Archive for the ‘The New Normal’ Category

Why is Dayton, Ohio, demolishing its past?

January 27, 2015

Cartoonist Ted Rall wondered why his home town of Dayton, Ohio, is demolishing buildings that are architecturally and historically valuable.  These are the buildings he remembers from his childhood that give the city its character.

He was told that the likely reason is to reduce the city’s vacancy rate, which is an important factor that out-of town banks consider when deciding whether to make loans.  The fewer the buildings, the lower the percentage of vacant buildings.

I’d guess that another reason is to lower property taxes.  Unimproved real estate (land with no buildings) has a lower assessed value than improved real estate (land with buildings).

He’s probably right to say that the Dayton city fathers should exercise some judgment and think about re-purposing its valuable old buildings instead of treating them the same way they treat rat-infested fire hazards.

The basic problem is that nowadays decisions about local communities are made by powerful people far away who don’t understand local conditions.  And there are local people who think of the powerful people far away as god-like “job creators” who must be catered to and not questioned.

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The Gutting of Dayton: Why My City Is Gone by Ted Rall for A New Domain.

Austerity: the global reach of a bad ideology

January 23, 2015

2014-12-25-racetothebottom-thumbThe Western world is in the grip of a bad idea that its governments can’t seem to shake off—although its peoples are starting to.

The idea is called “austerity.” It is the belief that public goods must be destroyed in order to increase private wealth.

Banks impose this policy on indebted nations such as Greece.  They say the governments must curtail public services, including schools and public health, while raising taxes and adopting economic policies that will result in higher prices and lower wages.

Supposedly the money saved can be used to pay off the nation’s debts.  The problem is that so-called austerity destroys the nation’s ability to generate new wealth, and so, as long as countries accept the “austerity” meme, they stay in debt indefinitely.

Nations that default on their debts, as American states frequently did in the era before the Civil War, are threatened with loss of credit.  But the fact is that the banking system literally has more money than the bankers know what to do with.  In practice, lending always starts up again after a few years.

Members of the European Union that use the Euro as their currency have a special problem.  Historically the exchange rates of currencies fell when the issuing nation had a balance of payments deficit.  This tended to bring the balance of trade into balance, because their exports became cheaper in relation to foreign currencies and their imports became more expensive.

Under austerity, nations attempt to achieve the same thing by increasing prices, lowering wages and cutting government services.  Unlike with change in the exchange rate, the burden does not fall upon the whole nation equally, but only on the less wealthy and politically powerless.

Austerity involves raising taxes, but never taxes on the wealthy.  That is because the wealthy are considered to be the “job creators” who must be catered to in order to bring about economic recovery.

The “job creator” philosophy is popular here in the USA.  The saying is, “No poor man ever gave me a job.”  The conclusion is that the key to jobs is to have more and richer rich people.

Well, we Americans have made that experiment, repeatedly, and it hasn’t worked.

If we want mass prosperity, we need to invest in the things that create wealth—education, public infrastructure and scientific research—and then see that the benefits of the new wealth are widely spread, so as to create markets for private business.

We Americans once made that experiment, too, and it did work.

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The emerging American job market

January 15, 2015

Tom the Dancing BugVia Tom the Dancing Bug

What’s the matter with us liberal Democrats?

January 14, 2015

Barack_Obama_Hope_posterWhy did President Obama never crack down on the Wall Street banks that caused the financial crisis?

Why did Eric Holder’s Justice Department never prosecute financial fraud?  Why were the failed banks bailed out rather than put into receivership and reorganized, as was done after the savings and loan crisis?  Why didn’t the President hire regulators who were willing to do their jobs?

And why don’t we liberal Democrats care?

All these things, as Thomas Frank has pointed out with his usual eloquence, were (1) fully within the President’s power, (2) good policy and (3) hugely popular.  Instead the President invests his political capital in anti-worker initiatives such as the Trans Pacific Partnership Agreement and Transatlantic Trade and Investment Partnership.

The liberal Washington press corps says it is politically impossible for President Obama to do the things that his constituents elected him to do.  Frank debunked their arguments one by one, and pointed out that, if the pundits are right, then American politics is an exercise in futility and nothing will ever change for the better.

What the President offers working people are placebos.  He has proposed giving free tuition community college students who meet certain criteria.

