties and disruptions
that free market globalization has brought to many white Americans, particularly in the South
and Midwest. When people demonstrate against Obamacare with signs saying "Keep Your Government
Hands off My Medicare," they are trying to protect their own health care benefits from changes
that they see as threatening what they have. When they express deep hostility to immigrants and
immigration reform, they are responding to a perceived threat to their own resources-now considerably
diminished from outsourcing and deindustrialization. Polanyi teaches us that in the face of market
failures and instabilities we must be relentlessly vigilant to the threats to democracy that are
often not immediately apparent in the political mobilizations of the double movement.
We just saw in the European elections that right-wing, seemingly fringe parties, came in first
in France and the U.K. This is a response to the continuing austerity policies of the European
Community that have kept unemployment rates high and blocked national efforts to stimulate stronger
growth. It might still be largely a protest vote-a signal to the major parties that they need
to abandon austerity, create jobs, and reverse the cuts in public spending. But unless there are
some serious initiatives at the European Community and the global level to chart a new course,
we can expect that the threat from the nationalist and xenophobic right will only grow stronger.
Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa
Mayin a watered down form. They may or may not deliver on their rhetoric (Trump's anti-Wall Street
fervor, for example, has miraculously disappeared after his election), but each bases their appeal
on it.
There are different flavors of Polanyian thought. Iber and Konczal represent a left-leaning social
democratic flavor, that is in line with the Sanders wing of the Democratic party, and look to build
bridges with those further to the left. Other Polanyians like Sheri Berman are more attracted to
a moderate version, which builds more directly on the European example, and are skeptical of anti-system
versions of leftism. Polanyian arguments involve compromise between a left critique of markets and
a more centrist defense of liberalism. Different writers strike the compromise in different places.
This also has implications for how one analyses Trump and other populists. For example,
Berman argues that the dangers of right wing populism depends to a very great extent on the strength
of existing liberal institutions and practices, and the willingness of others to oppose Trump (just
as traditional fascism depended for its success on the willingness of 'establishment' conservatives
to strike a deal).
Polanyi's arguments about great transformations differ from civil society oriented approaches
like Gellner's in some important ways. Gellner is, in the end, on the side of the cosmopolitans –
he prefers a detached and ironic liberalism to more traditionalist versions of identity, and believes
that it is crucially linked to the thought system that has given rise to science and the partial
mastery of nature (even if he prefers to maintain a quasi-ironic stance towards that thought system
too). Civic nationalism, for Gellner, is the homage that virtue pays towards vice – an identity politics
homeopathically diluted so as to make it stronger in some ways (people remain oriented to the general
interest of a larger collective), but weaker in others (they are also capable of maintaining and
moving between other forms of identification). Polanyi, in contrast, values community attachment
and accompanying 'thick' notions of society as good things in their own right. While he also sees
great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society,
both because of the devastation that it wreaks itself, and the corresponding devastation that may
be wreaked by Society taking its revenge.
This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left.
The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile
the values of liberalism and community order. The second is a more strongly left leaning social democratism,
which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a
different set of intellectual ancestors than those of the Marxist tradition.
The weakness of traditional Polanyian thought is twofold. First, modern conditions are not the
same as those identified by Polanyi in the 1930s. There isn't a stalemate between the workers and
the capitalists (the capitalists seemed mostly to have won). Second, the mechanisms that Polanyi
identifies are notably vague. To argue that 'Society' strikes back against the 'Market' is to identify
an already indistinct relationship between two indistinctly defined abstracts. There is arguably
something very important in there, somewhere. However, without further specificity, it is hard to
make concrete arguments about what is going to happen when, let alone to build on these arguments
towards successful action.
One possible way forward is offered in a new paper (
non-paywalled
until the end of May at Review of International Political Economy ) by Blyth and Matthias
Matthijs. As noted before, Blyth's first book riffed explicitly on Polanyi, while drawing out a separate
set of arguments about the relationship between ideas and institutions, and how this explained the
senescence of embedded liberalism as well as its birth. This paper, in contrast, is not a development
of Polanyi's arguments so much as an effort to do what Polanyi did in the 1940s. Blyth and Matthijs
use current events to come to a systemic understanding of changes in the world economy, changes in
domestic economies, and how they are related to each other.
They argue, more or less, that the international economic order tends at any one moment in time
to have a specific 'regime' – a set of 'policy targets' or expected goals that actors within the
system, look to achieve, and the institutions within which these targets are embedded. The problem,
they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds
of its own destruction. More precisely, each regime encourages actors within it to behave in ways
that gradually make the regime politically unworkable.
Thus, after World War II, the regime of Western countries was oriented towards the policy target
of achieving full employment. This, however, as Kalecki argued, meant that the median wage kept on
rising, advantaging skilled workers, and disadvantaging business, which found it hard to 'discipline'
labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at
the same time as inflation rose too – the so-called 'stagflation' of the 1970s. Kalecki predicted,
rightly, that this would lead business and capitalists to start pushing actively for a more 'orthodox'
set of policies which would move away from trying to maintain full employment, and towards cutting
deficits instead.
Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism.
The neoliberal regime identified the key problem of the previous regime, inflation, as its major
policy target. And indeed, advanced industrialized democracies have had relatively low inflation
over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism
too contains the seeds of its own demise, even if they are different seeds, and it is a different
demise.
If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts,
Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt
is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and
neglected book on money, Frozen Desire ). Thus, the current regime is pursuing a "policy of price stability in an environment
of wage stagnation and rising debt levels driven by the [regime] itself" (p. 22). Stagnant wages
and low job security led people to borrow money to retain their ability to consume, helping lead
to the financial crisis. The policy responses to this crisis – which have boosted returns to asset
holders, while imposing austerity on others – have not eased the systemic problems of the new regime,
but rather worsened them.
This (combined with the supine response of the center left to these problems) is what is leading
to the new populism that is threatening to overwhelm the existing system – the "anti-creditor pro-debtor
political coalitions that have been systematically eating away at mainstream center-left and center-right
party vote shares since the crisis." The political success of Trump, and politicians like him, is
the consequence of endogenous breakdown within the regime.
Blyth and Matthijs's account differs from Polanyi's in some very important ways. The key dynamic
is not 'Society' striking back at the 'Market.' Instead, it is a more specific set of actors, whose
interests are largely determined by the situation that they find themselves in, and how that situation
changes as the dynamics of a given regime become self-undermining (in the sense that they erode the
underlying foundations of the regime) at the same time as they are self-reinforcing (in the sense
that the core actors try to keep the system going through increasingly desperate measures. It also
is, as they note, exploratory rather than dispositive. What it does is to usefully show how Polanyi's
basic intuitions – that the neo-liberal project of market creation is inherently self-undermining
– can be applied to a far more specific set of actors, and specific set of mechanisms entraining
those actors, than described in Polanyi's own work.
(Updated to include many small fixes and a couple of clarifications. Updated again to include
Block and Somers quote which really should have been there in the first place).
Looks like you are going to write my paper about how Gellner, Polanyi, Keynes, and Tocqueville
are the master social-theory keys to understanding the 21st century before I do
Afaict a lot of the research would say that what we're seeing is primarily a reaction to cultural
change, and although that can't be completely divorced from market driven socio economic changes
(for example occupational/class shifts) a lot is just simply demographics (a reaction to immigration,
decline in status for once dominant ethnic groups etc)
What could polanyi say about that, if the changes people were reacting to were mainly demographic
rather than socio economic ?
Very interesting essay. I will offer only a reaction to a couple of small points.
after World War II, the regime of Western countries was oriented towards the policy target
of achieving full employment. This, . . . meant that the median wage kept on rising, advantaging
skilled workers, and disadvantaging business, which found it hard to 'discipline' labour, or maintain
productivity. In turn then, private investment fell, and unemployment rose at the same time as
inflation rose too – the so-called 'stagflation' of the 1970s.
A couple of things are questionable in this narrative account and that may be telling to larger
arguments. What is "advantaging skilled workers" doing in this narrative? Really, it was
"skilled" workers who were advantaged? What skills? "Skills" are one of those things people introduce
to economic arguments willy nilly when they want to invoke moral factors but avoid mentioning
political power. It's hand-waving of the worst sort.
The auto and steel workers scored because they were organized and because the economic rents
enjoyed by their oligopolistic employers were vulnerable. "Discipline" was a real enough problem
- quality in car production was notorious. But, the "unskilled" nature of production labor was
also conspicuous - the jobs were extremely boring. And, management wasn't sure whose side they
were on; that management employees would get the same union benefits that they conceded to hourly
labor was surely a factor in the generous terms of the 1969 labor agreements.
"private investment fell" Not actually true. Returns on investment fell, even
as rates of investment continued to rise - that was the problem of the late 1960s and 1970s. There's
a paradox here, in the relationship of invested capital to wages and it has to do with diminishing
returns. That was then, and today, we are experiencing the mirror image problem: rates of return
are now very high, but rates of investment are quite low - in fact, a large part of the apparent
increase in the share of national income going to "capital" over the last generation is attributable
to net disinvestment, cashing out of accumulated capital stock, tangible and intangible, and diversion
of flows from social reproduction of that capital stock. In the 1960s, the U.S. was building the
interstate highway system and great state university systems; now infrastructure is conspicuously
shabby and college is a trapdoor into debt peonage.
I am thinking it might be worthwhile to throw in a bit of Frank Capra and It's a Wonderful
Life to show what Polanyi is pointing at. What are the economics of that movie fantasy? And,
the alternative of Potterville? Savings and loans on the one hand, and casinos on the other, among
other things. And, now we have as President, someone who profited pushing casino gambling as a
key to economic development.
Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys
Really?
I'm reading Henry's pieces, largely without comment, looking to see which way the winds are
blowing. Okay, maybe the Marxians lost and are over, and the Continental Theorists aren't welcome,
but the Social Constructionists? Michael Mann, Giddens, Baumann, Randall Collins, Bellah, Sassen not
political theory enough maybe. And then the cyberkids, post-90s thinkers:Fuchs, Castells, Hayles,
Kittler, Manovich, Couldry, Bakardjieva, Kosseleck media studies, cultural studies nothing to
do with political economy. Nor the feminists, critical race theorists, or post-colonialists or
queer theorists. (Not that I have read them all, but I want to, I should)
Lots of mentions of "society" there, and none of the nation-state, which is interesting, since
one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby
the economy has ceased to be a national economy but "society" has largely remained within borders.
engels 05.01.17 at 7:09 pm
we are again seeing a 'double movement,' as right wing populist politicians take advantage
of popular anger to restore a social and moral order which may look appalling to liberal eyes,
but which reinstitutes (or, at least, claims to reinstitute) much desired social protections
This sounds a bit like: 'we are about to see the end of human mortality because Sergey Brin
is going to live forever (or at least claims he will)'.
Henry: "Polanyi believed that fascism had little to do with the outcomes of World War I".
Life is short, I have many other things to do, I confess I've not read Polanyi. But could you
enlighten me: does he explain why Fascism did well in states badly defeated in WWI (Germany, Austria,
Hungary) or disappointed (Italy, Romania), but not in states more or less victorious (France,
Belgium, UK, USA, Canada, Australia) or happily neutral (Sweden, Norway, Denmark, Netherlands,
Switzerland)?
Also: "Blyth and Matthjis identify the current order as a creditor's paradise where the real
value of debt is maintained". As far as I can see, negative real interest rates are becoming more
and more common. Some mistake here?
There were skilled workers outside of the automobile assembly lines.
Ships, turbines, generators and other complex machinery were not built using assembly lines.
