Tuesday, June 30, 2015

Economics and History

From "The Lessons of History" by Will and Ariel Durant:
In the Athens of 594 B.C., according to Plutarch, "the disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances . . . seemed possible but despotic power."  The poor, finding their status worsened with each year— the government in the hands of their masters, and the corrupt courts deciding every issue against them—began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force. Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devaluated the currency, thereby easing the burden of all debtors (though he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he canceled arrears for taxes and mortgage interest; he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; and he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government's expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not redivided the land; but within a generation almost all agreed that his reforms had saved Athens from revolution.

The Roman Senate, so famous for its wisdom, adopted an uncompromising course when the concentration of wealth approached an explosive point in Italy; the result was a hundred years of class and civil war. Tiberius Gracchus, an aristocrat elected as tribune of the people, proposed to redistribute land by limiting ownership to 333 acres per person, and allotting surplus land to the restive proletariat of the capital. The Senate rejected his proposals as confiscatory. He appealed to the people, telling them, "You fight and die to give wealth and luxury to others; you are called the masters of the world, but there is not a foot of ground that you can call your own." Contrary to Roman law, he campaigned for re-election as tribune; in an election-day riot he was slain (133 B.C.). His brother Caius, taking up his cause, failed to prevent a renewal of violence, and ordered his servant to kill him; the slave obeyed, and then killed himself (121 B.C.); three thousand of Caius' followers were put to death by Senatorial decree. Marius became the leader of the plebs, but withdrew when the movement verged on revolution. Catiline, proposing to abolish all debts, organized a revolutionary army of "wretched paupers"; he was inundated by Cicero's angry eloquence, and died in battle against the state (62 B.C.). Julius Caesar attempted a compromise, but was cut down by the patricians (44 B.C.) after five years of civil war. Mark Antony confused his support of Caesar's policies with personal ambitions and romance; Octavius defeated him at Actium, and established the "Principate" that for 210 years (30 B.C. - A.D. 180) maintained the Pax Romana between the classes as well as among the states within the Imperial frontiers.

After the breakdown of political order in the Western Roman Empire (A.D. 476), centuries of destitution were followed by the slow renewal and reconcentration of wealth, partly in the hierarchy of the Catholic Church. In one aspect the Reformation was a redistribution of this wealth by the reduction of German and English payments to the Roman Church, and by the secular appropriation of ecclesiastical property and revenues. The French Revolution attempted a violent redistribution of wealth by Jacqueries in the countryside and massacres in the cities, but the chief result was a transfer of property and privilege from the aristocracy to the bourgeoisie. The government of the United States, in 1933-52 and 1960-65, followed Solon's peaceful methods, and accomplished a moderate and pacifying redistribution; perhaps someone had studied history. The upper classes in America cursed, complied, and resumed the concentration of wealth.

We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution. In this view all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation.
pp. 55-57

Monday, June 29, 2015

What We've Lost

Even if humans manage to survive the century, we'll be living on a planet where an incomprehensible amount of magic and mystery will be gone forever. From the lush, blue planet our hunter-gatherer ancestors inherited, we've managed to urn it into a more monotonous and sterile world where nothing exists except the limited biological support systems that cater to our use. We've multiplied like bacteria. We are the ultimate weed. Here are a couple of beautiful things that will be lost forever:

In the past 30 years, their habitat has shrunk by 71%, Mr Li said. This is partly because of climate change and partly because their grazing area has been taken over by a growing population of people at the bottom of the mountain. With less than 1,000 left they are now rarer than pandas.
Meet China's 'magic bunny' - the Ili Pika (BBC)

A picture of loneliness: you are looking at the last male northern white rhino (The Guardian)

"A recent survey detected a steep decline in part of the Japanese breeding population which has presumably occurred because of forest loss and degradation in its winter range." 
Japanese paradise flycatcher (TYWKIWDBI) I like his comment:
'That seems to be true for everything beautiful and awesome in our natural world.  Our grandchildren will have to be satisfied with jellyfish and cockroaches."
But since these animals have no "economic value" to humans, well, to hell with them! What are they good for? What "ecosystem services" do they provide? After all, they need to earn their keep in the Market just like the rest of us, right?

This brings to mind David Quammen's classic essay in Harper's - Planet of Weeds.  It's hard to believe it was written back in 1998. In it, Quammen looks at the mass extinction of species that biologists were predicting even back then, which were on the order of the great mass extinctions in the past. To learn more about it, he talks to a paleontologist named David Jablonsky.
Some people will tell you that we as a species, Homo sapiens, the savvy ape, all 5.9 billion of us in our collective impact, are destroying the world. Me, I won't tell you that because "the world" is so vague, whereas what we aren't destroying is quite specific. Some people will tell you that we are rampaging suicidally toward a degree of global wreckage that will result in our own extinction. I won't tell you that either. Some people say that the environment will be the paramount social and political concern of the twenty-first century, but what they mean by "the environment" is anyone's guess. Polluted air? Polluted water? Acid rain? A frayed skein of ozone over Antarctica? Greenhouse gasses emitted by smokestacks and cars? Toxic wastes? None of these concerns is the big one, paleontological in scope, though some are more closely entangled with it than others. If the world's air is clean for humans to breathe but supports no birds or butterflies, if the world's waters are pure for humans to drink but contain no fish or crustaceans or diatoms, have we solved our environmental problems? Well, I suppose so, at least as environmentalism is commonly construed. That clumsy, confused, and presumptuous formulation known as "the environment" implies viewing air, water, soil, forests, rivers, swamps, deserts, and oceans as merely a milieu within which something important is set: human life, human history. But what's at issue in fact is not an environment; it's a living world.

Here is instead what I'd like to tell you: The consensus among conscientious biologists is that we're headed into another mass extinction, a vale of biological impoverishment commensurate with the big five. Many experts remain hopeful that we can brake that descent, but my own view is that we're likely to go all the way down. I visited David Jablonsky to ask what we might see at the bottom.


Do you see Homo sapiens as a likely survivor, I ask [Jablonksy], or as a casualty? "Oh, we've got to be one of the most bomb-proof species on the planet," he says. "We're geographically widespread, we have a pretty remarkable reproductive rate, we're incredibly good at co-opting and monopolizing resources. I think it would take a really serious concerted effort to wipe out the human species." The point he is making is one that has probably already dawned on you: Homo sapiens is the consummate weed. Why shouldn't we survive, then, on the Planet of Weeds? But there's a wide range of possible circumstances, Jablonski reminds me, between the extinction of our species and the continued growth of the human population, consumption, and comfort. "I think we'll be one of the survivors," he says, "sort of picking up the rubble." Besides losing all the pharmaceutical and genetic resources that lay hidden within those extinguished species, and all the spiritual and aesthetic values they offered, he foresees unpredictable levels of loss in many physical and biochemical functions that ordinarily come as benefits from diverse, robust ecosystems--functions such as cleaning and recirculating air and water, mitigating droughts and floods, decomposing wastes, controlling erosion, creating new soil, pollinating crops, capturing and transporting nutrients, damping short-term temperature extremes and longer-term fluctuations of climate, restraining outbreaks of pestiferous species, and shielding earth's surface from the full brunt of ultra-violet radiation. Strip away the ecosystems that perform those services, Jablonski says, and you expect grievous detriment to the reality we inhabit. "A lot of things are going to happen that will make this a crummier place to live--a more stressful place to live, a more difficult place to live, a less resilient place to live--before the human species is at any risk at all." And maybe some of the new difficulties, he adds, will serve as incentive for major changes in the trajectory along which we pursue our aggregate self interests. maybe we'll pull back before our current episode matches the Traiassic extinction of the K-T event. Maybe it will turn out to be no worse than the Eocene extinction, with a 35 percent loss of species.

"Are you hopeful?" I ask.

Given that hope is a duty from which paleontologists are exempt, I'm surpised when he answers, "Yes, I am."

