The power to become habituated to his surroundings is a marked characteristic of mankind. Very few of us realize with conviction the intensely unusual, unstable, complicated, unreliable, temporary nature of the economic organization by which Western Europe has lived for the last half century. We assume some of the most peculiar and temporary of our late advantages as natural, permanent, and to be depended on, and we lay our plans accordingly. On this sandy and false foundation we scheme for social improvement and dress our political platforms, pursue our animosities and particular ambitions ... [John Maynard Keynes, The Economic Consequences of the Peace], 1920Keynes was a genius. Read the article and see what kind of shape we're in and what kind of thinking it's going to take to get us out. GCS students, you'll be reading some of this.
A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument casts as villain the Community Reinvestment Act, which prevents banks from "redlining" minority neighborhoods as not creditworthy. Another theory blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue.I've often found Slate to be a haven for those pseudo-centrist NPR types who are actually quite right-wing, so Jacob Weisberg's piece is a welcome change.
There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.
To which the rest of us can only respond, Haven't you people done enough harm already? We have narrowly avoided a global depression and are mercifully pointed toward merely the worst recession in a long while. This is thanks to a global economic meltdown made possible by libertarian ideas. I don't have much patience with the notion that trying to figure out how we got into this mess is somehow unacceptably vicious and pointless—Sarah Palin's view of global warming. As with any failure, inquest is central to improvement. And any competent forensic work has to put the libertarian theory of self-regulating financial markets at the scene of the crime.
[...]
There's enough blame to go around, but this wasn't just a collective failure. Three officials, more than any others, have been responsible for preventing effective regulatory action over a period of years: Alan Greenspan, the oracular former Fed chairman; Phil Gramm, the heartless former chairman of the Senate banking committee; and Christopher Cox, the unapologetic chairman of the Securities and Exchange Commission. Blame Greenspan for making the case that the exploding trade in derivatives was a benign way of hedging against risk. Blame Gramm for making sure derivatives weren't covered by the Commodity Futures Modernization Act, a bill he shepherded through Congress in 2000. Blame Cox for championing Bush's policy of "voluntary" regulation of investment banks at the SEC. [There's more...]
"37 % de la récolte de riz a été perdue dans la plaine de l'Artibonite, la principale région productrice du pays", souligne Maurepas Jeudy, le directeur d'Oxfam Intermon en Haïti. "Les désastres climatiques se sont ajoutés à la crise alimentaire qui sévissait dans le pays. Depuis les années 1980, les gouvernements successifs ont appliqué des politiques néolibérales qui ont fait des dégâts considérables, dit-il. Avant 1986, la production rizicole couvrait 80 % des besoins. Aujourd'hui, plus de 80 % de la demande est importée. C'est la même chose pour le maïs, les haricots ou les oeufs." [Le Monde]
A novel contribution of this paper is that it appears to provide a real-world example of the 'Big Push' theory. Never heard of the 'Big Push' theory? Well, here is how the authors describe it:According to the “big push” theory of economic development, publicly coordinated investment can break the underdevelopment trap by helping economies overcome deficiencies in private incentives that prevent firms from adopting modern production techniques and achieving scale economies. These scale economies, in turn, create demand spillovers, increase market size, and theoretically generate a self-sustaining growth path that allows the economy to move to a Pareto preferred Nash equilibrium where it is a mutual best response for economic actors to choose large-scale industrialization over agriculture and small-scale production. The big push literature, originated by Rosenstein-Rodan [1943, 1961], was initially motivated by the postwar reconstruction of Eastern Europe. The theory subsequently appeared to have had limited empirical application... [S]cholars have found few real-world examples of such an infusion of investment helping to “push” an economy to high-level industrialization equilibrium.Until this paper, that is. The authors continue:We argue here that the “Great Rebound” of the American South, which followed large public capital investments during the Great Depression and World War II, is one such application. Although 1930s New Deal programs are typically presented in the context of their attempt to bring relief and recovery to the U.S. economy through demand-stimulating public expenditures, the long-term economic effects of these and subsequent wartime expenditures were profound for the South. Specifically, and consistent with big push theoretical literature, the infusion of public capital—roads, schools, waterworks, power plants, dams, airfields, and hospitals, among other infrastructural improvements—fundamentally reshaped the Southern economy, expanded markets, generated significant external economies, increased rates of return to large scale manufacturing, and encouraged a subsequent investment stream. These improvements helped create the conditions that allowed the region to break free from its low-income, low-productivity trap and embark on its rapid postwar industrialization.This paper deals with the break from the South's poverty trap. The sustained nature of the South's postwar economic recovery has been covered by other studies: Connolly (2004) looks to improved human capital formation, Cobb (1982) points to industrial policy, Beasley, Persson, and Sturm (2005) finger increased political competition, and Glaeser and Tobio (2008) discuss the merits of the climate or Sunbelt effect. (I will also note I have seen somewhere the advent of air conditioning did wonders for development in the South).
