Archive for the ‘Books’ Category

A true history of Reconstruction

July 10, 2014

I was brought up with the view that just as the Civil War was a great national tragedy, Reconstruction was a crime  - the oppression of Southern white people by ignorant black people manipulated by corrupt Northern carpetbaggers and Southern scalawags.  I was taught that the Ku Klux Klan was the national liberation movement of the Southern white people, of which the 20th century Klan was a degenerate and unworthy successor.

Eric Foner, following in the footsteps of black historian W.E.B DuBois, set the record straight in RECONSTRUCTION: America’s Unfinished Revolution 1863-1877, published in 1988.

The Reconstruction governments were the most progressive of the 19th century, establishing the foundations of public education and other public services, broadening the franchise for whites as well as blacks and setting a precedent for African Americans exercising equal rights as citizens.

Reconstruction.EricFonerFar from being ignorant and easily led, the Southern black leaders of that era were surprisingly astute and enlightened, given their restricted opportunities for education.  The failure of Reconstruction was not a failure of African American self-government, but of the failure of the federal government to stand behind equal rights for all.

Reconstruction was a complex phenomenon.  The Republican governments in the South rested on three groups – black people, including freedmen and newly-liberated slaves; Northern whites, including some do-gooders who wished to help the former slaves, but predominantly entrepreneurs in search of opportunity; and Southern whites, many of them small upcountry farmers, who had been loyal to the Union during the war and wanted a reward.

This was an unstable coalition because its members had different aims.  The Northern whites and some of the Southern whites were primarily interested in railroad-building and economic development, not in public education or sale of public lands to small farmers.

Although things played out differently in different states, the Southern Republicans were unable in the end to stand up to the South’s landowning elite with its message of white solidarity, its uninhibited use of terror and violence and its superior firepower.

The authority of the plantation owner was replaced by the authority of the state and local government, which required black people to sign labor contracts with white employers and made it a crime to quit a job or be without a contract.

The Grant administration soon lost interest in black rights.  After postwar demobilization, federal troops were needed to fight Indians and break strikes.

One interesting sidelight was information on the postwar careers of some of the figures of the Civil War era.  The great abolitionists – William Lloyd Garrison, Wendell Phillips and Charles Sumner – were soon marginalized.  Abolitionism never commanded majority support in the North to begin with, except for a brief period during the Civil War.

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A true history of the Civil War

July 10, 2014

BATTLE CRY OF FREEDOM: The Civil War Era, by James M. McPherson (1988) emphasizes a key fact about the Civil War which some historians try to ignore—that the war was started by the South and fought in defense of slavery.

This book is a history of the struggle over slavery, in its social and political as well as military aspects, from the start of the Mexican War to the end of the Civil War.

The Mexican War itself was fought partly to expand the territory open to slavery (and was opposed by many Northern abolitionists for that reason); during the next decade, Southern politicians tried to expand slave territory by purchasing Cuba and by sponsoring private military expeditions to Cuba, Nicaragua and other countries.

Battle_Cry_of_Freedom_(book)_coverThe cause of the Civil War was the growing Northern opposition to the spread of slavery and the refusal of the South to tolerate any restrictions on slavery.  Although the Southern leaders’ rationale for secession was state’s rights, this was a secondary consideration.  They did not recognize state’s rights in regard to enforcement of the Fugitive Slave Law and they endorsed the Dred Scott decision, which denied the right of a state to forbid slavery.

Some were more frank than others.  Alexander Stephens, the vice president of the Confederacy, said the U.S. Declaration of Independence was in error in saying all men are created equal.

“Our new government is founded upon exactly the opposite idea; its foundations are laid, its cornerstone rests, upon the great truth that the negro is not equal to the white man; that slavery … is his natural and normal condition,” Stephens said.  “This, our new government, is the first in the history of the world based on this great physical, philosophical and moral truth.”

The war was not initiated by the North to abolish slavery.  Abraham Lincoln’s position was that slavery was a great evil and should not be permitted to expand, but that the federal government had no Constitutional right to interfere with it where it existed.

