Friday, January 31, 2014

The truth about neoliberalism

“That which seems the height of absurdity in one generation often becomes the height of wisdom in the next”
 --John Stuart Mill

And so tyranny naturally arises out of democracy, and the most aggravated form of tyranny and slavery out of the most extreme form of liberty.
--Plato, The Republic, Book VIII

Since we're on the subject, I thought I'd share this interview featured on the BBC podcast Thinking Allowed a while back. It's about the history of neoliberalism, and why it's become so dominant. I think the critical point made by author Philip Mirowski in the interview is that neoliberalism claims it's in favor of small government, but nothing could be further from the truth! In fact, since markets are always created by government, it needs a large, activist government to impose its will on society. In fact, the size of government has historically been driven by the size of the market - these things aren't opposed, they're complementary. Thus "getting government out of the way" is just a smokescreen peddled to the rubes for the rich being allowed to do whatever they want to the wider society to maximize their profits. It also discusses some of the underlying philosophical issues that we have all just internalized, which is why there is no resistance to these ideas:

It begins with the show host asking for a concise definition of neoliberalism:
Philip Mirowski: Neoliberals are not conservatives, and they don't believe in laissez-faire. They believe in a strong state that has to impose certain kinds of market societies that they think should exist. And they have a few key doctrines - the one I'll mention here is that they believe that the market is an information processor much more powerful than any human being. The beauty of stating it in that short way is that that's their argument against socialism - all attempts at planning must fail because no human being can know what the market knows. But interestingly enough, it's more than just  economics, it's also a philosophy about what it means to be a successful human being.

Laurie Taylor (host): It is surprising to hear that it is in favor of a strong state. the assumption is that neoliberals are infavor of a weak state and allowing the market to rule all.

Philip Mirowski: Right. Well, we can follow up on that by pointing out that they have different ideas on how people should understand their own movement. And to say it in a very short way, they have ways of dealing with crises that develop different responses in different time frames. And so, for example, in the short term, one of their ideas is to create a fog of doubt in the public to neutralize any immediate tendencies to blame the market. And so that's where you get some of this confusion about 'are they really hostile to the state or not?'

Laurie Taylor: So we're talking about - it is a belief in markets - markets have knowledge which will solve all our problems. But from time to time Neoliberals would want to believe in a strong state which does something to enable the development of new markets, is that right?

Philip Mirowski: Yes, because, that's another part of their project. Let's say that people believe that markets have gone awry or failed in some sense. Their immediate-term project is basically to propose new and stranger markets to fix any problems with old markets or previous markets. And, in  order to do that, this doesn't just happen by itself. This is why need a strong state, because it takes a strong state to impose these new market forms to supposedly address the crisis. One can see this in the economic crisis with various maket-based forms of saving the banks and saving finance rather than simply nationalizing the banks and causing them to shrink and reorganizing them.

Laurie Taylor: So, if you talk about this development of new markets, what would be an example of that? How would the government enable the development of new markets which would be in line with neoliberalism's requirements?

Philip Mirowski: Well, a nice clean example has to do with global warming. The common way to address problems of carbon emissions recently since Kyoto has been to develop these markets in carbon emission permits. So instead of having the state cause various emitters to emit less, instead we have a marketplace of permits which will supposedly cut down on the amount of emissions that are being emitted. And so what's interesting about that is that even though these markets are very popular with certain--for example, in finance--that they don't actually reduce the amounts of emissions. So what happens is that you introduce various markets to fix problems, but really what it does is it just sort of spreads out the problem over the longer term.

Laurie Taylor: Now I said in my introduction that you look in great detail at the origins of neoliberalism in the thirties and forties; The Mont Pelerin Society, Hayek and Friedman and the group of thinkers which evolved into the neoliberal thought collective. You use the analogy of a Russian doll to talk about the development of neoliberalism. Why that analogy?

Philip Mirowski: Because there are a number of concentric rings of institutions that constitute the neoliberal thought collective. I tend to think that the center, perhaps the smallest of them all, is the Mont Pelerin society itself, founded in 1947 which was a discussion society for these various figures to rethink classical liberalism. And the figures that were involved in that history are people like Friedman, Friedrich Hayek, George Stigler, Lionel Robbins, Karl Popper, Gary Becker and many others. Then, as time went on, they developed a concentric ring around that discussion group built up out of think tanks, and these think tanks would be think tanks that some people are aware of like IEA in Britain, Heritage, Cato, Atlas, the Stockholm Network. And then you have a next layer, which is a layer of sort of media and promulgation of the ideas in various national contexts. One example woud be the Murdoch empire in America...

Laurie Taylor: Doesn't this sound a bit conspiratorial? I mean mightn't these think tanks and academic departments be deciding that this was the particular approach to economics that they want to adopt because they believe it to be true?

Philip Mirowski: See, I find that objection interesting because, remember, I'm also a historian of science. And it seems when people make that objection, they think either all thought is individual, you know a genius and their followers, or else it's a conspiracy, when in fact, even in the history of science, there's been a long discussion of what it means to have collective movements of thought and the ways in which people hold together their thought collectives, and in fact the whole idea of a thought collective is taken from Ludwig Fleck who theorizes about biology.

So why do I call it a Russian doll? I call it a Russian doll because in these different layers, the same people can perform different functions. And that what's interesting about it And that's what holds it together is that people can act in different ways in the different parts of the layers, and yet...

Laurie Taylor: Sorry to interrupt, but I want to move you on because time is limited. Neoliberalism's success lies in the fact the we all have to varying degrees internalized its logic. We've all become neoliberals. And indeed, this explains why we've returned to neoliberal solutions after the financial crisis which might have been thought to have subverted that type of thought forever.

Philip Mirowski: This is not anything novel or original with me, I mean this goes back to the work of Foucault who essentially says that the neoliberal agent is an 'entrepreneur of the self.' Now why do we need an entrepreneur of the self? That's because people never know as much as the market, so because we're a flawed thinker, we must learn to transform ourselves to take in these packets of truth delivered by the market and alter ourselves to respond to them.

So in this view, there's no true self you should remain faithful to. And I'll give you some examples. Like education is no longer about finding myself or my true self or about becoming a solid citizen, its just about investing in human capital for a future payoff. Or another way of thinking about this, is that all my failures are personal, either because I didn't take enough risk or else a risk went bad, so in that sense whatever happened to me was all my fault.

So I tend to think of this as, 'your credit score is as important as your blood pressure, and its *your* job to monitor both,' see health is your fault.

Laurie Taylor: So this emphasis on your fault would seem to be one of the reasons we cant have any political mobilizations against neoliberal idea, because were all locked into that notion of individual fault.

Philip Mirowski: Well, that's part of it, but I also think that there's this larger idea that people who don't care about politics at all imbibe this kind of neoliberalism from their environment. For example Ilana Gershon has this lovely series of articles showing how Facebook is a device for training youth how to be neoliberal agents, because it takes your information for free, it sells it to others for profit and what you're supposed to do is, you're supposed to construct a profile so you can play around with being a person who's different from who you really are and then you get little metric about how many friends you have and so forth and so on.  I mean what it is, is you have this sense of yourself as this wierd agglomeration of parts that you can put together.

Laurie Taylor: It's a very defeatist message isn't it, given the pervasiveness of neoliberalism? How on earth can we produce counter-narratives or visions that will help us to get out of it?

Philip Mirowski: Well, that's what the book is for. The book suggests the left these days has nothing as sophisticated as this combined political project plus a philosophical project, and instead it tends to fight one battle at a time, or make an argument about this kind of regulation, when in fact the way to fight this I would argue, and I do in the book, is that we have to change the notions of what markets do, just like the neoliberals did starting the nineteen thirties and forties. Before the Great Depression, markets were treated as a classical allocation of scarce resources to given ends. What the neoliberals have done is they've made it an intellectual project; they've made markets to be information processors. The left needs a different story about markets in order to tell a story about why we should have different kinds of social arrangements.
Work and Consumption; Neo-liberal Economics (BBC). The truimph of Neoliberal economics in the post Recession world. Laurie Taylor talks to US Professor of Economics, Philip Mirowski, about his analysis of why neoliberalism survived, and even prospered, in the aftermath of the financial meltdown of 2008. Although it was widely asserted that the economic convictions behind the disaster would be consigned to history, Mirowski says that the opposite is the case. He claims that once neoliberalism became a Theory of Everything, providing a revolutionary account of self, knowledge, markets, and government, it was impossible to falsify by data from the 'real' economy. Neoliberalism, he suggests, wasn't dislodged by the recession because we have internalised its messages. Have we all, in a sense, become neoliberals, inhabiting "entrepreneurial" selves which compel us to position ourselves in the market and rebrand ourselves daily? Also, why do work almost as hard as we did 40 years ago, despite being on average twice as rich? Robert Skidelsky, Emeritus Professor of Political Economy, suggests an escape from the work and consumption treadmill.