Let's start with an email I received this morning from Kap Fulton:
"Who are Justin, Josh, Lance, Ryan, Dan, Grady, Chase, and Evan?
A. Roll call for a second grade class in at a suburban Ohio elementary school
B. The most popular boys names in Denver, CO
C. Characters from the new 90210
D. Bud Selig's attempt at diversity: one Canadian."
If you answered D, take a bow. Yes, Justin Morneau, (the Canadian), Josh Hamilton, Lance Berkman, Ryan Braun, Dan Uggla, Grady Sizemore, Chase Utley, and Evan Longoria were the contestants in this year's Home Run Derby on the eve of the 2008 All Star Game, and it was quite the Caucasian ovation (although, as I've learned since posting this column, Grady Sizemore's father is African American). Granted, the big time rainbow coalition of home run boppers like David Ortiz, Alex Rodriguez, and Ryan Howard declined to participate, but it was still bizarre and even a touch disturbing to see a home run derby that looked a lot like a contest out of 1946, before Jackie Robinson integrated the game. The vibe wasn't helped when one of the announcers celebrated Josh Hamilton's record setting derby barrage, by exclaiming, "This is a bad night to be an atheist!" (Please may God have better things to do than watch - and intervene in - the Home Run Derby.)
Yet an all-white derby complete with hallelujahs and hosannas might be appropriate for All-Star festivities drenched in nostalgia for its host site Yankee Stadium. The 85-year-old ballpark is of course known as "the house that Ruth built," a testimony to the dominance of Babe Ruth in the 1920s, when the game was segregated and Ruth never had to face great Negro League pitchers like Satchel Paige or Smokey Joe Williams. In the All-Star game itself, the only African American to suit up was Milton Bradley, a player excoriated four years back for saying, "White people never want to see race-with anything. But there's race involved in baseball. That's why there's less than 9 percent African-American representation in the game."
The numbers back up Bradley's frustration. In the 2008 Racial and Gender Report Card, Richard Lapchick, Nikki Bowey and Ray Mathew wrote,
"The game has the lowest percentage (8.2) of African-Americans in the two decades that we have published the Report Card. That number is less than half what it was in 1997 on the 50th anniversary of [Jackie] Robinson's debut with the Dodgers, when African-Americans made up 17 percent of the players, and less than the percentage of blacks in the general population of the U.S. (12.3 percent)."
Ironically this is occurring while baseball has gone global, with 29% of all Major Leaguers born in Latin America, with impact players from Asia making their mark as well. The number of white players has remained remarkably constant with the numbers at 58-60%. (86% of college baseball players are white.)
The debate about why the number of African American players has plummeted has been explored aplenty. The predominant argument is that baseball has an "image problem" in black America. It has no cultural cache and therefore young athletic black men gravitate toward basketball and football. I think this gets the argument completely backward, (although it can't help baseball's image in the black community that Barry Bonds can't find a team while all manner of proven juicers grace major league rosters). To make this an argument about whether or not baseball is "cool" is like saying there aren't any prominent African American harpsichord players because the harpsichord just isn't funky fresh. While it's true that if you poll an inner city classroom, and ask how many young people want to be baseball players you may get the same number that want to play the harpsichord. But is this a question of what is "cool" or is this about actual access, choices, and opportunity? Baseball requires equipment, investment, and infrastructure. But baseball owners have chosen to make this investment beyond the border where players can be developed signed and discarded on the cheap. This game of baseball that was so closely associated with the black freedom struggle in the days of Jackie Robinson has been removed physically from our cities, and is now as culturally alien in many areas as the steeplechase. I recently spoke with sports sociologist Dr. Harry Edwards and he put it very sharply.