I'm not. My own guess about the mid-term future, excused by no exemption, is that our Planet of Weeds will indeed be a crummier place, a lonelier and uglier place, and a particularly wretched place for the 2 billion people comprising Alan Duming's absolute poor. What will increase most dramatically as time proceeds, I suspect, won't be generalized misery or futuristic modes of consumption but the gulf between the two global classes experiencing those extremes. Progressive failure of ecosystem functions? Yes, but human resourcefulness of the sort Julian Simon so admired will probably find stopgap technological remedies, to be available for a price. So the world's privileged class--that's your class and my class--will probably still manage to maintain themselves inside Homer-Dixon's stretch limo, drinking bottled water and breathing bottled air and eating reasonably healthy food that has become incredibly precious, while the potholes on the road outside grow ever deeper. Eventually the limo will look more like a lunar rover. Ragtag mobs of desperate souls will cling to its bumpers, like groupies on Elvis's final Cadillac. The absolute poor will suffer their lack of ecological privilege in the form of lower life expectancy, bad health, absence of education, corrosive want, and anger. Maybe in time they'll find ways to gather themselves in localized revolt against the affluent class. Not likely, though, as long as affluence buys guns. In any case, well before that they will have burned the last stick of Bornean dipterocarp for firewood and roasted the last lemur, the last grizzly bear, the last elephant left unprotected outside a zoo.
If bees go extinct, this is what your supermarket will look like (io9)

Lemurs sliding towards extinction (BBC)

The lion: A victim of its own power? (BBC)

Humans Are the Worst: Western Black Rhinos Now Extinct (Jezebel)

The Earth stands on the brink of its sixth mass extinction and the fault is ours (Guardian)

Global Warming Is Now a "Medical Emergency" That Could Wipe Out 50 Years of Global Health Gains (Mother Jones)

Many animals kill for their needs, but what other animal kills for pleasure and status alone?

Sunday, June 28, 2015

Startup Luck

Marginal Revolution:
Havekarma.com - That is a new start-up.  The purpose is to help your “sharing economy” reputation be portable across a number of sites, for instance Airbnb, DogVacay, Uber, Craigslist, and so on.

I wish them luck…
An excellent choice of words, because they're going to need it:
"LastPass, a company that offers users a way to centrally manage all of their passwords online with a single master password, disclosed Monday that intruders had broken into its databases and made off with user email addresses and password reminders, among other data."

Saturday, June 27, 2015

Friday, June 26, 2015

Against Techno-Optimism and the Future of Work

A photo of New York from 1900. Source.
Martin Wolf has written a great essay for Foreign Affairs basically arguing that “the techno-optimists are wrong.” Mr. Wolf is the widely-read and highly influential opinion writer for the Financial Times. I cited this article in a previous post.

Wolf makes two points. The first is that the lowest hanging fruits of innovation are harvested first, leading to ever more marginal gains from new technologies, something I’ve argued here for quite some time. This is what is meant by diminishing returns to technology. The big gains are made first, leading to increasingly more incremental steps. The big leaps can only be harvested once. Thus, growth naturally slows down, and waiting for a new techno-miracle is like waiting for Godot, preventing you from taking real action in the present. Furthermore, more of what our economy consists of - eds, meds, and services - is not subject to rapid advances in productivity:
Over the past two centuries, historic breakthroughs have been responsible for generating huge unmeasured value. The motor vehicle eliminated vast quantities of manure from urban streets. The refrigerator prevented food from becoming contaminated. Clean running water and vaccines delivered drastic declines in child mortality rates. The introduction of running water, gas and electric cookers, vacuums, and washing machines helped liberate women from domestic labor. The telephone removed obstacles to speedy contact with the police, fire brigades, and ambulance services. The discovery of electric light eliminated forced idleness. Central heating and air conditioning ended discomfort. The introduction of the railroad, the steam ship, the motor car, and the airplane annihilated distance.

The radio, the gramophone, and the television alone did far more to revolutionize home entertainment than the technologies of the past two decades have. Yet these were but a tiny fraction of the cornucopia of innovation that owed its origin to the so-called general-purpose technologies—industrialized chemistry, electricity, and the internal combustion engine—introduced by what is considered the Second Industrial Revolution, which occurred between the 1870s and the early twentieth century. The reason we are impressed by the relatively paltry innovations of our own time is that we take for granted the innovations of the past.


The technologies introduced in the late nineteenth century did more than cause three generations of relatively high productivity growth. They did more, too, than generate huge unmeasured economic and social value. They also brought with them unparalleled social and economic changes. An ancient Roman would have understood the way of life of the United States of 1840 fairly well. He would have found that of 1940 beyond his imagination.

Among the most important of these broader changes were urbanization and the huge jumps in life expectancy and standards of education. The United States was 75 percent rural in the 1870s. By the mid-twentieth century, it was 64 percent urban. Life expectancy rose twice as fast in the first half of the twentieth century as in the second half...The jump in high school graduation rates—from less than ten percent of young people in 1900 to roughly 80 percent by 1970—was a central driver of twentieth-century economic growth...All these changes were also, by their nature, one-offs. This is also true of the more recent shift of women entering the labor force. It has happened. It cannot be repeated.

The reason we are impressed by the relatively paltry innovations of our own time is that we take for granted the innovations of the past...The [breakthroughs of the nineteenth and early twentieth] were vastly broader, affecting energy; transportation; sanitation; food production, distribution, and processing; entertainment; and, not least, entire patterns of habitation...The only recent connections between homes and the outside world are satellite dishes and broadband. Neither is close to being as important as clean water, sewerage, gas, electricity, and the telephone. The great breakthroughs in health—clean water, sewerage, refrigeration, packaging, vaccinations, and antibiotics—are also all long established...
His second point is that the new "innovations" in telecommunications that have been so highly touted have not only not equaled the vast changes of the nineteenth/twentieth century or caused big leaps in productivity, but have actually contributed to falling living standards for many via outsourcing, automation, and so forth, creating a "winner take all" economy and enabling wealth concentration to an unprecedented degree:
The impact of the biomedical advances so far has been remarkably small, with pharmaceutical companies finding it increasingly difficult to register significant breakthroughs. So-called big data is clearly helping decision-making. But many of its products—ultra-high-speed trading, for example—are either socially and economically irrelevant or, quite possibly, harmful. Three-D printing is a niche activity—fun, but unlikely to revolutionize manufacturing. 
[T]he computer itself is more than half a century old,..Yet except for the upward blip between 1996 and 2004, we are still...seeing the information technology age “everywhere but in the productivity statistics.”...Yet perhaps paradoxically, recent technological progress might still have had some important effects on the economy, and particularly the distribution of income...The information age coincided with—and must, to some extent, have caused—adverse economic trends: the stagnation of median real incomes, rising inequality of labor income and of the distribution of income between labor and capital, and growing long-term unemployment....Information technology has turbocharged globalization by making it vastly easier to organize global supply chains, run 24-hour global financial markets, and spread technological know-how...Technology has also brought about the rise of winner-take-all markets, as superstars have come to bestride the globe. 
It is also possible that the ultimate result might be a tiny minority of huge winners and a vast number of losers. But such an outcome would be a choice, not a destiny. Techno-feudalism is unnecessary. Above all, technology itself does not dictate the outcomes. Economic and political institutions do. If the ones we have do not give the results we want, we will need to change them.
Same as it Ever Was: Against Techno-Optimism (Martin Wolf, Foreign Affairs)

Related to that last point: A World Without Work - a lengthy article on the jobless future in The Atlantic. It's a good roundup of a lot of the articles I've featured and written here over the years.The author uses Youngstown, Ohio as an example of what happens when work disappears (apparently not caused by spontaneous mass outbreaks of laziness):
Youngstown was transformed not only by an economic disruption but also by a psychological and cultural breakdown. Depression, spousal abuse, and suicide all became much more prevalent; the caseload of the area’s mental-health center tripled within a decade. The city built four prisons in the mid-1990s—a rare growth industry. One of the few downtown construction projects of that period was a museum dedicated to the defunct steel industry.
As for the idea that an economy's ability to create new jobs is unlimited (belied by the fact that every country requires work visas for employment):
After 300 years of breathtaking innovation, people aren’t massively unemployed or indentured by machines. But to suggest how this could change, some economists have pointed to the defunct career of the second-most-important species in U.S. economic history: the horse...Humans can do much more than trot, carry, and pull. But the skills required in most offices hardly elicit our full range of intelligence. Most jobs are still boring, repetitive, and easily learned. The most-common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Together, these four jobs employ 15.4 million people—nearly 10 percent of the labor force, or more workers than there are in Texas and Massachusetts combined. Each is highly susceptible to automation, according to the Oxford study.