Here's a suggestion: we can start getting people to think of markets as what they really are: basically just giant casinos. We run our entire economies as a casino, and we wonder why it keeps turning into disaster.

Thursday, January 30, 2014

Democracy versus capitalism

"I believe that oligarchy follows next in order. And what manner of government do you term oligarchy? A government resting on a valuation of property, in which the rich have power and the poor man is deprived of it."
--PLATO, The Republic, Book VIII

There’s some talk about an extraordinary book soon to come out in America. The book, like so many important things, was originally published in French by economist Thomas Pinketty. Here's a summary by Thomas B. Edsall:
Piketty, a professor at the Paris School of Economics...contends that capitalism’s inherent dynamic propels powerful forces that threaten democratic societies.

Capitalism, according to Piketty, confronts both modern and modernizing countries with a dilemma: entrepreneurs become increasingly dominant over those who own only their own labor. In Piketty’s view, while emerging economies can defeat this logic in the near term, in the long run, “when pay setters set their own pay, there’s no limit,” unless “confiscatory tax rates” are imposed....Conservative readers will find that Piketty’s book disputes the view that the free market, liberated from the distorting effects of government intervention, “distributes,” as Milton Friedman famously put it, “the fruits of economic progress among all people. That’s the secret of the enormous improvements in the conditions of the working person over the past two centuries.”

Piketty proposes instead that the rise in inequality reflects markets working precisely as they should: “This has nothing to do with a market imperfection: the more perfect the capital market, the higher” the rate of return on capital is in comparison to the rate of growth of the economy. The higher this ratio is, the greater inequality is.

According to Piketty...[T]he six-decade period of growing equality in western nations – starting roughly with the onset of World War I and extending into the early 1970s – was unique and highly unlikely to be repeated. [T]hose halcyon six decades were the result of two world wars and the Great Depression. The owners of capital – those at the top of the pyramid of wealth and income – absorbed a series of devastating blows. These included the loss of credibility and authority as markets crashed; physical destruction of capital throughout Europe in both World War I and World War II; the raising of tax rates, especially on high incomes, to finance the wars; high rates of inflation that eroded the assets of creditors; the nationalization of major industries in both England and France; and the appropriation of industries and property in post-colonial countries.

At the same time, the Great Depression produced the New Deal coalition in the United States, which empowered an insurgent labor movement. The postwar period saw huge gains in growth and productivity, the benefits of which were shared with workers who had strong backing from the trade union movement and from the dominant Democratic Party. Widespread support for liberal social and economic policy was so strong that even a Republican president who won easily twice, Dwight D. Eisenhower, recognized that an assault on the New Deal would be futile. In Eisenhower’s words, “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear from that party again in our political history.”

The six decades between 1914 and 1973 stand out from the past and future, according to Piketty, because the rate of economic growth exceeded the after-tax rate of return on capital. [That period, Piketty suggests, represented an exception to the more deeply rooted pattern of growing inequality.] Since then, the rate of growth of the economy has declined, while the return on capital is rising to its pre-World War I levels.

“If the rate of return on capital remains permanently above the rate of growth of the economy – this is Piketty’s key inequality relationship,” [Branko] Milanovic writes in his review, it “generates a changing functional distribution of income in favor of capital and, if capital incomes are more concentrated than incomes from labor (a rather uncontroversial fact), personal income distribution will also get more unequal — which indeed is what we have witnessed in the past 30 years.”

The only way to halt this process, he argues, is to impose a global progressive tax on wealth – global in order to prevent (among other things) the transfer of assets to countries without such levies....The Piketty diagnosis helps explain the recent drop in the share of national income going to labor and a parallel increase in the share going to capital.

Piketty’s analysis also sheds light on the worldwide growth in the number of the unemployed. The International Labor Organization, an agency of the United Nations, reported recently that the number of unemployed grew by 5 million from 2012 to 2013, reaching nearly 202 million by the end of last year. It is projected to grow to 215 million by 2018. Piketty does not treat worker ownership as a solution, and he is generally dismissive of small-bore reforms, arguing that they will have only modest effects on economic growth worldwide, which he believes is very likely to be stuck at 1 to 1.5 percent through the rest of this century. Piketty joins a number of scholars raising significant questions about how the global economic system will deal with such phenomena as robotics, the hollowing out of the job market, outsourcing and global competition.

His prognosis is extremely bleak. Without what he acknowledges is a politically unrealistic global wealth tax, he sees the United States and the developed world on a path toward a degree of inequality that will reach levels likely to cause severe social disruption. Final judgment on Piketty’s work will come with time – a problem in and of itself, because if he is right, inequality will worsen, making it all the more difficult to take preemptive action.
Capitalism vs. Democracy (New York Times)

Here's Brad Delong's summary:
If I had to summarize the lessons that I drew from Piketty’s book powerpoint presentation for his Helsinki Lecture, I would say that they are four.

First, that inequality is driven by the dynamics of capital (and more broadly, wealth–wealth includes land and also rent-extraction position as well) accumulation–the capital-to-output ratio and the capital share of income–and by the dynamics of wealth distribution. A society with a high savings rate and a low growth rate will have a high wealth-to-income ratio and a high capital share in income. A society with multiplicative dynamics–in which the return on wealth are such that wealth makes more wealth rather than wealth getting taxed or stolen or bombed or consumed away–will be one with an unequal distribution of what wealth there is. A society with both of those things will be an unequal society.

Second, from roughly 1930 to 1980, the North Atlantic had neither of these. Rapid productivity and technology population from the Second Industrial Revolution coupled with the population explosion of the demographic transition era raised the denominator of the wealth-to-income ratio. Wars, progressive taxation to finance wars, the sticking of progressive taxation even after the wars were over, and a popular demand for social democracy and social insurance inhibited multiplicative dynamics by which more was given to those who had.

Third, meritocracy? Make me laugh. In my view meritocracy does not produce inequality. Rather, true equality of opportunity produces relatively small income differentials because there is always somebody almost as good eager to bid for your high-paid job. Inequality emerges either (i) when this generation’s human capital is last generation’s wealth, or (ii) when other non-meritocratic factors are creating jobs that are the equivalent of covering yourself with glue, standing outside at a corner in Canary Wharf, and watching the money stick to you as it blows by.

Fourth, now with the end of the demographic transition era and with the possible slowing of technological progress, we face a world with a much higher capital share of income than over 1930-1980. And multiplicative dynamics are back with a vengeance–largely, I think, because unequal wealth poisons politics and creates a powerful class interested in making sure that multiplicative wealth dynamics persist.

But what does Piketty say?

In his Helsinki lecture, Tomas made six major points:
  1. As growth rates decline in the Old World (Europe and Japan), we will once again see the dominance of capital: a greater proportion of the wealth of society will be held in the form of physical and other non-human-skill assets, and inheritance and position will matter more and individual effort and luck less.
  2. In fact, given relatively high average rates of return on capital and thus a large gap vis-a-vis the growth rate, wealth concentration is likely to reach and then surpass peak levels seen in previous history as the superrich become those who started wealthy and benefitted from compound interest and luck.
  3. America remains an exceptional puzzle: it looks, however, like it is headed for an even more extreme distribution of wealth than is the Old World.
  4. Remember, however: the evolution of income and wealth distributions is always political, chaotic, unpredictable–and nation-specific: not global market conditions but national identities rule wealth distributions.
  5. High wealth inequality is not due to any “market failure”: this is a market success: the more frictionless and distortion-free are capital markets, the higher will wealth inequality become.
  6. The ideal solution? Progressive global-scale wealth taxes.
With that as a guide, let’s jump in…
Tomas Piketty: Capital in the Twenty-First Century/Inequality and Capitalism in the Long Run: The Honest Broker (Equitablog)


Last Year Was the 4th-Best Year Ever for the Top 1 Percent (Atlantic)

Pinketty’s work is more of a bombshell that it may seem. While, many of the arguments he puts forth might be familiar to readers, it is unusual for a respected professional member of the economic elite (albeit a French socialist one), using the tools of capitalism, to conclude that capitalism inexorably allocates wealth to a smaller and smaller slice of the population leaving the vast majority behind. His argument flies in the face of neoliberal free-market fundamentalism, concluding that this is not some “flaw” in the system in need of correction – that this is how the system is designed to function! He-who-must-not-be-named made this argument in the nineteenth century, but it’s had to be strenuously ignored and refuted ever since. His claim that massive concentration of wealth is a threat to popular democracy is also remarkable.