"Forty percent of baseball is foreign born, they've gone global, globalization in sports follows globalization in corporations with the same outcome. There are off-shoring the jobs... Blacks are going to be displaced. The reality is that because of deterioration of education in the community, because of the violence in the community, we're disqualifying, jailing and burying our potential boxers, wide receivers, and baseball players. When you see that happening, then you understand that the Black athlete is really just a canary in the mineshaft because what they're really telling us is something happening in the African-American community. They're merely a canary in the mine shaft saying we have serious problems of survival."
If baseball is sincere about seeing the game return to the cities and if they don't want home run derbies whiter than the Republican National Convention, they are going to need to do more than offer meager urban academy programs. Major League Baseball might have to use its political clout to make sure our cities aren't hollowed out husks. They might have to forgo public stadium funding for a different set of priorities that pours money in instead of vacuuming it out.
Checks on markets? Gosh, I wish someone had thought about that before.Change is in the air for financial superclass, by David Rothkopf, Commentary, Financial Times: ...The re-engineering of international finance has been one of the transformational trends of our times – in just a quarter-century, capital flows became massive, instantaneous and controlled by a new breed of traders representing a handful of major financial institutions from a few countries. Their rewards have transcended any in history as shown by an estimate ... that the top hedge fund manager last year made $3bn.
The concentration of power has also steadily grown..., the key executives are in the US and Europe, underscoring the transatlantic nature of this elite. Change, however, is in the air. The history of elites is one of their rising up, over-reaching, being reined in and supplanted by a new elite. Several recent developments suggest that the financial crisis could signal the high-water mark of power for this group.
First, the crisis is prompting a re-regulatory drive. The power of financial elites had been evident in their ability to argue that global financial markets and markets in new securities should remain “self-regulating” (how many of them would hop into a self-regulating taxicab?), then when crisis comes ... these champions of less government involvement have then persuaded governments to cauterise their wounds.
Now, however, there are encouraging, if preliminary, signs of a push towards more effective collaboration between governments – the first steps towards creating the much needed checks on global markets... This could erode the agility of financial elites to play governments off against each other, with the weakest regulator setting the rules.
Globalization, in its natural, uncontrolled diversity, will be and should be an irregular process in which countries pragmatically adopt and appropriate a la carte things from elsewhere that work for them...
Millions of children are being raised on prejudice and disinformation. Educated in schools that teach a skewed ideology, they are exposed to a dogma that runs counter to core beliefs shared by many other Western countries. They study from textbooks filled with a doctrine of dissent, which they learn to recite as they prepare to attend many of the better universities in the world. Extracting these children from the jaws of bias could mean the difference between world prosperity and menacing global rifts. And doing so will not be easy. But not because these children are found in the madrasas of Pakistan or the state-controlled schools of Saudi Arabia. They are not. Rather, they live in two of the world’s great democracies—France and Germany.
Ok. So you get the idea. This article is full of less-than-nuanced insult. It should be noted that the author quotes not a single statistic in this piece. De does not demonstrate that globalization has been much more beneficial for places like Europe and the U.S. than for, say, Côte d'Ivoire. He does not mention that the minimum wage has stagnated in the U.S. and Europe. He does not mention the increasing disparity between CEOs and the average worker. He does not give us statistics about child labor. Really, this is not serious work, Stefan.
The deep anti-market bias that French and Germans continue to teach challenges the conventional wisdom that it’s just a matter of time, thanks to the pressures of globalization, before much of the world agrees upon a supposedly “Western” model of free-market capitalism. Politicians in democracies cannot long fight the preferences of the majority of their constituents. So this bias will likely continue to circumscribe both European elections and policy outcomes. A likely alternative scenario may be that the changes wrought by globalization will awaken deeply held resentment against capitalism and, in many countries from Europe to Latin America, provide a fertile ground for populists and demagogues, a trend that is already manifesting itself in the sudden rise of many leftist movements today.
Behind TV Analysts, Pentagon’s Hidden Hand, by David Barstow, Message machine, NY Times: In the summer of 2005, the Bush administration confronted a fresh wave of criticism over Guantánamo Bay. The detention center had just been branded “the gulag of our times” by Amnesty International, there were new allegations of abuse from United Nations human rights experts and calls were mounting for its closure.