Skilled workers in those fields included welders, grinders, machinists, crane operators, riveters,
pattern-makers, foundry workers, electricians and drafters. GE had an Apprentice Program to teach
high-school graduates these skilled trades, in the 1950's, 60's, and 70's.
At a design meeting in the 1970's, Dr. W, the Manager of Aerodynamic Development Engineering
at GE Large Steam Turbine once told us, "The key to aerodynamic efficiency in a turbine blade
is continuity of the second-derivative." To which the Rotor Design Engineering Technical leader
replied, "Someday let me introduce you to the large Polish guy who grinds the second derivative."
(Who probably made as much as Dr. W, with overtime to get things shipped in December instead of
January to meet year-end billing.)
– and I always thought that contemporary 'Populists' just pick -(without a lot of 'thought') –
whatever (currently) is popular to get elected?
– and that's why so much 'Social-Democratic-Policy' is in the programs of Europeans Populists
– but so little in the thoughts of a Von Clownstick.
And that the only 'things' Populists in the US and in Europe share – is 'braindead nationalism'
– very 'narrow minds' – and pretending to be -(courtesy – Oxford Dictionary) –
'A member or adherent of a political party seeking to represent the interests of ordinary people'?
And I never thought there is any thought behind the willy-nilly-ways Von Clownstick picked
his friends – from US Republicans to Crazy Right-Wingers – Russians – if helpful – or even the
Blond from Wikileaks – und so weiter
And there is this old German Fairy Tale -I think from Wilhelm Hauff – where a 'citizen' who
hates the establishment in the town he lives – dresses up an Ape in very fancy clothes and presents
him as 'a gentlemen' – and how 'visionary' was that – and did you guys ever enter a Trump Hotel?
I mean – the way the dude picks his Interior Design – that's so 'Nouveau Rich Russian' – that
we should ask for his birth certificate?
I expected to like the Mark Blyth and very much did, thanks for the link. Blyth seems to be good,
much better than I, at communicating the useful ideas to the audience that needs to hear them.
Bertram: whereby the economy has ceased to be a national economy but "society" has largely
remained within borders.
Blyth and co-writer at the end talk about a return to "neo-nationalism" without being clear
how it differs from nationalism. My early impressions of the current reaction is that globalization,
cosmopolitanism and uhh diversity have progressed much further than say 1900-1925 (how much is
left of agricultural and rural sectors, or even mass manufacturing) and are embedded more deeply
and broadly in national populations, up to 20 to 30 percent. Not yet enough to be hegemonic in
adverse conditions.
So reactionary nationalism will mostly fail, as we are seeing, in strong economic changes.
We will remain neoliberal. It will I think fail on social or cultural changes, except in areas
where the state makes a difference. it will roll back state programs, including immigration, minority
protections, cultural support etc. But culture will continue to globalize and diversify as a media
and social project.
PS: Blyth does the now std periodization, 1945-75 as the Keynesian Fordist era, 1975-2008 as
the neoliberal retrenchment (?). But stuff like the National Endowment for the Arts, Food Stamps,
Great Society and Civil Rights Programs endured and prospered throughout the latter period. Could
we possibly reassess those as more neoliberal than Fordist, and therewith expand our understanding
of neoliberalism?
I think JimV and Bruce are both right. Skilled worker can be a meaningful concept hut nowadays
it seems to be commonly used as a kind of virtus dormitiva explanation for the higher wages paid
to people higher up the corporate food chain and a fig-leaf for various kinds of rent, connections,
cultural capital, etc
A wonderful review-essay, Henry; I'll be thinking about some of the things you say here for a
while. My only comment is that when you say
This makes Polanyi attractive to two, somewhat different, strains of modern argument on
the left. The first – closer to the center – is a strand of communitarianism, which similarly
looks to reconcile the values of liberalism and community order. The second is a more strongly
left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian
thought, but which looks to find a different set of intellectual ancestors than those of the Marxist
tradition.
I think you might be making a slight category error, in that you're looking at different elements
of the left that ground themselves in slightly differing disciplinary perspectives, but which
are very much a part of the same whole. The theorists who call themselves "communitarians" and
those who call themselves "social democrats" do not necessarily overlap, but that's because they're
looking at different sets of conceptual questions: at the collective nature of humankind's social
epistemology and moral evaluation, in the former, and at the collective nature of political legitimacy
and public goods, in the latter. The Marxist tradition has things to contribute to both, I think.
John Quiggin 05.02.17 at 12:41 am
Pro-debtor politics is always in competition with social democracy. In the
US, for example, there is a strong negative correlation at the state level between redistributive
taxation and debtor-friendly bankruptcy laws. Trump, a repeated bankrupt and tax dodger, embodies
this perfectly.
Thus, Polanyi believed that fascism had little to do with the outcomes of World War I, and
depended for success more on the sympathies of the powerful than on any true mass movement.
Orwell specifically offered this [emphasis added] which admittedly doesn't go as far as the
Polanyi attribution:
Mein Kampf by Adolf Hitler
reviewed by George Orwell
. . . It is a sign of the speed at which events are moving that Hurst and Blackett's unexpurgated
edition of Mein Kampf, published only a year ago, is edited from a pro-Hitler angle. The obvious
intention of the translator's preface and notes is to tone down the book's ferocity and present
Hitler in as kindly a light as possible. For at that date (early 1939) Hitler was still respectable.
He had crushed the German labour movement, and for that the property-owning classes were
willing to forgive him almost anything.
I'm a bit puzzled by JQ @12. "Financial assets" are at bottom debt, i.e. claims held by creditors
against underlying production incomes, wages and profits. One might argue that there are all sorts
pf property and equity claims count as much (though that's increasingly untrue with stock buy-backs,
PE buy-outs, etc.), but "wealth" is held primarily in the form of "financial assets" and those
assets are increasingly inflated in "value" by debt leveraging, officially supported by CBs among
other agencies; while drawing off production incomes from the rest of the economy, they are based
on speculation, M-M' without any intermediating C, IOW fictitious capital. Public debt, while
stigmatized by neo-liberal austerity advocates, nonetheless supplies key collateral for the financial
system and its leveraging strategies and instruments, while substituting for taxation. So just
how would progressive income taxation be the opposite of bankruptcy, i.e. debt reduction and restructuring,
when increasing potions of basic earned income are consumed in debt servicing, while large shares
of income are siphoned off by inflated financial "assets"? Doesn't that just indicate the weakness
of traditional social democratic thinking and the economic models that supported it, which largely
missed the debt dynamics that culminated in the current continuing crisis? Now if you wanted to
talk of taxation of financial "wealth" and the blocking off of financial flows to tax havens and
the substitution of public investment for private extractions, in the face of public deficit fear-mongering,
then you might get at the required debt-restructuring and head toward a real program of income
redistribution and economic revival oriented toward alternative ends. But it's hard to see how
one could do that while maintaining a "cosmopolitan" outlook that ignores states and their citizen
publics.
I don't quite understand the "discipline" argument. Productivity growth rates were higher in the
Postwar Period than in the decades before, despite far stronger and more militant unions. Why
would such be easier to discipline than before?
It feels more like declining productivity was caused by something else, and that plus inflation
increasingly cratered returns on investment (especially since this was back when the stock market
was still boring in the US).
halasz, it would be helpful, for me anyway, if you could further unpack your reasoning starting
with "so just how would progressive taxation " and especially the bit about the weakness of "social
democratic thinking" that follows.
I think I'm following based on the last couple of sentences, but something more explicit would
be nice. Insofar that I am, this may be the cul de sac in which the political economy of globalization/neoliberalism
will founder with its inability/unwillingness to reverse direction.
If there can be no limits or boundaries to the flows of "cosmopolitan" capital and wealth (or
its concentration) within and across various configurations of the state (or other kinds of communities)
the outcome will be increasing constrictions on the power and sovereignty of states and communities.
This much is already clear. What is less clear, though outlines are taking shape, is the full
extent of social reaction to this state of affairs. The de riguer right wing and/or "populist"
reactionary reaction among some publics is plainly visible but will go no further than exacerbating
existent problems or further devolving states' atrophied capacity to act on behalf of the public.
The political wildcard is on the leftward spectrum of reaction where actors are finally waking
up en masse to the realities of a sociocultural compromise with liberalism and to the plain fact
that neoliberal governance as financialized corporate globalism is willing to compromise on exactly
nothing. The problem, as you seem to be indicating, is the left spectrum remains enthralled to
models that appear to have been checkmated. As of yet the left has yet to produce any novel solutions
that confront actually existing concentrations of power and not those of 75 – 100 years ago.
Given current state of affairs, mass or public reaction may well push toward more or less complete
withdrawal of "participation," general refusal, and legitimacy collapse across political and economic
institutions. Bartelby the Scrivener as world history.
Interesting to characterize these movements as a debtors revolt given that trump allegedly
owes a lot of money to some dubious creditors.
MFB 05.02.17 at 12:57 pm
Interesting point, faustusnotes, but perhaps you are making the mistake
of a) thinking that Trump believes what he says and b) thinking that Trump voters know what they're
doing.
In reality, there is obviously an enormous amount of debt generated by the need to promote
easy credit in order to keep consumption high while keeping wages low. This was bound to piss
people off sooner or later. There is also an enormous amount of underemployment and unemployment
driven by a reluctance to invest in anything which doesn't offer an enormous return on investment.
It seems likely that what is happening at the moment is simply a revulsion against the circumstances
in which people find themselves, combined with absolute ignorance (and massive misinformation)
about the source and cause of those circumstances. Hence, all over the world, people are making
extremely unwise choices of leaders and then getting immensely pissed off when those leaders don't
do what they imagine the leaders have promised to do, and going off and voting for even less wise
choices in consequence.
Commenting on such a deep yet wide-ranging post almost feels like cheapening. Here goes nevertheless
there isn't a stalemate between the workers and the capitalists (the capitalists seemed
mostly to have won)
and
This (combined with the supine response of the center left to these problems) is what is
leading to the new populism
attracted my attention.
In addition to the reaction of the business community described in Blyth & Matthjis, a designed
economical response if I understood correctly their thesis, isn't it also the case that the educative
trajectories of the various groups in advanced societies started to diverge (and more properly
sociological change)? Whereas all groups made great educative gains in the 1900/1970 period
(with first universal primary and secondary education, then the massification of undergraduate
education), only the top 15% to 25% went on to pass this threshold (at least for several decades).
I think members of this latter group, who typically do not own significant amounts of capital
yet are hardly accurately described as workers, can legitimately be counted on the side of the
winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center
mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been
a non-capitalists member of this group, making the "supine response" of these parties to the inherent
problems of the neoliberal regime almost natural: elected representatives of these parties and
their core voters profited, and still profit, from this regime (in the increasingly present context
of climate disruption, it is not unconceivable that this group-aka as us-would experience a net
reduction of its level of economic prosperity in the event of an egalitarian redistribution more
attuned to ecological needs).
Hence also the preference for irrationalism and intellectual heterodoxy amongst the political
adversaries of this group.
"Inglehart, is a die hard modernization theorist. So he would insist on long-term connections
between economic development, affluence and liberal postmaterial values. But this is a very different
kind of socio-economic determinism than the one usually invoked to explain the current surge of
radical right politics. And it would seem to me that the Polanyians should concede some major
modifications to their crisis model. How exactly one might modify the Polanyian model, I will
need to write a separate post.
The trigger of immigration, after all, can easily be squared with a basic Polanyian position.
