Archives for category: Economics

 

I thought I would discuss this Atlantic article in the context of political love languages, but there are so many other problems with Conor Friedersdorf’s Take the Shutdown Skeptics Seriously that I’m just going to get into it as a political discussion.

Friedersdorf argues several points:

  • That the discussion isn’t as clear-cut as pro-human and pro-economy. However, he goes on to argue the pro-economy stance much of the way through.
  • That because we don’t know how long a solution will take, or if we will reach a solution, “Americans should carefully consider the potential costs of prolonged shutdowns lest they cause more deaths or harm to the vulnerable than they spare.”
  • That supply chain interruptions and a prolonged depression are equally great risks to life and not to be discounted.
  • That crashed healthcare and education systems are also hard to recover.

He cites Michael Klare’s warning in The Nation that “Even where supply chains remain intact, many poor countries lack the funds to pay for imported food,” he explained. “This has long been a problem for the least-developed countries, which often depend on international food aid” This is not new. Starvation and poor access  to food has always been a hazard because of (among other things) how international trade and exploitation are arranged now and have been since the admitted colonial times. (These places are still colonies – of multinationals now, not other countries, but still.) When we talk about developing/developed countries, there’s often the assumption of dependence on foreign assistance. The problem here is that there are so many internal and external forces at play that keep such countries in the ’not developed’ column. Using this as an excuse not to work on those issues is just a continuance of the problem.

And note the absence of discussion of the plague of locusts in Africa – no global locust watch dashboards but the problem still exists, and people will starve because of it.

Note, too, that there’s currently enough food gin the US supply chain if we’re processing it carefully and not sending it to China. The web of trade can’t be brought back but government stimulus – paying a fair wage for fair work harvesting the food that’s rotting on the vine right now and planting for the next season will feed more people. But again, it seems to be a matter in American politics and the US media that dividing people works in some folks’ favour, and bringing people together to support the effort and each other runs counter to that. This might be a dream that free people will do manual labor in the absence of other labor to do, or in the interest of the country not going underfed in a land of plenty.

The part of the article that really got my blood boiling is the assertion that this crashing economy won’t leave the healthcare systems standing, sourced to Esther O’Reilly’s Arc Digital article Economic Costs Are Human Costs. In the West, this is mostly a problem in the US where a large portion of the economy rests on a fragile but very lucrative system of people paying large sums of money to insurance companies on the slim chance those companies will take care of them in the event of catastrophe. Those companies have a bottom line dependent on not covering care in the event of catastrophe. This is the big hole in how the US economy works that Obama and many before him were trying to fix and now we’re seeing how that affects the rest of society. In the context of the pandemic, we find that we had an opportunity to meet the disaster head on by working with manufacturers to build up the stockpiles of ventilators and PPE that were going to be necessary. See above about the ease of dividing people rather than bringing together to meet the challenge.

Healthcare systems running out of cash on hand is one of the symptoms of poorly run healthcare (and a poorly run country, in my opinion) – or healthcare run on a for-profit basis. We can fight the virus and put the economy on hold if the money we’re borrowing to shore up the economy goes into fighting the disaster and to the people it needs to help. It’s the same with giving tax breaks at the top rather than minimum wage increases at the bottom. That wage increase gets plugged right back into the economy. But a few more people are fed first.

Stimulus works a lot better when it’s effectively directed as well. Hospitals (nursing homes, prisons, food processing plants), three months into this disaster, should have all the PPE they need. There were hundreds of ways to reconfigure our manufacturing base temporarily to address the situation in testing as well as equipment. We (the executive branch of the US government) simply didn’t and made excuses for not doing so. And continues to. Gracious, DJT. You can’t blame the system for that – you can, but we saw disaster on the horizon and decided not to prepare and identified who we’d sacrifice and which corporations would reap the benefit of stimulus packages that should have supported humans in need.

A final point in the article that made me scratch my head was this: ‘The shuttering of auto manufacturing plants led to an 85 percent increase in opioid overdose deaths in the surrounding counties over seven years, according to a recent study.’ (The referenced article by Heather Mac Donald in The Spectator – https://spectator.us/consider-costs-coronavirus/ doesn’t cite a source for this statistic.) Friedersdorf is trying to argue about the social costs of a depression should this shutdown last too long. There’s a leap of logic here that I can’t fathom. Opioid deaths are also associated with the companies pushing the opioids, other healthcare issues associated with manufacturing and the holes in our healthcare system and the generally accepted disposability of workers in general in the US. Topic for another blog

And finally, I found this related sentiment on Facebook, but am having a time sourcing the original tweet:

medically-informed

We absolutely can do much better.