The more money you have, the more opportunities you have to make money, thus it becomes a snowball effect. Many of the Internet billionaires were rich venture capitalists who could come up with massive sums to exploit the new technologies. Look at all the Harvard Grads and venture capitalists who invested in Facebook. Jeff Bezos of Amazon was a Hedge fund guy. The Google billionaires were at Stanford. Basically, there's a tiny sliver of places to be to get wealthy available only to elites. The new inventions of the future just make the existing investor class even more money which they also use to buy up the world's common resources and turn them into revenue streams.

One argument I often hear is that inequality is not important – that it’s the absolute living standards of the poorest people in a society that matters, and even the poorest people have indoor plumbing and heating, sneakers, cell phones and the like. Some points:

1.) This has less to do with capitalism as it does with mass production and energy surplus. When you can produce enough cars for everyone in the U.S., of course they're going to get cheaper and more people are going to have them under whatever economic system you have - capitalism, socialism, whatever. The same goes for cloth, durable goods, furniture, computers, iPods, whatever. That's part of the natural progress of human invention regardless of the economic system. It's one place where trickle-down really is true. After all, even the rich can only consume so many houses, cars, clothes, etc.

2.) Absolute living standards for the poorest people are now starting to decline in absolute terms. Life expectancy, far more valuable than any durable good, is now falling for the poorest members of society. Homelessness is rising, as is child poverty. The last ten years have seen no significant gains.

As I've pointed out before, for the vast majority of people, their lives actually got worse under capitalism until about 1870 (Marx wrote the Communist Manifesto in 1848 - a year of revolutions across Europe). Widespread government intervention after that time began to improve living standards (clean water and sanitation measures, closing debtors' prisons, outlawing child labor etc.). The Great Compression you see above is due almost entirely to government intervention, as well as the historical forces mentioned above. As David Brin has put it, "...most of the West has lived a miracle for half a century - in societies wherein the well-off and empowered Middle Class has - for the first time in human history - actually outnumbered the poor." Is that ending?


Interesting to note that according to the above, the slowing of the growth rate is a critical factor in all this. Although not mentioned, we know that the slowing of growth is caused by 1) Reduced net energy - energy return on energy invested, 2) Maximum fossil fuels per capita as the developing world tries to industrialize along the Western model 3) Stabilizing or decreasing populations in developed countries and overpopulation in poor countries 4) Limits to resources such as fresh water, phosphorus, rare earths and the like, combined with the costs of pollution (including climate change) 5) Falling rates of education in the developed world, and the reduction of people in the work force, 6 )Diminishing marginal utility of new inventions as the low-hanging fruit is harvested first. Slow growth and debt are two sides to this coin - symptoms rather than causes.

As the economic elite becomes more powerful, two additional things are happening – they are becoming an international wealth class, able to transfer their money anywhere in the world, and they are finding ways to sabotage democratic governance to lock in their gains and make change impossible. I've noticed that failing capitalism is tending to look a lot like failing communism - a tiny, unaccountable, gated elite holed up in the dachas surrounded by mass poverty. Ever more strident and hysterical propaganda to try and keep people from suspecting the system is failing. And the construction of a mass surveillance state, the persecution of whistleblowers, and the intimidation and silencing of the citizenry who don't like the state of affairs.

I think the central question is, will the social progress of the twentieth century be preserved as we return to the wealth disparities of the eighteenth century? And will reform be impossible - is this tyrannical system now essentially permanent?

P.S.: One of the comments to the Edsall article mentions this book: Monopoly Capital: An Essay on the American Economic and Social Order

Wednesday, January 29, 2014

Where real power comes from

Matt Yglesias wonders why we listen to the rich:
The presumption of the annual World Economic Forum meeting is that leading policymakers and scholars ought to mingle with very, very, very rich businessmen (and, yes, it’s overwhelmingly men) to talk about the leading issues of the day. The idea, in other words, is that CEOs and major investors have unique and important insights on pressing public policy issues. After all, they’re so rich! How could they not be smart?

Outside the business world, we tend to take it for granted that just because you’re good at one thing doesn’t automatically make you a mastermind at other things. Nobody expects Taylor Swift to make important contributions to a panel on sustainable growth in Africa or rethinking global food security. But the Davos panels on such topics always include a rich executive from the business world. Because who better to solve the world’s problems than the people who benefit from the status quo?

Of course, if there were just one somewhat obnoxious conference like Davos, it wouldn’t be a big deal. But the Davos mentality—the assumption that managing a for-profit enterprise gives you special insight into social ills—is all around us, from the Aspen Ideas Festival on down. It has also infested more formalized policymaking settings. Rich businesspeople wield disproportionate interest in the political system simply through their ability to make campaign contributions and hire lobbyists. But over and beyond that, they are regularly invited to enter policymaking circles.

In the early months of his administration, President Obama held a summit with bank CEOs to discuss the state of the financial system. He did a big roundtable with tech CEOs in December. Back in 2011, he made a big deal out of creating a council on jobs and competitiveness headed by General Electric CEO Jeffrey Immelt and largely composed of other business titans. And yet a staple of Republican criticism of Obama during his first term was that he didn’t do enough of this kind of thing and his administration lacked firsthand business experience. Finance whiz kid Mitt Romney was supposed to turn things around with his business savvy.

It’s not impossible to be multitalented. Bill Gates was a great innovator and businessman and also has pretty smart ideas about global public health. But the fact of the matter is that he’s an important figure in global public health because he’s both extremely rich and extremely generous, not because he’s the No. 1 most insightful thinker on the subject. To say that some billionaires are insightful on subjects outside their core area of expertise is just to say that billionaires are people too—and for every Gates, you have a dozen business leaders who can’t tell the difference between policy insight and knee-jerk prejudice. They’re up there on the panels, in the meetings with policymakers, spouting off on CNBC, being quoted in newspapers, and writing the occasional op-ed. All because of the unwarranted presumption that being rich and successful makes you insightful.
Either Yglesias is being deliberately obtuse or deliberately naive. The reason politicians and the media listen to and consult with the rich and business leaders has absolutely nothing to do with any presumption of their knowledge, experience, insight or competence. Anyone can see that. The reason the rich have exclusive access to politicians and the power to make policy and allocate resources is because we live in plutocracy. It's as simple as that. A plutocracy, by definition, is rule by those with money. That's what the word means! And that's why people use it all the time - because it's a far, far better and more accurate description of our current political system than democracy.
Plutocracy (from Greek πλοῦτος, ploutos, meaning "wealth", and κράτος, kratos, meaning "power, dominion, rule"), also known as plutonomy or plutarchy, defines a society or a system ruled and dominated by the small minority of the wealthiest citizens. The first known use of the term is 1652. Unlike systems such as democracy, capitalism, socialism or anarchism, plutocracy is not rooted in an established political philosophy and has no formal advocates. The concept of plutocracy may be advocated by the wealthy classes of a society in an indirect or surreptitious fashion, though the term itself is almost always used in a pejorative sense.
http://en.wikipedia.org/wiki/Plutocracy

The wealthy rule the world. Period, full stop. What they decide becomes law. What they oppose does not. It's that simple. What do they want? To increase their wealth, naturally. How can that be done? By making the rest of the world poorer is one way. By stripping away laws limiting their power is another way. Everything the wealthy advocate is designed to increase their fortunes, regardless of the effect on society. You don't need to know any more than that. That, in a nutshell, is why global civilization is failing. As Salon put it:
It is impossible to get elected president without the backing of a cadre of multimillionaires. It is nearly impossible to get elected to the U.S. Senate without a couple in your corner. The multimillionaires and billionaires fund every effective political interest group in the country, from gun rights to gay rights groups. What makes the wealthy persecution fantasy so risible is that our political class is responsive almost solely to the priorities and views of the rich, but the fantasy serves a purpose: It prevents Congress from actually acting to address economic inequity. As long as the rich perceive even ineffectual social opprobrium as an existential threat, politicians will be too terrified to advance any actual redistributionist agenda.
And a commenter to the Slate piece:
The trouble is, we, and our government can't stop listening to the super wealthy. They speak much more loudly than the rest of us through ownership of the media, and ownership of politicians, and all the influence over public policy, laws, and our freedom to consume what they are selling that that buys. It's obvious and easy to say that we shouldn't (shouldn't have to?) listen to some of these besieged billionaires, but we have to in more ways than we should. It is our version of official state corruption, not so different from the systems in Russia and China. It creates cynicism and apathy and is the enemy of real democracy.
Increasingly, the wealth class rules directly rather than indirectly: Half of US Congressional politicians are millionaires (BBC) Democrats were slightly more wealthy than Republicans.

Wealth and democracy are inherently incompatible, and they're taking us back to the Gilded Age, and possibly pre-Enlightenment. More on that tomorrow.