It is the model of cultural development, or lack of it, that is the problem. Why do some people
react to globalization protectively and not others and does this reduce to sectional economic
interests and exposures to competitive pressure?
" the aforementioned 'other post'
engels @ 12: I think JimV and Bruce are both right.
Indeed. JimV experienced and is describing aspects and manifestations of what I abstractly
labeled, "disinvestment" - the dismantling and burning off of accumulated often intangible social
capital to fund upward income redistribution.
Brett @ 19: I don't quite understand the "discipline" argument. . . . It feels more like
declining productivity was caused by something else, and that plus inflation increasingly cratered
returns on investment (especially since this was back when the stock market was still boring in
the US).
Blyth and Matthijs are arguing a "regime" as explanator, which is to say that it isn't any
one thing, but the common alignment of many things, that matters. And, they are explicitly
insisting on - or at least emphasizing - a top-down, macro dictates micro, everything-becomes-endogenous
approach in constructing the identification of how the regime both explains and orders dynamic
development.
The conventional Chicago School mainstream neoclassical economics that underpins the neoliberal
explanation of the neoliberal regime (1980-2008+) says that we live in a market economy, a decentralized
system of markets loosely coordinated by more-or-less competitive market prices, drawn toward
manifest stability most of the time by the strange attractor of a near-by general equilibrium
cum Solow growth path, to which to the U.S. economy (it is always the U.S. economy which is the
implicit model for macroeconomic speculation) always returns after exogenous shocks have knocked
it down temporarily. This market economy stabilized by general equilibrium in price is imagined
to be rather like the one Hayek imagined for his essay on the Use of Knowledge in Society, a better-than-socialist-planning
emergent utopian economy, which is less-than-perfect only because wages and prices are too "sticky".
Wages are sticky downward, you see, and that is particularly unfortunate in blocking the path
of necessary adjustments toward a utopia of ever cheaper labor - workers are inexplicably stupid
about not-accepting lower wages when that would be to their advantage in restoring equilibrium
full-employment. (Do I have to mention that I am being sarcastic?)
Neoliberalism's explanation of the neoliberal regime helped to create the neoliberal regime.
And, Blyth and Matthijs are self-consciously aware that they must find a way out of that explanatory
structure, which is why, for example, they feature a recasting of the Lucas Critique, which was
an important foundation stone in erecting the intellectual superstructure of the neoliberal regime
way back when. The previous regime's "Keynesian" (or New Deal or ordo-liberal) intellectual superstructure
was subverted pretty completely over a long period of time, its main threads thoroughly marginalized,
so it is hard to get a clear view without calling the whole of mainstream economics a giant cabal
of fools and liars.
Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism
one Big Lie, though it does take away a bit from the clarity of their exposition that they must
refrain from doing so, for the moment.
A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general
market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing
mechanism for the growth path of the economy.
A regime, as a common alignment of many things, many trends if you will, is compatible
with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy
which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution
of risk reflexively drives the distribution of income and economic behavior. A regime explanation
says that periods of apparent stability are the result of a kind of gyroscopic stability imparted
by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the
bicycle smoothly stable as long as it is in forward motion.
So, a regime explanation says that the post-war period of economic growth and expansion
was the consequence of getting a lot of things aligned and then launching the bicycle on its course
down a smooth slope. Not one thing alone, but many things, repeating and repeating in pattern
like the spinning of a bicycle's wheels: trivial things many of them, like the auto industry's
annual introduction of new models or negotiating new labor contracts. And, not by the emergent
magic of the market alone, but by deliberate institution building and management.
So, if you were to go back and seek an explanation for the steady increase of productivity
and wages over the nearly thirty years from 1946 to 1973, using a regime to organize your thinking
would allow an identification of many underlying factors - increasing use of petroleum, increasing
use of process manufacturing techniques and increasing scale of production under those techniques,
increasing scope and reach of the money economy, increasing scale of global trade and exchange.
What allows for the appearance of stability in what is a highly dynamic period is getting all
of that moving forward in a way that lets people coordinate their expectations and behavior: the
overarching regime that imparts stability to dynamic change. Risks are low despite epic rates
of change and people act confidently, increasingly assured that the recent past is a good guide
to a reliable and therefore beneficent future.
The implied essence of the regime as explanator is that capitalism is inherently dynamic
and unstable - really that uncertainty (that we don't know a lot more than we do know or
can expect to learn and we never know exactly what we do not know) dominates economic organization;
rational expectations is b.s. in a world driven to founder on disappointed expectations). All
the factors that might explain some apparently linear trend, like say productivity growth, over
some seemingly stable period are in fact arcing thru a cycle, self-subverting if you like but
also not unlike an arrow shot up into the sky that must come down somewhere.
Labor discipline is no different from any other factor trend: it was arcing across the 1940s
to the 1970s just like the expansion of petroleum and electricity, or the expansion of world trade
within the framework of Bretton Woods. The bicycle of the world economy centered on the U.S. hit
a wall and the rider fell off in the 1970s stagflation. Talk about over-determined! Bretton Woods
broke; the vestigial gold exchange standard broke, the petroleum economy hit a ceiling and broke,
the Fordist manufacturing economy broke, the U.S. agricultural economy built on subsidized control
of production broke.
Or, if you prefer, not-broke so much as simply passed an inflection point on an inevitable
arc, and a new institutional regime was required to organize and structure the economy, to put
the bicycle back up and into forward motion to restore the sense of stable movement. Blyth and
Matthijs are proposing that the neoliberal regime put into place around 1980 can be understood
as organized around a monetary policy of disinflation leading to deflation: that was the essential
stabilizing element around which everything else aligned. I think they might be being too clever
by half, self-consciously trying to lead a neoliberal establishment away from its self-regarding
orthodoxy by playing on its narcissism and its self-love for the Great Moderation.
A remarkable thing about the 1930s is how reluctant liberals were to take the opportunity presented
by the New Economy of electricity and gasoline and mass production. The means to greatly expand
production and increase human welfare were ready to hand and people were stumbling over reactionary
resistance and their own certainty that there was magic in the hair-shirt of austerity and the
gold standard. (The non-liberal left in the 1930s was fomenting revolution in a way that seemed
mostly to add to the palsy of liberalism. Then there was Stalin, who certainly transformed Russia
in an ugly hurry.)
We liberals and leftists, today, do not have such great opportunities, but we seem to want
to imagine that we do. Elon Musk is our hero. Post-scarcity is our leftish vision for an overpopulated
world on the eve of what is almost certain to be a toboggan ride toward a collapse of ecologies
and probably civilization itself.
Sorry for the double post, I'm slowly grappling with the ideas.
I think in the end what I meant to say is that Polanyi's Great Transformation can be conceptualized
as a struggle between Society and Markets in the context of a convergence of social groups
within a given society (convergence driven by rising educative level, the correlative universal
participation in the political sphere and perhaps the massive destruction of capital in the two
world wars and the Great Depression) while the current Great Transformation of the neoliberal
and post-neoliberal regime can be likewise conceptualized as a struggle between Society and Markets
but this time in the context of a divergence of social groups (driven by diverging educative
achievements, the correlative diverging modes of participation in the political sphere and perhaps
the lack of massive destruction of capital by cataclysmic events).
An interesting aside, also touched upon by Chris, is that even though Polanyi's Great Transformation
happened in a converging context within the national system, it was remarkable in its diversity
internationally (New Deal in the US, Front Populaire in France, Nazism in Germany ). It is unclear
to me to whether the current Transformation is happening in a diverging or converging context
internationally. On the one hand, comparable nation-states are currently clearly engaged in diverging
socio-economic trajectories (if only in terms of demographic evolution) and supposedly homologous
political forces actually do diverge quite a bit (there is not so much in common politically between
the US under Trump, the UK under May and Germany under Merkel for instance, even though they supposedly
all represent the mainstream rightwing party of their respective national systems). On the other
hand, the governing élite is very cosmopolitan and socially homogeneous and actual political reactions
to the current economic system tend to be quite similar, perhaps.
So, disembedded markets are or tend to be bad for (the) people, who eventually realize that in
a very imperfect fashion. Fascism has required the costs of disembedded markets. Deregulated markets
are disembedded markets. Neoliberalism leads or contributes to fascism. And those who co-built
and opened the door for the fascists can close it behind them both
In the trumpian case, I do see both fascism and neoliberalism (continuity of; Obamacare excepted).
There is a fascist perspective within the administration, with its nationalist-populist components,
not just authoritarian, but it coexists with neoliberal bullshit and policy, such as the usual
tax breaks for the usual suspects. Neoliberal fascism?
Is there room (and time) for neoliberal fascism as a national regime properly understood?
Very useful text, Henry.
There's a great deal to admire and enjoy in this essay. So much so that I won't bother to comment
on the many useful and informative elements. The piece is well-grounded, well-argued, and clearly
the product of Henry's solid scholarship. The problems appear, predictably I'm afraid, in Henry's
characterization of the tea party and of Trump supporters.
Few, in any, social scientists of Henry's political disposition appear to have spent much time
digesting tea party arguments first hand, or those of Trump. Immigration can be a magnet and code
argument for xenophobes and racists. I'd suggest, however, that many tea party people see/saw
themselves as pro-immigration. Every call for the wall by Trump was followed a call for legal
immigration through a great, beautiful gate. At the local level, immigration presents both opportunities
for new experiences and revitalizing old fears. The industry and optimism of immigrants (generally)
is a slap in the face to those who've learned their very existence is regarded by the powers that
be (including elites on both coasts) as an impediment to progress and efficiency. The 'left' certainly
displays no interest, or sympathy, for coal miners in West Virginia, for example, despite efforts
by Obama and HRC to draw attention to their plight, a plight clearly of concern to Henry and many
here.
Yet, submission on cultural issues such as abortion and trans-gender rights seems to be the
price demanded by rank-and-file 'liberals' as a condition of re-humanizing this group of fellow
citizens. That rank ignorance and bigotry are rife in some of these same communities should not
and cannot be a factor in forming economic alliances with these folks, not least because right-leaning
populists are far more motivated and committed to change than those on the left. (Henry's earlier
critique on the motivations of the new Labour members is worth recalling)
I crossed this bridge myself in 2008. Trump's supporters are principally concerned with
creating opportunities for their kids, not improving their own immediate circumstances, which
are just fine for the most part. This vision of the world is not one in which most of the
people in the picture are a different color, creed, or culture. Most people would like to think
(I believe) that their own kids can raise families of their own in circumstances somewhat better
than their own – without being forced to learn a new language, or adapt customs foreign to their
own way of life.
I'll close by restating that culture is at least as important as cash – that's the conclusion
of Arlie Hochschild. Liberals need to set aside their own prejudices and disdain for those who
vote for Trump and Brexit if liberals have any hope of winning their trust. Both this essay and
others like it suggest that task may be easier said than done.
Let me suggest that the real problem here is the wrong level of analysis. What the essay presents
is a series of models for how the world works - the Polanyi model was relevant then but broke
down, the Blyth and Matthijs model now describes today. Instead let me suggest that the problem
is meta: Modernism (growing since the Enlightenment) is an insistence that the messiness of reality
can be captured by models. This is not just an insistence on rationality, it is an insistence
that the axioms that feed into that rationality are fairly few and can be fairly easily grasped.
And what I see over "recent" history is occasional angry rebellions against the feeling of
living in a society that is created by these rigid rules - an unhappiness stemming from both constant
(always apparently, frequently actually) stupid constraints AND also a constant need to have to
make and deal with choices even when you don't care about the choices. (Not just choices of "what
peanut butter to buy" but choices of the "I don't know how to be a man anymore" or "how come what
we used to say thirty years ago is suddenly so taboo?" form.)