I think this would be nice, but community college is already reasonably affordable.  The problem of student debt originates elsewhere.  And sending more people to college does not in itself generate more well-paying jobs.  In itself, it just means higher-educated servers at Starbucks.

I criticize President Obama a lot, but I think the deeper problem is that so many liberal Democrats are willing to go along with the Washington consensus he represents.  Thankfully, this is starting to change.

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It’s not just Fox News: how liberal apologists torpedoed change, helped make the Democrats safe for Wall Street by Thomas Frank for Salon.   Well worth reading in its entirety.

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What’s the matter with us Americans?

January 14, 2015

Europeans think Americans have gone crazy.  Ann Jones, who has lived in Europe for decades, said her European friends once respected the United States, but no longer.  Here are questions she gets from her European friends.

  • Why would anybody oppose national health care?
  • How could you set up that concentration camp in Cuba and why can’t you shut it down?
  • How can  you pretend to be a Christian country and still carry out the death penalty?
  • Why can’t you Americans stop interfering with women’s health care?
  • cia-loves-u-760208Why can’t you understand science?
  • How can you still be so blind to the reality of climate change?
  • How can you speak of the rule of law when your presidents break international laws to make war whenever they want?
  • How can you hand over the power to blow up the planet to one lone, ordinary man?
  • How can you throw away the Geneva Conventions and your principles to advocate torture?
  • Why do you Americans like guns so much? Why do you kill each other at such a rate?
  • Why do you send your military all over the world to stir up trouble for the rest of us?

She added:

authoritarianism9fd18cThat last question is particularly pressing because countries historically friendly to the United States, from Australia to Finland, are struggling to keep up with an influx of refugees from America’s wars and interventions.

Throughout Western Europe and Scandinavia, right-wing parties that have scarcely or never played a role in government are now rising rapidly on a wave of opposition to long-established immigration policies.

Only last month, such a party almost toppled the sitting social democratic government of Sweden, a generous country that has absorbed more than its fair share of asylum seekers fleeing the shock waves of “the finest fighting force that the world has ever known.”

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In 2015, expect civil unrest, disaffected police

January 1, 2015

The astute John Michael Greer, whose Archdruid Report is one of my favorite blogs, predicted that the most important trends in 2015 will be the disaffection of America’s police combined with continuing civil unrest.

He said the morale of American police is at the same state as that of the American forces in Vietnam in the 1970s.  Police feel they’ve been sent into a war they can’t win, and abandoned by the civilian authority that’s nominally their superior.

I think there’s truth to that, although it’s exaggerated.  Rank-and-file police officers did not invent the “broken windows” theory of policing, which is that the way to ensure civil order is to punish every violation, no matter how minor.  Nor are they the ones who decided that the way to finance municipal government in places such as Ferguson, Missouri, is to collect traffic fines from poor people.

civil-unrest-2016Revolutions generally occur when the police and the military cease to be willing to defend existing authority against rebels.

I think there is zero chance that the military or police would go over to the side of rioting black people or even peacefully protesting black people.  Armed resistance is not a feasible option for African-Americans in the present-day USA.

Effective resistance to civil authority, as I see it, would come from armed and organized militias, such as the group that formed around rancher Cliven Bundy in his fight with the federal government over grazing fees.   They defied federal and local police with loaded weapons, and were not met with deadly force.

I believe there is a real possibility that, as the U.S. economic plight worsens, resistance to government could grow and, as military and police morale decline, resistance to government would be tolerated until it became a real threat.

If things continue as they are in the United States, I believe there is bound to be an explosion.  And, given the history of violent revolution, I do not expect anything good to come from such an explosion.

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Here is John Michael Greer in his own words:

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The dangerous new ‘precariat’ class

October 28, 2014

Millions of people in the USA and other industrial countries are living paycheck to paycheck.  There are millions more for whom being able to live paycheck to paycheck would be a considerable improvement.

The people in this second group, “the precariat,” don’t know from week to week whether they’ll be able to work or how much they’ll earn.   From the perspective of the elite, that means a “flexible” labor force, which from their perspective is a good thing.  But the flexibility is all on the part of workers, not of managers or holders of financial assets.

Prof. Guy Standing of the University of London said the precariat class is growing in all industrial countries.  This class consists of three categories of people—sons and daughters of blue collar workers who had secure jobs, migrants and minorities who live on the fringe of society, and college graduates who find themselves unable to work in their fields.