This was not good enough for the Southern leaders, who saw in Lincoln’s platform a future threat to slavery.  Ironically, if the Southern states had not seceded, slavery would have endured for many years to come.

Subjugation of black people was a matter of principle for the Confederates.  Robert E. Lee refused to permit exchanges of prisoners of war, which would have been to his benefit militarily, because Lincoln insisted on black prisoners being included in the exchanges.

The Confederacy announced that captured black Northern soldiers would be sold into slavery; this was suspended only after Lincoln threatened to put equal numbers of white Southern troops to hard labor.

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A true history of the Jacksonian era

July 10, 2014

WHAT HATH GOD WROUGHT: The Transformation of America, 1815-1848 by David Walker Howe (2007)  is a masterly synthesis of political, economic, military, social and cultural history, throwing new light on many aspects of the so-called Jacksonian era of American history.  Howe dedicated his book to John Quincy Adams, and asserts that Adams, not Jackson, represented what was best and most important in this era.

I once thought, along with Arthur Schlesinger Jr. in The Age of Jackson and innumerable Democratic speakers at  Jefferson-Jackson Day picnics, of Andrew Jackson as a champion of working people, or at least of white working men, and of the Democratic Party of today as a continuation of the Democratic Party of that era.

        I modified that view over the years without entirely giving it up, but Howe’s book shows me how completely wrong it was, and also what a mistake it is to project the political divisions of the present onto the past.  The basic principle of Jackson’s Democratic Party was white supremacy.

White men, regardless of social status or economic class, were regarded as equally superior to blacks, Indians and Mexicans.

Jackson’s deeds as a slave owner and Indian fighter were as historically significant as his campaign against the Bank of the United States.  The Cherokee, Creek and other Indian tribes once held legal title to most of the land area of Georgia, Alabama and Mississippi and large sections of other states.

General Jackson’s defeat of the Cherokee and Creek and President Jackson’s support of Indian Removal opened up the Deep South to cotton cultivation, giving slavery a new lease on life.  Cotton quickly became the leading U.S. export crop, and the availability of cheap high-quality cotton provided the basis of the British and New England textile industries, the leading manufacturing industries of their day, so this was an important historical event.

Jackson’s vision of the United States was like Thomas Jefferson’s – a nation of independent white farmers and craftsmen, independent of governmental authority or exploitation by government-chartered banks and corporations.

His opponents, the middle-class Whigs, believed in progress through improvements in technology, infrastructure (canals and railroads), public education and humanitarian reform. Most Whigs were not abolitionists, but most abolitionists were either non-political or Whigs.

Evangelical Protestantism in this era was a strong force for progress, according to Howe.  Protestantism, progressivism and patriotism were not at odds; neither were self-improvement and social reform.  Most evangelical Protestants, in Howe’s telling, regarded them as part of the same thing.  They thought the Second Coming of Christ was coming soon, and they thought they could hasten it by becoming better people and making the world a better place.  This is very different from the defensive evangelical Protestantism of our own day.

Most of the great Unitarians and Transcendentalists also were Whigs.  Most Catholic immigrants, believing in a different theology and in conflict with native-born Protestant workers and business owners, were Democrats.

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Reflections on Piketty’s inequality argument

June 14, 2014

 

The novels of Jane Austen, Honore de Balzac or Henry James, in which civilized life was confined to a small percentage of the population and the only way most people could acquire significant wealth was to inherit it or marry it.

According to Thomas Piketty’s Capital in the Twenty-First Century, there is nothing to stop that kind of world from coming back.

1_percent_decomposed_2.png.CROP.promovar-mediumlargePiketty’s basic argument goes as follows:
•    If the rate of return on investment is a higher percentage than the rate of economic growth, which he expresses as r > g,  the owners of investment property will get an ever-larger share of national income.
•    R > g is the normal state of affairs.
•    Ownership of wealth is distributed even more unequally than income.   The higher the share of income that comes from wealth, the more unequal it will be.
•    The larger the amount of wealth you own, the faster it is likely to compound.   So not only do the rich become richer at a faster rate than ordinary people, the super-rich become richer at a faster rate than the ordinary rich.
•    At some point the process levels off, but the leveling-off point may not come until inequality reaches a point that we associate with 18th century Europe or the Third World

The economic prosperity and relative equality during 1945-1975 were made possible by the destruction of capital during the Great Depression and the two World Wars, according to Piketty.   Of course war and depression left everybody worse off, not just rich people, but when economic growth resumed, a lesser share went to the economic elite.