My best beloved reads the Economist every week, and occasionally I’ll read an article or two as well. She’s noted to me that periodicals like the Economist, the Financial Times and the Wall Street Journal are written for people with an interest in the proliferation of money. As such they’re (historically) neither right-wing nor left-wing. Save for the elephant in the room, of course.

I was rereading a column from last June from the Economist’s ‘Bartleby Blog’. On the web site, this blog is subtitled ‘Thoughts on management and the world of work, in the spirit of the “scrivener” of Herman Melville’s 1853 novel’. This alone is problematic for a number of reasons:

  • Bartleby the Scrivener is a short story, not a novel.
  • The titular character of Bartleby the Scrivener would rather starve than work. His catch phrase is ‘I would prefer not to.’ He utters this phrase whenever his boss or others ask him to do something.
  • It seems that whoever named the blog took note of Bartleby’s initial burst of hard work, not the fact that by the end of the story, he’s been evicted, arrested, and starves in the Tombs, Manhattan’s municipal jail.

With all of this in mind, I point you to the June 29th edition of the blog in which the writer discusses the differences between American and European working hours and vacation habits.

First point: In 1979, the average worker in the US and Europe put in about 38.2 hours per week. Later measurements diverge. By 2000, the US worker was putting in 39.4 hours. This fell to 38.6 hours in 2016.

Second point: European and US workers differ in the amount of holiday they take. Rather than looking at the number of days off each culture has, the blogger points out that over the course of a year, Americans average 34 hours per week, the French 28 hours and the Germans 26.

Third point: The wealthy in the US work longer hours, but still tend to work in daylight as opposed to cleaners and food delivery people who mostly work at night.

Why the differences? Taxation? Possibly. But the key point is made in the passive voice: ‘Another potential explanation is that a decline in trade union membership has weakened American workers’ bargaining power. Except that unionization rates in France and America are not far apart.’

Let’s take a look at that for a moment: What happened to the unions in the US shortly after the 1979 calculation? I’d point to Ronald Reagan’s firing of almost the entire membership of the Professional Air Traffic Controllers Organization rather than bargaining in good faith, given that he had supported the union during his campaign. This act alone signaled the death knell for unions in the United States.

The blogger distinguishes between unionization and policy. What isn’t spoken is how a well unionized country affects policy. Employers in underunionized countries also affect policy. Far more now than they used to. In the US, legislators financed by large employers have succeeded in gutting union power in a variety of areas. And they also succeed in breaking labor laws that protect the rights to unionize. So the question of who shapes policy goes unanswered.

I can’t speak for unionization rates in France, but labor in general speaks louder in Western Europe. Mandated holiday time of at least 20 days per year as a matter of national policy in most EU countries makes a big difference in that average number of hours worked.

Continuing through the blog, we get an assertion that ‘champions of workers’ rights have focused on raising the minimum wage (so far to little avail at the federal level)’. Again, begging the question as to WHY these efforts fail at the federal level. Might it have something to do with who is financing those who set the policy? I have a feeling that it might.

The writer then discusses the longer hours worked by the higher paid than the lower paid in the US. And this class of people discussed: cleaners and food delivery workers? Take a wild guess as to the areas of employment that are the least stable from the employee perspective? And which have unionization efforts stymied by both legal and illegal measures almost before such efforts have begun? Yeah, that would be those classes. It’s not that unionization rates have dropped simply through attrition or that the US minimum wage has stagnated through some kind of Adam Smithian invisible hand of the market. Those with money have made it higher to increase either one to the point of impossibility.

Last week I saw one of those blocks of text posted on Facebook in an image file. I probably know better than to share these things without looking up who the attribution belongs to, but no one who read it called me out on the person who said this:

Treated like starved rats in cages, human beings will interact accordingly. If everyone had jobs, healthcare, education, and safe, affordable housing, relations between humans would be transformed: With nothing to police, there would be no need for police. But with scarcity comes the need to enforce the unequal distribution of resources. The absurd contradiction we must resolve is that capitalist scarcity is artificial. There is more than enough to go around. It is only the profit motive that stands in the way of a rational system of production, distribution, and exchange in harmony with the environment.

(Attributed to a John Peterson – none of the John Petersons or John Petersens on Wikipedia’s disambiguation pages seem to be the type to utter this sort of sentiment. However, a search reveals the quote comes from a July, 2016 editorial published on marxist.com and possibly also in The Socialist Appeal. USA: Police Brutality, Racism, and the Politics of Polarization.)