Why Do the Super-Rich Keep Comparing Obama to Hitler? (The Atlantic)

The Brittle Grip, Part 2 (Talking Points Memo)

Plutocrats Feeling Persecuted (NYT)

Why the rich are freaking out (Politico)

Twisted minds of the super-rich: Why insane Nazi analogies have become so common (Salon)

Tuesday, January 28, 2014

Realities of money and class in America


It's always amusing to watch pundits wake up to reality. It's even more amusing watching Americans wake up to reality. After forty solid years of declining incomes, outsourcing, insourcing, de-industrialization, de-unionization, financialization, automation, and predation by the nation's elites, and five years into a punishing depression that seems to have no end, Americans are realizing that there is no longer a middle class, and that they are downwardly mobile.

First up, Paul Krugman, who discovers what I've previously called the "but they have cell phones" argument:
My post on Americans starting to recognize class realities has brought some predictable reactions, which I’d place under two headings: (1) “But they have cell phones!” and (2) it’s about how you behave, not how much money you have.

My answer to both of these would be to say that when we talk about being middle class, I’d argue that we have two crucial attributes of that status in mind: security and opportunity.

By security, I mean that you have enough resources and backup that the ordinary emergencies of life won’t plunge you into the abyss. This means having decent health insurance, reasonably stable employment, and enough financial assets that having to replace your car or your boiler isn’t a crisis.

By opportunity I mainly mean being able to get your children a good education and access to job prospects, not feeling that doors are shut because you just can’t afford to do the right thing.

If you don’t have these things, I would say that you don’t lead a middle-class life, even if you have a car and a few electronic gadgets that weren’t around during the era when most Americans really were middle class, and no matter how clean, sober, and prudent your behavior may be.

Now, according to that Pew survey, in early 2008 only 6 percent of Americans considered themselves lower class — far below the official poverty rate! — only 2 percent upper class, and 1 percent didn’t know. So 91 percent of Americans — roughly speaking, people with incomes between $15,000 and $250,000 — considered themselves middle class. And a large portion of these people were wrong.

Consider health insurance: many Americans with incomes significantly above the poverty line are, or were until very recently uninsured, and many more were at risk of losing coverage. That, to me, says that they weren’t middle class on that basis alone. Many, probably most, low-wage workers have hardly any financial assets, no retirement plan, etc.

What about opportunity? Public schools in America vary widely in quality, and lower-income families can’t afford to live in good districts. College education has become far less accessible as aid to public institutions falls. The chance of finishing college varies drastically with family income (pdf).

I could go on, but surely it’s obvious when you think about it (and if you have any sense of the realities of life). A lot of Americans — quite arguably a majority — just don’t have the prerequisites for middle-class life as we’ve always understood it....The sad thing is that our fetishization of the middle class, our pretense that we’re almost all members of that class, is a major reason so many of us actually aren’t. That’s why the growing appreciation of class realities on the part of the public is a good thing; it raises the chances that we’ll actually start creating the kind of society we only pretend to have.
Money and Class (NYT)
According to a new Pew survey (pdf), there has been a sharp increase in the number of people calling themselves lower class, and a somewhat smaller rise in the number calling themselves lower-middle, so that at this point the combined “lower” categories are close to a plurality of the population — in fact, closing in on, um, 47 percent.

This is, I believe, a very significant development. The whole politics of poverty since the 70s has rested on the popular belief that the poor are Those People, not like us hard-working real Americans. This belief has been out of touch with reality for decades — but only now does reality seem to be breaking in. But what it means now is that conservatives claiming that character defects are the source of poverty, and that poverty programs are bad because they make life too easy, are now talking to an audience with large numbers of Not Those People who realize that they are among those who sometimes need help from the safety net.
The Realities of Class Begin To Sink In (NYT)

And Kevin Drum:
If you actually take a close look at the numbers, it turns out that of the people who identified as middle class in 2008, nearly a third of them now identify as lower middle or lower class. And as dramatic as that sounds, it's actually even more dramatic than those bare words suggest. Class self-identification is deeply tied up with culture, not just income, and this decline means that a lot of people—about one in six Americans—now think of themselves as not just suffering an income drop, but suffering an income drop they consider permanent. Permanent enough that they now live in a different neighborhood, associate with different friends, and apparently consider themselves part of a different culture than they did just six years ago.

I'm going to repeat that: A third of the people who identified as middle class in 2008 now identify as lower middle or lower class. And that happened in a mere six years.
One-Third of Americans Who Were Middle Class in 2008 Now Consider Themselves Lower or Lower Middle Class (MoJo)

And a big contributor to this is associative mating - the wealthy are now as inbred as the English peerage system:

Why Elizabeth Bennet could not marry Mr. Darcy. Nor could your daughter. (Fabius Maximus):
America’s social structure changes slowly and unnoticed, taking us to a future with the class system of the past. Jane Austin would understand this New America, and her books might describe our children’s lives.

Last week I described one such change: how the increased concentration of wealth had created an aristocracy in America, a national class with stronger ties to each other than the elites of their communities. This class then use their increased power to restructure our social institutions to more closely reflect the shape of this New America, subjecting local institutions to centralized control — turning grassroots leaders into functionaries.

Our economic structure regresses to that of the Gilded Age (e.g., crushed unions, shrinking middle class, precarious prosperity of blue collar workers). Similarly the social structure of New America’s aristocracy and gentry echos that of Georgian England, in which marriage customs further concentrated wealth, and social divisions widened to match those of wealth...These classes were broken over several generations by economic changes created by the industrial revolution. Unfortunately the phases of the current technological revolution appear to be having the reverse effect, further concentrating wealth and power. 
Assortative mating and income inequality (Marginal Revolution)

No, the Decline of Cinderella Marriages Probably Hasn't Played a Big Role in Rising Income Inequality (Mother Jones) This is a little deceptive. for example:
...they conclude that rising income inequality isn't really due to a rise in assortative mating per se. It's mostly due to the simple fact that more women work outside the home these days. After all, who a man marries doesn't affect his household income much if his wife doesn't have an outside job. But when women with college degrees all started working, it caused a big increase in upper class household incomes regardless of whether assortative mating had increased.
Yeah, that's kind of the point. And then there's this fascinating post at Marginal Revolution:
...Consider Janet Yellen, her recent confirmation to chair the Fed has made her the most powerful woman in the world, the most powerful woman in world history, the world’s second most powerful person, or the world’s most powerful person depending on who you believe. In any case, Yellen is powerful. Moreover, Yellen is married to Nobel prize winner George Akerlof. The fact that two such outstanding individuals should be married to one another is an illustration of assortative mating. Yellen-Akerlof are the 1% of the 1% and all that political and cultural achievement concentrated in one family is an example of the growth of inequality. Tellingly, one of the drivers of this inequality was greater equality of opportunity for women.

Now consider, President Obama’s nomination for Fed vice-chairman, Stanley Fischer. Fischer was born in Zambia, holds dual Israeli-American citizenship and was most recently the governor of the Bank of Israel. In all of US history there is almost no precedent for a former major official of a foreign country to become a major official of the United States. Given all the economists in the United States one might have thought that a suitable candidate could be found without this peculiar history and yet it’s not hard to understand why President Obama has nominated Fischer–to wit, I wouldn’t be surprised if everyone President Obama asked for advice on this question to told him that Fischer would be one of the best people in the entire world for the job.

Indeed, many of the people Obama spoke to, including Ben Bernanke, would have been Fischer’s students, themselves a large subset of the tiny elite of the world’s top monetary economists. Perhaps the world of monetary economics is an inbred clique, a supplier-controlled cartel. Maybe so, but I see this as part of a larger story. Stanley Fischer, rather than thousands of other nearly equally-qualified people, is being nominated to the U.S. Federal Reserve for the same reasons that large firms, compete madly for a handful of CEO’s (in the process bidding up their wages to stratospheric levels).

Consider that even in the rarefied world of monetary policy Fischer’s appointment isn’t unique. In 2012, the British appointed Mark Carney, a Canadian, to be the Governor of the Bank of England, the first non-Briton to ever hold the role. When even Great Britain and the United States find that their home-grown talent isn’t good enough that tells you that the demand for talent is immense. My favorite example of this from the business world is Sergio Marchionne. Marchionne is the CEO of Italy’s Fiat and the Chairman and CEO of Chrysler, among several other positions. He commutes between Italy and the United States, lives in Switzerland, and has dual Italian and Canadian (!) citizenship. Appointments and potential appointments like those of Carney and Fischer illustrate that the demand for talent and the winner-take-all phenomena of a globalized world are not limited to the business world.

