Monday, October 31, 2011

Crooked Timber on neo-liberalism:

An interesting post:
This comment by Yglesias is on target: “the TNR staff editorial on the subject [of OWS] feels distinctly like an op-ed penned eleven years ago about anti-globalization protestors, put on ice, and then re-animated with a hasty rewrite that fails to consider the actual political and economic circumstances.”

The staff editorial itself is not so important. What’s important is that, once upon a time, there were debates about trade ‘liberalization’ – globalization – that used to divide neoliberals and liberals and progressives. Basically, the neoliberals were gung-ho for trade on the grounds that the alternative was protectionism that amounted to shooting your own foot, and didn’t do any good for the poor in the Third World. And the progressives saw jobs being outsourced, labor unions weakening. Liberals were those caught in the squishy middle, per usual. ...

[Yglesias] considers himself a neoliberal and sees, correctly, I think, that anyone committed to that market-oriented outlook is more or less committed to sympathy for the core grievances expressed by the OWS protesters. Neoliberalism was always in favor of markets as means, not ends. Neoliberalism was never – or was never supposed to be – the view that being in favor of trade liberalizaton means market fundamentalism in everything. Neoliberalism says market liberalization should go hand in hand with progressive taxation and appropriate regulation so the pains that buy the gains are mitigated and borne equitably. Spread the gain, to spread the pain. If liberalization means making the 1% richer and everyone else poorer, you shouldn’t take the deal. Only (some) conservatives and (some) libertarians should be willing to take that deal. ...
"Neoliberalism says market liberalization should go hand in hand with progressive taxation and appropriate regulation so the pains that buy the gains are mitigated and borne equitably."
That never happened. Instead, we got globalization and no relief. This is something neo-liberals still fail to comprehend. What they did do, is orient towards "pity charity" as Freddie deBoer points out: (emp add)
There’s a troubling form of liberalism that is increasingly found in the wonky, think-tank-and-establishment-media blogosphere that is so influential these days. I’ve called it, in the past, globalize/grow/give progressivism. Mike Konczal of Rortybomb has referred to it as pity charity liberalism. ... Whatever you want to call it, this vision of the liberal project defines itself through the social safety net. Its orientation is towards expanding and protecting a redistributive social welfare system. Meanwhile, it is at best uninterested in (and often downright hostile towards) worker organization, unions, regulation, and other attempts to empower workers in relation to capital and poor people in relation to the rich. The idea is that, if you get the economy going well enough, you can redistribute enough money to the poor that they’ll be alright, even while you’ve undermined their ability to collectively bargain, raise the value of their labor, and exercise power. ...

The first problem with pity charity liberalism is that the people advocating it tend to be far more optimistic about getting the social welfare state they want than they should be. I’ve been using the example of health care reform: a decent health care system has to be a part of a minimally fair social welfare system. We had a president with a serious mandate who campaigned explicitly on health care reform, majorities in both houses of congress, a uniquely favorable political moment, and an objective that broad majorities of Americans have supported for years. We just barely got a compromised bill through, and it is under perpetual legal and political threat. If those are the conditions that we’re going to have to defend the welfare state under, I don’t see how anyone can be confident in purely redistributive liberalism.

Contrast that with the history of the American labor movement. Check the record: on every issue of worker rights and protections, workers went first. They didn’t ask politicians to give them safer conditions, cleaner conditions, higher wages, shorter hours, more bargaining power, and a better system to redress their grievances. They demanded those things from the bosses, and they did so with the threat of shutting the whole operation down. Only after they had won those things did they eventually become codified in law. (It’s for this reason that May Day—a joke here, I’m afraid, but celebrated passionately in much of Europe and South America—is specifically a celebration of Haymarket square and American unions.) If we’ve lost those gains since, it’s been because of a very well-funded, coordinated and consistent effort by people in power to undermine unions and refuse to enforce existing labor law.

Even if you could guarantee a certain minimal welfare state, the idea of poor and working people depending on the largesse of the rich and powerful is obscene. Sometimes, people have to live under the charity of others. But nobody wants to in perpetuity, because they then are not in control of their own lives, and because having to do so leaves many feeling robbed of personal dignity. As long as economic security is a gift of those at the top, it can be taken away. And if the last several decades have shown us anything, it’s that for the richest, what they already have will never be enough. No matter how income inequality spirals out of control, no matter how absurd the gap between those on top and everybody else grows, they’ll look to take more. And the more that you make the people on the bottom dependent on charity, the less they’re able to protect their own interests.
Kevin Drum has thoughts along those lines:
The problem is that a system that generates enormous income inequality also generates enormous power inequality — and if corporations and the rich are allowed to amass huge amounts of economic power, they'll always use that power to keep their own tax rates low. It's nearly impossible to create a high-tax/high-service state if your starting point is a near oligarchy where the rich control the levers of political power.
Which is pretty much where we are today.