Few of them participate in politics because they’re too busy just scrambling to make a living.  They’re divided among themselves, with the children of the middle class sometimes blaming minorities and migrants for their plight.

But they’re discontented, and while their discontent mostly takes the form of violent protest, Standing thinks that, under the leadership of the educated part of the precariat, they could become a powerful force.

The militarization of the police, the spread of universal surveillance and the criminalization of dissent indicate that a lot of people in authority think the same thing.

  LINK

The Precariat: The New Dangerous Class by Guy Standing for Working Class Perspectives  (Hat tip to Bill Harvey)

 

A professor who teaches blogging

October 27, 2014

I never knew that the art of blogging was taught in college.

Bad Paper: The world of the debt collector

October 20, 2014

Jake Halpern wrote a New Yorker article, and then a book, Bad Paper (which I haven’t read), about the debt collection industry.  He was interviewed by Bloomberg’s Megan McArdle.

My mom was getting hounded by a debt collector for a bill that she did not owe.  She eventually paid it just to get him to stop harassing her.

bad.paperI started investigating and found out that much debt-collection activities were in my hometown of Buffalo, New York.  I ended up writing a profile on a Buffalo-based debt collector who bought and sold and collected on debt for pennies on the dollar; that story ran in the New Yorker.

That New Yorker story got optioned by Brad Pitt’s production company.  So I went back to Buffalo with the screenwriter.

No one wanted to talk to a journalist back when I was doing the New Yorker piece, but now that I was with Brad Pitt, everyone talked.  One night, the screenwriter and I go out to dinner with a banker and a former armed robber who had gone into business with one another.

They tell me an incredible tale.  They purchased $1.5 billion worth of bad debt for pennies on the dollar. Their aim was to make a fortune.   All goes well on this unlikely venture until some of the debt is stolen and the former armed robber must delve into an underworld where debt is bought and sold on street corners.  This quest ends in a showdown with guns in the inner city of Buffalo, New York.

The world Halpern describes is lower on the economic food chain than the one described by Matt Taibbi in The Divide, but the process is basically the same.  A lender decides it is not worth the effort to collect on certain bad debts, and sells the debt to a collection agency for pennies on the dollar.

The problem is the lack of reliable information as to what is owed and for what.  Sometimes the collectors don’t know how much is principal and how much is accrued interest.  Sometimes unscrupulous lenders will sell the same debt to several collection agencies.

Halpern said he wound up having more sympathy with debt collectors than he expected.  It is one of the few occupations open to convicted felons.  The central figure in his New Yorker article was a former cocaine dealer trying to go straight.

What does he think needs to be changed about debt collection?

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The billions nobody bothered to keep track of

October 16, 2014

Between $1.2 billion and $1.6 billion in shrink-wrapped $100 bills, earmarked for Iraq reconstruction, reportedly turned up in a bunker in Lebanon, along with $200 million in Iraqi gold.

bagdad-money-palette-300x200

“Bricks” of cash in Baghdad

Stuart Bowen, a special inspector general appointed by President Bush to keep track of waste and corruption in Iraq, reported that he has been unable to persuade anybody in either the U.S. or Iraqi governments to check it out.  The U.S. embassy in Beirut denied him permission to go to Lebanon to look for himself.

The stacks of money are part of $12 billion to $14 billion in shrink-wrapped “bricks” of currency, provided by the Federal Reserve Bank.  The money was flown to Iraq on wooden pallets, to be handed out as needed. An additional $5 billion was sent via electronic transfer.

Bowen said most of the money was probably spent for legitimate purposes, but $6.6 billion is unaccounted for.  This is a staggering amount.

Notice the $2 billion margin for error in the estimate of what was sent.  That, too, is a staggering amount.

Why the lack of interest in what become of the money?

One possible explanation is that the U.S. government and the Iraqi government have a very good idea of who got the money, and don’t want it made known to the public.

Another is that they don’t know, and don’t want the public to be reminded that they don’t know.

 LINKS

Billions set aside for post-Saddam Iraq turned up in Lebanese bunker by Rory Carroll for The Guardian.

$1.6 billion in Iraqi cash seized in Lebanon by Ahmed Hussein for Iraqi News.  A good article with an inaccurate headline. The money was never seized and nobody knows whether it is still there.