Small differences in quality at the top have a greater impact the larger the firm, the market, or the economy. How many truly great decisions did Bill Gates make at Microsoft (compared to another plausible CEO)? I would guess that fewer than 10 decisions made billions of dollars of difference. And if Yellen-Fischer make just a few better calls than their next best counterparts, well that could easily be worth hundreds of billions.
Inequality and the Masters of Money

The global ruling class
Which reinforces what I've said earlier - the wealth class is now an international class with exclusive access to elite institutions and social circles (on full display recently at Davos, and will be again at the Winter Olympics). While Marx predicted solidarity for the workers of the world, the real people who united were the rich of the world from all different cultures - Europe, China, Africa, Russia, the U.S., Latin America, and so on. Wealthy elites have never been more unified. And the presence of women and non-Europeans is constantly used to bolster the claim that it's all down to "merit." Meanwhile, the working classes of the world have never been more divided - by ethnicity, nationality, class, religion, etc. In Europe they use immigration, in the U.S. it's gay marriage and guns, but the idea is the same.

This is why the warfare of the twenty-first century is going to increasingly be intranational instead of international - elites against their own people. Hence the massive security state apparatus, local police equipped with armored personnel carriers and tear gas, government controls on the internet, widespread surveillance, spying on activist groups, fears of "terrorism," "free speech zones'" etc. For example, the FBI (America's internal police force) recently changed its mission from law enfocement to "national security," whatever that means. Telling. We're already seeing it all over the world.

Meanwhile, some are trumpeting the fact that a new economic study claims that social mobility has not declined at all. This is apparently seen as some sort of validation for the status quo. Dig deeper, and you'll find a few other disturbing facts. As Ross Douthat of the Times (!!) tweeted: "Policy debates aside, isn't there something *existentially* unsettling about idea that US social mobility hasn't changed in 50-60 years?" As another commentator put it with a different spin: "A Better Headline Would be “Mobility Stagnant as U.S. Economy Doubles”. Apparently, all of us who think we're downwardly mobile are just "wrong." Relax everybody, the economy's doing great! I wonder if the social mobility study included the massive amounts of debt it now takes to be "middle class," and how easy it is to fall out of it. I'm guessing no. John Cassidy adds:
Now for the bad news: the Horatio Alger myth is still a myth. Relative to many other advanced countries, the United States remains a highly stratified society, and most poor kids still have few prospects of making big strides. I’ve already mentioned the finding that the odds of a child moving from the bottom fifth of the income distribution to the top fifth are less than one in ten, and have been that way for decades. For children who are born in the second fifth of the income distribution, those who might be categorized as working class or lower-middle class, the probability of moving up to the top quintile has fallen significantly. For someone born in 1971, it was 17.7 per cent; for someone born in 1986, it was 13.8 per cent.

It has been known for some time that social mobility in the United States is lower than in most European countries, and that it trails some of them, such as the Scandinavian nations, by a great deal. The new study doesn’t challenge this finding, nor does it contradict the fact that other indicators of future economic success for young people—such as test scores, levels of parental involvement, and the extent of social connectedness—have exhibited a growing socioeconomic gap, leading Robert Putman and others to predict a sharp fall in social mobility. Indeed, the paper notes, “An important question for future research is why such a plunge in mobility has not occurred.”

Finally, the new study doesn’t mean that the effects of inequality aren’t more serious than they used to be. With inequality rising, particularly at the top, the rewards for clambering up the income distribution are greater, and so are the costs of getting stuck at the bottom. “The consequences of the ‘birth lottery’—the parents to whom a child is born—are larger today than in the past,” the paper notes. Or, as Saez said to the Times, “The level of opportunity is alarming, even though it’s stable over time.”
And why?

Back to the future in New America: our new class structure (FabMax)

Why are US corporate profits so high? Because wages are so low (Reuters)

Profits Up, Wages Down: What Economics Has to Say (NYT):
The economist Lawrence Katz, an important thinker is this debate because of his deep contributions to the literature on education as a wage determinant, agrees: “The only moments we’ve had of broadly shared prosperity have been in tight labor markets.”

Absent more individual and collective bargaining power for the vast majority of workers who lack it, some of whom have college degrees, we will be hard pressed to turn these wage trends around. Such power is not the only determinant of wages, but it may well be the most important and the one most sorely lacking.
And see this: Why There's No Outcry (Robert Reich)

Serf's up!

Sunday, January 26, 2014

This land is your land, this land is my land...

'How much land does a man need?" Leo Tolstoy asked in his jewel of a story. Never quite satisfied with the plots of land allocated by the local commune, or mir, the peasant Pahom sets out to acquire ever more and is finally faced with the opportunity to buy cheap land from the nomad Bashkirs, a people "as simple as sheep." The going rate on a piece of Bashkir steppe is "one thousand rubles a day"—1,000 rubles, that is, for as much acreage as Pahom can walk around in one day.

Quite apart from its literary qualities, the fable of Pahom's temptation and greed was highly topical when published in 1886. Tolstoy, himself owner of the 4,000-acre Yasnaya Polyana estate, worked by 350 peasants, had once bought land off the Bashkirs. Yet his story shows that Tolstoy despised the attitudes that went with private property and nostalgically favored the old order of the mir and its communal control of arable land. Two decades before writing "How Much Land Does a Man Need?" Tolstoy, with the rest of Russia, had experienced a great historical change in liberty and ownership, as all serfs were freed in the Emancipation Reform of 1861. At one time people had belonged to the land—and its self-appointed owners—but possessed the right to occupy it. Now they were free to fend for themselves, but could no longer rely on support and protection in times of shortage and conflict.

[...]

Present-day distinctions among governments and societies across the globe, Linklater argues, are the result of land ownership evolving along different lines. In one of these lines, the history of the modern Western world takes as its starting point a novel concept introduced in 16th-century England, toward the end of medieval feudalism: the idea that land could be owned individually, without obligations to earthly or heavenly lords and masters or to communities, tribes and families. This was a gradual process but well-developed by the 1540s, when Henry VIII sold off half of the land that he had confiscated from the monasteries, mainly to well-positioned courtiers. Within two generations some of this land had already changed hands as a new class of moneyed men—London merchants, sheep farmers and government officials—entered the property market.

The idea of individual, exclusive land ownership has affected modern history more than any other—in Linklater's words, it has proved to be "the most destructive and creative cultural force in written history." He later refers to individual ownership as a paradox. On the one hand, it shattered traditional civilizations, robbing communities of their land and thus of their sense of themselves in the world. On the other hand, individual ownership freed the English peasants as they emerged out of the Middle Ages and, slowly but steadily, led to revolutions that demanded liberty and equality for all, to the end of serfdom and the abolition of slavery and to representational government and democracy.

Views on how individual rights to land are achieved or granted—and how they may be controlled—vary over time and across continents. When the Earl of Carlisle was granted Barbados by charter of King Charles I in 1627, the charter stated that the king had officially made the grant "by our special grace, certain knowledge, and mere motion." For the Puritans in the Massachusetts Bay Colony, however, rights to the land required more than a "mere motion" or a flick of the hand. Ownership, like their Puritan faith, relied on hard work and self-reliance. This argument for the concept of property as a natural right settled their consciences in regard to the native population, who were not tilling the land or building permanent homesteads.

A century later John Locke would argue, in a similar fashion, that the earth was common to all men but that "every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his." His labor could give him claim to land once thought communal. Locke's argument for natural, embodied rights to private property is neatly counterpointed by Hobbes's claim that ownership of the earth must be a creation of civil law enforced by a Leviathan-style state. Both ideas of private property, though, merged seamlessly from an agrarian to an industrial society. The structure of landowner-tenant-laborer was translated into shareholder-manager-worker, and the ideas behind the common law of property could easily encompass intellectual property as the fruits of (mental) labor.
Book Review: 'Owning the Earth' by Andro Linklater (Wall Street Journal) A novel idea sprang up in 16th-century England: that an individual could own land outright, without obligation to earthly or heavenly masters or to tribes and families.
Barely two centuries ago, most of the world’s productive land still belonged either communally to traditional societies or to the higher powers of monarch or church. But that pattern, and the ways of life that went with it, were consigned to history by, Andro Linklater persuasively argues, the most creative and at the same time destructive cultural force in the modern era—the idea of individual, exclusive ownership of land.

Spreading from both shores of the north Atlantic, it laid waste to traditional communal civilizations, displacing entire peoples from their homelands, but at the same time brought into being a unique concept of individual freedom and a distinct form of representative government and democratic institutions. By contrast, as Linklater demonstrates, other great civilizations, in Russia, China, and the Islamic world, evolved very different structures of land ownership and thus very different forms of government and social responsibility.