Technology creates some jobs too, but the creative half of creative destruction is easily overstated. Nine out of 10 workers today are in occupations that existed 100 years ago, and just 5 percent of the jobs generated between 1993 and 2013 came from “high tech” sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people. It is for precisely this reason that the economic historian Robert Skidelsky, comparing the exponential growth in computing power with the less-than-exponential growth in job complexity, has said, “Sooner or later, we will run out of jobs.”
He describes three possible futures: Consumption, Communal Creativity, and Contingency:
1. Consumtion - the paradox of leisure: American society has “an irrational belief in work for work’s sake,” says Benjamin Hunnicutt, another post-workist and a historian at the University of Iowa, even though most jobs aren’t so uplifting. A 2014 Gallup report of worker satisfaction found that as many as 70 percent of Americans don’t feel engaged by their current job. Hunnicutt told me that if a cashier’s work were a video game—grab an item, find the bar code, scan it, slide the item onward, and repeat—critics of video games might call it mindless. But when it’s a job, politicians praise its intrinsic dignity. “Purpose, meaning, identity, fulfillment, creativity, autonomy—all these things that positive psychology has shown us to be necessary for well-being are absent in the average job,” he said.
2 Communal Creativity - the artisan's revenge: You don’t need any particular fondness for plasma cutters to see the beauty of an economy where tens of millions of people make things they enjoy making—whether physical or digital, in buildings or in online communities—and receive feedback and appreciation for their work. The Internet and the cheap availability of artistic tools have already empowered millions of people to produce culture from their living rooms. People upload more than 400,000 hours of YouTube videos and 350 million new Facebook photos every day. The demise of the formal economy could free many would-be artists, writers, and craftspeople to dedicate their time to creative interests—to live as cultural producers. Such activities offer virtues that many organizational psychologists consider central to satisfaction at work: independence, the chance to develop mastery, and a sense of purpose.
3. Contingency - you're on your own: Russo sees Youngstown as the leading edge of a larger trend toward the development of what he calls the “precariat”—a working class that swings from task to task in order to make ends meet and suffers a loss of labor rights, bargaining rights, and job security. In Youngstown, many of these workers have by now made their peace with insecurity and poverty by building an identity, and some measure of pride, around contingency. The faith they lost in institutions—the corporations that have abandoned the city, the police who have failed to keep them safe—has not returned. But Russo and Woodroofe both told me they put stock in their own independence. And so a place that once defined itself single-mindedly by the steel its residents made has gradually learned to embrace the valorization of well-rounded resourcefulness.

Among Youngstown’s precariat, one can see a third possible future, where millions of people struggle for years to build a sense of purpose in the absence of formal jobs, and where entrepreneurship emerges out of necessity. But while it lacks the comforts of the consumption economy or the cultural richness of Lawrence Katz’s artisanal future, it is more complex than an outright dystopia. “There are young people working part-time in the new economy who feel independent, whose work and personal relationships are contingent, and say they like it like this—to have short hours so they have time to focus on their passions,” Russo said.
He sees a new role for government, but it's hard to square that with the complete and total capture of the government by wealthy interests and the drive initiated by the wealthy to shrink the state. In the  end, it's hard to reach a conclusion:
When I think about the role that work plays in people’s self-esteem—particularly in America—the prospect of a no-work future seems hopeless. There is no universal basic income that can prevent the civic ruin of a country built on a handful of workers permanently subsidizing the idleness of tens of millions of people. But a future of less work still holds a glint of hope, because the necessity of salaried jobs now prevents so many from seeking immersive activities that they enjoy.
 Ironically, of the three 'C's', one is conspicuously absent - Collapse - things fall apart.

New York 1900. Source ibid.

Fun Facts

The International Trade Union Confederation estimates that 4,000 workers will die in Qatar by the time 2022 arrives.

America's wealth grew by 60 percent in the past six years, by over $30 trillion. In approximately the same time, the number of homeless children has also grown by 60 percent.

The top 0.01 percent of Americans -- fewer than 14,000 households -- received 5.6 percent of adjusted gross income in 2012...the top 0.001 percent...had its best year since 2007.

There are now more American workers on disability (8.9 million) than are working on assembly lines (8.6 million).

[Les Moonves, president and CEO of CBS Corp] in one day...makes more than double the annual median household income in the United States.

You are much more likely to be struck dead by lightning, choke on a chicken bone or drown in the bathtub than be killed by a terrorist. Any number of well-known diseases — cancer, diabetes, the flu — take the lives of far, far more people. Yet, by one estimate, the United States spends $500 million per victim of terrorism, and a piddling $10,000 per cancer death.

Nearly three out of 10 Americans have shown evidence of a serious alcohol-related problem at some point in their lives.

The average American woman now weighs as much as the average 1960s man

The least fit child from a class of 30 in 1998 would be one of the five fittest children in a class of the same age today in the U.K.

According to the 2015 Global Peace Index, the number of refugees and internally displaced people has reached its highest point since World War II.

Five of the top ten books on Amazon last month were coloring books for grown-ups.

Wednesday, June 24, 2015

Scary Fact from Fonzie

Recently, Marc Maron of the WTF podcast interviewed one of the world’s most important people. I’m referring, of course to Henry Winkler, TV’s Fonz. Given the fact that we have a statue of the guy downtown, I figured I ought to give it a listen.

In a fascinating and wide-ranging interview, Winkler talks about his childhood background and the relatives who escaped the Holocaust (and didn’t), how he got into acting, moving to Hollywood, what happened after Happy Days, and his struggles with learning disabilities. He’s turned that last item into a sort of second career helping children who struggle with learning disabilities like he did, authoring a series of children’s books for dyslexics. But I want to highlight something shocking and disturbing that he says toward the end of the episode:

WTF Episonde 593: Henry Winkler [1:012:40]
Marc Maron: What’s your wife do? 
Henry Winkler: My wife is an unbelievable grandmother. She was a champion for abused, abandoned and neglected children in L.A., and then she went and worked when Clinton was president in Washington for those children. Except, here’s the sad thing. Really, we talk a lot about children in America. But they don’t write checks, so you don’t really do a lot for them, you just talk about them. But the real reason is, because they don’t make contributions. 
Marc Maron: Which means? 
Henry Winkler: Which means that we talk about how important their future is. How important their education is. But we really don’t lift a finger. 
Marc Maron: Yeah, so nothing gets solved. I was just talking about that today with a comedian friend of mine, Greg Proops, that the education system; there isn’t some context, there isn’t some guidance, there isn’t some sort of people, you know, who will engage these kids. It’s just… 
Henry Winkler: Well, we now teach toward a test. Do you know that the number of prison cells is negotiated by tests taken by third graders? 
Marc Maron: What?? Is that real? 
Henry Winkler: That’s real. That’s real. 
Marc Maron: That’s one of the saddest things I’ve ever heard. 
Henry Winkler: Fifty-seven percent of human beings, or sixty-two percent, somewhere in there, of human beings incarcerated, probably anywhere in the world, but in America and England, are in some way learning challenged. They fell through the cracks. 
Marc Maron: It’s horrendous. And also there’s a big prison business system here. It’s big business. Like, so, what do you do? I mean, it’s so sad that… 
Henry Winkler: Here’s what you do. You do it one little kid at a time. Any child you meet, you tell them, they’re great. You tell them, they are powerful. And that, because if —I travel and talk to children in classrooms. I ask one question. I say, 'anyone know what they’re great at?'  Every single child in that room anywhere in the world that I have gone knows what they’re great at. And that’s where we should start in moving children toward being great adults on the earth.
So, in other words, locking up a certain percentage of the population is just part of the plan! They are already planning how many of us they want to lock up in a cage twenty years from now based on our current test scores. Now we know why they were so obsessed with enacting all that testing, even though every single teacher I’ve ever heard says how much it hampers true learning. It’s all part of the plan. These are the “surplus” people not able to be turned into “human resources.” I wonder to what extent the projected unemployment rate is also influencing the future prison/security state budget.

This is the most chilling indictment of modernity I’ve ever seen. I think capitalism has definitely jumped the shark.

Sunday, June 21, 2015

Let Them Eat Smartphones!

Lately I've noticed a new trend among the economics priesthood. When trying to explain the extreme income inequality, stagnation in living standards, social disintegration, and general immiseration of the population of the past few decades under Neoliberal capitalism, economists have a new favorite argument:

They argue that it isn't true at all--people are, in fact, much better off! Look, people have the internet! Smartphones! Flat Screen TV's! Netflix! None of those things existed in the 1980's. They argue that the "utility" of these things is not captured in the "official statistics," therefore the longer hours, falling wages, debt servitude and precariousness of work is all cancelled out.