So we have, for example, Nazism (and Japan) as a reaction to this. (I'm not about the more
backward parts of Europe, and I think Russia, like China was something different.) Then we have
1968 and The Greening of America. Then we have the Iranian Revolution. Then we the Tea Party in
America and Al Qaeda in the Arabic world.
I'm not denying that political entrepreneurs hijack the zeitgeist to suit their ends; nor am
I claiming that every spasm of recent world history was a reaction to the world created by Modernism;
but I am saying that the events I listed had this reaction as their ultimate cause. Which means,
IMHO, that you can't satisfy the unhappiness simply with a political program because the unhappiness
is not of political origin, even though that's a particularly graphic manifestation.
In other words, the sorts of texts that *I* think are relevant to understanding are things
like Bendict Anderson, _Seeing like a State_, the point being not a trivial libertarian "states
are stupid and they suck" but rather "Modernist models of the world try to impose legibility on
situations that are fundamentally complex, and this enforced legibility will frequently lead to
backlash and disaster, whether it's ignorantly designed "scientific forestry in Germany, or attempts
to redesign agriculture in the USSR, or the assumption that risk can be so well modeled and distributed
that it can be nullified as we saw in 2007".
Or Iain McGilchrist, _The Master and his Emissary_, talking about two alternative ways in which
the brain works (holistic vs analytic, filled with fascinating anecdotes about the consequences
of various types of brain traumas), and how the West (and I'd say much of Asia) appears to be
in thrall to the analytic, to the extent that it can no longer see or even understand that the
map is not the territory.
Karl Polanyi demonstrated that Classical Liberalism and current Neoliberalism were organized
political movements, but their successes sparked political backlashes against laissez-faire economics
- a dialectic that continues to shape politics to this day. Laissez faire was planned, explained
Karl Polanyi in The Great Transformation: The origins of the market system go back to the intentional
project of institutional transformation initiated in England in the 19th century, establishing a
free labor market, free trade and the gold standard. Institutions such as the unions, the industrial
cartels and the Welfare State instead emerged subsequently as spontaneous counter-reactions to laissez
faire. Kari Polanyi Levitt and Mario Seccareccia show, with a new periodization, how this dialectic
interaction, or 'double movement' can still guide the understanding of today's Neoliberalism.
Matt Stoller is a fellow at the Open Markets Program at New America.
Silicon Valley is the story of overthrowing entrenched interests through innovation. Children
dream of becoming inventors, and scientists come to Silicon Valley from all over the world. But something
is wrong when Juicero and Theranos are in the headlines, and bad behavior from Uber executives overshadows
actual innovation.
$120 million in venture funding from Google Ventures and Kleiner Perkins, for a juicer? And the
founder, Doug Evans, calling himself himself Steve Jobs "in his pursuit of juicing perfection?" And
how is Theranos's Elizabeth Holmes walking around freely?
Eventually, the rhetoric of innovation turns into .... a Google-backed punchline.
These stories are embarrassing, yes. But there's something deeper going on here. Silicon Valley,
an international treasure that birthed the technology of our age, is being destroyed.
Monopolies are now so powerful that they dictate the roll-out of new technology, and the only
things left to invest in are the scraps that fall off the table.
Sometimes those scraps are Snapchat, which managed to keep alive, despite what Ben Thompson calls
'
theft ' by Facebook.
Sometimes it's Diapers.com , which was destroyed
and bought out by Amazon through predatory pricing. And sometimes it's Juicero and Theranos.
It's not that Juicero and Theranos that are the problem. Mistakes - even really big, stupid ones
- happen.
== quote ==
The lexicon of The Wall Street Journal and the business
sections of Time and Newsweek turned out to bear a striking
resemblance to Genesis, the Epistle to the Romans, and Saint
Augustine's City of God. Behind descriptions of market
reforms, monetary policy, and the convolutions of the Dow, I
gradually made out the pieces of a grand narrative about the
inner meaning of human history, why things had gone wrong,
and how to put them right. Theologians call these myths of
origin, legends of the fall, and doctrines of sin and
redemption. But here they were again, and in only thin
disguise: chronicles about the creation of wealth, the
seductive temptations of statism, captivity to faceless
economic cycles, and, ultimately, salvation through the
advent of free markets, with a small dose of ascetic belt
tightening along the way
== end of quote ==
In neo-classical economy market is the most efficient
distribution mechanism of goods and allocation of capital.
In neoliberalism it is more like giant artificial
intelligence machine which automatically comes to optimal
decision, that no single individual or, God forbid,
government is capable to archive.
"... The poor [under neoliberalism] are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class. ..."
The poor [under neoliberalism] are errant children who need to be molded. Conservatives may whine about the "nanny
state" but what they really want to see is either the negligent mommy state or the abusive daddy
state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and
kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes
this seems to be the motivating ideology of too much of the contemporary governing class.
== quote ==
The lexicon of The Wall Street Journal and the business
sections of Time and Newsweek turned out to bear a striking
resemblance to Genesis, the Epistle to the Romans, and Saint
Augustine's City of God. Behind descriptions of market
reforms, monetary policy, and the convolutions of the Dow, I
gradually made out the pieces of a grand narrative about the
inner meaning of human history, why things had gone wrong,
and how to put them right.
Theologians call these myths of
origin, legends of the fall, and doctrines of sin and
redemption. But here they were again, and in only thin
disguise: chronicles about the creation of wealth, the
seductive temptations of statism, captivity to faceless
economic cycles, and, ultimately, salvation through the
advent of free markets, with a small dose of ascetic belt
tightening along the way
== end of quote ==
In neo-classical economy market is the most efficient
distribution mechanism of goods and allocation of capital.
In neoliberalism it is more like giant artificial
intelligence machine which automatically comes to optimal
decision, that no single individual or, God forbid,
government is capable to archive.
"Krugman thought that this was because economists, enamored by the "jewel in the crown of economics",
theory of comparative advantage, tend to look at average effects, not at the heterogeneity of
effects. He thought that this was changing now. "
Interesting that economists still seem to avoid a discussion of those supposedly 'diffuse'
winners. Sure, consumers saw lower prices. But what about investors, at whose behest these 'fair'
trade deals got negotiated in the first place?
Will some honest economist, if there are any left, finally step up and analyze the distributional
effects of 'free' trade between capital and labor?
I expect that the most concentrated effects 'free' trade will be found not only among displaced
workers but also in the profits...and earnings going to the 1%.
Neil Irwin had an interesting piece in the NY Times a couple days ago. Basically, he was meditating
on the future direction of the economic stagnation. He speculates that the rise in inflation was
a non-recurring event, driven largely by rising oil prices. Those clamoring for more inflation
are likely to be disappointed.
Irwin notes that underlying drivers of growth and inflation are absent: globally there is over
capacity in manufacturing, ample supplies of commodities, and a glut of labor.
Concentrated oligopolies know how to best leverage this situation to their advantage, shifting
production and employment among various operations.
I have long argued that this new reality will put a damper on US wage growth, because employers
have escape valves in the global market. IMO Promoters of low interest rates ignore this new reality,
claiming that pressurizing the economy will inevitably lead to higher wages.
We will see who is right. Ten years and counting...and wages have yet to rise.
Yep. However, there is always room for complexity in economics. The right and wrong of inflation
will depend upon the basket of goods AND services. CPI includes the following.
• Food and beverages
• Housing
• Apparel
• Transportation
• Medical care
• Recreation
• Education and communication
• Other goods and services
There is more than ample room for cost push inflation that is not linked to wages in every
bullet. That is not something to celebrate though.
I agree that we want to see inflation resulting from higher wages...but economists rarely talk
about wages in the same breath as inflation...which leads me to suspect that they are interested
mostly in more inflation, which I believe has few benefits, rather than higher wages, which has
a lot of benefits.
Most here strenuously disagree, believing that we must take it on faith that liberal economists
are really promoting higher wages via accommodative monetary policy, even though wages almost
never factor into any discussion of monetary policy or its benefits.
Mainstream center-left Democrats like
Justin Wolfers or Jason Furman - even Krugman and Summers - don't to say that government spending
always works or is always the answer so they say it's only in this special situation when we're at
or near the ZLB and the Fed has to rely on unconventional policy.
And then zombie supposed-leftwingers
like RGC say monetary policy only works when rates rise and credit is rationed. Sorry, that's incredibly
stupid.
Fiscal policy always works as does monetary policy, just depends on how well it is executed and
how much is done.
The people who say monetary policy doesn't work are just providing excuses to the Fed which didn't
really try and gave us the worst recovery on record.
But when asked, the Fed says they gave us the recovery they wanted. Massive fukin cognitive dissonance.
Under neoliberalism government
intervention is prohibited as it undermines the fundamental myth about self-regulating "free
market". Which is the symbol of faith for neoliberals.
That means that the helicopter drops is the only tool that is left in recessions.
"Economics Upside Down" or Why "Free Markets" Don't Exist
This is an instructive interview with Ha-Joon Chang, author of the new book "23
Things They Don't Tell You About Capitalism." He debunks some widely accepted
beliefs, such at the existence of "free markets" or the necessity of "free
trade" for the development of capitalism.
Enjoy!
Topics: China, Corporate governance, Credit markets, Free markets and their
discontents, Globalization, The dismal science
Email This Post Posted by Yves Smith at 12:09 am
11 Comments " Links to this post
11 Comments:
Charles Frith says:
June 15, 2011 at 2:25 am
Bravo.
Reply
Septeus7 says:
June 15, 2011 at 5:57 am
Ha-Joon Chang is one of the best real world economists out there and I find it
sad that Asians now have to teach Americans about traditional American system
development and industrial policies but we should take any help we can get at
this point.
When will we stop with these idiotic so-called "free market" economics and start
understanding that
if we run away from our
responsibility to look out for our own economic interest politically then we
will have our lunch taken by those "free market" types pouring billions into
political influence because they obviously don't believe a word of their own
faux-economic ideology?
Reply
Another Gordon says:
June 15, 2011 at 6:22 am
An excellent book, nicely structured and easy to read.
However, he does leave out a couple of things, for example that competition does
not always lead to lower prices and/or better outcomes as the neoliberal fantasy
has it.
Competition only works when it costs less than its benefits. Yet it is often
horribly expensive and the benefits often modest at best.
Reply
Iolaus says:
June 15, 2011 at 11:02 am
Ha-Joon says "You can't have slaves." But we do have slavery, right here.
Reply
Anonymous Jones says:
June 15, 2011 at 12:42 pm
What is truly amazing is that something this obvious (that all markets are
regulated by some means, and that whether you prefer those means versus others
is almost entirely based on outcomes rather than procedures) is such a fringe
idea.
I was watching the Bobby Fischer documentary on HBO, and it struck me how easy
it must be slip into madness living in this completely insane world. There are
so many obvious fallacies you must accept to "fit into" normal society (the
existence not just of a god, but the particular consensus "God" of your
community; the belief that your community (oh, let's say America) always has
good intentions and could never (gasp) be using its might to enrich the people
running the place; the weird idea that "honor" for samurai or other military
types is selflessly serving the elite who are exploiting the rest of society).
To be thought sane, one's insanity must match others' insanity.