Wednesday, October 26, 2011

Who agrees with this sentiment?

From Think Progress:
Bachmann: Uninsured Americans Can Rely On ‘Charitable Organizations’ For Health Care

“We will always have people in this country through hardship, through no fault of their own, who won’t be able to afford health care,” Bachmann said. “That’s just the way it is. But usually what we have are charitable organizations or hospitals who have enough left over so that they can pick up the cost for the indigent who can’t afford it.

“But what we have to do is be a profitable nation that’s growing, so that we can pay for those people who can’t afford it through no fault of their own. Once ‘Obamacare’ is gone, this is what we have to do.“
That sentiment was echoed on NBC's Nightly News this Monday with this:
Boy, 7, raises money for cancer racing go-karts (Bing video)

Seven-year-old Timmy “Mini” Tyrrell learned his friend had cancer, and he decided he could help raise money by racing go-karts. Timmy calls it “Mini’s Mission,” and so far he’s raised $7,000 and counting. NBC’s Anne Thompson has the story.
The day before, CBS ended its evening news with a story about how a single mom was in economic trouble (unemployed, etc.) and how a lady befriended her and helped her out.

There could have been stories about how government aid agencies - and the staff - help people. Instead, we are shown problems being solved by private effort. Both take place, of course, but the bias in reporting is to the "feel good" maudlin story that excludes government programs that we have established and paid for.


Sunday, October 23, 2011

Matthew Yglesias cannot remember what he's read:

Popular blogger Yglesias has a post about labor's declining share of national income. He starts out with:
Peter Orszag has a column about the declining labor share of national income that concludes by saying that “We are effectively missing $500 billion a year in wages, and no one has a credible set of ideas that would bring it back.” ...
And then goes on to argue with another blogger about arcane issues about volatility of the statistics.

But Yglesias really should pay attention to what Orszag wrote. This, for example: (emp add)
The two primary drivers are globalization and technological change. From 1980 to 2005, as the world became more integrated, the effective labor supply available on a global basis expanded by 100 percent to 300 percent (depending on how the estimates are done). That increased competition has pushed labor compensation down in the industrialized economies. ...

In a 2007 paper for the International Monetary Fund, Florence Jaumotte and Irina Tytell tried to parse the various causes of the declining labor share. In the U.S., the U.K., Australia and Canada, the economists concluded, labor globalization and technological change played roughly equal roles, and crucial ones at that. In European countries and Japan, technological change was more significant than labor globalization. Other factors --including unions and privatization trends -- have been found to be influential, but labor globalization and technological change loom as the dominant forces.
There is something you can do about globalization. De-globalize, by enacting protectionist legislation.

It's simple, has worked before (U.S. in the nineteenth century). But the elites don't like it because they actually prefer to have labor compete against one another.


Saturday, October 22, 2011

The Fox Nation audience:

Here's the headline and story featured at the top of their page:
The website has recently added to the end of each stiry a poll of what readers thought. Here are the results:
Two-thirds have a positive reaction. Even though the vote total isn't particularly large (36), it is representative of the attitude of this crows as any frequent visitor to Fox Nation can attest.

That's part of our politics today. There is a real desire to hurt - really hurt - those in distress or showing concern for same.


Monday, October 17, 2011

What Occupy Wall Street is doing:

They have no agenda - at least nothing directly targeting legislation pending or proposed. They have no leadership. They are not supporting or challenging particular politicians.

That could change, of course.

So what's Occupy Wall Street all about?

What it, and the other occupy events throughout the country, is doing is filling in a gap. For the last two years the press has largely ignored both the un/underemployed and those with jobs but under siege (foreclosures, health care expenses, college tuition, loans, etc.)

During past downturns, there would be a steady drumbeat of stories about those impacted. There was some of that in late 2008 and early 2009, but not much thereafter. Yet the economy hasn't done a whole lot of recovering, and so there are a lot of people feeling economic pain but feeling invisible.

Occupy Wall Street is something that they hope will change that.


Thursday, October 13, 2011

A bit more about those free trade agreements:

CBS Evening News did a good job of explaining why it is a good thing. Presented to the viewer were cases where exports would grow. A firm that lost to Germany a contract for $100,000 and would have meant three jobs. Increased beef exports. And drilling machinery to Columbia. Those were the examples. To counter, they had Richard Trumka of the AFL/CIO who said he didn't like it and that he disagreed with Obama on the policy.