I'm not joking. I've seen this argument more times than I can count (especially on libertarian Web sites and podcasts - Marginal Revolution and Econtalk drop this one on an almost daily basis). This article in the Washington Post (owned by Jeff Bezos) sums it up:
But even if we have less money, you know what we do have that we didn't 15 years ago? Smartphones and social networks, Netflix and HD TVs, apps and whatever other technology you prefer to waste time on. Now, it's true, you can't eat an iPad, but it's also true that these things make our lives better in ways that are hard to measure...If you paid $400 for an HD TV today, for example, and $400 for a regular TV 10 years ago, did you really pay the same price? Technically, yes. But the fact remains that you got something better for the same amount of money than you would have before. And that's even trickier when you're talking about things that didn't even exist back then, like smartphones, that are really every electronic device from the 1990s rolled into one pocket-sized piece...
Try this thought experiment. Adjusted for inflation, would you rather make $50,000 in today's world or $100,000 in 1980's? In other words, is an extra $50,000 enough to get you to give up the internet and TV and computer that you have now? The answer isn't obvious. And if $100,000 isn't enough, what would be? $200,000? More? This might be the best way to get a sense of how much better technology has made our lives—not to mention the fact that people are living longer—the past 35 years, but the problem is it's particular to you and your tastes. It's not easy to generalize.
Why your middle-class salary is better than you might think (Washington Post)

Believe it or not, this is a a very common argument. In fact, I would argue that it is the most common argument I see deployed by economists of late to justify the failure of the current status quo. Their argument is basically this: If Reagan hadn't drastically lowered taxes on the rich, we would still be looking at picture tubes, talking on land lines and using maps to find our way around in what would surely be a miserable hell beyond human imagination. Here's Dean Baker summarizing the same argument:
A survey of elite economists (you know, the type of people that couldn't see an $8 trillion housing bubble) found that the vast majority said that the official income data understated the increase in the standard of living for the middle class over the last 35 years. 
The explanation for this view is that new goods like cell phones and the Internet have vastly improved our standard of living in ways that are not picked up in the data. O'Brien suggests a thought experiment that has been put forward by this elite group. Would you be willing to trade an income of $50,000 in 2015 for an inflation adjusted $100,000 income in 1980, knowing that you can only buy the goods and services available in 1980? The implication is that most of us would say no, since it would mean giving up our cell phones, Ipads and Ipods, smartphone cameras, wifi, and all sorts of other neat things.
And Martin Wolf:
Those whom [Robert] Gordon calls “techno-optimists”—Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, for example—respond that the GDP statistics omit the enormous unmeasured value provided by the free entertainment and information available on the Internet. They emphasize the plethora of cheap or free services (Skype, Wikipedia), the scale of do-it-yourself entertainment (Facebook), and the failure to account fully for all the new products and services. Techno-optimists point out that before June 2007, an iPhone was out of reach for even the richest man on earth. Its price was infinite. The fall from an infinite to a definite price is not reflected in the price indexes. Moreover, say the techno-optimists, the “consumer surplus” in digital products and services—the difference between the price and the value to consumers—is huge. Finally, they argue, measures of GDP underestimate investment in intangible assets.
It's price was infinite? That's a bizarre argument. Theoretically, there are in indefinite number of goods whose price is infinite right now. Moreover, this was the case in 1990, 1980, 1880, 1776, and 1440 BC. If people couldn't buy them, then why did they care?

Who cares that you need to make six figures to afford the rent in many American cities? Who cares about the housing bubble or people being priced out of New York and San Francisco? Who cares about the 1 trillion dollars in college debt? Who cares that the 99 percent are getting poorer every year? Who cares that the fastest-growing occupations in America pay terrible wages? Who cares that we're commuting farther than ever to get to our jobs? Who cares that children never go outside anymore? Who cares about how many people we're incarcerating? Who cares about cities where the water is being shut off or the municipal bankruptcies? Who cares that getting sick will lead to being in debt for a lifetime in America? Who cares that three-quarters of Americans are living paycheck-to-paycheck, or have not been able to save enough money for retirement? Who cares that we are working one entire month more per year than in 1970, despite all our "labor saving" technology? Who cares about mass surveillance? Who cares about austerity in Europe? Who cares about climate change and species extinction?

You've got the Facebook!!! 

It's basically the "Let them eat smartphones" argument.

This is the new argument that the economics profession is rolling out and testing in their latest desperate attempt to convince people that, no, capitalism really is working for everyone. As I've often said, economics is mainly used to persuade people that what they know is so just ain't so.

It also shows the built-in materialistic and hedonistic bias of economic "science." Who cares about the extreme levels of inequality, the increasing competitiveness of the job market, the precariousness of work, the alienation, the longer hours, the debt serfdom, the economic Balkinazation of society, the corruption of politics, the despoiling of nature, and the coarsening of culture generally. There's more stuff to buy! Therefore life is better for everyone full stop.

I'm not joking, this is seriously what economists like to argue. For example, in books and papers about the Industrial Revolution, economists like to tell us how much better off people were because of all the new goods on offer and the rising wages, even though the people buying them went from working for themselves on farms with their families in line with the rhythms of nature to working sixteen hour days in smoke-filled factories for a sociopathic boss. But hey, look at all the stuff they could buy! After all, thanks to rising wages, you could afford to be buried in a new linen  suit and mahogany coffin when you died of black lung at age thirty. This is economic logic.

Now, of course, they don't even have rising wages anymore. Time for plan B. I love how economists discount anything they can't measure. But when they try to justify the status quo, suddenly all the benefits to our lives are "unmeasurable" and not captured in the statistics. New inventions justify everything.

It's doubly ironic, since one of the favorite arguments from political conservatives when you point out increasing poverty is "poor people buying things they can't afford," like - you guessed it - cell phones and flat-screen TV's! The implication is that if they just didn't buy these things then there would be no poverty problem. But where does that leave the above argument? Wouldn't poor people be better off if those things had not been invented, since they can't afford them anyway?

Also, what I don't understand about these arguments is that you can just as easily easily make the case that all these digital distractions have actually made us worse off, viz:

Thanks to digital technology, a significant portion of Americans are never off from work. Laptop on the beach syndrome means you are never on vacation either. I've gotten plenty of emails timed from 8:00-10:00 at night and on weekends. I've had plenty of people tell me that they've got their cell phone and laptop to be contacted when they leave at 5:00 or go on vacation (I don't, of course, one reason my career is DOA). And then of course, there is the whole digital Taylorism phenomenon where every movement and every keystroke is tracked, monitored and analyzed to increase "efficiency."

That didn't exist in 1980.

Are we really better off with all the "smart phone zombies" walking around everywhere mesmerized by their digital screens? Not talking or interacting with other people. Not able to spend more than three seconds idle without some sort of digital distraction. Texting and driving is now a thing.

I've lost track of all the destructive effect on teenagers due to all the novel pressures put on them because of "social media. " This includes everything from "cyberbullying" (which did not exist in 1980), to sexting, to cyberstalking, to distributing nude photos, leading in some cases to suicides which might not have happened otherwise. Now kids have yet another outlet to dispense social pressure and obligations, and all of us have yet more media designed to manipulate us, criticize us, sell to us, and make us feel miserable and inadequate. You "need" to be on social media like LinkedIn now just to get a job. That didn't exist in 1980, and neither did the algorithms that are picking who gets hired or not. If Facebook went away tomorrow, would anyone even care?

Not to mention the effect of these screens on our health has been terrible. They've been linked to disrupted sleep cycles and other health effects. Now we have to spend all day staring at a screen in a sedentary position.

Back in the 1980's if you wanted to listen to people's phone calls you had to bug their phone. If you wanted to record the conversation you had to tape it. Just like with nuclear weapons, we now have entirely new fields of warfare - "cyberwarfare," to worry about since we have made everyone dependent upon the Internet.

Are we really saying we're so much better off because we have bigger and flatter televisions and more ways to distract ourselves from life?

Of course I'm well aware of the hypocrisy of a blogger saying all of this. Sure there are some benefits, but in the cost/benefit analysis, is it all worth it? I've got to tell you, I'm not at all sure.
As for the scenario above of having twice as much money in 1980 than now, I think it's a no-brainer - of course you would want that!

In the 1980's most major cities were affordable and you could take an airline flight without being crammed in like a sardine and paying through the nose for the privilege.

Durable goods were also much higher quality. Plastic and cheap laminated particle board shit from China is nowhere near the quality of stuff you could buy in the past. When I was a kid (I'm 41) we had metal lunchboxes and snow shovels. Any trip to a house built before 1950 and any trip to a rummage sale selling stuff made before 1985 will confirm this fact. Look at the stuff owned by your grandparents - the tools, the furniture, the silverware, the clothes, even things like watches and sewing machines.