The history and evolution of landownership is a fascinating chronicle in the history of civilization, offering unexpected insights about how various forms of democracy and capitalism developed, as well as a revealing analysis of a future where the Earth must sustain nine billion lives. Seen through the eyes of remarkable individuals—Chinese emperors; German peasants; the seventeenth century English surveyor William Petty, who first saw the connection between private property and free-market capitalism; the American radical Wolf Ladejinsky, whose land redistribution in Japan, Taiwan, and South Korea after WWII made possible the emergence of Asian tiger economies—Owning the Earth presents a radically new view of mankind’s place on the planet.
Owning the Earth (Bloomsbury Publishing)

The Death of the Car


I'm not sure why the Peak Oil community isn't making a bigger deal of this - Americans are abandoning cars, both by choice and by necessity due to high costs and declining incomes. Of course, I don't think this means Americans are abandoning suburbia yet; rather, I think Americans are doing less "discretionary driving" - vacations, pointless errands, etc.

In fact, what we're seeing is counterintuitive from what some Peak Oil commentators have said in the past. Rather than moving back to big cities and walkable communities because they can't afford gasoline and insurance, downwardly-mobile people are being pushed ever farther out into the sprawling suburbs because this is the only place where rents and housing prices are low enough for them to live with their minimal incomes!  Books like Average is Over have predicted Mexican-style shantytowns with nonexistent municipal services developing along the fringes of America's sun-belt cities for the teeming masses of Americans who will end up impoverished by automation and outsourcing.

So even though the price of gas has gone up, the price of housing has gone up even more, making it economically impossible to live in walkable communities, so people are forced to live far from their job and commute in, even with the high gas prices. That is, if they even have a job - a lot of young people are probably trapped in their parents suburban chalets bought in the fifties and sixties at the margins.

Meanwhile, walkable vibrant urban communities have essentially become winner's circles for elite  Americans because, as Kunstler and others point out, they're just better to live in! As cities become gentrified, the suburbs become soulless ghettos for America's new poor, especially the white poor ("slumburbia"). So, perversely, the very people who can easily afford higher gas prices don't need to because they have shorter commutes and can walk everywhere. This is reinforced by America's extreme spatial balkanization along income lines - the rich live by the rich, and the poor have to live with the poor, and more and more that seems to be the suburbs. It's yet another way everything in America is geared to comfort the comfortable and afflict the afflicted.

Related: These 2 Cities Are Now Exclusively For Rich People (Huffington Post)

Nevertheless, the trend is clear - driving in the developed world is going down, and fracking doesn't seem to be saving it. I've noted before that in Europe, bicycle sales have surpassed car sales for the past couple of years.

Vehicle Miles Driven (Business Insider)

Has the Developed World Hit “Peak Car Use”? (Naked Capitalism)

It's not the economy, stupid; young people really are turning their backs on cars (Treehugger)
Young people have turned to transit because they can’t afford vehicle ownership. Yes, the proportion of young drivers has dropped in the last decade. But HLDI [Highway Loss Data Institute] data suggests that drop has coincided with the economic downturn – which has not only hammered youth employment, but also has had an impact on parents who might otherwise help their kids take the wheel. As HLDI points out, “There was an inverse relationship between the growing unemployment spread and the falling ratio of teen drivers to prime-age drivers.” As unemployment rises, youth driving sinks.

Meanwhile, in the "developing" world:

Beijing 'plans congestion charge' to ease traffic woes (BBC) and Sao Paulo: A city with 180km traffic jams (BBC) and 10 monster traffic jams from around the world (BBC)

Degrowth and the Internet

Internet provocateur Evgeny Morozov endorses the Degrowth movement:
For a very long time, the assumption of infinite growth—with GDP as the sole benchmark for assessing government policy—has ruled supreme here as well. The first dissident voices in the early 1970s quickly drowned in the free-market sloganeering of Margaret Thatcher and Ronald Reagan, but the critical questioning of growth as the sole focus of economic activity resumed during the last decade, driven by concerns over global warming.

Today, this critical agenda is being pursued by the adherents of the “degrowth” movement—popular in Europe but enjoying very little traction in the United States. The goal of this movement is not just to scrutinize the ecological wisdom of continuing in the current pro-growth mode but also to question the wisdom of using indicators like the GDP to assess and formulate public policy. As Yves-Marie Abraham, a Canadian sociologist and one of the proponents of the degrowth agenda, puts it, “[T]his is not [about] the decline of GDP, but the end of GDP and all other quantitative measures used as indicators of well being.”

This is not the time or place to assess the merits of the degrowth agenda with regard to the economy. But it's hard to deny that it has presented many interesting intellectual challenges to mainstream economics. A robust defense of the pro-growth agenda today requires addressing concerns over climate change as well as explaining why there's no simple linear relationship between growth and happiness. If more growth doesn't make us happier, why should it guide our economic policy?

As an alternative paradigm for arranging productive activity, the degrowth agenda has resulted in at least some provocative new thinking about politics and economics. There is no such alternative paradigm with respect to information yet. The existing efforts to think of different ways to relate to technology and information smack of privatized and transcendentalist solutions that work at the level of individuals, not collectives: We are encouraged to explore “digital detoxing” to reinvigorate our sense of reality, to install apps that would make us more “mindful,” to spend time in camps that ban gadgets from their premises.

None of these solutions offers a coherent intellectual alternative to the current paradigm of “more information is always better.” Degrowth theorists invoke the convenient but real bogeyman of global warming to reorient our thinking process. The vision of such a disaster, however, has so far been missing from the information debate. All we see are concerns about personal health, shortening attention spans, distraction. These are concerns about individuals, not collectives. No wonder they lend themselves to private solutions like apps to regain mindfulness.
Why You Should Embrace the "Degrowth" Movement (Slate)

Although I'd have to agree with this comment: "I wonder if the author's back is hurting from all the stretching required to maintain that very awkward parallel. Both the information theory and macroeconomic topics are great but the only thing they really have in common here is the issue of "growth". Maybe it was assigned as two essays but the author ran out of time and just combined them to up the word count." I don't see the parallel either, except that ever-more information is no better than ever-more stuff - both are subject to diminishing returns. But it's good to see the idea of growth being criticized by more people, even if it probably won't do any good.

Saturday, January 25, 2014

Shifting Baselines in Action


I've seen this excellent XKCD comic in a number of places because it perfectly illustrates the idiocy of using the recent attack of the polar vortices (vortexes?) to suddenly convince ourselves that all's well and good with the climate. It's too bad the term 'global warming' caught on because, while it is accurate - the globe as a whole is heating up - what that translates to on in any single location is weird, unpredictable, unusual weather, and that's exactly what we're seeing. Climate change is a better term, but oh well. Is there any issue that isn't just decided by marketing?

As Treehugger explains: Cold waves used to be more frequent, and now that we're not used to them, they seem worse:
Our rather short-term human memory means that we quickly forget how things used to be decades ago (if we were even alive back then), and so if things that used to be more frequent become more rare, they could seem like evidence that things are moving in the opposite direction because we're not used to them anymore.

A good example of this is that people who are younger than 28 have never lived a month of below average global temperatures. So what seems normal to them is actually part of an abnormal warming long-term trend. In other words, a long-term normal temp would seem unusually cold to these people based on personal experience.

The only way to have an informed, scientific opinion about long-term trends like climate change is to look at the hard data over long periods, which is what climate scientists are doing. You can't just anecdotally look at regional weather and compare it to what you remember to make up your mind.
and also:
The calculations...show that overall there is a downward trend in the number of extreme cold nights like we’re currently experiencing – although there are variations in a few cities. This trend is consistent with climate studies showing that overall, winters across the contiguous U.S. have warmed by .61°F per decade since 1970, and every region has warmed at least somewhat over that time.

…For example, in Minneapolis in the 1970s (1969-79), there were an average of 14.7 nights with temperatures below minus 10°F. But in the past decade (2002-2012), that number has fallen dramatically, to about 3.8. The calculations run from July through June of the following year, so that we wouldn’t break up the winter season.

In Detroit in the 1970s, there were an average of 7.9 nights with temperatures below zero degrees. But now, that number is closer to 2 nights. And in Washington D.C., the number of nights with a low of 20 or below was 13.5 in the 1970s, but was closer to 8.3 in the past decade. The overnight low at Reagan National Airport on Jan. 7 was 6°F.

And in St. Louis, the 1970s featured an average of 3.8 nights with a low of 0°F or below, yet in the past decade, the average for such frigid nights fell to zero.
Yves Smith of Naked Capitalism comments: I hate to sound like the old fart that I am, but in the 1980s, every winter, there would be at least one 2-3 day period when the daily high was below 5 degrees in NYC, sometimes below zero. The problem is with over 20 years of not having spells like that, no one has the right clothes for it when it does show up. Wear more layers!!! I seem to recall winters being colder and snowier in my youth. Of course, back then I didn't care. See also:

Polar Vortex in U.S. May be Example of Global Warming (Climate Central)
 
This is a perfect example of what I've talked about before: shifting baseline syndrome. I found this excellent description of shifting baseline syndrome on Edge Magazine by Paul Kedrosky under their question of the year 2011 : WHAT SCIENTIFIC CONCEPT WOULD IMPROVE EVERYBODY'S COGNITIVE TOOLKIT?
When John Cabot came to the Grand Banks off Newfoundland in 1497 he was astonished at what he saw. Fish, so many fish - fish in numbers he could hardly comprehend. According to Farley Mowat, Cabot wrote that the waters were so "swarming with fish [that they] could be taken not only with a net but in baskets let down and [weighted] with a stone."

