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.
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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.