Piketty’s conclusions are backed up by archival research that traces income and wealth distribution in France, Britain and the USA for two centuries and many other countries for shorter periods of time.  That research shows that r > g is the typical state of affairs in most countries and most periods of history for which information is available.

One striking finding is that there is just as much inequality among the elite as there is among the public at large.  In the USA, the top 10 percent have about half the wealth, the top 1 percent have about half the wealth of the top 10 percent, and the top 0.1 percent have about half the wealth of the top 1 percent.

Another finding, based on comparisons of American university endowment funds, is that the larger the amount of wealth you have to invest, the higher your rate of return is likely to be.   This is probably because the richer you are, the better financial managers you can hire, the better able you are to diversify your investments and the better cushion you have when you make high-risk, high-return investments.

chart_2.png.CROP.promovar-mediumlargePiketty proposes to deal with inequality by means of a graduated tax on wealth to go along with graduated taxes on inheritance and income.  But there are other ways.

You could figure out ways to increase the rate of economic growth, for example.  Or you could figure out ways to achieve a wider distribution of wealth, such as through employee stock-ownership plans or worker-owned enterprises.   Or you could strengthen labor unions, increase minimum wage or take other measures to increase the incomes of the middle class, working people and the poor.

It’s important to keep in mind that Piketty only deals with one specific issue, the concentration of income and wealth in a small elite—an important issue, but not the only one.   Piketty does not tell us how to raise people out of dire poverty, nor how to achieve better productivity, or economic growth, or better education, or a cleaner environment, or any other goal.

And taking money away from the economic elite will not in and of itself make anyone any better off.   A lot of financial wealth was destroyed during the Great Depression and and a lot of tangible wealth was destroyed during World War Two, but this did help anybody at the bottom of the economic scale.  Piketty thinks that destruction of wealth cleared the way for the prosperity of the 1950s and 1960s, but I don’t think anybody who lived through the 1930s and 1940s would have said it was worth it.

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Piketty’s inequality argument in six charts

June 14, 2014

Thomas Piketty’s book, Capital in the Twenty-First Century, has stirred up a lot of controversy.  As well it should.  If he is right, there is nothing to stop a tiny elite from growing richer and richer at the expense of the rest of us.

The important thing to remember of Piketty’s argument is that it is not based on economic theory.   It is based on years of research on sources of wealth and income through history in different countries.   And, as quantitative information, it lends itself to charts.

I think Piketty’s research is important to understand for the future of our country and the world.   I’m reproducing six charts based on Piketty’s data from an article by John Cassidy in The New Yorker, which sum up Piketty’s findings well.

The first chart shows the share of American income taken by the best-paid 10 percent.

chart-01The chart shows that half of the income earned by all Americans went to the top 10 percent just prior to the stock market crash of 1929, that their income share fell to between 30 and 35 percent between 1945 and 1975 and now it is going back up again to 1920s levels.

Piketty explained this with his equation, r > g.   When the rate of return on investment is a higher percentage than the rate of economic growth, the holders of capital will get an ever-increasing share of income.   For the purposes of his book, Piketty has a special definition of capital, which is different from economists’ standard definition.  He defines capital as anything you can own that will give you an income, including agricultural land, government bonds, houses (which you can rent), common stocks or anything else.   In the Old South, prior to the Civil War, slaves were a form of capital.

Income distribution in the 20th century USA became more equal for a time partly because the Great Depression destroyed the value of so many financial assets, but mostly because of the high rate of economic growth following the Second World War.

Of late the pay of financiers and corporate executives has gone up much faster than the pay of middle-class and poor people, but, as the following chart shows, inequality in ownership of financial assets is a bigger factor in the income share of the top 1 percent than inequality in wages and salaries.

top1%sharechart-02

The next chart shows that same trend exists among the top 1 percent in all the major English-speaking countries.

chart-03

The next Cassidy chart shows the income shares of the top 1 percent in some of the developing countries.