Special Report: The Pentagon’s doctored ledgers conceal epic waste by Scot J. Paltrow for Reuters.  The bigger picture is that it’s simpler for the Defense Department to order new stuff than keep track of what they’ve got.  Hat tip for this link to Peter Van Buren.  He also had a post on the Lebanon bunker, but for some reason I can’t link to the post.  I’ll add the link when and if I can.

Previous post

“The biggest theft of funds in national history”

Why Norway didn’t bid for the 2022 Olympics

October 12, 2014

Norway dropped out of the bidding to host the 2022 Winter Olympics.   It’s easy to understand why after you read this list of requirements by the International Olympic Committee, as reported in the Norwegian press.

  • They demand to meet the king prior to the opening ceremony.  Afterwards, there shall be a cocktail reception.  Drinks shall be paid for by the Royal Palace or the local organizing committee.
  • Separate lanes should be created on all roads where IOC members will travel, which are not to be used by regular people or public transportation.
  • A welcome greeting from the local Olympic boss and the hotel manager should be presented in IOC members’ rooms, along with fruit and cakes of the season.  [Seasonal fruit in Oslo in February is a challenge …]
  • The hotel bar at their hotel should extend its hours “extra late” and the minibars must stock Coke products.
  • The IOC president shall be welcomed ceremoniously on the runway when he arrives.
  • The IOC members should have separate entrances and exits to and from the airport.
  • During the opening and closing ceremonies a fully stocked bar shall be available.  During competition days, wine and beer will do at the stadium lounge.
  • IOC members shall be greeted with a smile when arriving at their hotel.
  • Meeting rooms shall be kept at exactly 20 degrees Celsius at all times.
  • The hot food offered in the lounges at venues should be replaced at regular intervals, as IOC members might “risk” having to eat several meals at the same lounge during the Olympics.

via Slate.

I’m always amazed as the sense of entitlement by members of the privileged classes, but this list is worthy of a gold medal.

Apart from the behavior of the IOC, bidding wars to host the Olympic games serve no useful purpose.

It doesn’t make sense for countries to spend hundreds of millions of dollars to build huge facilities for one-time-only events.  It would be better to have permanent Olympic sites.

The Summer Olympics should be held in Greece, in honor of the original Olympic games, and sports-minded colder countries could bid to be a permanent site for the Winter Olympics.

Hat tip to Mike the Mad Biologist.

Fed official says low unemployment is dangerous

September 29, 2014

Richard Fisher, president of the Federal Reserve Bank of Dallas, said it may be necessary to raise interest rates if the unemployment rate falls below 6.1 percent because low unemployment could lead to higher wages.

Crowded Michigan Unemployment OfficeFisher pointed out that in Texas, wages are rising faster than the rate of inflation.

To me, that is a good thing, not a bad thing.  Why interfere with the law of supply and demand?  The only reason that I can think of is that it might decrease the market value of financial assets.

I am reminded of Karl Marx’s claim that “a reserve army of the unemployed” is necessary to the functioning of capitalism.

I believe in the value of self-discipline, education and the willingness to work.  But anybody who preaches these values ought to be able to show that there is a payoff, and that the payoff is available to everyone, not just the exceptionally talented and the exceptionally lucky.

If the economic system is set up so that at least 6.1 percent of the work force is unemployed at all times, then there is no way to rise out of that 6.1 percent without knocking somebody else down into it.

LINKS

Fed’s Fisher: wages rise when joblessness falls below 6.1 percent by Reuters (via Tom the Dancing Bug).

‘Poor people don’t plan long term.  We’ll just get our hearts broken’ by Linda Tirado for The Guardian.  Somewhat long, but well worth reading.

Obama’s Long Battle to Cut Social Security Benefits by Eric Zuesse for Washington’s Blog (via Mike the Mad Biologist).  The President’s goals are not what his supporters think they are.

The war for living space

September 27, 2014

Tom the Dancing BugSource: Tom the Dancing Bug Blog.

I don’t think the discomfort of airline flight discomforts me as much as it does most people.

The night before I go on an airplane trip, I stay up as late as I can so that I doze all through my airplane flight.

I have the ability to lose myself in reading and always take an engrossing pocket-size book with me on a flight.

LINK

To recline your seat or not?  Stop arguing.  Capitalism has already won this stupid war by Oliver Burkeman for The Guardian.

Prosperity for whom?

September 25, 2014

income distribution

This chart shows that during the Obama administration, the United States has had an economic expansion in which the vast majority of the population lost income.   This is the first time this has happened in more than 50 years.