When I was a kid we bought things from local stores owned by local people and made in America - WalMart had not taken over the country with its low wages and shoddy crap from China, and neither had the associated poverty culture. Middle class people routinely shopped at stores like Sears and Gimbels and "dime stores" like Ben Franklin.

And the above argument that people are living longer? Is he really arguing that people are healthier now than in 1980? Are you fucking kidding me??? Look at any photo before 1980 and you know what you won't see? The ridiculous levels of obesity. Bloated and distended bodies form a steady diet of corn syrup. People living on fast food. Forty-year-olds riding around on scooters. Thirteen-year -olds with Type 2 diabetes. Children with asthma and food allergies. Drug ads on TV. Children zonked out on pharmaceuticals. Strip malls being converted into dialysis clinics. Hospital complexes as the largest employers in most small cities. Some of this is due to population aging, of course, but as we've seen before, 90 percent of young people are rejected from militarily service due to health problems. I doubt this was true in 1980.

Here's Matt Breunig on the "Would you prefer 1980?" thought experiment:
...We actually have people who are alive right now who were in their adulthoods in 1980. These people know what the technology was like then and now. And, at present, they have some degree of control over which set of technologies they use. 
Using smartphone adoption as a proxy for these people's technological preferences, it's clear that the people who actually lived as adults through both technological periods overwhelmingly prefer older technologies.The super-majority of people over the age of 55 do not have a smartphone. Additionally, a good chunk of those over that age that do have a smartphone don't really use it like a smartphone (instead they treat it more like an older phone). 
Judging from these people's preferences, you'd have to conclude that, in fact, older technologies are preferable to newer technologies. You don't need a hypothetical to determine whether living in the past was better: these are people who lived in the past and the present and clearly prefer the way they lived in the past, at least when it comes to the technologies that are supposed to have made life dramatically better (as incomes stagnated).
In saying all of this, I realize there is a semi-obvious rebuttal: older people only prefer older technologies because they grew up with them, were habituated to them, and feel familiar to them. This is a very compelling rebuttal, but it ends up swallowing the entire argument that people are better off than income trends show. Old people prefer older technologies because they are habituated to them, but the same is also true for younger people and newer technologies.
People Aren't Better Off Than Income Trends Show (Demos)

Dean Baker:
The first point is a narrow one. These folks are upset that our price indexes don't have a way of picking up the benefits of new goods like television, refrigerators, and the polio vaccine. (Sorry, guess those are pretty old now. But the point is that important new goods are not new.) But good economists know that price indexes also don't pick up the cost of these new goods. To be specific, we can complain that the consumer price index doesn't pick up the gain from the wonders of a cell phone. That's true. But it also doesn't pick up the cost of buying the phone and paying for monthly service. (It picks up the change in these costs once they are included in the price basket, but not the initial cost.) With an important qualification that we will get to momentarily, we can assume the benefits are greater than the cost since people opt to buy cell phones, but that gap is much less than just counting the benefits alone, which it seems is how our elite economists view the issue. 
The second point is that we adjust our society and living patterns around the technology we have. Ask someone who lived in the suburbs in the 1960s how they would feel living without a car. It would be pretty awful, but just 30 years earlier most middle class families did not have a car or think they needed one. To take a slightly more recent example, imagine living without air conditioning in the summer. Most middle class families did fifty years ago. 
We have constructed a society that is built around cell phones and the Internet. Asking people to go without these items would be a real hardship because they have become integrated into their lives. Does this mean that we are better off in a society with these things than without? It probably does, but asking how our Internet/cell phone addict would do in a world without the Internet or cell phones is a silly question. 
There is one more point worth mentioning. Our elite economist friends presumably don't want to believe that well-being is relative. This could be important because there is a much sharper gap between the living standards of the rich and famous in 2015 than in 1980. Some people may take this into account in their assessment of their well-being. In other words they may feel deprived to some extent because their living standards are so much lower relative to the rich than was the case in 1980. We know the elite economists don't want people to think like this, but some of the ignorant masses might anyhow. Maybe if they just took more economics ...
Is the Middle Class Better Off? Economists' Poor Logic on New Goods (Beat the Press)

Martin Wolf:
These points are correct. But they are nothing new: all of this has repeatedly been true since the nineteenth century. Indeed, past innovations generated vastly greater unmeasured value than the relatively trivial innovations of today. Just consider the shift from a world without telephones to one with them, or from a world of oil lamps to one with electric light. Next to that, who cares about Facebook or the iPad? Indeed, who really cares about the Internet when one considers clean water and flushing toilets?
Rising wages and technological innovation did not used to be mutually exclusive. In fact, they used to be linked. Are economists actually contending that they are not anymore? Is this what they are having to resort to? And what does that mean for the economic system?

Thursday, June 18, 2015

Unemployment and the Environment

Richard Wolff had some interesting comments on his radio show recently. I've transcribed them and shifted them around slightly so that they flow better for clarity:

5-14-2015 [31:10]
I want to spend a little bit of time talking about two topics that you might not put together but really are very well linked. One is the problem of unemployment, a perennial difficulty of capitalist economic systems, and ecology…So let’s start with unemployment and then I’ll show you its link to ecology. 
The way modern capitalist societies generally handle unemployment is the height of unfairness and irrationality. Let me explain. In general, when [mass] unemployment…descends on a capitalist economy, which is every few years in what those folks who like capitalist economies tend to refer as recessions… Mass unemployment usually descends on millions of people, more or less, at the same time. For example in 2008 it descended across the world practically, and we were talking about hundreds of millions of people thrown out of work. 
Clearly in those situations it isn’t the fault of the unemployed. They didn’t suddenly lose their skills and they didn’t suddenly become less productive. Rather they were caught up in an economic system that had no use for them. Now the proper way to handle a social problem like that…would be to share the pain. Because it’s no particular group which you can blame for the unemployment, even though Lord knows there are folks who try. It is really a social phenomenon of a capitalist system… 
Why don’t we blame a particular group? Well, let’s see where we would go if we did that…Who causes unemployment? The logical answer to that is whoever tells another person that they won’t be paid anymore, and their services are not wanted. In other words, employers cause unemployment by firing people. That’s what happened in 2008. Tens of thousands of employers told tens of millions of workers not to come back to work because they weren’t wanted and they wouldn’t be paid. 
So if you’re looking for the group that caused unemployment, the first place for you to look would be the private employers, and then also the public employers who laid workers off – who fired them. 
But of course a sophisticated economic analysis would ask the question 'why would these employers suddenly fire these people?' Why did they cause unemployment? And I would be the first to show it's because either their profits are falling, or threatened, or in some way their economic viability as enterprises was in trouble, and they resolved that problem…by laying off workers because then they wouldn’t have to pay them, which wouldn’t make much sense unless they had trouble selling what they paid those workers to produce. 
So I understand it isn’t really the fault of those who fired those workers; it’s really a system problem. The employer was caught up in a system that made him do something that caused millions of people to lose their jobs. 
Well if it isn’t the fault of the employer who fired you and it is the fault of the system, than why is the burden of unemployment put only on some people rather than being shared? If the employers have to share the pain, in lowered profits, lowered business, poorer conditions they all face, than workers ought to be able to share the pain too. And that would mean reducing the work week for all workers for as long as the economic downturn lasts. 
So the proper way to handle this crisis would be for everybody to share the pain, we’ll get through this together, teamwork and all that. How would that happen? Simple. You don’t take one part of the population and plunge them into the disaster of having no work and no income. For example at the height of the 2008 and 2009 crisis here in the United States, we had in excess ten percent of our people unemployed….Sharing would mean that instead of saying to ten percent of the people, ‘your life is now a disaster, you have no job, you have no income, and all the problems that go with it,’ and saying to the other ninety percent of the people, ‘it’s not your problem.’ We could instead say, 'everybody works ten percent less than they did before.' That means we share the unemployment. Instead of firing some people, we reduce the work week for everybody, then everybody would share. 
Why isn’t this done, this fairer, more equitable, more democratic, way of handing the unemployment flaw of capitalism as it recurrently revisits this disaster upon us?
The answer is here, I think, a political one. If all workers were periodically told …you’re going on 90 percent time rather than 100 percent time; we’re only going to pay you 9/10ths of your salary because you’re only going to be working 9/10ths the hours because everybody’s sharing the 10 percent unemployment, guess what would happen. 
ALL of the workers, being affected by unemployment, would all become much more interested and much more critical of an economic system that dumps this unemployment problem on them periodically and recurrently. That would be dangerous for capitalism.
It’s much easier to sustain a capitalist system if you keep singling out a small section of the population and really dump unemployment on them and exempt others from it. It’s a kind of scapegoat economics. Even better if you can make it the same people who get dumped into unemployment first. You know, the last ones hired and the first ones fired – those folks. And if they’re different from others – ethnically, skin color, gender, doesn’t really matter, then you can begin to suggest to the ninety percent who have no unemployment that it isn’t really about a system that can’t provide work, it’s a flaw in those people. And then you have unemployment rationalized by something well on its way to racism.
It makes sense if you think about – why give a small segment of the population zero hours where they earn nothing at all, while the majority of the population gets to pretend like nothing has happened? It’s structuring the jobs market like a game of musical chairs, as I’ve often pointed out. But I hadn’t considered the political angle. In this way, the people who lose their jobs are singled out and blamed for the economic situation they did nothing to cause. The people who didn’t get laid off can blame the unemployed for their own plight.