The vote triggered an essay at Salon by Andrew Leonard. Excerpts: (emp add)
After five years of squabbling, the U.S. Senate and House of Representatives finally passed free trade agreements with South Korea, Colombia and Panama on Wednesday. The Hill described the news as a “win” for President Obama. At first glance, the terminology seems a bit odd. The free trade agreements were originally negotiated by President George Bush, have been a high priority for Republicans ever since, and are considered extremely suspect by many Democrats ...

What’s more, in 2008, Obama campaigned in Ohio and Michigan against free trade agreements like NAFTA, for blatantly political reasons. But now it’s a victory for him to get the biggest free trade deal since NAFTA — the South Korean FTA — through Congress? ...

Whatever one thinks of Korea’s regulatory environment, the deal cut by Obama’s negotiators assuaged the U.S. auto industry’s concerns about the FTA, thus explaining the support from Michigan Democrats. But whether the changes will boost car imports significantly is still highly open to question. A study conducted by U.S. International Trade Council concluded that Korea’s carmakers would end up benefiting more from the deal in the long run than Detroit’s Big 3. ...

... anyone who has ever been to South Korea — or any other East Asian nation — understands immediately that, engine tax or no engine tax, big American cars just don’t make sense in crowded Asian cities where the cost of a gallon of gas is several dollars higher than in the U.S. And there is nothing that a free trade agreement can do to change that basic truth.

So there’s your big win for Obama: a legislative victory that upsets big swaths of his own party, won’t materially improve the fortunes of the domestic auto industry, and is unlikely to make a significant difference in states that are critical to his election.
Of course this will be a loser for those in the bottom half of society, since they will be pitted against even more low-wage workers overseas. Interesting that CBS chose only to present businesses that would gain (including cattle ranchers!) and not any that would lose.


Wednesday, October 12, 2011

Evidence of who your politicians work for:
Congress on Wednesday approved three long-stalled free-trade deals with Colombia, Panama and South Korea.
It sure isn't you.

Of interest, ABC World News had a segment on yesterday called "Made in America" where home builders were shown a list of domestic suppliers (e.g. for nails) and many saying that they'd consider it and also that buying locally made products keeps jobs here. In addition, there have been several reports our recently pointing out that the lower half of American workers have taken it on the chin due to 30 years of globalization, which caused their jobs to disappear or their wages to stagnate.

And in the face of that, Congress is continuing to pursue policies that will not help labor, but will help international businesses.


Republicans say the sorry economy is all the government's fault:

Last night during the Republican debate, Gingrich had this to say:
... the first person to fire is Bernanke, who is a disastrous chairman of the Federal Reserve ...

... let's be clear who put the fix in: The fix was put in by the federal government.

I'm going to say one last thing. I want to repeat this. Bernanke has in secret spent hundreds of billions of dollars bailing out one group and not bailing out another group. I don't see anybody in the news media demanding the kind of transparency at the Fed that you would demand of every other aspect of the federal government. And I think it is corrupt and it is wrong for one man to have that kind of secret power.
Limbaugh had these post-debate observations:
We are living in a destroyed economy for very learnable reasons -- very discernible reasons, inarguable reasons. It has been years since the evidence was procured. ... Everybody in that town knows what happened. Everybody in that town, including Karen Tumulty, knows what went on. They know it was Fannie and Freddie and they know it was the federal government imposing these rules on the lenders. They know it, and what infuriates me is that they continue with the lie.
And Hannity constantly references the Community Redevelopment Act.

So there you have it. It was the Fed, Fannie and Freddie, and the Community Redevelopment Act that caused the recession. Not the banks.

That will be the message in 2012 (although Romney probably will hedge)


Saturday, October 08, 2011

That Bank of America $5 a month fee for debit card use that's pissing off everybody:

Why didn't they price it at $3 a month?

People probably would have been okay with that.


Thursday, October 06, 2011

Steve Jobs passing may be as good a date as any to mark ...

the end of the American Century.

Not to get into Apple fanboi stuff, but Jobs life and tenure parallels what may be the last gasp of economic satisfaction and superiority by the United States. First of all, Jobs grew up at a time when the states (especially California) were supportive of higher education. That brought forth the talent that, in Silicon Valley, got the computer revolution started. And then Jobs was part of the drive (by many others as well) that brought us much of the look and feel of so many electronic products that, for a while, were largely the province of American companies.

But that competitive advantage now appears to be over. Students have to pay much of the freight for a college education, a condition that is never good for a nation. The subsequent jobs risk going away to other parts of the world, which makes one wonder why bother with it at all. The rest of the world is catching up and is very hungry, and with unregulated globalization the competitive forces will be ferocious.

So maybe we can mark October 5, 2011 as an arbitrary - but reasonable - point in time when a distinctive American era ended.


Arnold King posess the right question for our times:

Over at the libertarianish Library of Economics and Liberty, he asks:
Where are the Servants?