To investigate the world, to examine the BS that you have been told over and
over, has the potential to completely untether the psyche. Look at all the
rampant conspiracy theorists on this site. Are they really different (in kind,
not in specifics) from the "Protocols" crazies or the bilderberg lunatics or the
"end of the world" preachers? Another thing that is so amazing is that you read
history and watch documentaries and you realize these crazies are doing almost
*exactly* the same thing as someone else in another generation 50 years ago, 100
years ago, 150 years ago, 1000 years ago. Fischer himself was once in the thrall
of an "end of the world" preacher who was doing almost exactly what Harold
Camping just did and then Fischer moved onto this insane "Protocols" fixation.
I guess people are just incapable of reflecting on themselves enough to see
this. Or I guess it would make them as crazy as Fischer if they ever did.
Reply
Just Tired says:
June 15, 2011 at 3:13 pm
Read Eric Fromm's, The Sane Society. In the 1950's, Fromm recognized that a
whole society could be mentally ill and those who were thought to be out of the
mainstream were really the sane ones. He also raised the question to the mental
health profession as to who were the proper ones to treat given that reality. It
is almost as if the mental health takes a kind of democratic approach to the
definition of mental illness, i.e. the majority of the population was defined as
sane by definition. Fromm argued that the approach should be more objective.
Reply
Foppe says:
June 15, 2011 at 5:25 pm
subjectivity and objectivity are meaningless notions once you start 'diagnosing'
entire societies as mentally ill or diseased. What is perceived as either is
done so through consensus formation; this cannot meaningfully happen if you
exclude the majority of the population from weighing in on the basis of an
argument that they are mentally ill. (I do not find Fromm's vocabulary very
helpful in this case)
Reply
LifelongLib says:
June 15, 2011 at 5:00 pm
Conspiracy theories are often twisted versions of things that are really
happening. Mark of the Beast, without which you can't buy or sell? Try getting a
plane ticket or renting a hotel room without a major credit card. World ruled by
alien reptiles? Some kid joins the army to get money for college, and ends up
getting blown apart 10,000 miles from home. Sure sounds like something alien
reptiles would set up. Actual human beings wouldn't do those things to each
other, right?
Reply
Fed Up :-) says:
June 16, 2011 at 5:05 am
How have individuals been affected by the technological advances of recent
years?
Here is the answer to this question given by a philosopher-psychiatrist, Dr.
Erich Fromm:
Our contemporary Western society, in spite of its material, intellectual and
political progress, is increasingly less conducive to mental health, and tends
to undermine the inner security, happiness, reason and the capacity for love in
the individual; it tends to turn him into an automaton who pays for his human
failure with increasing mental sickness, and with despair hidden under a frantic
drive for work and so-called pleasure.
Our "increasing mental sickness" may find expression in neurotic symptoms.
These symptoms are conspicuous and extremely distressing. But "let us beware,"
says Dr. Fromm, "of defining mental hygiene as the prevention of symptoms.
Symptoms as such are not our enemy, but our friend; where there are symptoms
there is conflict, and conflict always indicates that the forces of life which
strive for integration and happiness are still fighting." The really hopeless
victims of mental illness are to be found among those who appear to be most
normal. "Many of them are normal because they are so well adjusted to our mode
of existence, because their human voice has been silenced so early in their
lives, that they do not even struggle or suffer or develop symptoms as the
neurotic does." They are normal not in what may be called the absolute sense of
the word; they are normal only in relation to a profoundly abnormal society.
Their perfect adjustment to that abnormal society is a measure of their mental
sickness. These millions of abnormally normal people, living without fuss in a
society to which, if they were fully human beings, they ought not to be
adjusted, still cherish "the illusion of individuality," but in fact they have
been to a great extent deindividualized. Their conformity is developing into
something like uniformity. But "uniformity and freedom are incompatible.
Uniformity and mental health are incompatible too. . . . Man is not made to be
an automaton, and if he becomes one, the basis for mental health is destroyed."
Reply
Andrew P says:
June 15, 2011 at 9:07 pm
My main problem with Chang's book is that even though he destroys all these
market conceits, he doesn't properly incorporate Marxian, and other structural
critiques of capitalism. He just accepts that capitalism and market systems are
the best distributive means available, which is absurd. He ignores the
fundamentally irrational nature of capitalism, how it's at conflict with itself
and that as marx noted, "it sows the seeds of its own destruction."
For a great structural critique of modern capital everyone here at NC should
read up on John Bellamy Foster's Monopoly and finance capital. He builds on
Sweezy and Baran's earlier work on Monopoly capital, showing how production in
the "real" economy is less and less profitable, necessitating the explosion in
financial speculation and debt in order to keep resuscitating the moribund
monopoly production sector. It has aspects of Keen's Credit Accelerator argument
but goes a bit further.
This article is the first in a series. You can find the rest at the site.
Reply
MichaelPgh says:
June 16, 2011 at 4:02 am
Great post! See also Freud, "Civilization and its Discontents". The stories we
tell ourselves about how the world works versus our discoveries of how the world
actually works are a continuous source of "cognitive dissonance" (in modern
psychology), "alienation" (in Marxism), or "madness" (in Foucault). Trying to
reconcile the story with our own experience is perilous business indeed.
"... Is the question: "Are there Benefits from Free Trade" - different from the question "Are there Benefits from Trade"? What work is word "free" doing here - and what does it even mean? ..."
"... I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication. ..."
"... There is no "free" trade - only negotiated and regulated trade. And we seem to do a really lousy job of negotiating, unless you are in the small percentage who rigged the game. ..."
"... Silly boy, only large corporations and capital matter. Workers are a hindrance to rent extractions and can be sacrificed. ..."
Is the question: "Are there Benefits from Free Trade" - different from the question "Are there
Benefits from Trade"? What work is word "free" doing here - and what does it even mean?
I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning
to think it should just be banned. It is a hindrance to communication.
There is no "free" trade - only negotiated and regulated trade. And we seem to do a really
lousy job of negotiating, unless you are in the small percentage who rigged the game.
Who are "we"? Most people in the rest of the world thinks the game was rigged by the U.S. (whose
main interest seems to be in protecting its patent holders and agriculture).
I care more about US workers than workers in other countries. As should our politicians. And I
think when the US is strong the rest of the world is better for it.
As more expatriots travel and do business overseas, more foreign born sisters, brothers, and
cousins come here for our slice of the global supply chain production. As the line blurs between
our home girls and home boys vs others, the lines between many ethnicities also blurs as intermarriage
moves forward.
Forget political favoritism and affirmative favoritism! Let the good times roll and thrill
your soul! Got soul?
But in reality most of US media fits the definition "They are
among the most dishonest human beings on earth."
Unfortunately. Good articles still happen, but they are rare
jewels in the massive dung of propaganda.
They really are now quite on par with the USSR
propagandists from Pravda and Izvestia.
I for one switched to British media which is slightly
better (especially comments) while also quite neoliberal
(especially Guardian)
Comments to a typical article in WaPo suggest that with
the current level of brainwashing of the population (as
demonstrated by WaPo commenters, even adjusting for specific
social base of WaPo) the US got into an "ideological trap"
from which it might never be able to escape.
And it is not unplausible that because of this trap it
will remain disconnected with reality it might eventually
collapse and disintegrate like the USSR. That's the danger of
neoliberal brainwashing.
The USSR was unable to compete with the West. The USA
faces China and South Asia "tigers" problem.
BTW Japan might not be willing to remain the USA
protectorate forever.
Like communist ideology free market fundamentalism is
sticky and self-sustaining. Probably more then Bolshevism
ever was.
Witness amazing resilience it demonstrated after financial
collapse of 2008 which essentially buried neoliberalism (aka
free market fundamentalism) as ideology.
And self-regulating markets are the same kind of Utopia as
Communism (in its Bolshevism interpretation). Extremes meet.
In this particular sense, the US society now resembles the
USSR society: a para-theocratic state with neoliberalism as a
state religion
Actually "In God we trust" should probably be replaced "In
free market we trust" on dollar bills.
If I remember correctly Christ did not like money changers
so putting this on dollar bills and coins was a travesty from
the very beginning (The cleansing of the Temple story "And
making a whip of cords, he drove them all out of the temple,
with the sheep and oxen. And he poured out the coins of the
money-changers and overturned their tables. And he told those
who sold the pigeons, "Take these things away; do not make my
Father's house a house of trade."[Jn 2:13–16]")
And nobody in sound mind can't deny this fact of mass
brainwashing and the conversion of the US into a
para-theocratic state quite similar to the USSR.
How those honchos in congress can speak about wonders of
deregulation after 2008 without being drunk or on drugs I do
not fully understand.
"... Free trade always and everywhere leads to poverty. The US must return to Lincoln's protectionist tariff regime if it wants to recovery the prosperity Krugman and co. helped destroy in the free trade "globalization" period from 1973 to January 20, 2017. ..."
"... It is easier said then done. Many US companies now depends on foreign manufacturing and foreign markets. The train has left the station. ..."
"... Careful actions might help to change the situation for better, but any abrupt or reckless action will definitely make the current situation worse, as employment in the USA now depends on employment in Mexico like one auto part manufacturer recently explained to Trump: you institute tariffs -- we lay off the US workers, because we have no other option. ..."
Arrogant economists? Yes - the US may not have much, but it
is overflowing with arrogant economists.
A trillion dollar goods trade deficit that persists year
after year? A wealthy country stripped of its manufacturing
and turned into a debtor nation thanks to economists refusing
to bother with economic history that could not be more clear.
Free trade always and everywhere leads to poverty. The
US must return to Lincoln's protectionist tariff regime if it
wants to recovery the prosperity Krugman and co. helped
destroy in the free trade "globalization" period from 1973 to
January 20, 2017.
Trump should revive Lincoln protectionism - then he will
rightfully take his place among the greats.
"Trump should revive Lincoln protectionism - then he
will rightfully take his place among the greats."
It is easier said then done. Many US companies now
depends on foreign manufacturing and foreign markets. The
train has left the station.
Careful actions might help to change the situation for
better, but any abrupt or reckless action will definitely
make the current situation worse, as employment in the USA
now depends on employment in Mexico like one auto part
manufacturer recently explained to Trump: you institute
tariffs -- we lay off the US workers, because we have no
other option.
Are you willing "To kill the Goose That Laid the Golden
Eggs". Paradoxically this idiom means an unprofitable action
motivated by greed
"... Because that's what pays and what brought him where he is now. Krugman is not a scientist ready to be burned for his convictions. He is a despicable presstitute. Such people have no morals. ..."
"... Plato oil might throw a monkey wrench into such projections. Globalization is based on cheap oil and consume obscene amount of it for transportation of food and goods from one continent to another. ..."
"... Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do we need more battleships, fighter planes and attack helicopters? ..."
"... Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil extraction technologies. ..."
Did he really know nothing of economic history? Did he not think that the US would follow 19th
century free trade colonies and semi-colonies into dustbin and economic hell of deindustrialization?
Had Krugman never honestly heard of the city of Camden? Did he never wonder at the consequences
of 0% tariffs in a mercantilist world?
Time for free trade economists to sit down, be quiet and admit their mistakes.
"Why did Krugman insist free trade would be wonderful?"
Because that's what pays and what brought him where he is now. Krugman is not a scientist
ready to be burned for his convictions. He is a despicable presstitute. Such people have no morals.
Absolutely the best description and explanation of Trump and his presidency that I read
" Trump administration is basing its budget projections on the assumption that the U.S.
economy will grow very rapidly over the next decade - in fact, almost twice as fast as independent
institutions like the Congressional Budget Office and the Federal Reserve expect. There is,
as far as we can tell, no serious analysis behind this optimism; instead, the number was plugged
in to make the fiscal outlook appear better.