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Amazon is bad for writers and book lovers

June 12, 2014

 Amazon’s tactics against the book publisher Hachette are not just bad for publishers.  They are bad for writers.   And, in the long run, they are bad for lovers of books.

What’s going on is part of a familiar pattern.   A powerful company uses its power to squeeze the profit margins of weaker companies.   This means the weaker companies can’t afford decent pay for the people who produce the work.   But the producers can’t get at the powerful company because it is buffered by the intermediaries.

That is how it works with fast-food franchisers such as McConald’s, their franchisees and low-wage fast-food workers.   That is how it works with electronics companies such as Apple and Sony, their sub-contractors in Asia, and the low-paid sweatshop workers.  That is how it works with Walmart, its suppliers and their low-paid employees (aside from what Walmart pays its own employees)

Hachette Amazon LogoAnd this is how, apparently, it is going to work with Amazon, book publishers and authors.

Jeff Bezos of Amazon refuses to provide good service to buyers of Hachette books unless the publisher submits to his terms for distributing their books.  In an earlier dispute with the publisher Macmillian, he simply deleted the “buy” button from all Macmillan books listed on Amazon.

One of my favorite authors, Charles Stross, who is published by Hachette, explained what is at stake.

Amazon’s strategy … is to squat on the distribution channel, artificially subsidize the price of e-books “dumping” or predatory pricing to get consumers hooked, rely on DRM on the walled garden of the Kindle store to lock consumers onto their platform, and then to use their monopsony buying power to grab the publishers’ share of the profits.  If you’re a consumer, in the short term this is good news: it means you get cheap books.

But if you’re a reader, you probably like to read new books.  By driving down the unit revenue, Amazon makes it really hard for publishers—who are a proxy for authors—to turn a profit.  Eventually they go out of business, leaving just Amazon as a monopoly distribution channel retailing the output of an atomized cloud of highly vulnerable self-employed piece-workers like myself.

At which point the screws can be tightened indefinitely.  And after a while, there will be no more Charlie Stross novels because I will be unable to earn a living and will have to go find a paying job.

via Charlie’s Diary.

There is an old tradeoff:  Speed.  Price.  Quality.  Pick any two.  The business model being pushed by Jeff Bezos would pressure publishers into signing up authors who are prolific and cheap.  That literature has a value in and of itself doesn’t enter into his thinking.  As Stross said:

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Mark Mazzetti on The Way of the Knife

June 2, 2014

Lt. Col. John Paul Vann famously said during the Vietnam War that the best weapon in a war against insurgents was a knife, and the worst possible weapon was a bomb.   That is, in order to win, it is necessary to kill your enemies without killing indiscriminately and making new enemies.

Unfortunately for the United States, our armed forces in Vietnam, Iraq and Afghanistan used the way of the bomb against enemies who used the way of the knife.

I recently finished reading THE WAY OF THE KNIFE: The CIA, a Secret Army and a War at the Ends of the Earth by Mark Mazzetti (2013), which is a study of the American attempt to substitute targeted killing for indiscriminate killing and why it failed.

wayoftheknifeIt is based on interviews with members of the CIA and Special Operations forces as well as freelance operatives.  Mazzetti is fair to their point of view and to the risks they ran to do their duty as they saw it.  He gives a good picture of the war on terror as they experienced it.

His book is excellent for what it is, keeping in mind that it does not deal with the war as experienced by civilians on the ground nor does it explore the higher-level economic and geo-political aims of the war (controlling oil, containing Russia and China).

The Central Intelligence Agency and the Pentagon have become powers unto themselves, with their own policy agendas that are separate from that of the elected leadership .

This is not only a problem of implementation of military and foreign policy.  It is a Constitutional question which calls into question the possibility of limiting power by means of checks and balances.