There were sharp drops in average income growth during the Reagan (1982-1990) and Bush (2001-2007) years, but this is worse.

An economic expansion is a period of continuous growth in gross domestic product for at least two fiscal quarters in a row.  Americans are producing more.  But most aren’t getting the benefit of it.

I don’t think this is so much because of anything specific that the President and Congress have done as what they have not done.

I think the economic system is now structured to redistribute income upward unless something changes, and most of the present political establishment, both Democrat and Republican, is unwilling to change.

income-growth

It is true that the top income earners lose a greater fraction of their incomes in recessions that the majority do.  But taking the ups and downs together, the economic elite are taking an ever-larger share.

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Source: “The Most Remarkable Chart I’ve Seen in Some Time”: The Rich Gain More Ground in Every U.S. Expansion by Yves Smith for Naked Capitalism.

If you’re trying to reconcile the two charts, keep in mind that the top chart distinguishes between 10 and 90 percent of the population, and the bottom chart distinguishes between 1 and 99 percent of the population

David Graeber on funding scientific research

September 22, 2014

Common sense suggests that if you want to maximize scientific creativity, you find some bright people, give them the resources they need to pursue whatever idea comes into their heads, and then leave them alone. Most will turn up nothing, but one or two may well discover something.

But if you want to minimize the possibility of unexpected breakthroughs, tell those same people they will receive no resources at all unless they spend the bulk of their time competing against each other to convince you they know in advance what they are going to discover.

via Of Flying Cars and the Declining Rate of Profit – The Baffler.

The new normal: Links & comments 7/21/14

September 21, 2014

There Are Social and Political Benefits to Having Friends by David Brooks for the New York Times.  (Hat tip to Hal Bauer)

David Brooks argued for the benefits of friendship, especially how good friends bring out the best in each other.  He proposed, tongue in cheek (I think), a program for bringing people together in circumstances in which they would be likely to become friends.  I think it strange to live in a world where the value of friendship is an unfamiliar idea that you have to argue for.

Read Slowly to Benefit Your Brain and Cut Stress by Jeanne Whalen for The Wall Street Journal.  (Hat tip to David White)

I think this article, too, is strange.  The author cites scientific studies that show the benefits of reading, and specifically of reading from printed books, as if reading were an unfamiliar activity that needs justification.

Eight Things We Can Do Now to Build a Space Colony This Century by Annalee Newitz for io9.

Based on the comments, the most controversial of the eight proposals is to build a sustainable future here on Planet Earth so that the space colonists will have a world to come home to.   Some of the hard-core space enthusiasts think this is a false priority.

 

The SWAT team quiz

September 2, 2014

tumblr_navutiRisz1rt6ykvo1_1280

I found this on Tiffany’s Non-Blog.

Life in the wired society

August 25, 2014

Oral-B, a Procter & Gamble company, this year launched its SmartSeries Bluetooth toothbrush — an essential appliance for what the firm calls “the well-connected bathroom”.

It connects to your smartphone, where its app tracks brushing tasks: Have you flossed? cleaned the tongue? rinsed? And highlights areas of the mouth visualized on the phone screen that deserve more attention.

More importantly, as the toothbrush’s website proudly announces, it also “records brushing activity as data that you can chart on your own and share with dental professionals.”

What happens to that data — whether it goes to these dental professionals, or your insurance company, stays with you or is appended to your data already owned by Facebook and Google — is a controversial question.

via Evgeny Morozov: How much for your data?.

The principle of financialization is that if anything can be done, it not only can, but should be done for money, and that the only standard of value is monetary.  Technology in the service of financialization applies this to your personal life.  Any information about you that is worth knowing is worth selling for money.

Now if personal data is a financial asset and nothing else, the individual person should have the exclusive right to sell it, just as the individual person should have the exclusive right to sell his or her own blood.   But is this how we want to live?

The digitization of everyday life, and the rapaciousness of financialization, risk turning everything — genome to bedroom — into a productive asset. 

As Esther Dyson, a board member of 23andme, the leader in personalized genomics, said the company is “like the ATM that gives you access to the wealth locked within your genes”.

This is the future that Silicon Valley expects us to embrace: given enough sensors and net connections, our entire life becomes a giant ATM.  Those refusing this would have only themselves to blame. 