In  fact we all know it’s worse than that – when layoffs occur ,the people who still have their jobs are forced to work extra-hard to compensate for the loss of people – “I’m now working two jobs – me and they guy who got laid off,” is the popular refrain. And usually it’s not that companies are threatened or not profitable, they just aren’t profitable enough for Wall Street—they “missed their target” in the jargon, so they lay off people for a slight uptick in profits to satisfy the shareholder class while plunging many people into destitution. And the decimation tactics work just like they did in ancient Rome – they terrify the rest of the unit into behaving properly.

It’s an amazing form of social control.

It reminds me of the TV show Survivor – which is great training for capitalist ethics. Rather than cooperate, people are voted off the island one by one. This forces the people into a situation where they are forced into constantly manipulating, schmoozing, back-biting, gossiping, etc., basically playing office politics, to single out who stays and who goes, until no one is left. It’s basically a personality contest, just like corporate America. And survival is not really in question – nobody’s going to die here because of a lack of food or medical care. Instead, contestants are forced to play ridiculous and arbitrary games that serve no useful purpose to anyone (running through obstacle courses, etc.) to earn their keep. It’s the tropical Eden constructed along capitalist lines – which is to say a nightmare.

Singling out people to dump unemployment on is something I’m sure American readers are familiar with.

We dumped the effects of technological unemployment in this country almost exclusively onto the African-American community, allowing the white community (and economists) to pretend that nothing happened, and deindustrialization worked out OK. The black community bore the brunt of the first wave of technological unemployment due to deindustrialization. This is ironic, since as Jeremy Rifkin pointed out in The End of Work, the African-American community migrated to northern industrial cities because they lost their sharecropping livelihoods due to the invention of the mechanical cotton-picker (not to be confused with the cotton gin). The effects of technological unemployment on the black community were ignored and instead focused entirely on the personal behavior of “those people”, who were just determined by evolution to have children out of wedlock, drop out of school, shoot each other, and get addicted to drugs.

What’s interesting is how you’re seeing the exact same arguments applied to white people now!  Coincidence, or part of the plan? Thus today’s working-class whites are just assumed to be less “moral” than their parents by the pundit class, despite lowered crime rates and higher secondary school attendance than in 1970. Great American cities became collapsed no-go zones filled with gang violence, hopelessness, hunger and poverty, and we just pretended it didn’t happen because the “official” unemployment rate was low and, hey, New York looks great, doesn’t it? If you want to pretend deindustrialization worked out okay, you have to just forget the fact that major American cities like Detroit, Baltimore, Cleveland and Chicago were transformed from prosperous, industrious cities to post-collapse hellholes, quite a feat. But, of course, for economists whatever does not show up in “official statistics” does not, in fact, exist.

A popular book about this phenomenon was called “When Work Disappears” by William Julius Wilson. But why did it disappear? According to economists, it didn’t disappear! Than why do those cities look the way they do? The decimation of the Industrial Midwest was enabled by racism.
Let’s go back to this idea of sharing unemployment. Because now I can draw the bridge between an analysis of unemployment on the one hand, and the ecology or environmental considerations on the other. 
Let’s suppose we had a rational society that decided not only what it wanted to have produced, goods and services, housing, food, clothing, transportation, entertainment, whatever, but also took ecological and environmental considerations seriously. Then it might be decided, democratically, one hopes, to put to the mass of people the question. Can we find ways to be more respectful, to be better able to preserve that natural environment we depend on than we have been, and what are the implications for work? And such a deliberation could decide, yes, we can get by very well with much less stuff. And that will preserve our energy resources, that will preserve the health and well-being of our natural environment. And it has another benefit. If we produce less, and use up less of our earth, we will also therefore have to work less. And this would become appealing to the American people if they knew that the benefit of ecological consciousness would include sharing more leisure. Let me explain very concretely. 
In the United States…we move people around by means of automobiles to an extraordinary extent. And private automobiles are notorious for the deaths and injuries they cause in traffic accidents, for the enormous waste of energy that is involved in moving one person I one vehicle, as opposed to 20 30 or 40 people in a bus or a train et cetera. The pollution caused by a private automobile far exceeds what public transportation would provide. Were we to decide to save on the energy waste, and the pollution, and the death and injury that the private automobile more of transportation entails, and if we were to move instead to beautiful, well-prepared, high-quality frequent public transportation in all the urban and suburban areas where most people in most advanced countries now live, we would be able to give everybody several hours a week less work. We wouldn’t be making those care anymore because we wouldn’t need them. We would be making-and it takes many fewer hours, we would be making trains, buses and vans instead. If that cut in the production of automobiles was accomplished by sharing the benefit that we don’t need to spend umpteen million hours producing the cars e no longer rely on, if that were shared, then the mass of people would be able by the same decision to save on the waste of energy involved in the car. To save on the death and injury involved in a car-based transportation system, to save on the pollution of air and water that wasteful car production has always meant, and at the same time, give themselves fewer hours of labor which would be shared across ALL industries and not just the automobile [industry]. 
Therefore, everybody would continue to work, they’d have less hours, and because of the savings in money from going from a private to a public transportation system, even the fact that the fewer hours you worked meant you got a little bit less pay, it wouldn’t impact your standard of living because, if you think about it, you would be saving a fortune moving to high quality, mass produced, mass transportation from the enormous expenses of your private car, with its private insurance, and its private excessive fueling, etc. etc. Our dependence upon oil, all of it could be changed. 
I don’t want to get lost in the specifics; I want the big point to be made. In a rational society, here’s how the economic system would be planned. Figure out how much stuff we as a society want. Take into account our needs our wants our pleasures. Take account of the economic and the ecological environment they’re in. figure out how many hours of work it would take to produce the goods and services it would take to reflect our respect for our individual needs and wants and our collective dependence on nature, and then divide the work equally among all the able-bodied adults so we all participate in doing the work that we altogether decided we as a community want. That’s a better way; it’s a more rational way. What it doesn’t allow for is a tiny group of people to make decisions based on their own profits even if they flaunt the needs and desires of a democratic society… 
Sharing unemployment is not only something we should do as we cope with the irrational instability of capitalism. Its’ also a way we can understand how we will win the majority of our fellow citizens to a program to make ecological preservation a central part of our political future, because we can go to the people and say, 'environmental protection is not a threat to your job. Not protecting is a threat.' Going in that direction, finding a way to produce less and to use up less of our natural resources is also a way to increase leisure as we share, for the first time, really, the benefits of a more rational economic system.
The problem with Wolff’s second point is that capitalists will be quick to point out that this democratic decisionmaking of what to produce is actually accomplished via the Market. The Market decides what to produce by the signals it sends, because nobody is able to know and anticipate what everyone’s needs will be. Centralized planning of what to produce leads shortages like in Russia. And since the Market is a distributed, bottom-up system, it aggregates peoples’ needs, wants and preferences through coordination measures like prices and profits without anyone having to exert central control, which inevitably leads to tyranny in any case. The Market is democratic, far more democratic than any government, they argue. Companies can only produce what people want.

I wish Wolff had addressed this because it’s such an easy criticism, and I would say the common-sense belief. While debunking it would take a book practically, I’ll just point out a few things. If corporations just produce what people want, how come they spend billions on advertising to tell people what they want? In the real world, corporations decide which products will maximize their profits, and then spend millions convincing us that we need them. And we always must purchase more than the year before, despite all the existing products already out there.