The administration’s communications experts responded swiftly. Early one Friday morning, they put a group of retired military officers on one of the jets normally used by Vice President Dick Cheney and flew them to Cuba for a carefully orchestrated tour of Guantánamo.
To the public, these men are members of a familiar fraternity, presented tens of thousands of times on television and radio as “military analysts” whose long service has equipped them to give authoritative and unfettered judgments about the most pressing issues of the post-Sept. 11 world.
Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance, an examination by The New York Times has found.
The effort, which began with the buildup to the Iraq war and continues to this day, has sought to exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air.
Those business relationships are hardly ever disclosed to the viewers, and sometimes not even to the networks themselves. But collectively, the men on the plane and several dozen other military analysts represent more than 150 military contractors either as lobbyists, senior executives, board members or consultants. The companies include defense heavyweights, but also scores of smaller companies, all part of a vast assemblage of contractors scrambling for hundreds of billions in military business generated by the administration’s war on terror. It is a furious competition, one in which inside information and easy access to senior officials are highly prized.
Records and interviews show how the Bush administration has used its control over access and information in an effort to transform the analysts into a kind of media Trojan horse — an instrument intended to shape terrorism coverage from inside the major TV and radio networks.
Analysts have been wooed in hundreds of private briefings with senior military leaders, including officials with significant influence over contracting and budget matters, records show. They have been taken on tours of Iraq and given access to classified intelligence. They have been briefed by officials from the White House, State Department and Justice Department, including Mr. Cheney, Alberto R. Gonzales and Stephen J. Hadley.
In turn, members of this group have echoed administration talking points, sometimes even when they suspected the information was false or inflated. Some analysts acknowledge they suppressed doubts because they feared jeopardizing their access.
A few expressed regret for participating in what they regarded as an effort to dupe the American public with propaganda dressed as independent military analysis. ... [...continue reading...]
[...]These new programs are very different from the ones that had been in place prior to the crisis.... By changing the level of the monetary base (really commercial bank reserve deposits at the central bank) Fed officials keep the market-determined federal funds rate near their target.... Given the quantity of assets it owns, the Fed can decide whether it wants to hold Treasury securities, foreign exchange reserves, or a variety of other things.... By the end of March 2008, the Fed had committed more than half of their nearly $1 trillion balance sheet to these new programs:
- $100 billion to the Term Auction Facility,
- $100 billion to 28-day repo of mortgage-backed securities,
- $200 billion to the Term Securities Lending Facility,
- $36 billion to foreign exchange swaps,
- $29 billion to a loan to support the sale of Bear Stearns,
- $30 billion so far to the Primary Dealer Credit Facility.
Changes in the composition of central bank assets are intended to influence the relative price a financial assets -- that is, interest rate spreads. So, by changing its lending procedures, Fed officials hoped that they would be able to reduce the cost of 3-month interbank loans and the spread between U.S. agency securities and the equivalent maturity Treasury rate. At this writing, these programs have met with only modest success.
[...]
Now, here are a few budget numbers from 2007 courtesy of Wikipedia:
I don't want to argue the specifics of these numbers (military spending is actually higher than stated here). I'm also not saying that our government should refrain from action, though I think the Bear Stearns bailout was misguided and that homeowners, not hedge funds, should be getting the billions.
My point is that we are going through a national emergency simply by definition of the proportion of our government's emergency spending on a single problem.
But Pennsylvanians are bitter.
In theory, the United States is all for free trade and is the leading advocate of the system. But, faced with a recession and a colossal trade deficit, it is reconsidering, as everyone knew it would. The US military contract for 79 refuelling tankers, co-produced by European Aeronautic Defence and Space (EADS) at a cost of $35bn, is no exception. US national interests are well protected. This “European” aircraft will be equipped with General Electric engines, produced in partnership with the US company Northrop Grumman and assembled in Alabama. More than half the added value will be generated in the US. Much of the equipment on offer from the main competitor, Boeing – less readily available, with a more limited refuelling capability and range – would not have been produced in the US.