Opting out from the “sharing economy” would come to be seen as economic sabotage and wasteful squandering of precious resources that could accelerate growth.

Eventually, the refusal to “share” becomes tinged with as much guilt as the refusal to save or work or pay debts, with a veneer of morality covering up — once again — exploitation.

It’s only natural that the less fortunate, under the burden of austerity, are turning their kitchens into restaurants, their cars into taxis, and their personal data into financial assets. What else can they do?

For Silicon Valley, this is a triumph of entrepreneurship — a spontaneous technological development, unrelated to the financial crisis.  But it is only as entrepreneurial as those who are driven — by the need to pay rent — into prostitution or selling their body parts.

via Evgeny Morozov: How much for your data?.

 Hat tip for the link to Daniel Brandt.

The 1% and the 99%: Links & comments 8/11/14

August 11, 2014

Corporate 1% in U.S. Gets Wealthier While Cash Piles Up by Lorraine Woellert for Bloomberg.  (via Naked Capitalism).

In the Future, We’ll All Be Renters: America’s Disappearing Middle Class by Joel Kotkin from his new book, The New Class Conflict.  (via Naked Capitalism)

During the Gilded Age of the late 19th century, U.S. politics was at least as corrupt as it is now, and a tiny oligarchy of wealth had as much power as it does now.   Yet these oligarchs also built railroads, steel mills, grain elevators—what we call physical capital—that was of ultimate benefit to the nation as a whole.  The same is true of the oligarchs of China and Russia today.

In contrast, the super-rich class in the USA today can’t seem to find anything useful to do with their money.  And that’s not because there is nothing useful to be done.  American roads, bridges and water and sewerage systems, as one example, need upgrade and repair.  But, no, I don’t think selling off American public infrastructure to private interests would be the answer.

Going Postal by Peter Byrne from his new book of the same name.  (via Corrente)

A corporation headed by Senator Dianne Feinstein’s husband, Richard C. Blum, has an exclusive contract to sell U.S. post offices as the Postal Service downsizes.   He is selling them to his friends, cheap.

Is ‘shareholder value’ bad for business? by Leon Neyfakh for the Boston Globe (via Mike the Mad Biologist)

Market Basket, a supermarket chain based in New Hampshire,  is an example of how a CEO can run a profitable business that pays good wages and serves customers well, and still be kicked out for failing to “maximize shareholder value”.

Now Is a Critical Moment to Stop Some Scary Global Corporate Deals That Are in the Works by Kevin Zeese and Margaret Flowers for AlterNet.

The Obama administration is pushing Congress to enact the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement, but the public is beginning to catch on that these are schemes to establish corporate power in international law.

The new normal: Links & comments 7/29/14

July 29, 2014

Soak the Rich: An exchange on capital, debt and the future by David Graeber and Thomas Piketty, translated and reprinted by The Baffler.

David Graeber is an anthropologist and radical anarchist known for his book, Debt: the First 5,000 Years, which looks at the origins of money, taxes and debt.   Thomas Piketty is a politically moderate economist known for his book, Capital in the 21st Century, which looks at the persistence of gross inequality during the past few centuries.

I admire them for their opposite virtues—Graeber for his bold and original speculation, Piketty for his research and his refusal to assert anything that can’t be backed up by data.

Graeber believes the capitalist system is doomed.  Once it goes away, people will have a chance to create a new system without fear of bosses or police, and Graber does not see any point in trying to describe the specifics of what that new system will be.

Piketty says history indicates that capitalism has proved amazingly resilient in the face of change, and that there is no reason to think this time is different.  Furthermore, he said, any society has a need for capital, the means to invest accumulated wealth into the means of creating new wealth.  (This is a different definition of capital from the one in his book).  His attitude toward capitalism is: Mend it, don’t end it.

One thing they do agree on is the centuries-old tendency for wealth to be concentrated in a few hands, and the danger this poses to a democratic society.

On the Causes of Investment Decline in the U.S. Economy by Dr. Jack Rasmus, the Green Party’s shadow Federal Reserve chair.  Hat tip to Bill Harvey.

I have long thought that increasing the earning power of average Americans would make many things fall into place.  If people had more money to buy stuff, merchants would sell more stuff and manufacturers would make more stuff, and this would be to everybody’s benefit.