Secondly, if corporations produce only what the market signals, then how do we get the boom and bust cycles of overproduction and scarcity? These actually used to be worse when there was less central control. Since producers don’t know what other producers are doing, to maximize profits they overproduce, since there is no central coordination. Thus you get slumps. You also get gluts where goods pile up on shelves without the income to buy them. Free-market anarchy has its downsides too, we just pretend they don’t exist due to propaganda.

Wolff’s last point – greater oversight of what to produce and sharing work is actually greener, is one I’ve tried to make often. If were able to spend money for the public purpose without being hamstrung by debt, we could construct a more resilient economy.

Which is to say, government policy affects the how the decline plays out. This is why it’s sad that some people just believe that we should disengage completely, cry "we’re doomed," and do nothing whatsoever to influence government policy, and just watch the collapse play out.

Related: http://hipcrime.blogspot.com/2015/01/against-basic-income.html

Tuesday, June 16, 2015

Economics is a Fraud Redux

As the United States deindustrialized in the late 1970’s through the 1980’s and one factory after another shuttered its doors, the economics profession cheered on this development. They took to the pages of op-ed columns and appeared on TV stations and assured us that we would now be living in something called the “service economy” where manufacturing jobs would be replaced by retail jobs selling the products now made in Asia, along with other various assorted “services.” This was an unstoppable and perfectly natural development, they told us, and nothing to worry about.

Today, in the 2000’s whenever workers in these service industries point out that they cannot earn enough to live on and agitate for higher wages, we are told that these service workers are not worth anything more. We are told by these same economists that this is their “marginal product” and they do not deserve to paid any more than they are. That this is what the "natural" wages of retail workers should be, and to pay them more would cause unemployment. Somehow, they neglected to mention that when they cheered on deindustrialization thirty years prior. If a service economy leads to a poorer population overall, then why was deindustrialization so good for us back in the 1980's? Economists are silent.

Similarly, we are constantly told by economists that “the economy is not a zero sum game.” That it’s about cooperation for mutual benefit. That there are no winners and losers when it comes to capitalist economics - everybody wins.

Yet at the same time, we are told that we must remain “competitive” with other countries, usually by means of low taxes on wealth. Whenever reports crop up about the United States abysmal education standards, we are told that we must “compete” with the citizens of Asia and Europe, and that we need to educate people better to remain competitive. That if we do not shape up, the citizens of Asia will “eat our lunch” (exact words). We also know that were always in head-to-head competition with other workers whenever we apply for a job.

How on earth does this square with the economy not being a zero-sum game?

We’re told not to worry about jobs or automation, because the economy’s ability to create jobs is essentially unlimited, and to claim otherwise is to subscribe to something they call The Lump of Labor Fallacy, or Luddism.

Yet what are the justifications for hydraulic fracturing or the Alberta Tar Sands pipeline? That we must “create jobs.” Whenever we are told about these projects, it is always coupled with how many jobs it will create. We are told we cannot tax wealth, because it will preclude the wealthy from “creating jobs.” So are jobs scare or plentiful? According to economists, it seems to vary depending on the day of the week.

So we’re worried about jobs when it involves some way for the rich to make a profit by exploiting the environment. Then jobs become scarce. But when you talk about automating the jobs of the middle class away, then suddenly the economy is a cornucopia of unlimited jobs.

If we do not exploit the tar sands or frack, or various other toxic environmental activities, won’t those jobs just be created somewhere else? After all, that’s their argument against worrying about technological unemployment. Why does this apply to one thing but not the other? All a right-wing politician has to say is that a regulation will “cost jobs” and people will turn against it. How does that square with the fact that economists tell us that the number of jobs is always unlimited?

We are told that “redistribution” via taxing the rich is immoral and punishing success. Yet the society as a whole is taxed and those taxes go to subsidize the business enterprises of the elite few, as was just revealed by the recent report that Elon Musk’s business ventures have received billions of dollars of taxpayer money in subsidies over the years. Why is that tax money funneled into the hands of a few wealthy businessmen? Why doesn’t the government just do such things itself without the middlemen, as it used to via things like NASA? Instead we funnel our taxpayer money to billionaires to do the exact same thing in the “private sector.” How is this more efficient? Isn’t this also redistribution from society to the elite few?

So taxing wealth and distributing it to those below is stealing and immoral. But taxing those below and giving it to the wealthy few is wealth creation. Got it.

Similar with incentives. Neoliberal economists love to say, "we just need to get the incentives right," and everything will fall into place via the magic invisible hand of the free market. The entire Freakonomics empire was built on this idea. But isn't the core incentive at the heart of capitalism to reduce wages and cause unemployment? Don't employers have a natural, built-in incentive to pay their workers as little as possible (since it increases profits) and to employ as few of them as possible with as little benefits as possible? Doesn't this indicate that the major "incentive" of capitalism is to immiserate the majority of people, since most people work for a living? Why not? Why are capitalists free from this incentive?

Aren’t we being played by economists? Doesn’t the above prove that they will say and do literally anything as long as it justifies what those in power want? That they will change their philosophy on a dime as long as it justifies whatever is going on? Whatever outrage the rich perpetrate on the rest of us, rest assured that economists will rationalize it with scientific jargon and abstruse mathematical equations to give them the outcome that they want.

See this story from NPR: Experts Debate: Will Computers Edge People Out Of Entire Careers? Do listen to the whole thing, it's quite short. The reporter wishes to know whether computers will hurt workers' employment prospects. So he interviews an economist who says yes. Then he goes to another economist on the very same campus who tells him the exact opposite!

So they can't even agree on this important issue? They can't get their story straight on this fundamental aspect of the economy that will affect millions and yet they call themselves a "science??" What a joke! And these people are advising the president. We're doomed!

Russ Roberts, the smarmy host of the Econtalk--part of the Koch brothers takeover of economics, has straight up admitted that his economic ideas flow from his desire to shrink the state. He's also accused his opponents of the opposite - a simplistic desire for bigger government in the tu quoque fallacy-you naturally assume that your opponents have the same motives as you (Krugman denies this claim).

When people like me deride economists and claim that economics is a political project designed to justify the status quo and particular world views while masquerading as a science, this is exactly what we mean. What they tell us directly contradicts itself. It is not a science, it is public relations. It is a pseudoscience.

Economics is a fraud. It is propaganda, pure and simple. The track record proves it.

Sunday, June 14, 2015

Saturday, June 13, 2015

Tomorrowland/Mad Max Chaser

Here are a few loose ends from the Tomorrowland/Mad Max review.

Straight out of Tomorrowland, here’s a bright, young, go-getter who seems like he just got a Tomorrowland badge dropped in his dorm room. The first paragraph caught my attention, so I decided to read further: It's up to us to create a better future for the planet (The Guardian)
As architecture design students we are taught to constantly question and reimagine the way things are. We’re taught that the world we live in is not a given. It’s the result of the best efforts our ancestors could muster at that time. If it has flaws, it is up to our generation to pick up where they left off and create the world we want to see for ourselves and our children. 
I’ve grown to understand that the society and culture I was born into is damaging the planet we live on at a greater scale than ever before. We put profit above people, economy above environment, progress above purpose. As a result, climate change has become the most important issue of our generation. 
But it’s such a meaty, complex problem that we’re not sure how to approach it. It doesn’t seem to pose an immediate threat to our everyday lives, and most of us assume that there are surely some very clever scientists somewhere who will solve the problem for us. 
I became curious. If climate change is as big a threat as I’m being told, then my work as a designer and an architect should focus on helping address the issue. I wanted to really understand, in layman terms, what it is that’s causing our climate to warm. Why is a warmer climate dangerous? And how can I make a positive difference?
Wow, he must have seen the movie! After listing all the dire effects of climate change and environmental destruction (namedropping Al Gore), he concludes:
So that’s the reality. Now what? My first reaction was to put my head in the sand. However I refuse to accept the dismal future that lies ahead. As a result of our changing climate, we have a really unique opportunity to build a better future. As humans we’re innovative and adaptive. We’re able to recognise and rectify our mistakes. 
Today, as the most connected generation in history, we have the unique ability to create a future that embraces renewable technology; that democratises the way we produce and consume energy; that encourages sharing and responsible consumerism; and that provides jobs in new sectors focused on sustainable progress.
His solutions:

1.) We ended slavery, man, which is the mic-drop of progress: “Only 200 years ago people argued that slavery was morally acceptable because it provided good, cheap energy that would help boost our global economy.Our forefathers recognised that inequity and changed that. Throughout history we’ve changed legislation, opinion and archaic systems to create a better world to live in.”