Editorials in newspapers and the business press assure us that it is wrong to take strong measures to protect national companies and their employees. But history shows that most developed countries owe their prominent positions to trade barriers. Britain, France, Korea, Japan and Prussia did not acquire their industrial power by obeying David Ricardo’s law of comparative advantage. And in the 19th and early 20th centuries, when the US had the highest growth rate in the world, its customs tariffs were around 50% (44% in 1913). President Ronald Reagan inveighed against protectionism but set limits on imports of cars, steel, sugar and textiles. His administration increased duties on cars with big engines (by a factor of 11) and on motorcycles, to rescue Harley-Davidson. And it pressured Japan to revalue its currency, just as President George Bush is asking China to do now (1).
The monetary policy pursued by the Federal Reserve with the tacit approval of the White House, although not openly protectionist, has obvious implications for trade. A weak dollar is good for exports and will reduce the impact of the current recession in the US. The European Union is almost alone in calmly allowing central bank policy on interest rates – high interest rates – to threaten major industries established with considerable injections of public money. Groups like EADS are relocating their activities to the dollar zone to escape the dire effects of revaluing the euro (2).
The deal with the Pentagon also has political and strategic implications. What price did Europe have to pay for the honour of refuelling US aircraft with equipment co-produced in the US because the Federal Reserve keeps interest rates down? When it was announced that the contract had been awarded to EADS, Democratic congressman John Murtha complained that the Europeans were not pulling their weight in Afghanistan. By coincidence, President Nicolas Sarkozy is about to send 1,000 more French troops there. Celebrating his new diplomatic entente with Washington, Sarkozy said: “It would have been unthinkable for EADS to win the contract for refuelling tankers in the previous climate of tension between France and the US” (3). Enough said. The Pentagon decision is a superlative lesson in free trade.
PIA: Furniture manufacturing, mattress manufacturing.
Vocational: Dry cleaning, electrical, graphic arts and printing, landscaping, machine shop, plumbing, sheet metal.
Academic: Adult Basic Education, High School/GED, Pre-Release, English as a Second Language, Literacy Program.
Other: Community Service Crews, Youth Diversion, Religious, Arts in Corrections, Victim Awareness, Drug Treatment/Diversion, Joint Venture, Computers for Schools, Eyeglass recycling, Bicycle repair.
San Quentin has some 5000 "students," each on an individually costumized track, and with some 2000 staff and adminstrators, you know that you will not be neglected.
I also see that Arnold is bringing out a new license plate with the DMV: "California: The Prison and Education State."
Seriously, what the hell is wrong with this state? (Answer: Republicans, Lobbyists, Media, Democrats--in that order.)
The only worse solution to government control of the border is privatizing the immigration process. Now this is already starting to happen in the policing of the border, but today's topic is not police state methods or the prison-industrial complex supported by the taxpayer. Rather, let's take a brief look at a proposal that came up in the WSJ yesterday:
The article has some interesting points, and does indeed point to the shortcomings (human and economic) of current immigration. Of course, the author, seemingly compassionate about the fate of workers, is actually taking an overall neoliberal perspective in which access to labor resources becomes even more of a commodity than it currently is. Flows of human capital could be increased or decreased through a bureaucratic decision rather than passing through the messy political world. Adjusting the immigration algorithms to fit their needs, meat-packing, farming, and construction companies could increase immigration more or less at will in order to undercut current labor prices. While increased legality would bring some benefits to the immigrant worker, he or she would still maintain a second class status and lend further power to the corporations to be "flexible" (to hire and fire at will).Free Markets Need Free People, by Gordon H. Hanson, Commentary, WSJ: If there is one point of consensus in the fraught politics of immigration, it is that illegal immigration is bad. Yesterday, President Bush voiced his support for tough enforcement at the U.S.-Mexico border and called on Congress to resolve the status of the 12 million illegal immigrants now in the country. Last week, Rep. Tom Tancredo (R., Colo.) entered the presidential race, promising to make resentment of illegal immigrants a major campaign issue. And yet, from a purely economic perspective, illegal immigration is arguably preferable to legal immigration. Because Congress and the president refuse to see this, further reform this year could make a bad situation worse.
Illegal immigration is persistent because it has a strong economic rationale. Low-skilled workers are increasingly scarce in the U.S. while they are still abundant in Mexico, Central America and elsewhere. ...[I]mpeding illegal immigration, without creating other avenues for legal entry, would conflict with market forces that push labor from low-wage countries to the high-wage U.S. labor market. ...