Leon Panetta as a congressman was a strong critic of the CIA.  But when President Obama appointed him director of the CIA, he was warned of the danger of endangering CIA “morale,” which, according to Mazzetti, he took as a veiled warning.  Panetta quickly became a strong advocate for the CIA’s viewpoint within the administration.  And the Obama administration itself doubled down on the policies for which Barack Obama as candidate criticized the Bush administration.

Instead of checks and balances, the government has an internal conflict between the CIA and the Pentagon.  The CIA does not trust the Pentagon to react quickly and has developed its own para-military forces.   The Pentagon does not trust the CIA’s intelligence and has developed its own sources of intelligence.  In general, the CIA works with intelligence services of foreign governments, such as Pakistan, while the Pentagon regards them as quasi-enemies.

The CIA and Pentagon operate independently of each other, and often disrupt each others’ missions.  Then there are mercenaries, and independent operators which are only loosely controlled by the U.S. government.

American foreign policy is implemented and largely determined by the CIA and Pentagon.  The State Department and career diplomats have no say at all, as has been made clear at top-level meetings.

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Thomas Piketty on democracy and capitalism

May 16, 2014


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Tom Ferguson on Piketty and the Democrats

May 15, 2014

Sustainability, ZPG and Piketty’s equation

May 1, 2014

If environmentalists achieve their dream of a sustainable, steady state economy and zero population growth, and if nothing else changes, then wealth will become more and more concentrated in a tiny wealthy elite.

populationgrowthoriginal

Source: Piketty, Capital in the 21st Century

That’s a logical conclusion from Thomas Piketty’s formula of r > g in his book, Capital in the Twenty-First Century.  His simple but powerful idea is that if the rate of return on investment is a higher percentage than the rate of economic growth, then an ever-higher percentage of income will go to investors and a ever-less percentage to workers.  At some point this wold level off, but it could be at high levels of inequality, just as in the past.

Now what is economic growth?  It is the product of the increase in output per person and the increase in the population.  Birth rates are falling in many parts of the world, including North America, Europe and China, and the rate of economic growth can be expected to fall to the extent that high growth in the past has been based on cheap coal, oil and natural gas.  If through all this the rate of return on investment remains at historic averages, then the rich will get richer at a faster rate than the economy grows (if it grows at all) and increasing amounts of wealth will be concentrated in the hands of a tiny elite.

piketty12growthrate

Source: Piketty, Capital in the 21st Century

Now this could play out in a number of ways.  There could be a sudden collapse, wiping out investments in the fossil fuel industry and the industries dependent on it (such as the auto industry).  Another Great Depression would be a very bad thing, but, like the previous Great Depression, it would be an example of what the economist Joseph Schumpeter called “creative destruction”.  By wiping out capital invested in obsolete or declining industries, it would open the way for new industry.

Unfortunately the known sustainable energy technologies are capital intensive.  That is to say, it is relatively cheap, for example, to build an oil-fired or natural gas-fired electrical generating plant, but the fuel itself is expensive.  With hydroelectric generating plants, windmills or solar energy, the source of energy is virtually free, but it costs a lot to make the equipment, and this requires capital.

Then again, maybe high technology will not be feasible.  Maybe a sustainable economy will be based on earlier types of technology.  If so, this will not necessarily mean less inequality.  Inequality in ancient and medieval Europe was greater than it is now.

A bleak equation.  But there are answers.  I’ve mentioned some of them in a previous post.  A more radical solution would be a redistribution of property so that return on investment would benefit everyone and not just a few.  There might not be a role for limited-liability, for-profit corporations in a slow-growth or no-growth economy.  Credit unions, consumer-owned cooperatives, employee-owned corporations or other forms of organization might work better.  As the Bible says, new wine belongs in new bottles.

Environmentalists will have to face up to this one way or another.  If birth rates fall to a zero population growth rate, this will mean an increase in the elderly population relative to the working-age population.  This can only work if there is an increase in the productivity of the working-age population, and this would have to be accomplished without technologies that burn up fossil fuels at a faster rate.

I don’t pretend to know the future, and I don’t pretend to know what a sustainable economy would be like.  Maybe some miracle technology will be invented that will resolve this issues, and all these concerns will have been for naught.  I wouldn’t count on it

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