I guess this was only to be expected from a man who keeps insisting that crime, which is
actually near record lows, is at a record high, that millions of illegal ballots were responsible
for his popular vote loss, and so on: In Trumpworld, numbers are what you want them to be,
and anything else is fake news. ..."
I'm going to keep this metric in mind whenever Trump or his Administration declares something
to be right and everyone else wrong, i.e., fake news
Plato oil might throw a monkey wrench into such projections. Globalization is based on cheap oil
and consume obscene amount of it for transportation of food and goods from one continent to another.
Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street
banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do
we need more battleships, fighter planes and attack helicopters?
Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West
high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil
extraction technologies.
The political stability of neoliberal society much like stability of Bolshevism depends on
whether the promises of higher standard of living for everybody are delivered.
If not, and for the bottom 80% they were not, the society enters the period of political instability.
Which in the USA probably has started with the election of Trump.
MSM dogs who are now barking at Trump are barking to the wrong tree.
Free-trade globalization is so ridiculous on so many levels
one can only conclude that economic theologians who support
it are either utterly incompetent or corrupt.
First take
skyrocketing inequality and government debt. Both are related
to free-trade outsourcing schemes. When production is moved
out of country to cut wage costs and cut corners on
regulations the only people who profit from it are corporate
executives and shareholders. In the US, the top 20% own 80%
of all investments. If the top 20% are the only ones
benefiting – while workers are getting slaughtered – then
clearly this is a major source of rising inequality.
In a functioning economy – and yes America once had a
functioning economy during the Keynesian New Deal era that
began with FDR and was ended with Reagan – all segments of
society benefit from GDP growth – not just self-aggrandizing
robber barons.
Next factor in twin deficits. When a country is importing
more goods than it is exporting it has a trade deficit. The
US has had a whopping structural trade deficit for about 40
years spanning the entire Friedmanian neoliberal era that
began with Reagan. How does a nation purchase imports it is
not earning with exports? By borrowing: i.e., running
government deficits.
A simple analysis of international trade over the
Friedmanian neoclassical era shows that economists must be
mental midgets or they are on the take. During the Ricardian
era, economists railed against mercantilist monarchs on the
basis it was illogical: i.e., as Krugman puts it, if all
countries want to run trade surpluses they have to trade with
another planet because if some countries are running
structural trade surpluses then others must run structural
trade deficits.
But what happened during the Friedmanian era? Economists
looked the other way on the most mercantilist period in
economic history. The oligarchs of undeveloped countries ran
massive net trade surpluses. Most developing countries ran
whopping net trade deficits. This is the very opposite of
Ricardian free-trade ideology predicated on countries having
a net balance of trade.
Next factor in lost GDP. It's definition: all final goods
and services produced in a country in a year. Not all final
goods outsourced from a country. Which is to say, outsourcing
kills GDP dollar for dollar. So it's really no wonder that
GDP growth collapsed after decades of outsourcing schemes –
along with the entire Western economy. (Of course this was
not the only kind of economic corruption that caused economic
collapse.)
But it's really funny to think that looting oligarchs in
developed countries are willing to destroy the economy for a
percentage. Because they only make a profit cutting labor
costs. That's a one time deal. The outsourced GDP is GDP that
is lost every year – from which they would've otherwise
profited. (This is not to suggest that all GDP must be
fiercely protected. Simply that there must be some balance
that can only be accomplished with some form of managed
trade.)
Next factor in the destruction of demand. Take a $30 an
hour auto job in the US or Canada. Ship it off to Mexico
where workers are paid $3 an hour. It's an economic miracle!
How many people making $3 an hour can afford to buy a new
car? Oh that's right! If the central bank prints money by
buying up toxic assets created by barbarian bankers tearing
up the global financial system – this will make up for all
the loss in demand. It's call "economic science."
Now for some salt in the wounds: for all the wealth that
flows out of the country from these outsourcing schemes an
equal amount must flow back and in the form of foreign debt.
Right now Chinese oligarchs are producing a massive housing
bubble in Canada snatching up real estate. Of course the
bubble won't burst overnight like in the US whose housing
bubble was predicated on predatory mortgage-lending fraud. It
will deflate like Japan in something like a 15-year bear
market which caused their economy to fall apart. (Note that
Japan's 22-year "lost decade" is actually a decades-long
Great Depression. 2015 GDP is the lower than 1993 – and
falling. Now that's an economic miracle: akin to the 7
plagues of Egypt.)
Long story short: looting barbarian plutocrats are even
dumber than their lapdog economists. First they started
burning the furniture to heat the house. Now they are tearing
up the rafters. Like the frog and scorpion story they don't
want to think about the consequences of their actions – i.e.,
the inevitable collapse of the Western economy into fascist
revolutions and world war.
The establishment is hysterical now that Trump has come
along – on behest of the American people – and put this
nonsense to a stop – which Obama in Hillary Clinton had
planned to accelerate with the TPP and whatever other "open
border" schemes across the Americas. ("Need more rafters!")
Like Keynes and FDR, Trump is at least taking some kind of
action to save capitalism and capitalists from themselves.
Americans had tasked their first African-American president
with this job. Now it's Plan B time.
It's amazing how many people think Trump is dumb when they
are so much dumber. Trump is smart enough to realize that
free-trade globalization is the problem (one of many; : but
at least he's smart enough to realize part of the problem.)
I don't believe in Trump. Never have. But I believe in him
a lot more than this tumorous growth of fake technocrats,
fake-news journalists, fake public servants and fake
meritocrats eroding the foundations of this primitive
barbarian proto-civilization by liquidating the public trust
and committing crimes against humanity.
People of privilege will always risk their complete
destruction rather than surrender any material part of their
advantage. Intellectual myopia, often called stupidity, is no
doubt a reason. But the privileged also feel that their
privileges, however egregious they may seem to others, are a
solemn, basic, God-given right. The sensitivity of the poor
to injustice is a trivial thing compared with that of the
rich.
-John Kenneth Galbraith
The Age of Uncertainty (1977)
Chapter 1, p. 22
"People of privilege will always risk their complete
destruction rather than surrender any material part of their
advantage."
I would say this is rational. Surrendering
advantages will generally weaken your position and thus
increase the risk of complete destruction or being stripped
of further advantages. Also quite often members of the elite,
individually or as a group, have likely acted in ways that
enraged their opponents to the point that they will likely
not stop at just stripping advantages until a "reasonable"
point, but indeed seek complete destruction. History is full
of things like guillotines and hunting down and murder or
lifelong imprisonment of all family members (who have not
been plausibly disavowed or disassociated while the old
regime was still comfortably in power).
Of course in the past, rulers and elites were often dethroned
by other elites, with popular uprisings only used as a
temporary tool. In any case, once it gets close to that
point, it's an all or nothing fight for either side.
There have been examples where elites have ceded advantages
in a peaceful transition. But that usually happen in a
context where there had already been gradual transitions to
shared/broader power in the past (generally not peaceful in
the initial stages). The UK and its royals/nobility are an
obvious example, probably also Scandinavia which are mostly
still nominally kingdoms (?), or the royal family and former
or still existing nobility has influence but officially only
a figurehead role. The transition to democracy happened
largely peacefully in the past 1-2 centuries, prior to that
not so much.
Until the Democrats reform their leadership and recommit to
working people again, they will have no future as a party.
Brad and Larry and Paul are a big part of the status quo for
the liberal establishment, and the incredible failure of
leadership they have achieved.
Continuing to argue about it here, with the quick resort
to personal attacks and name-calling, is irrelevant, because
the Democratic party is dead. Seriously, how big of a loss
can they take before the leadership gets tossed? It was not
just the presidency. They have lost almost everything.
Don't count the Democratic Party out yet. Politicians need to
make a living. After the Civil War the Democratic Party had
to scrape together what it could find that Republicans had
tossed out with the garbage. So, the Democratic Party took to
supporting immigrants and unions. Times have changed and the
Democratic Party lost the unions to corporatism, but tried to
make it up with racial politics. That worked some, but the
problem with identity politics is that eventually people get
their rights and freedoms and next thing you know they want
jobs and college educations for their children. The
Democratic Party made a big mistake abandoning the interests
of ordinary working people, but that is what their corporate
donors demanded. So, it is time for a makeover and if the
next one does not take then they will be back at it again
because politicians have to make a living.
The Democratic party, much less so than the Republican party,
is not homogenous. All the things you ascribe to them past or
present don't apply to most of their current members or
operatives.
It is one of the pernicious aspects of an
effectively two-party system that all progressives have a
strong motivation or even necessity to associate themselves
with the "least bad" party. By way of official narrative the
Democrats definitely fit the bill, even though they contain a
lot of "co-opted" (if not corrupted) establishment baggage.
That just happens with any major party - elites and interest
groups that nominally stay out of politics but factually
participate and not just a little are never resting.
In Germany, the 80's (perhaps late 70s?) saw an ascendancy
of the Green party which was strongly associated with
environmentalism, and by implication resistance to then
prevalent politics, social mores, etc. They were successful
as environmentalism and (I would say secondarily but that can
be debated) civil/individual liberties and gender/ethnic
equality which they also featured big time were themes that
found wide appeal, and the time was ripe for them (e.g.
environmental degradation had become undeniable, and
gender/ethnic discrimination had become recognized as a
factor hindering progress, aside from just fairness
concerns).
A few decades later (and starting even a few years after
the success) there was a noticeable bifurcation in the Greens
- it turned out they were not all on the same page regarding
all social issues. A number of Greens "defected" from the
party and associated themselves with Red (Social Democrats,
equivalent of US Democrats) or Black (Christian Democrats,
equivalent of US Republicans) - showing that environmental or
general (dimensions of) equal opportunity concerns are
perhaps orthogonal to stands on other more or less specific
social issues (or if one wants to be more cynical, that some
people are careerist and not so much about principles - that
exists but I would prefer (with little proof) to think it
doesn't explain the larger pattern).
The currently established welfare criterion used in international trade theory results in
conclusions that are not only intellectually dishonest and deceptively misleading but are not as
value free as is commonly believed. Although academic economists have devoted much effort to
understanding the distributional effects of trade, the current welfare conclusions of trade
basically ignore entirely the distributional effects. This paper argues that trade policy needs
to be framed within a legitimate moral framework that moves distribution to the forefront. The
welfare effects of trade should be judged by what actually happens, not by what could potentially
happen in an idealized world with costless transfers.
In the first section the inadequacy of current international welfare economics is discussed.
Second, the justification for using a utilitarian framework is developed along with a brief
history of the doctrine and its role in Cambridge welfare economics. Next the properties of a
utility function that would be realistic as well as having desirable mathematical properties are
discussed. Welfare considerations would not be especially important if trade did not create
significant redistributions; therefore the size of the redistributions relative to the efficiency
gains from trade liberalization is examined. Finally, the welfare effects of trade liberalization
using various trade models and simulations are discussed.
The current approach to the welfare analysis of trade is to follow the recommendation of Hicks
and Kaldor and equate national welfare with real national income and ignore entirely how income
is distributed. Although admitting that considering distribution involves an unscientific
value judgment, numerous economists (such as I.M.D. Little, Frank Knight, Edward Chamberlin) have
concluded that distribution is too important to ignore and it is better to consider it even if
that makes the analysis less than scientific. As Blaug has stated (1978,p. 626), "the true
function of welfare economics is to invade the discipline of applied ethics rather than to avoid
it."