Illegal immigration responds to economic signals in ways that legal immigration does not. Illegal migrants tend to arrive in larger numbers when the U.S. economy is booming and move to regions where job growth is strong. Legal immigration, in contrast, is subject to bureaucratic delays... The lengthy visa application process requires employers to plan their hiring far in advance. Once here, guest workers cannot easily move between jobs, limiting their benefit to the U.S. economy. ...
Congress should redesign temporary immigration from the ground up. Successful reform would have to mimic current beneficial aspects of illegal immigration. Employers would have to be able to hire the types of workers they desire, when they desire. One way to achieve this would be for the Department of Homeland Security to sanction the creation of global temp agencies...
Matching foreign workers to U.S. employers efficiently would require flexibility in the number of guest workers admitted -- and one way to make the number of visas sensitive to market signals would be to auction the right to hire a guest worker to U.S. employers. The auction price for visas that clears the market would reflect the supply of and demand for foreign guest workers. An increase in the auction price signals the need to expand the number of visas; a decline in the price indicates that the number of visas could be reduced. [...] (h/t Economist's View)
One question to be asked is how have temp agencies helped you, the worker? I went to the Bureau of Labor Statistics this morning and looked up the information on "employment services." Here is a graph of this industry's employment numbers since 1959:
Now, I haven't adjusted this for population or anything in making this graph, but to my eyes the chart is clear enough already. Beginning in the 70s with Nixon's liberalization of monetary policy, combined with decreased social spending, temp agencies have blossomed. Meanwhile, unionization dropped and income disparity has risen dramatically to levels unseen since the Gilded Age.
What could motivate a move to privatize the border? Profits? Hmmm. Here's an article that recently appeared in Business Week:
One of the dominant themes emerging from Davos this year is the power of demographics. Population isn't exactly destiny, but it's a huge determinant in how nations, economies, and companies fare. And the demographics often reveal trends that, on the surface at least, contradict the general appearance of a nation's prosperity.
Take the case of Russia. Under President Vladimir Putin, Russia is harnessing its oil and gas reserves to reclaim its status as a power with which to contend. But at a dinner presentation on Wednesday night, demographer Nicholas Eberstadt painted a starkly different picture. Russia's mortality rate is catastrophic, its birth rate abysmal. There will come a time in the not-too-distant future when Russia's depleted population will threaten the Kremlin's neo-imperialist designs.
So how do companies respond to these deep, slow-moving shifts? A talk with some of the top brass of Manpower (MAN) of Milwaukee is very revealing. In 2005, Manpower's network of temp services and human resources operations put 5 million people to work around the globe. With more than $17 billion in revenue, it ranks with Swiss-based Adecco (ADO) as the world-class provider of workers to the top corporations on the planet. Manpower's studies of global workforce trends are some of the best available. [Business Week]
Given that access to cheap labor is one of the fundamental goals of globalization, as evidenced by the policies discussed at Davos and the WTO, none of this is surprising. The question is, do we want to give up a lot of our political power to yet another corporation that will then pull the strings of immigration policy? As much as I despise people like Tancredo, at least I can fight to beat him at the ballot box. Having a voice in privatized immigration will be even harder.
The growth of temp agencies seems to be correlated with a lot of things I don't like: stagnant salaries, a weak NBLR, the breaking of social bonds between employer and employee, income disparity and overall precarity for the average laborer. Do we really want these companies, who are already global players, actually determing flows of human capital? As poorly as our democracy treats workers, do we want to give up the little power democratic representation gives us?
At their core, theologies address the problem of evil and why God doesn't do something about it. Political economy grapples with the the question of how a social and historical process as creative, fruitful, and intriguing as capitalism can give rise to so many stubborn and ugly problems (and what we might do about these problems, if anything). (215)
"Rising inequality isn't new. The gap between rich and poor started growing before Ronald Reagan took office, and it continued to widen through the Clinton years. But what is happening under Bush is something entirely unprecedented: For the first time in our history, so much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth -- and they know it.