Jack Rasmus suggests that maybe this isn’t so.  Maybe getting people into debt and putting the squeeze on them is more profitable that creating useful goods and services.  If that’s so, we can’t look to private enterprise to recreate a high-wage, full-employment economy.

His solution is a massive public works program, which I agree is needed, but doesn’t address the problem he describes.

Defending Trade Unions While the Justices Are Away by David Coates.  Hat tip to Labor News in Rochester, NY.

Labor unions helped maintain American prosperity in the mid-20th century by fighting for good wages and job security.  But the union movement is handicapped by laws and court decisions that increasingly restrict unions while freeing corporations of responsibility.

In Harris v. Quinn, the Supreme Court ruled that home health-care workers in Illinois could not be required to pay dues the Service Employees International Union, but they were still entitled the benefits of the SEIU contract and to SEIU representation.  It is as if the Supreme Court ruled that I could not be required to pay my Rochester Gas and Electric bill, but RG&E is still obligated to supply me with gas and electricity.

Chris Dodd Warns of Coalition Between Populist Democrats and Republicans by Zach Carter for the Huffington Post.

Ex-Senator Chris Dodd, a Connecticut Democrat, gave a speech warning against trying to strengthen the Dodd-Frank financial reform bill.   He said in a speech to the Bipartisan Policy Center that opening up the bill to amendments would open a “Pandora’s box” that would be dangerous the financial services industry.

He said warned against right-wing Republicans and left-wing Democrats teaming up against Wall Street.   He probably was thinking of a bill co-sponsored by Senator Sherrod Brown (D-Ohio) and David Vitter (R-Louisiana) to break up the “too big to fail” banks, an unacceptable type of bipartisanship.  Dodd said breaking up big banks is unnecessary.

As Court Fees Rise, The Poor Are Paying the Price by Joseph Shapiro for National Public Radio.

The criminalization of poverty by Radley Balko for the Washington Post.

A majority of U.S. states have recreated the equivalent of debtors’ prisons.  They are trying to make their criminal justice system self-financing by charging fees for public defenders, the cost of a jury trial, room and board for jail and prison time, and parole and probation costs.   Poor people who can’t pay these fees go to jail, even though this has been ruled unconstitutional.

 

“The pitchforks are coming … for us plutocrats”

June 27, 2014

[Video added 6/28/14.  The TED organization refused to distribute this TED talk because it was “too controversial” ]

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Nick Hanauer, a billionaire who lives in Seattle, said he got rich mainly by foreseeing 30 years ago how important the Internet was going to become.  What does he foresee now?  Pitchforks—that is, revolution against people in his income class unless income and wealth are more widely distributed.   He wrote in the current issue of Politico:

The fundamental law of capitalism must be: If workers have more money, businesses have more customers.

Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.  … …

During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo.  CEOs used to earn 30 times the median wage; now they rake in 500 times.

Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before.  So, too, for financial services workers and technology workers.  These folks earn multiples of the median wage, yet we somehow have more and more of them.

The thing about us businesspeople is that we love our customers rich and our employees poor. … …

The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy.  It’s believing that if the poor get richer, it’s bad for the economy. … …

Hanauer believes that Seattle’s new $15 an hour minimum wage will be good for the local economy.

Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies.  But capitalism left unchecked tends toward concentration and collapse. 

It can be managed either to benefit the few in the near term or the many in the long term.  The work of democracies is to bend it to the latter.

That is why investments in the middle class work.   And tax breaks for rich people like us don’t.  

Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism.  It’s an indispensable tool.

via Nick Hanauer – POLITICO Magazine.

I thank my friend David Damico for the link.

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The new normal: Links & comments 6/22/14

June 22, 2014

Thrown Out of Court: How corporations became people you can’t sue by Lina Khan for The Washington Monthly.

Individual Americans are losing their right to sue large corporations by means of “terms of service” contracts that customers and employees are required to sign as a condition of doing business.   By signing these contracts, individuals give up their right to take their complaints to a judge and jury and instead agree to abide by the decision of a corporate-friendly arbitrator.

Corporations have been complaining for years about the burden of litigation, and, back in the day, I fell for this.   But even then, the courts were busier with lawsuits by corporations against each other than they were lawsuits by individuals or by class-action suits.

Owners and managers of corporations already have a privilege denied to ordinary citizens, which is limited liability for their debts and fines.  We are getting far beyond the question of whether corporate entities have the same rights as individuals.  By means of this 21st century version of the “yellow-dog contract,” they are becoming mini-governments.