Two people commented on the post. One offered a pretty flippant restating of the communist declaration (‘to each according to ability, from each according to need’) as ‘To each according to their ability to fake their need, from each according to their ability to hide their skills.’

Francine Orr / Los Angeles Times

There’s no arguing the Marxist perspective of the original quote, but boiling it down to the failure of Communism to produce a just society is missing the point. The second commenter wrote something longer than most of my blog entries in which he described the key failures of communism in Czechoslovakia/the Czech Republic (a place he lived for 20 years and I lived for five). The issues he brought up revolved around the tenet ‘He who does not steal from the state steals from his family’ and the soul-destroying pervasiveness of the state apparatus.

Both of these comments, however, miss the point Peterson is trying to make: We have too much money, food, and housing to deny a roof and a meal to anyone. The scarcity under which we operate is a construct we use to keep a large segment of the population in straits. I can’t explain our defense of the status quo any more than I can explain why we continue to teach children that it’s acceptable to bully the kid being raised by an interracial or same sex couple. Insert comment here about Americans all being frustrated millionaires rather than one medium-sized tragedy or difficulty from being on the street.

The trick, of course, is extricating ourselves. Politically speaking, it’s a nonstarter, at least in the UK and the US. But have you walked over the homeless in any major city? What I keep trying to say here, in as many different ways as I can is that it doesn’t matter how a person gets into straits, or finds herself unable to feed her family or ends up estranged from the network of people who raised him. The social contract we’re in as members of human society should be the one in which a person on the street gets a meal, a roof, care.

I have found myself and others concerned with the difference between what that poor person gets and what we have. And what we’ve earned that they haven’t. Politics always plays into this craziness and the flip side of housing the family on the street is looking at extreme wealth. I do begrudge the very wealthy their fortunes for a variety of reasons, the main one being that there are hungry people on our streets. Another is that the extremely wealthy find it easier to maintain power structures that enable the hoarding of wealth. And then there’s the way extreme wealth seems to multiply for some at about same rate as extreme poverty multiplies for the rest of society. Earlier I was looking at the Wikipedia article on presidential candidate Michael Bloomberg. In passing, the article notes that in 2009, Bloomberg’s wealth was approximately 16 billion dollars. Think of how many people you know that have even 16 thousand dollars available to them. At the time, Bloomberg was worth one million times that sum. One question is, how has he nearly quadrupled that fortune in ten years? I think we can look at most members of the two houses of the US Congress and find similar expansions of fortune, in terms of rate, if not scale.

And I ask: Leaving 10 billion dollars in his pockets, how many people can you feed, clothe, and house for 50 billion dollars? Flip it around. If you could levy a one-time tax on wealth of that magnitude of even 10%, how many people could Bloomberg feed for six billion dollars? When we talk about how to feed people in the US, we have to look at the people in those strata because the wealth keeps getting sucked up and none of it trickles down, notwithstanding the lies of Ronald Reagan all the economists he and his successors parroted.

At what point does the hoard just become accumulation for the sake of accumulation? We know that shame plays no role in this. If it did, we wouldn’t have people working multiple jobs just to keep one step or half a step ahead of winding up in a tent city under a freeway. When does the fact that San Francisco, New York, and Manchester, London, Vancouver and Rio de Janeiro having large sectors that look like something out of the Grapes of Wrath reveal to us the poverty of our responses?

And how large do we have to think for this situation to become largely unacceptable? We’ve been accepting it so long, that it seems normal.