A merica has never been an egalitarian society, but during the New Deal and the Second World War, government policies and organized labor combined to create a broad and solid middle class. The economic historians Claudia Goldin and Robert Margo call what happened between 1933 and 1945 the Great Compression: The rich got dramatically poorer while workers got considerably richer. Americans found themselves sharing broadly similar lifestyles in a way not seen since before the Civil War.
But in the 1970s, inequality began increasing again -- slowly at first, then more and more rapidly. You can see how much things have changed by comparing the state of affairs at America's largest employer, then and now. In 1969, General Motors was the country's largest corporation aside from AT&T, which enjoyed a government-guaranteed monopoly on phone service. GM paid its chief executive, James M. Roche, a salary of $795,000 -- the equivalent of $4.2 million today, adjusting for inflation. At the time, that was considered very high. But nobody denied that ordinary GM workers were paid pretty well. The average paycheck for production workers in the auto industry was almost $8,000 -- more than $45,000 today. GM workers, who also received excellent health and retirement benefits, were considered solidly in the middle class.
Today, Wal-Mart is America's largest corporation, with 1.3 million employees. H. Lee Scott, its chairman, is paid almost $23 million -- more than five times Roche's inflation-adjusted salary. Yet Scott's compensation excites relatively little comment, since it's not exceptional for the CEO of a large corporation these days. The wages paid to Wal-Mart's workers, on the other hand, do attract attention, because they are low even by current standards. On average, Wal-Mart's non-supervisory employees are paid $18,000 a year, far less than half what GM workers were paid thirty-five years ago, adjusted for inflation. And Wal-Mart is notorious both for how few of its workers receive health benefits and for the stinginess of those scarce benefits.
The broader picture is equally dismal. According to the federal Bureau of Labor Statistics, the hourly wage of the average American non-supervisory worker is actually lower, adjusted for inflation, than it was in 1970. Meanwhile, CEO pay has soared -- from less than thirty times the average wage to almost 300 times the typical worker's pay.
The widening gulf between workers and executives is part of a stunning increase in inequality throughout the U.S. economy during the past thirty years. To get a sense of just how dramatic that shift has been, imagine a line of 1,000 people who represent the entire population of America. They are standing in ascending order of income, with the poorest person on the left and the richest person on the right. And their height is proportional to their income -- the richer they are, the taller they are.
Start with 1973. If you assume that a height of six feet represents the average income in that year, the person on the far left side of the line -- representing those Americans living in extreme poverty -- is only sixteen inches tall. By the time you get to the guy at the extreme right, he towers over the line at more than 113 feet. http://www.rollingstone.com/politics/story/12699486/paul_krugman_on_the_great_wealth_transfer/print
Is the consumerist totalization of this country and the world really a conscious plot by a handful of powerful corporate and financial masters? If we answer "yes" we find ourselves trundled off toward the babbling ranks of the paranoid. Still though, it's easy enough to name those who would piss themselves with joy over the prospect of a One World corporate state, with billions of people begging to work for their 1,500 calories a day and an xBox chip in their necks. It's too bad our news media quit hunting with live ammo decades ago, leaving us with no one to track the activities and progress of what sure as hell seem to be global elites, judging from the financial spoor we find along every pathway of modern life.In our saner moments we can also see that it does not take dark super-centralized plotting to pull off what appears to have been accomplished. Even without working in overt concert, a few thousands of dedicated individual corporate and financial interests can constitute a unified pathogenic whole, much the same as individual cells create a viable dominant colony of malignant organisms -- malignant simply by their anti-human, anti-societal nature. We don't see GM, Halliburton, Burger King and CitiBank lobbying the state for universal health or clean rivers, do we? But mention unions or living wages, and the financial colony within our national Petri dish shape shifts into a Gila monster and squirts venom on the idea and shits money all over Capitol Hill. I looked at all this as coincidence for years until the proposition finally strained credulity so much that I threw in the towel and said, "Fuck it. There is only so much coincidence to go around in this world. [Source: http://www.joebageant.com/joe/2006/12/somewhere_a_ban.html h/t: http://www.electricedge.com/greymatter/archives/00007254.htm]
Diesel
An Overview of A Brief History of Neoliberalism Part I
An Overview of A Brief History of Neoliberalism Part II
An Overview of A Brief History of Neoliberalism Part III
Me on Google Earth: Moral Crossings