The fisheries boomed for five hundred years, but by 1992 it was all over. The Grand Banks cod fishery was destroyed, and the Canadian government was forced to close it entirely, putting 30,000 fishers out of work. It has never recovered.

What went wrong? Many things, from factory fishing to inadequate oversight, but much of it was aided and abetted by treating each step toward disaster as normal. The entire path, from plenitude to collapse, was taken as the status quo, right up until the fishery was essentially wiped out.

In 1995 fisheries scientist Daniel Pauly coined a phrase for this troubling ecological obliviousness - he called it "shifting baseline syndrome". Here is how Pauly first described the syndrome: "Each generation of fisheries scientist accepts as baseline the stock situation that occurred at the beginning of their careers, and uses this to evaluate changes. When the next generation starts its career, the stocks have further declined, but it is the stocks at that time that serve as a new baseline. The result obviously is a gradual shift of the baseline, a gradual accommodation of the creeping disappearance of resource species."

It is blindness, stupidity, intergeneration data obliviousness. Most scientific disciplines have long timelines of data, but many ecological disciplines don't. We are forced to rely on second-hand and anecdotal information - we don't have enough data to know what is normal, so we convince ourselves that this is normal.

But it often isn't normal. Instead, it is a steadily and insidiously shifting baseline, no different than convincing ourselves that winters have always been this warm, or this snowy. Or convincing ourselves that there have always been this many deer in the forests of eastern North America. Or that current levels of energy consumption per capita in the developed world are normal. All of these are shifting baselines, where our data inadequacy, whether personal or scientific, provides dangerous cover for missing important longer-term changes in the world around us.

When you understand shifting baseline syndrome it forces you to continually ask what is normal. Is this? Was that? And, at least as importantly, it asks how we "know" that it's normal. Because, if it isn't, we need to stop shifting the baselines and do something about it before it's too late.
I've heard a lot of claims recently about how much "better" our environment has become under neoliberal capitalism. Even if that were true, we're judging it against what's "normal" and a lot of that is the extremely polluted, overexploited world of the very recent past. And, of course, the pollution hasn't gone away, it's just been dumped in the backyards of people even poorer than we are - Chinese and African peasants, for example. That was a major point of this post, particularly the following quote:
 "...the hunter-gatherers of the old days weren't forced into marginal areas. They were living off the fat of the land in the best areas in the world, killing mammoths and so forth, even in the Ice Ages and so forth. So they were living in the highest carrying capacity areas in the world. I mean you read about the hunter-gatherers in the Nile. I mean, this is a good life, man! You go in there, and you gather, and there’s so many fish, and there’s so many birds, and there’s so many animals that they practically fall into your hands. People have no idea how lush the world used to be."
And, of course, shifting baselines apply to more than the environment. A lot of what we consider "normal" today - going heavily into debt for college, minimal taxes of wealth and capital gains, large amounts of people making minimum wage, politicians bought out by special interests, tenuous employment with no benefits - was anything but "normal" in times past. This is tied into the concept of "creeping normalcy." What was once an outrage just becomes "the way things are."

The safest road to Hell is the gradual one — the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts.

--CS Lewis, The Screwtape Letters

BONUS: Maybe we should move to Alaska, which is now too warm for sled dog racing (and about 30 degrees warmer than here): 2nd Iditarod qualifier yields to warm temperatures (AP)

Friday, January 24, 2014

The Golden Age of Big Apple Manufacturing

Given our latest topics of discussion, I thought this was an interesting find:
This map, printed by the Merchants’ Association of New York in 1922, shows industrial activity in the city, as reported to the 1919 Census of Manufactures. The map was meant as a promotional tool—beige areas represent areas “available for industrial development”—and to boost the city’s profile in the larger business community.
In the upper right-hand corner of the map, a box lists the “lines” (or types of manufactured goods) in which New York’s factories competed. In 1919, this list shows, New York produced more than 50 percent of total national output in 12 lines of manufacture, and was competitive in many more.
Geographer Richard Harris, writing about industry in the city between 1900-40 in the Journal of Historical Geography, points out that because of the particular products New York was known for (lapidary work, women’s clothing, millinery), many industrial workers were women. In 1939, they represented 36 percent of the total workforce. Workers in Lower Manhattan, where many garment factories were located, were particularly female. 
Harris points out that although factories tended to move outward into the boroughs after 1919, before WWII the city did retain many factories in its central core, bucking the nationwide trend of suburbanization of industry. In 1940, 60 percent of New York workers had manufacturing jobs.
In the midcentury period, however, development trends turned toward offices and corporate headquarters. Zoning regulations made building more factories difficult...In recent years, the city’s economy has rested on the service and financial industries. While manufacturers still do set up shop in the city, the scope of their activities is specialized. According to the New York City Economic Development Corporation, industry now provides just 16% of private-sector jobs. 
1919 Map of New York City's Manufacturers Shows a Bygone Industrial Landscape (Slate)  Interesting year. Note that when workers made the stuff they consumed, we had steadily rising living standards (though still terrible poverty). This led to the roaring twenties (along with Henry Ford paying his workers five dollars a day). then it came crashing down in the 1930's - a period which coincided with the mass industrialization of agriculture. Coincidence?

Wednesday, January 22, 2014

The Mancession and the Sheconomy


Perhaps you've noticed that's it seems to be lot easier for women to get jobs these days than men. Most of the jobs being "created" today are some sort of cubicle-warming position with "manager," "representative," "associate," "coordinator," or "specialist"in the title. These jobs consist mainly of attending meetings, delegating authority, patiently explaining things to other people, and some form of useless paper shuffling.

The "jobs of the future" are things men simply don't want to do (I know I don't) - things like changing diapers, mopping up vomit, emptying bedpans, drawing blood, taking care of a roomful of children, waiting tables, planning weddings, and so on. Most of the remaining jobs are dead-end "service" jobs, which men, who instinctively compete for status, tend to dislike, as it requires obedience, docility, and a "may I help you" attitude that many men simply don't possess (or affect while internalizing suppressed rage). Not to mention the salaries are abysmal - hard to woo women or start a family earning that kind of money.

The things that men like to do are the ones that have disproportionately been taken over by machines, like manufacturing. The resulting oversupply of male labor (including bottomless unskilled labor from Mexico) has driven male wages down, even for jobs which can't be shipped overseas like pipefitting, landscaping, HVAC installation, auto mechanics and so on. Now, a new wave of automation is coming for things like truck driving, the mainstay of blue-collar males since deindustrialization (check out all those pickup truck ads. What are all those guys doing anyway, and why are they baling hay?). Improvements in auto-production and a shift to electric cars may reduce the need (hopefully) for auto mechanics, oil changers, etc. Those areas that men tend to work in, like building construction, have taken a beating thanks to lack of capital. We can't just go on building more buildings every single year forever - for one, the entire earth would be paved over, for another, we'd run out of materials, and another, we wouldn't even have enough people to put in them, especially if population is declining.

Even the few remaining fields where men have a small numerical edge (science, engineering, mathematics, computer programming, construction), the common lament you always hear is "how do we get more women to get interested in this profession?" WTF? There aren't enough jobs right now for all the men in these professions, and you want to get more women into them? Shouldn't you be more worried about the quantity of jobs rather who is doing them? If a job is getting done, what does it matter if it's a man or a woman doing it?

In general, men prefer movement and action. They like physical things and don't like sitting still for long amounts of time. They are good at focusing on a specific task, but their attention varies, and they are less docile, generally. Many men have less-than-desirable social skills. School is almost perfectly designed to turn men off from learning and education, and our "college for all" culture provides few opportunities for the average man to become a decent, productive member of society (unlike, say Germany with their apprentice systems), instead preferring to lock them up and throw away the key. Non-college jobs are denigrated in American society, attracting people who see themselves as "rejects" for college, and leading to poor-quality service. At the same time, like twenty people all crowding together trying to enter into an elevator at the exact same time, students are encouraged to go to college so they can get "prestigious" jobs that don't exist, and graduate with nothing but debt to show for it.

Women, by contrast, have an easier time sitting behind a desk all day, cooperating, behaving, smiling, and being social, which is what jobs tend to be all about nowadays. I once read someone's opinion that the "women's lib" movement was actively encouraged so that women would enter the workforce en masse, competing against men and driving down salaries. Plus, women were more docile and easier to control - they didn't talk back to their (male) bosses, rock the boat, ask for a raise, or try and outcompete or outshine their (male) bosses. There was a sense that, since women were considered a "second" income, that you could pay them less, and this is probably why women still tend to earn a little less than men in the same positions (although this is greatly exaggerated). It seems believable enough, especially since this seems to be the only mass movement since the War that the oligarchy has not strangled in its crib.