We’ve painted ourselves into a corner with the outbreak of Covid-19 (aka Coronavirus). How much manufacturing previously done in the West is now (not being) done in China and other countries in Asia? We made a decision in the 80s that American manufacturing was too expensive and that we’d do better as industrialists and consumers to move production to Mexico and Asia. This, I suppose, is fine, save that we stopped paying living wages to America’s (former) manufacturing employees and increased their credit lines as a sort of compensation.
That’s three of several dozen problems that have been building up in the US over the last 35 years or so. How we handled American purchasing power is a different part of the discussion. China raised its own game in the years following the pro-democracy demonstrations in 1989. You can’t have democracy but if you’re a Chinese citizen you are entitled to some more of these trappings of capitalism. And it seemed to work. Many Chinese got filthy rich, casinos opened on Chinese real estate, for example, and if you weren’t used to democracy, it did work. Hong Kong? Different question. (Fairport Convention’s Jewel in the Crown seems appropriate.)
Anyhow, US and to a lesser extent, I think, European purchasing power went up, because a lot of Chinese made a lot of stuff very cheaply. So it didn’t matter that real wages in the US haven’t shifted much in 40 years. The decline of unions in post-Reagan America pushed workers into so-called service industries where real wages are kept artificially low much of the time.
Bottom line: We don’t MAKE anything, and as a result we’re in a position where the place that does make all our stuff is on lockdown for we don’t know how long. And creating a manufacturing sector out of whole cloth can’t be done so easily anymore. (It could be done if we were willing to pry a little bit of money and commitment out of the 1%. Not in the cards at the moment.) The same is true in Europe. We have the tools to create that self-sufficient situation, but it means retraining the populous to buy what they need and a lot less of what they want. We’re going to learn mighty soon that the old watch, phone, and TV will last a little longer. (A little less of the planned obsolescence would go a long way.) Clothes and everything else we buy might be more expensive, but part of what we need to do to recover, sustainably, from this crisis is to rebuild the industry and rework how we as people and consumers and industrialists relate to industry.
In William Gibson’s novel The Peripheral, we meet a class of people, the klept, who have more money than they could ever use and play games with large swaths of humanity, often to the death. Gibson didn’t have to reach far for models; examples of the kleptocracy are all around us. The damage they do is not quite at the scale of Gibson’s klept only because Gibson imagines hundreds or thousands of timelines they can use for their playgrounds. (The chapter entitled Parliament of Birds (pdf) gives a good idea of what the klept are about.)
I’ve been considering writing about our modern klept for several weeks now and just when I think there’s nothing worse that could happen, I only have to consider the headlines for a moment. The most public members of the Klept, or maybe just their public representatives, are (not surprisingly) Boris Johnson, Donald Trump, Vladimir Putin, and (new member!) Brazil’s Jair Bolsonaro. When I thought I might be able to let this idea go, go on to writing something else, I saw this BBC headline: US and Brazil agree to Amazon development.
The world is quite literally on fire from Alaska to Siberia to Australia to, indeed, the Amazon. Instead of finding ways to protect these places for future generations, these so-called leaders are letting them burn so that the land can be exploited for oil and agribusiness. Bolsonaro’s very clever – if he doesn’t do anything about the fires, he solves one issue that he’s publicly declared a problem: the native populations of the Amazon basin. If they no longer have a forest in which to live, they’re no longer in need of any kind of protection. The other advantage I’ve read about is that he can then allow monoculture farming of in-demand commodities such as soybeans. (This becomes attractive given how Trump has buggered up the Chinese market for American soybeans. Trump’s trade war with China is one that probably could use some delving but it makes little sense to me as yet.)
And if neighboring Venezuela is anything to go by, there’s probably oil to be drilled as well. (Note that the vast majority of Brazil’s untapped oil holding is found in a region off the coast of Rio de Janeiro, rather far from Venezuela.

Man looking right forking dollars into his mouth while much smaller man has pennies to eat. Caption: When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it. Frederic Bastiat, French economist.

I know that equating fat and eating with greed is problematic, but we’re dealing with the oversized share of wealth consumed by the few at the expense of the many. I think this illustration addresses that pretty well.

And if we let Alaska burn, it may be easier for the oil companies to get into ANWAR (Arctic National Wildlife Refuge – a protected area that contains some desirable oil reserves). At the moment there are fires throughout central Alaska, but not in the northeast corner where ANWAR is located. Difficult to access Siberian reserves are also going to be easier to get at once the place burns. (Yes, I’m being terribly reductive. The fact that these fires are starting because of record high temperatures caused is not lost on anyone concerned, though.)
This isn’t exactly the klept in a nutshell. But the high-stakes games being played with the lives of large numbers of inconveniently located people form the heart of what the ultra-rich and the world leaders who front for them are about (and have always been about).
The thing with Johnson and the mess that Parliament is trying to clean up is that Johnson’s a really minor member of the klept. Cursory web searches suggest that his net worth is about two million pounds. More than I’ll ever see in a personal bank account (unless things go really tits up, Zimbabwe style), but in the grand scheme of the very wealthy, not very much. So why is he pushing for no-deal Brexit so hard? The short answer is that the klept in the UK stand to lose a lot of money when the new EU Anti-Tax Avoidance Directive goes into effect next year. Pretty much all of the large-scale folks who have pushed Brexit stand to lose a lot of money. Johnson, it seems, is mostly just a front for those folks.
There’s more to address regarding the American klept, including folks like Mitch McConnell, but it’s going to have to wait.