In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don't Sergey Brin and Bill Gates have hundreds of people on personal retainer?

I pose this question as a way to think about labor markets and macroeconomics. Some possible answers:

1. It's a supply problem. Nobody wants to be a personal servant. They think that their human capital will depreciate less if they remain unemployed.

2. It's a demand problem. The marginal product of personal servants is very, very low. As Don Boudreaux points out, the impersonal servant of the market delivers us much higher quality goods and services than kings were able to obtain from all of their personal servants.

3. It's a recalculation problem. Gates and Brin cannot figure out what they would do with hundreds of personal retainers. They cannot even find a personal retainer who can figure out what they would do with hundreds of personal retainers.
So why haven't personal servants replaced blue collar manufacturing jobs killed by cheap imports and white collar jobs lost to outsourcing? Clearly, when the economy tanks, people will do most anything for a dollar (pace item 1) and be cheap enough so that the marginal value will be positive (pace item 2).

Which really means that it's a problem of imagination. If it's true that "Gates and Brin cannot figure out what they would do with hundreds of personal retainers" then those billionaires need help! What can we suggest for this duo - and their equally rich friends - do with hundreds of personal retainers? And why limit it to hundreds? Didn't the pharaoh have thousands of people toiling away? How about a Giza-sized pyramid for each billionaire? That would get this economy humming again. Let's do it!

It has the additional benefit of reestablishing clear class distinctions which we have sadly abandoned for about a century. A few extremely rich people. Lots of servants. No middle class. Paradise.


Wednesday, October 05, 2011

Brother, can you spare $180/year ?

U.S. banking giant Citigroup Inc. said this week it would charge $15 per month for checking account holders who kept a balance below $6,000.

The firm's move comes on the heels of Bank of America's announcement this week that it would charge $5 for most debit card holders and sparked at least one desertion, the Los Angeles Times reported Saturday.

Cheryl Holt of Burbank, Calif., said she was "on my way out the door right now … off to start a new account at my nearest credit union."

"Should have done it years before," she added.

Holt said she received a letter with an "absurd salutation," that said, "Customers like you have told us that what they want from their banks are simple options and great rewards. We heard you and are writing to let you know that we are making some changes to your EZ Checking Package."

That said, the bank dropped the $180 per year bomb.
This has got to have political repercussions.


Sunday, October 02, 2011

New York Times review of ABC's Pan Am:

... “Pan Am” romanticizes the past, whereas “Mad Men,” on AMC, takes pleasure in slyly mocking antiquated mores ...

“Pan Am” takes place in New York, Paris and London, and practically every scene is shot in lush, golden light. The series is a paean to a more prosperous and confident era; even an airline terminal looks like a movie dream sequence about 1960s heaven.
[It really does.]

If only for the costumes and ’60s music, “Pan Am” is amusing to see at least once, but if it has any instructive benefit at all, it’s as a mood indicator for these times, not those. There have been plenty of series set in earlier times — “That ’70s Show” was set in the Carter administration, “M*A*S*H” took place during the Korean War. But usually period shows pick through the past to meditate on the present, whether it’s examining generational rites of passage or critiquing the Vietnam War at a safe remove.

“Pan Am” doesn’t say much of anything about the current state of the nation except that our best days are behind us.
Expect that to be a recurring theme this decade (and beyond?).

Opening music on the pilot episode.


Tom Friedman says not to worry:

From his Sunday op-ed:
... world is now a challenge to white-collar workers. They have to compete with a bigger pool of cheap geniuses ...

It is also both a huge challenge and opportunity. It has never been harder to find a job and never been easier — for those prepared for this world — to invent a job or find a customer. ...

What is out and what is in anymore?”

Matt Barrie, is the founder of, which today lists 2.8 million freelancers offering every service you can imagine. “The whole world is connecting up now at an incredibly rapid pace,” says Barrie, and many of these people are coming to to offer their talents. Barrie says he describes this rising global army of freelancers the way he describes his own team: “They all have Ph.D.’s. They are poor, hungry and driven: P.H.D.”

Barrie offered me a few examples on his site right now: Someone is looking for a designer to design “a fully functioning dune buggy.” Forty people are now bidding on the job at an average price of $268.
There's your glorious future, according to Tom Friedman. Global non-pooled labor bidding against itself for tiny wages and no healthcare (at least in the U.S.) or retirement security.


Taking David Mamet on:

Scott Galupo of The American Conservative does a good job.

Some conversions in political philosophy are understandable, but others, like Mamet's, are inscrutable. What caused him to make the switch? Not mentioned in the article is that Mamet's conservative rabbi gave him a bunch of books - by conservative hacks - and that material appears to have gotten the playwright to chance his views.