Of course, schools were originally designed to churn out obedient soldiers and factory workers as John Taylor Gatto has so aptly demonstrated. Now that the factory work is gone, they seem to do little more than keep people out of the workforce until they turn 18, and then they can become either prisoners or debt donkeys. But this "sit still, be quiet, behave, do exactly what you're told, stand up and sit down when the bell rings;" type of mentality is inherently easier for girls to go along with. Mass education has only been around for 50-60 years (even before World War Two it wasn't uncommon for people to have only a primary school education, and many of these people were smart as a whip), and that's way too little time for evolution to mold all men and boys into obedient little workers, especially since the previous few million years before that encouraged the behavioral traits I listed above for reproductive success. Thus, I doubt men are simply going to behave as the robots economists use for their models and transform into home health care aides, third-grade teachers, nurses, and so on. I tend to agree that schools treat boys as "defective girls" and try to medicate away the problem:
Being a boy can be a serious liability in today’s classroom. As a group, boys are noisy, rowdy and hard to manage. Many are messy, disorganized and won’t sit still. Young male rambunctiousness, according to a recent study, leads teachers to underestimate their intellectual and academic abilities. “Girl behavior is the gold standard in schools,” says psychologist Michael Thompson. “Boys are treated like defective girls.”

These “defective girls” are not faring well academically. Compared with girls, boys earn lower grades, win fewer honors and are less likely to go to college. One education expert has quipped that if current trends continue, the last male will graduate from college in 2068. In today’s knowledge-based economy, success in the classroom has never been more crucial to a young person’s life prospects. Women are adapting; men are not.
What Schools Can Do to Help Boys Succeed (Time)

Lest you think any of the above is an exaggeration, I advise you to check out the following link:

The glass ceiling illustrated in one ‘meet the staff’ web page

This also leads to the loss of class mobility and concentration of wealth, as men now no longer have to compete against just upper-class men, but upper-class women as well. Now members of both genders who are "to the manor born" can hoard opportunities, making sure there's no room for people from the lower classes to rise up the ladder as was more likely in times past. There's only so much room on each level of the pyramid, after all.

At Colleges, Women Are Leaving Men in the Dust (New York Times)

And this has caused the feeding of men's insecurities, especially those of white males. Predictably, these insecurities have given birth to a whole host of "movements," the Tea Party movement, Libertarianism in its varied forms, including the latest Neoreactionary movement (bring back the aristocracy!), the militia movement, the men's rights movement, the "pickup" community, sovereign citizens, survivalists, the NRA (what it's become) and the John Birch Society (which has now captured the entire Republican Party). I'm sure there are others I'm forgetting.

FOX News is specifically designed by its creators to appeal of this fever pitch of anxiety, anger and insecurity. Exhibit A: FOX News propagandists Bill O'Reilly and Brit Hume arguing that the corrupt, obese bully Chris Christie is just "too manly" for a "feminized" culture like the United States. Predictably, Christie's numbers shot up among what is essentially now an aging white male party. Exhibit B - Elizabeth Hasselbeck, one of FOX's endless stable of pulchritudinous, square-jawed, blonde, Aryan Überfrauen, has stated that "wussified" men are now a threat to national security! You can almost cut the anxiety with a knife. Of course, outlets like Rush Limbaugh pioneered revelling in "political incorrectness," depicting opponents of their entire message as "shrill harpies," and themselves as "just one of the guys" chatting in the locker room after the game. "Feminazis" were one of the major targets of him and his clones, and you can see why these types of shows are played on AM radio outlets that used to be known primarily for sports talk radio (blue-collar men listen to radio in the truck or on the job site). There are a whole genre of books about "how to be a real man," and things like "the Man Show" are out there to supposedly define what a man is "supposed to be" (unfortunately, in America that seems to be one particular type of man - loutish, big-mouthed, arrogant, aggressive, sloppy, unintellectual, incurious, and beer-and-sports-obsessed). Note how you didn't see stuff like this forty years ago.

Presumably, Larry the Cable guy is a "real man" 'cause he's driving a monster truck!
History shows that Whenever you have a large amount of unemployed or unemployable men, you have a recipe for trouble. If men don't have work - they'll make work, and that work is likely to be crime, rape, violence, vandalism, vigilantism, and all sorts of other mischief, including picking up guns and heading to town hall meetings or policing polling stations for "voter fraud."

All of which is prelude to this crunching of some dire data from Matt Yglesias:
Catherine Rampell recently noted that all the net job growth in December was accounted for by women's employment while men gained zero net jobs. Month-to-month numbers can get noisy, and you shouldn't attribute too much significance to net zero as a threshold, but it is true that the labor market in the United States is highly gendered. It's not just a question of various disparities that arise inside particular firms—there are systematic sectoral gaps between what jobs women hold and what jobs men hold. So an economic trend that's bad for construction workers lands very heavily on men, whereas one that's bad for teachers lands very heavily on women.

Taking the long view, we can see that American women have regained the employment level they were at before the recession. Men, by contrast, have not. The much-hyped "manufacturing rennaissance" is a bit of a myth, and to the extent that it's happened, it hasn't made up for construction job losses. There's a very real male-dominated boom in natural resource extraction jobs, but that sector just doesn't employ that many people.

Younger women were hit by the recession but have also more than recovered their losses. Young men's employment level is way down from where it once was. Optimistically one might hope this represents a surge in young men enrolling in college and learning useful things, but to the best of my knowledge the gender gap in college attendance and graduation continues to favor women.

All told, it's very much an End of Men scenario—with the particularly striking fact being that you see the end of men more strongly in the younger cohorts. The population of people over the age of 55 is both large and growing, so the experience of older people carries a lot of weight in national aggregates. But the younger you look the more you see men's disemployment as a theme. For younger workers we really are slouching toward gender equity—we're just doing it more by men becoming worse off than by women becoming better off.
Four Charts Show the Gendered Labor Market (Slate)

See also: U.S. Women Last Month Regained All Jobs Lost to the Great Recession; Men Still 2.1 Million Short (September 12, 2013) (IWPR)

And it's likely to get worse:
In the next two decades, 47% of US jobs are at risk of being automated away, an alarming Oxford study found last week.

But computers create as well as destroy jobs: Economist Tyler Cowen points out that an unmanned Predator drone requires 168 workers to keep it in the air for 24 hours, whereas one sortie by an F-16 is backed by fewer than 100 workers. Our economic future will increasingly be a story of those who complement computers. And though it may be counterintuitive to say so, that means big potential upside for women.

Why, when the computer-programming field remains dominated by men? Because women are more conscientious. Women are also more likely to ask for help or acknowledge their limits. Women are more modest, and modesty, it turns out, will be an invaluable trait in the future.

How does this play out in terms of gender? Keep in mind that one of the most common and preventable sources of deadly infections in hospitals is failure to wash hands. One study found that women doctors washed their hands after 88% of patient contact, but for men that figure was 54%. That’s arrogance, a belief that you are such a great medicine man that you couldn’t possibly be ferrying disease.

Changes in higher education will reward superior female conscientiousness. Today college is essentially a four-year vacation from reality for the children of the well-off that produces a valuable credential. But free online universities are turning that model upside down: Within a few years, students who paid nothing for their tuition but crammed intensely and learned much more than the average kid at Party U. will be presenting themselves to employers, who will not fail to notice the new source of talent.

The most conscientious, self-motivated students, regardless of where they came from, will eat the lunch of the kids who didn’t bother to learn a useful skill in college. Cowen points out, “women are more likely to follow instructions and orders with exactness and without resentment. . . . There is plenty of evidence that women are less interested in direct workplace competition and more likely to work well in teams.”

Women have a new word for the masculine tendency to belittle feminine input while asserting expertise they don’t necessarily possess: mansplaining. In an increasingly meritocratic and linked world, mansplaining will prove to be a costly flaw.

“If you’re a young male hothead who just can’t follow orders, and you have your own ideas about how everything should be done,” writes Cowen, “you’re probably going to have an ever-tougher time in the labor markets of the future. There won’t be much room for a ‘rebel without a cause’ or, for that matter, a rebel with a cause.”

Men have already been punished by de-industrialization that values office skills more than physical strength. Now we’d better learn that we can’t mansplain our way through the e-economy.
Which workers will survive the robot age? (New York Post)

The bottom line is: must men fail for women to succeed? I say no. I say we rise and fall together. There's no other way. Otherwise, too many men with nothing to lose will tear the system down anyway.