I’m not convinced that we just suddenly got more moral. In an industrial economy, wage slavery is a lot more effective than chattel slavery anyway, for a number of reasons. You don’t have to feed and clothe wage slaves, you just hand them a paycheck and tell them fend for themselves in the “free” market. There’s more flexibility: you can hire and fire people as need be. Capitalists realized they did not need the whip and the lash to motivate workers to work; the whip and the lash of poverty and destitution would work just as effectively without all the unpleasantness and associated costs. Plus you could claim the moral high ground because workers are coming in “voluntarily” day after day because “they choose to trade leisure for consumption,” or some such nonsense in the neoclassical economic formulation. In their concept of the economy, everybody is “free” – the capitalists are free to exploit workers to the hilt and the workers are free to take whatever the capitalists are offering or starve and live on the street. “They can always go someplace else or start their own corporation!” cry the capitalists whenever you bring this up.

In addition, those paychecks create customers for the products that capitalists produce, which is the only way capitalism functions(ed). The economy of the old South, for example, did not need an internal consumer class because it was mainly producing export commodities (cotton and tobacco). As the United States expanded, it needed to choose which model it would follow, and was obvious that industrialism would win out, which meant that slavery had to go. Plus, of course, we got energy slaves in place of human ones. Besides, slavery never really went away, there are more slaves today than ever before in history in absolute numbers. And a lot of workers who are technically not slaves (migrant agricultural workers in the U.S., brick makers in India, sweatshop workers in Indonesia, child laborers in Africa, Thai fisherman on shrimp boats, construction workers in Qatar, etc.) work in conditions as bad or worse than slavery even though they are not “officially” slaves.

2.) Divesting fossil fuels: “Large corporations and universities can start by divesting their investments from the fossil fuel industry.” This has always struck me as a useless feel-good solution. So Harvard divests from fossil fuels and then, what, the companies shut down, or something? Don’t they just raise capital from someplace else? Isn’t this just another form of free-market fundamentalism solving all our problems (rather than being the cause of them?) But, hey, the upper-class kids of Harvard feel like they are doing something to make a difference before they take up their jobs as corporate bankers, lawyers and lobbyists.

3.) Elon Musk is awesome! He’s, like, making electric cars and stuff! Solar panels!! Wind farms!!! “We’ve already seen Elon Musk build a billion-dollar electric car business he claims will be worth as much as Apple in a decade.” So Elon Musk is peddling the idea that if we just switch all our cars to electric we can just continue the status quo of the suburban SUV lifestyle.

4.) There’s another international conference that will fix stuff: “As for our world leaders, in December they will come together in Paris to discuss the future of our planet at the United Nations Climate Change Conference.” Because international conferences run by global elites have such a great track record.[eyeroll]. They’re not even discussing the environment at Bilderberg this year (but are discussing artificial intelligence)

5.) Dude, we’ve got the Internet! “If you’re reading this article, then you have access to the internet. You have the unique ability to voice your opinion.”  In other words, ‘To save everything, click here!’ I’ve heard this trope so often, it’s hard to even read it anymore. World leader/corporate CEO: "I've totally changed my views thanks to this online petition."

So as not to accused of stomping on youthful idealism, what’s my solution? Well, it starts by recognizing a toxic economic system based on growth for starters. If I were asked to write this I would mention overproduction, planned obsolescence, a financialized, debt-based economy that yokes us to eternal growth, an economic priesthood that clutches its peals and reaches for smelling salts at the very idea of population decline or growth rates less than 3 percent a year; bond market “discipline” which keeps governments from helping their own people; the incentives of capitalism which are to immiserate people who draw a paycheck; our agricultural system based on overproduction of monocrops via fossil fuels while condemning animals to incomprehensibly cruel concentration camps. Heck I could go on all day. But you’re never supposed to think of the system as being part of the problem. Just screw in some LED lights, buy a Tesla, and sign an online petition. Sigh. Maybe if this guy showed some awareness of the problems inherent in the system a la Naomi Klein  beyond the typical fell-good bromides (electric cars, solar panels, online petitions) I would be less judgmental. But his whole article is redolent of Tomorrowland’s simplistic attitude.

As for architects changing the world, we do what people pay us to do –all the ideas in the world don’t work without money. If we were paid to give shelter to everyone, we’d do it. Instead we’re paid to build palatial school buildings, ten-story gold-plated hospital buildings, titanic shopping malls in China and Pikettyscrapers for the one percent.  Architecture in the West is being kept on life support by the eds and meds economy – this is where our paychecks come from. Art museums are pretty much status-symbols put up by wealthy patrons in the manner of Renaissance barons like the Medici, and stadiums are the most egregious form of corporate welfare imaginable. Architects aren’t changing anything; ideas about “changing the world” wither and die on the vine without corporate support. This is what happens when you get out of school. You also realize the rich and well-connected monopolize all the design opportunities while you are just another cog in the wheel poring over Excel spreadhseets and shop drawings. But maybe I'm just bitter, lol.

As for where all the bright young people go, it’s not for lack of idealism that problems are festering. I recently listened to a live podcast with Duncan Trussell and Abby Martin recorded in the Northern Virginia/Washington DC area. That area is truly the belly of the beast – an alternate reality where government Mandarins and toadies, lobbyists, financiers, generals, contractors, profiteers, media personalities, and other assorted sociopaths and grifters attend cocktail parties in an alternative-universe bubble that makes Panem in The Hunger Games look like a model of democracy. This comment later in the podcast made me think
[1:052] [audience member] “Abby, I think you said something really important earlier, and that’s that, a lot of the violence that goes on in the world is not motivated by maliciousness. And I wanted to offer a little bit of insight into that. I went through seven years of really rough graduate school. And at the end of it I knew a lot of physicists and mathematicians--PhD.s, and I had an option of ‘where was I going to go to work?’ And I could continue in academia and make something approaching assistant manager in retail. Or, and I know lots of people who chose this path, make three times that amount and go work for Ratheon, go work for Lockheed-Martin, go work for the NSA, go work for NGIC. And these are sweet people. And they just looked at, ‘well, how much am I going to make?’ And they’re not making--a lot of them aren’t making weapons, they’re not doing something directly applicable to killing people…” 
[Abby Martin] “Yeah, the compartmentalized and, yeah…” 
[audience member] “Right. But they’re working for companies that benefit from people dying. And they make more money when people die. And they’re supporting an industry that makes money from death. And these are some of the smartest people in the country and this is the choice they’re faced with. And that’s, like--'what are you going to do?' It’s a brain drain because of economic incentive unless…you know, Google’s sort of like a godsend; they’re offering lots of money for smart people to do things that aren’t violent. But outside of that, where are people going to work, because there’s not enough room in academia. And I don’t know what the options are.” 
[Duncan Trussell] “What did you do? What was your decision?” 
[audience member] “I’m working for a salary that’s approaching assistant manager at retail. And I will sweep floors or sort shit before I work towards something that contributes to violence. [applause]. But that’s what we’re faced with. You know, I want people to realize that all the violence that goes on, the people behind it aren’t necessarily being malicious. They’re making a choice that not necessarily related to what actually happens. And so, this consciousness raising, like you talked about, is what has to happen to see past that strictly economic decision.”
These are some of the smartest people in the country. And this is the decision they are faced with. No wonder we aren’t getting anywhere.

Tomorrowland contends that there aren’t enough smart people, or we’re too gloomy to solve problems. But this comment gives an insight into what’s really going wrong beyond the simplistic Disney formula. Instead of designing jetpacks, Tomorrowland is conducting cyber warfare, building killer robots, creating "designer babies" and stopping the one percent from aging. Meanwhile, the rest of us are having the water shut off.

Meanwhile, Mad Max 4Real:  More than two-thirds of the Humvees the US supplied to Iraq to fight terrorists have ended up in the hands of Islamic State militants.

ISIS is turning US Humvees into Iraq's worst nightmare (Business Insider)

I’m sure they make great tricked out vehicles, if a bit slow. Maybe they will stick those giant areal poles on the back. I don’ think these guys would go with a doof warrior, though.

Syrian Civil War - Homemade Tanks and Armored Cars (YouTube)

As for where the money went: Yahoo Money’ The Daily Ticker  is reporting that is has discovered a Reuters investigation that reveals$8.5 trillion – that’s trillion with a “T” – in taxpayer money doled out by Congress to the Pentagon since 1996 that has never been accounted for. Report Reveals $8.5 Trillion Missing From Pentagon Budget (Disinfo) Probably enough for a space colony right there.