The basic objective of trade policy under modern welfare analysis therefore is to maximize
national income. This outcome is considered optimal because of the Hicks-Kaldor compensation
principle whereby everyone could potentially be made better off than in any other alternative
with the appropriate lump sum transfers. For some, the possibility that these transfers
could be made is sufficient, regardless of whether any transfers are actually made. For others,
there is a naive belief that after all the income maximizing policies are implemented, that the
government (or society) then consistently redistributes income in a manner consistent with its
specific social welfare function. However, Rodrik (1997, p.30) is correct when he states that in
regard to trade policy changes, "compensation rarely takes place in practice and never in full."
Even if society wanted to redistribute income, however, it can not be done in a zero costs lump sum fashion.
Exactly. And the rules have been set by U.S. multinational
corporate negotiators. Just look at TPP.
There is also
dollar policy which is again set by corporate interests.
Paul Samuelson also praised Australia's Tariffs & US became
ultra rich under Lincoln's protectionism :
, -1
In case anyone cared, Samuelson also argued cogently for
Australia's high tariff regime in a famous 1981 article.
In
case economists want to bother learning history (why would
they?) - you can also consider the funny example of Abraham
Lincoln who "took away property rights" and raised tariffs
sky high.
Did the US become a poor third world country because it
took away plantation owners' property rights and jacked up
tariffs? Hmm. Reason to pause and reflect economists?
Dean Baker has some interesting "Free Market" proposals that
will make elitist libertarians sputter.
He suggests a vacant property tax, which I see is a good
idea, especially in dense urban areas. It takes our city
years to get abandoned houses condemned or landlord
compliance through the legal system.
I would take it one step further and drastically raise taxes
on parking lots. I would not allow religious organizations to
exempt their parking lots from this tax. Other buildings, ok,
but churches should not be allowed to destroy the tax base
and neighborhoods by replacing buildings with parking lots.
I would say that Dean Bakers proposals fit with DeLong's call
for better economic policy:
From his comments
"I would note that the "trade deals" did not create
international trade. If you want to say that we should have
no international trade, be my guest--but Donald Trump will
not agree with you. The problem is that he is saying that
getting rid of NAFTA and getting tough with China will bring
all those good manufacturing jobs back. And that is
completely false.
As I say, technology has carried us down from 30% to
12%--and we do not want to hinder that--lousy macro policies
have gotten us down from 12% to 9%, and "trade deals" have
maybe gotten us down from 9% to 8.6%. If you don't want to
hear that, I can't make you..."
I would note that the "trade deals" did not create
international trade. If you want to say that we should have
no international trade, be my guest--but Donald Trump will
not agree with you. The problem is that he is saying that
getting rid of NAFTA and getting tough with China will bring
all those good manufacturing jobs back. And that is
completely false.
Dean Baker writing about market based reforms for publication
by AEI is not the pro-labor Dean Baker that we have come to
love and honor. It gets him exposure that he would otherwise
not have though.
Free market is a neoliberal myth, the cornerstone of neoliberal secular region.
Notable quotes:
"... Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's. ..."
Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute
for policy in the government sphere. Except very telling except when we're talking about funding
the security state.
The other is that the real power of markets is that in a real free market (not a Potemkin one)
decisions are made often at the point where needs, information, incentives, and economic power
come together. But the large scale decisions the governments have to make, markets fail. Policy
though doesn't.
But Neoliberals hate policy.
AngloSaxon -> Gibbon1...
Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy,
you destroy the ability to make profit and you get the 1970's.
Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion. Somewhat
similar to "Immaculate Conception" in Catholicism.
In reality market almost by definition is controlled by government, who enforces the rules
and punish for the transgressions.
Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals
talk about "free market, not "fair market".
After 2008 few are buying this fairy tale about how markets can operate and can solve society
problems independently of political power, and state's instruments of violence (the police and
the military). This myths is essentially dead.
But like Adventists did not disappear when the second coming of Christ did not occurred in
predicted timeframe, neoliberals did not did not disappeared after 2008 either. And neither did
neoliberalism, it just entered into zombie, more bloodthirsty stage. the fact that even the term
"neoliberalism" is prohibited in the US MSM also helped. It is kind of stealth ideology, unlike
say, Marxists, neoliberals do not like to identify themselves as such. The behave more like members
of some secret society, free market masons.
Friedmanism is a flavor of economic Lysenkoism. Note that Lysenko like Friedman was not a complete
charlatan. Some of his ideas were pretty sound and withstood the test of time. But that does not
make his less evil.
And for those who try to embellish this person, I would remind his role in 1973 Chilean coup
d'état ( https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat
) and bringing Pinochet to power. His "Chicago boys" played a vital role in the events. This
man did has blood on his hands.
=== quote ===
Of course, bringing a reign of terror to Chile was not why the CIA had sponsored him. The reason
he was there was to reverse the gains of the Allende social democracy and return control of the
country's economic and political assets to the oligarchy. Pinochet was convinced, through supporters
among the academics in the elite Chilean universities, to try a new series of economic policies,
called "neoliberal" by their founders, the economists of the University of Chicago, led by an
economist by the name of Milton Friedman, who three years later would go on to win a Nobel Prize
in Economics for what he was about to unleash upon Chile.
Friedman and his colleagues were referred to by the Chileans as "the Chicago Boys." The term
originally meant the economists from the University of Chicago, but as time went on, as their
policies began to disliquidate the middle class and poor, it took on a perjorative meaning. That
was because as the reforms were implemented, and began to take hold, the results were not what
Friedman and company had been predicting. But what were the reforms?
The reforms were what has come to be called "neoliberalism." To understand what "neoliberal"
economics is, one must first understand what "liberal" economics are, and so we'll digress briefly
from our look at Chile for a quick...
=== end of quote ===
[As if] protectionist Japan is now backward and poverty stricken; free trade Africa is soaring
on the wings of giant trade deficits :
Economists lead the way in silly beliefs that defy empirical reality and common sense. The most glaring
example of this is the view that free trade is beneficial. All evidence points in the opposite direction,
but no matter - our fake economists are happy to say/believe whatever so long as their foreign government
paymasters and banks write the ten thousand dollar checks for "consulting" and "academic reports".
You are probably wrong. Free trade is a delicate instrument, much like tennis racket. If you hold
it too tightly you can't play well. If you hold it too loose you can't play well either.
Neoliberals promote "free trade" (note "free" not "fair") as the universal cure for all nations
problems in all circumstances. This is a typical neoliberal Three-card Monte.
The real effect in many cases is opening market for transnationals who dictate nations the
rules of the game and loot the country.
But isolationism has its own perils. So some middle ground should be fought against excessive
demands of neoliberal institutions like IMF and World Bank. For example, any country that take
loans from them (usually on pretty harsh conditions; with string attached), has a great danger
that money will be looted via local fifth column. And will return in no time back into Western Banks
leaving the country in the role of the debt slave.
The latter is the preferred role neoliberals want to see each and every third world country
(and not only third world countries -- see Greece and Cyprus). Essentially in their "secret" book
this is the role those counties should be driven into.
Recent looting of Ukraine is the textbook example of this process. The majority of population
now will live on less then $2 a day for many, many years.
At the same time, balancing free trade and isolationism is tricky process also. Because at some
point, the subversion starts and three letter agencies come into the play. You risk getting color
revolution as a free present for your refusal to play the game.
Neoliberals usually do not take NO for the answer.
That's when the word "neoliberal" becomes yet another dirty word.
"He stated, the culture in Silicon Valley is about social liberalism and environmentalism,
yet, the tech firms are full of the most ruthless free market capitalists he's ever seen."
Ha, Silicon Valley is full of the most anti-free market capitalists anywhere. They spend all
their time trying to figure out ways to eliminate competition through mergers and buyouts and
market domination.
The spend all their time suing each other to maintain their government enforced
anti-competitive patent monopolies. Silicon Valley hates free market competition. They spend inordinate
amounts of time and money to reduce free market competition.
Given their intense desire to destroy and smash Iran through bombing or any other means possible,
I'm surprised that the Republicans still like Reagan, who illegally sold high-tech missiles to
Iran without Congressional approval.
Reagan has been lionized by the right because he personified an ideal, that of free markets
and small government. What he actually did in office, whether successful or not in pursuing a
conservative agenda, have no bearing on his popularity.
Economists may enjoy debating the merits of his economic record. But they should recognize
that not all judgments are economic. Reagan gave the country a morale boost when it was most
needed. As to his actual record, the faithful don't give a damn.
But there is little connection between the broad measures of any president's success/failure
re economic policies and "how the economy works".
On one hand, in Reagan's case, interest rates brought under control, unemployment greatly reduced;
wages increased; energy prices greatly reduced - is Reagan directly responsible? - matters little
most people and without doubt the Republican/conservative population will look no further - nor
will this change with expert economic analysis 'proving' otherwise; which of course will be disputed
by other experts.
The roots of Reagan's success as seen by the many non-expert, but more importantly voting,
population is that on balance broad measures of the U.S. economy were much better when he left
than when he started.
I have always thought that if Abraham Lincoln was the greatest Republican president and Franklin
D. Roosevelt the greatest Democratic president then Ronald Reagan was one of the strangest, if
not the strangest president in American history. He was born February 6, 1911 such that he voted
for FDR over Herbert Hoover in 1932. His father was one of the 25% unemployed and got a job with
the Federal Emergency Relief Agency, and, when that was converted to a works program with the
Works Project Administration. Reagan defended those programs as constructing real improvements
in the waterfront in Dixon, Ill. where he was a lifeguard. Reagan saw, as an adult "one third
of a nation ill-housed, ill-clad, and ill-nourished", soup lines and breadlines, and Hoovervilles.
He voted for FDR in 1936, 1940 and 1944. He voted for Truman in 1948 and supported Helen Gahagan
Douglas in 1950.
But his marriage to Jane Wyman dissolved and his grade B movie acting career ended. He took a
job hawking for General Electric where he came under the spell of Lemuel Rickets Boulware and
became a right winger. He led the GOP to radicalism. He ended the GOP as the party of Lincoln
on race. He adopted "supply side" tax cuts for the wealthy funded by massive budget deficits unseen
in American history. He led the movement back to Laissez Faire and repeal of the "strict supervision"
of finance that gave us the longest period of financial stability in American history. Radicalism
not at all conservative.
I observed the Reagan Administration at close hand and you write the truth.
I think the GOP might have had something to break the ideological mold in "Carly" Fiorina. She
was "head and shoulders" above the Governors and the sitting Senators.
There is a new demographic and the old rich white guys who were setting the agenda for both
parties are losing power. They are fighting like hell to hold on but I don't think they can
make it to the White House.
Of course they have strength at the local and district level where money really counts so the
challenge is to form a government to deal with the real problems by taking back the House and
the Senate and the State Houses. As you have recognized, it was all over for President Obama in
2010.
We need to correct this imbalance if we are to have a chance of stopping the drift to oligarchy
and monopoly. The whole economy is being hurt and it is kind of stupid. America can do more than
sell weapons all over the World. Why not invest in electric Maglev transport for freight and passengers
and reduce the cost of goods delivered & fare cost for travel.
Space solar anyone? 2 cents per kwh would make synthetic gasoline, diesel, and jet fuel feasible.
Cheap electric transport and cheap electricity are principal milestones of the project plan for
achieving a paradise by the end of the Century. The return on investment can be used to pay the
tuition, books, fees, room and board of pre-k through 16. It can be done.
All thinking and intellectually honest people know the truth about the Reagan administration.
It's almost boring to discuss it anymore.