Hillary Clinton forgets the ’90s: Our latest gilded age and our latest phony populists by Thomas Frank in Salon.

When Bill Clinton ran for President in 1992, he ran as the advocate of working people against the corporate interests who didn’t play by the rules.  What we got was Ronald Reagan with some of the sharp edges filed off.  As Thomas Frank wrote in Salon today, the Clinton Presidency was an era of corporate mergers, financial deregulation, downsizing of government and NAFTA

That’s what we’re likely to get from a Hillary Clinton presidency, too.  She voices the same populist rhetoric and has the same corporate allegiances.

The floor is open by Psychopolitik.

How committed are we Americans to democracy?  A Gallup poll indicates a “no confidence” vote in the institutions of democracy.   The institution in which Americans have the most confidence (74%) is the military and the one in which we have the least confidence is Congress (7%).   A majority lack confidence in the Presidency and the Supreme Court, but they have confidence in the police.

If I didn’t know better, I’d take that for a poll of Italians just prior to Mussolini’s march on Rome.

Every year, we waste Spain by Tim Stuhldreher.  Hat tip for this link to Mike the Mad Biologist.

U.S. Healthcare: Most Expensive and Worst Performing by Olga Khazan for The Atlantic.

If the U.S. spending per person for medical care were the same as a typical industrial nation, our annual health care budget would be more than $1 trillion less.   That’s the equivalent to the gross domestic product of Spain, out of which a nation of 47 million people feed, clothe, shelter, educate and amuse themselves, and, yes, also provide medical care.

Who in the world is hopeful about the future?

June 21, 2014
global-agenda-17

Click to enlarge

One of the defining characteristics of Americans used to be that, whatever our circumstances, almost all of us expected that our children and grandchildren would be better off than we are.

This is no longer true.  And a Pew Research survey indicates that people in other supposedly advanced nations are more pessimistic than we are.

While 62 percent of Americans expect the next generation to be financially worse off than their parents, this pessimistic view is held by 64 percent of Canadians, 64 percent of Germans, 74 percent of the British, 76 percent of Japanese and 90 percent of the French.

The most optimistic nations in the world are China, where 82 percent of those surveyed said they expect a better future, and Brazil, where 79 percent are hopeful (see below).  Among European countries, the least pessimistic was Russia.

I think survey results in China or any other dictatorship have to be taken with a certain amount of skepticism, but, even so, I am astonished at the differences among countries.

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A footnote on disruptive innovation

June 21, 2014

Buzzwords such as disruptive innovation and creative destruction are popular among managers and officials who are neither innovative nor creative, but merely disruptive and destructive.

Will Social Security be Internet-only service?

June 18, 2014

I like the Internet.  The power to go on-line has enriched my life in so many ways that I feel at a loss when Internet service temporarily shuts down.   What I dislike is the attempt to shut down alternatives to the Internet, which is becoming more and more common in American life.

Wait times on customer-service phone lines have been made so long that you are virtually forced to go on-line.   Book distributors are pushing to replace physical books with Kindle and Nook.  There are even people who seriously propose to get rid of currency and coins, and require all financial transactions be conducted through credit cards, debit cards or otherwise on-line.

socialsecurity.govThe latest example is the Social Security Administration.  Its Vision 2025 plan is to close most of its 1,200 field offices, allow its work force to shrink by 30,000 through attribution and serve clients through “on-line service delivery” rather than face-to-face contacts with human beings.

This follows a widespread business and government model of achieving cost savings and administrative convenience by degrading the quality of service.

People who depend on Social Security for their income probably can’t afford Internet connections, and many people of the Social Security generation aren’t at home with computers.   When I signed up for Social Security nearly 16 years ago, I was pleased at the helpfulness of the woman I talked to.   I would not have wanted to try to communicate with a software algorithm.

The Obama administration apparently is willing to adopt, or at least tolerate, a policy that is bad for two core Democratic constituencies, senior citizens and union workers, and benefits nobody except the high tech companies that will get the contracts to provide this service.

I predict that if this policy is adopted, it will be used by opponents to Social Security as evidence that government can’t work, and that Social Security should be privatized.

LINK

The Biggest Change to Social Security You’ve Never Heard About by J. David Cox, president of the American Federation of Government Employees, for Huffington Post.  Hat tip to Jack Clontz.