Carter had OPEC and the resulting inflation to deal with twice, and geologists telling him that
end of oil was near. Reagan cut taxes DRAMATICALLY, borrowed $2.5T over the course of his administration
(back when $1T meant something) and Iran/Iraq had a 10 year war that they financed by flooding
the oil markets, providing 10 years of nearly free energy.
Reagan partied without any eye to the future. And here we are in his future. Thanks, Reagan.
It is not just that the economy under Reagan was not that great. Reagan himself was not a very
bright or thoughtful person. In many ways he set the country on the wrong path. Someday soon historians
will document well the many different ways he ruined the country for its citizens.
The Great Communicator was really handy with the tribal buzzwords of a tribe beginning to see
the end of its dominance. That's why that tribe doesn't want to let go of St. Reagan. There will
be a tipping point - soon? - where that tribe will collapse in on itself, and the new era begins.
Reagan is right on Dubya's shirt=tail as the worst President ever!
Republicans have historical amnesia about everything Reagan did including funding terrorists.
Yes, the same group that attacked the World Trade Center, the Pentagon and brought down the plane
in Pennsylvania. In the 1980's while preparing for a possible war with the Soviet Union, Ronald
Reagan spent billions of taxpayer dollars funding the Islamist mujahidin Freedom Fighters in Afghanistan.
He supplied the Taliban and Osama Bin Laden with weapons and training and they gave it back to
the United States over a decade later....911.
Margaret Thatcher about Ron Reagan: "Poor Dear, there's nothing between his ears."
When Reagan slashed Carter's budget for solar energy by two third, it was a great day for Germany.
We had lost our radio/tv industry to Japan, losing many well-paid jobs. It took a while, but the
solar industry eventually became a great success for Germany and China. Thank you so much, Ronald
Reagan.
Regarding that "white male" comment, I suggest you don't go down the road of identity politics.
It's a logic- and reason-free zone of oppression olympics that's no less fact-denying that the
worst of conservatism.
Stick to liberalism, which holds no truck with bad ideas no matter how broadly similar the motives
of those holding them are.
The job creation success of the Democrats seems to be repeatable. From Carter, to Clinton,
to Obama. My guess is that if job creation is what you want to do, with the power of America and
its government, it's not that hard. The Reagan success can't be replicated. Basically because
there's nothing there.
Another part of the Reagan myth is that his push for massive expansion of military spending
- including the deployment of weapons intended to provide first strike capability such as the
MIRV'd MX missile, the creation of the "Star Wars" program, deployment of nuclear armed Pershing
II missiles in Europe, and the gigantic naval expansion - brought the Soviet Union to its knees
and won the cold war. The fact is that the USSR was teetering on brink of economic and political
collapse for years, something famously predicted by Soveit dissident Andre Amalrik in his 1970
book "Will the Soviet Union Survive until 1984?"
The foreign policy failures and aberrations of the Reagan administration (bombing of the Marine
Barracks in Lebanon, invasion of Granada, Iran-Contra scandal) are legendary.
Reagan's presidency has been overrated in so many ways.
Brief summary of Reagan's "low tax" and "small government":
1. Average tax revenue (%GDP) under Reagan: 18.2%. US Average (40 years) :18.1%.
2. Federal spending (%GDP) under Reagan: 22.4%. US Average (40 years): 20.7%
3. Reagan cut top income tax rate on the richest from 70% to 28%.
4. Reagan upped social security tax.
The amazing thing to me is how the Right has hero-worshipped Reagan into the role of the great
de-regulator. It was Carter (with a Democratic congress) who deregulated airlines. Railroads.
Trucking. Telecommunications. There was banking reform and the sudden ability to provide branch
banking across political boundaries.
Some were for better, a few for worse, but the Reagan mythology continues, even though I can't
think of anything he did that was comparable. (While the AT&T breakup happened during the Reagan
years, the process began during the Carter time)
Well, the Internet was coming to be by 1980, though it was more than fifteen years after that
before the general public really got to use it. But I am definitely splitting hairs here :-)
I think the problem is we are not use to looking at the stats through the global lens. Thus,
I can understand how the economy (macro economy) "vanishes"--according to the stats in your last
post.
We live in a security [surveillance] state. Therefore the transparency, we so much desire, would
probably hurt future growth potential projections or G.D.P.
Or, we can see this as being an aid to the real transparency we seek.
I do laugh thinking about the philosopher Alain de Botton's work and why he and the philosophy
of Roger Scruton play off each other. Then again, the philosopher Terry Eagleton, seems to be
on board with de Botton (if I understand Eagleton correctly. It's all about ___________. But,
really, what do you think society will look like in 50-100 years?
If you could live in any time period in our past would you? I don't think you would.
"It's quite remarkable that the right can't find any more contemporary role models."
But, but... Isn't the whole point to the Right about taking us back to where we were? In fact,
I find it remarkable they can fixate on someone so contemporary.
"2036, when Democrats will have nominated their first android"
I dunno, man. 2036 seems a tad on the near side. Can we agree on 2044?
Here's something you probably never saw or heard about in the west. This is Putin answering questions
regarding ISIS from a US journalist at the Valdai International Discussion Club in late 2014.
from the U.S.. much love for you Putin. you really opened the eyes of many, even in our country.
this man is the definition of president and the u.s hasnt had one for over 40 years... smh.
As an American I can say that all of this is very confusing. However, one thing I believe is
true, Obama and Hillary are the worst thing to ever happen to my country !!!! Average Americans
don't want war with Russia. Why would we ?? The common people of both countries don't deserve
this !!!!
+Emanuil Penev Obama is a human puppet who chose to be controlled, He is therefore culpable
for his action of supporting Islamic terrorists. Right now Islamic invasion of western countries
is the real problem. The USA is now under the control of Obama the Muslim Trojan horse who wants
the world to be under the rule of an Islamic empire. USA's military action in the Middle East
is the result of USA being under occupation by a Muslim Trojan horse that wants to create tidal
waves of Muslim refugees harboring Muslim radicals and terrorists for invading Europe and the
USA. Watch video (copy and paste for search) *From Europe to America The Caliphate Muslim Trojan
Horse The USA is a victim, not a culprit, in the Muslim invasion of western counties. Obama and
his cohorts are the culprits.
basically Russia wants to be friends with America again and America ain't having it. they have
the capabilities to set up shop all around the world. it's like putting guard towers in everyone's
lawn just in case somebody wants commit crime. but you never see inside the towers or know who
is in them but they have giant guns mounted on them ready to kill. that's how Putin feels. I mean
I get it but every other country has nukes. get rid of the nukes and the missile defense will
go away. if the situation were reversed it would be out president voicing this frustration. but
Putin said it, America is a good example of success that's what Russia needs to do is be more
like America. they have been doing it in the last year or so. I think America will come around
and we will have good relations with Russia again. so wait... did we support isis as being generally
isis or support all Qaeda / Saddam's regime which lead to isis??
The US supported multiple Rebel Groups that fought against Syria, they armed them, gave them
money, and members of those groups split up and formed more Rebel groups or joined different ones.
ISIS (at the time, not as large) was supported by the rebel groups the US armed and they got weapons
and equipment from said Rebel Groups, even manpower as well.. That is how ISIS came to be the
threat it is today.
putin doesnt view the us as a threat to russia..?? he has said countless times that he considers
the us as a threat.. and that russian actions are a result of us aggression
US people are a threat for all the world because they are not interested in politics, they
don't want to know truth, they believe to their one-sided media and allow their government and
other warmongers in the US military industry to do whatever they wish all over the world. US politics
are dangerous and lead to a new big war where US territory won't stay away this time. It''s time
for Americans to understand it. If you allow your son to become a criminal, don't be surprised
that your house will be burned some day.
Obama and Clinton are progressive evil cunts funded by Soros. Their decision making is calculated
and they want these horrendous results because it weakens the US and benefits globalism. Putin
kicked the globalists the fuck out, and when Trump wins he will do the same! They are scared shitless.
TRUMP/PENCE 2016
With a stupid and warmongering opponent such as the USA, Russia do not need to construct a
narrative or think out some elaborate propaganda. Russia simply needs to speak the truth. And
this is why the US and its puppets hates Russia and Putin so much.
"... Russia is aware of the United States' plans for nuclear hegemony ..."
"... The Russian president also highlighted the fact that although the United States missile system is referred to as an "anti-missile defense system," the systems are just as offensive as they are defensive: ..."
"... Putin further explained the implications of this missile defense system's implementation without any response from Russia. The ability of the missile defense system to render Russia's nuclear capabilities useless would cause an upset in what Putin refers to as the "strategic balance" of the world. Without this balance of power, the U.S. would be free to pursue their policies throughout the world without any tangible threat from Russia. Therefore, this "strategic balance," according to Putin, is what has kept the world safe from large-scale wars and military conflicts. ..."
(ANTIMEDIA)
As the United States continues to
develop and upgrade their nuclear weapons capabilities at an alarming rate,
America's ruling class refuses to heed warnings from President Vladimir Putin
that Russia will respond as necessary.
In his most
recent
attempt to warn his Western counterparts about the impending danger of a
new nuclear arms race, Putin told the heads of large foreign companies and business
associations that Russia is aware of the United States' plans for nuclear
hegemony. He was speaking at the 20th St. Petersburg International Economic
Forum.
"We know year by year what will happen, and they know that we know,"
he said.
Putin argued that the rationale the U.S. previously gave for maintaining
and developing its nuclear weapons system is directed at the so-called "Iranian
threat." But that threat has been drastically reduced since the U.S. proved
instrumental in reaching an
agreement with Iran that should
put to rest any possible Iranian nuclear potential.
The Russian president also highlighted the fact that although the United
States missile system is referred to as an "anti-missile defense system," the
systems are just as offensive as they are defensive:
"They say [the missile systems] are part of their defense capability,
and are not offensive, that these systems are aimed at protecting them from
aggression. It's not true the strategic ballistic missile defense is part
of an offensive strategic capability, [and] functions in conjunction with
an aggressive missile strike system."
This missile system has been launched throughout Europe, and despite
American promises at the end of the Cold War that NATO's expansion would
not move "as much as a thumb's width further to the East," the missile system
has been implemented in many of Russia's neighboring countries, most recently
in Romania.
Russia views this as a direct attack on their security.
"How do we know what's inside those launchers? All one needs to do
is reprogram [the system], which is an absolutely inconspicuous task,"
Putin stated.
Putin further explained the implications of this missile defense system's
implementation without any response from Russia. The ability of the missile
defense system to render Russia's nuclear capabilities useless would cause an
upset in what Putin refers to as the "strategic balance" of the world. Without
this balance of power, the U.S. would be free to pursue their policies throughout
the world without any tangible threat from Russia. Therefore, this "strategic
balance," according to Putin, is what has kept the world safe from large-scale
wars and military conflicts.
Following
George W. Bush's 2001 decision to unilaterally withdraw the U.S. from the
1972 Antiballistic Missile Treaty, Russia was, according to Putin, left with
no choice but to upgrade their capabilities in response.
Putin warned:
"Today Russia has reached significant achievements in this field.
We have modernized our missile systems and successfully developed new generations.
Not to mention missile defense systems We must provide security not only
for ourselves. It's important to provide strategic balance in the world,
which guarantees peace on the planet.
Neutralizing Russia's nuclear potential will undo, according to Putin,
"the mutual threat that has provided [mankind] with global security for decades."
It should, therefore, come as no surprise that NASA scientists want to
colonize the moon by 2022 - we may have to if we don't drastically alter
the path we are on. As Albert Einstein
famously stated:
"I know not with what weapons World War III will be fought, but World
War IV will be fought with sticks and stones."
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
Ph.D
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