Softpanorama

Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
May the source be with you, but remember the KISS principle ;-)

Chronic Unemployment

Neoliberalism as the Cause of Chronic, Structural Unemployment in the USA

News Over 50 and unemployed Recommended Links Chronic stress Computers eat people Underemployment Eroding Western living standards
The neoliberal myth of human capital Perma Temps Adverse Selection Scapegoating and victimization of poor Productivity Myth and "Rising labor costs" hypocrisy Neoliberalism and Christianity The problem of inequality
Neoliberalism as a New Form of Corporatism Corporatism Casino Capitalism If Corporations Are People, They Are Psychopaths Toxic Managers Office Stockholm Syndrome Learned helplessness
Unemployment after graduation Fake Employment Statistics Destructiveness of GDP Mania   Financial Sector Induced Systemic Instability

Economics Pseudo Theories

Notes on Republican Economic Policy
John Kenneth Galbraith Invisible Hand Hypothesis Inflation vs. Deflation Lysenkoism Financial Humor Humor  Etc

Unemployment offices, homeless shelters,  hospitals, prisons and casinos. and are the only real growth industries of Obama Administration. In Jan 2010 35 millions, or one in eight Americans, were on food stamps.

Obama's  biggest — and only major — jobs program is the U.S. military


When I was a kid they told us that automation would "free" us from working long hours. What they didn't tell us what that they weren't going to pay us for all this leisure time we'd get.

Mass unemployment is the primary indication of the collapse of a given form of society -- James Burnham


Introduction


"Unemployment" statistics has been the political advertising media for every Administration in modern times

From comment in
The Rise of Invisible Unemployment
 The Atlantic, Nov 9, 2014

 

Chronic unemployment is an immanent feature of neoliberalism, which requires the army of unemployed to suppress wages in order to increase share of profits for the top 1$ and, especially, the top 0.01%.  Another problem is secular (long-term) stagnation of the economy due to destruction of consumer demand, which comes with the deterioration of the standard of living and high level of unemployment.  As Pope Francis noted:

...Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.

Human beings are themselves considered consumer goods to be used and then discarded. We have created a “disposable” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.

... ... ...

One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

The institutions of neoliberal capitalism, while promoting an expanded role in the economy for "market forces" (read "financial oligarchy")  simultaneously transform labor relations. The “market” under neoliberalism certainly no longer refers to competition as a form of the production and distribution goods and services. Instead, it means something more along the lines of international financial monopolies protected by collusion between captured vassal state institutions (including neoliberal fifth column domination in the all major branches of government, especially executive and  legislative branches, educational institutions and media) and multinationals, which pay money to sustain this social order. The term “Free markets” under neoliberalism means letting rich people do what they want, not promoting efficient allocation of resources through competition and the price mechanism. The core of the fifth column are local oligarchs and so called "Chicago boys": sons and daughters of local elite who are trained for and indoctrinated for this purpose in Western universities. As aptly noted Neoliberalism – the ideology at the root of all our problems ( The Guardian,  April 15, 2016)

We internalize and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

Never mind structural unemployment: if you don't have a job it's because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you're feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it's your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

Under neoliberalism labor relations assumes the form of full domination of labor by capitalists. Unions are officially suppressed and large part of middle class is brainwashed to hate using set of propaganda stories about unions corruption, welfare quinsy, lack of competitiveness in unionized industries (with Detroit as a prime story), etc.  In this sense crushing by Reagan of the strike of air controllers was one of the first manifestation of this dominance. Workers again are downgraded to the role of debt slaves, who should be glad to get subsistence wages. And, for example, wages in Wal-Mart are really on subsistence level, no question about it (Making Change at Wal-Mart » Fact Sheet – Wages):

Wal-Mart jobs are poverty-level jobs.
Wal-Mart's average sale Associate makes $8.81 per hour, according to IBISWorld, an independent market research group. This translates to annual pay of $15,576, based upon Wal-Mart's full-time status of 34 hours per week1. This is significantly below the 2010 Federal Poverty Level of $22,050 for a family of four. The Wall Street Journal reported that the average Wal-Mart cashier makes just $8.48 an hour, far below the $11.22 national average for all cashiers.

This contrasts with the capital-labor compromise that characterized the state capitalism that existed several post-WWII decades and that was crushed by neoliberalism in 1970th. Neoliberalism also brought change in the relation between financial and non-financial capital: financial capital now again like in 1920th plays a dominant role dictating the rules of the game to manufacturing sector and controlling it via banks.

Under neoliberalism the wealthy and their academic servants, see inequality as a noble outcome. University professors of economics form the most corrupt part of intellectual elite – they are nothing more than employees of the financial oligarchy paid to administer intellectual anesthetic to those among debt slaves, who still have enough time to ask what’s going on. They want to further enrich top 1%, shrink middle class making it less secure, and impoverish poor.  That's an officially state goal. Then in 1992, when asked what Iran-Contra was really all about, Bush I replied that it was done for "...the continuous consolidation of money and power into higher, tighter and righter hands."

The upward redistribution of wealth requires high unemployment to weep prols into unconditional obedience.  In other words neoliberalism and high unemployment are twins.

Under the disguise of "free market" Newspeak  neoliberals promote a type of economy which is often called a plantation economy. In this type of the economy all the resources and power are in the hands of a wealthy planter class who then gives preference for easy jobs and the easy life to their loyal toadies. The wealthy elites like cheap labor: it's much easier to  dictate their conditions of employment when unemployment is high.

Keynesian economics values the middle class and does not value unemployment or cheap labor, so it is incompatible with neoliberal ideology and needs to be suppressed.  Neoliberals created the system which richly reward stooges of neoliberalism for their loyalty to the top 1%  bestowing on them an easier life than they otherwise merit. In a meritocracy where individuals receive public goods and services that allow them to compete on a level playing field, many neoliberal academic toadies would be losers who cannot compete.

One of the most important measures of the health of an economy is the following criteria: how many fulfilling, living-wage jobs are created or destroyed (most other economic factors can be distilled to this.). For example, widely used measure of economic growth, GDP is too influenced by financial masturbation and does not distinguish useful activity from harmful or irrelevant. 

Under neoliberalism the elite revived Roman emperor Septimius Severus advice to his sons before he died at Eboracum (York) on  February 4, 211:

"Avoid infighting, pay well the soldiers, and ignore everybody else" . 

So during the Great Recession Congress simply tuned backs to unemployed. With the implicit message you just need to die out folks ;-).

Military budget at the same time was greatly expanded and several unnecessary wars were launched.  Brainwashed American public eats all those neoliberal policies like real lemmings, demonstrating the level of groupthink and lack of critical thinking that is typical for high demand cults. So the myth about highly conscious "proletariat" that Marxists cherished remains a myth. Moreover quite opposite tendencies to creation of "enlightened lower classes" show their ugly face (Chris Hedges America is a Tinderbox naked capitalism):

ictus92, July 21, 2013 at 5:07 pm

To paraphrase Madeline Albright: “What’s the point of creating a totalitarian police state if you’re not going to use it?”

So where is the American totalitarian state going? If you look at the NDAA and the discussion around repealing the Posse Comitatus Act, the key words include quelling “domestic civil unrest”… So what are the “deep government” types anticipating so hysterically?

Well, the financial crisis keeps grinding away and is about to enter another phase of collapse as “quantitative easing” has run its course. Interest rates are rising, posing “technical insolvency” of the Federal Reserve itself. What this means is that time’s up for the 46 million in the Food Stamp Supplemental Program; 56 million getting Social Security retirement or disability benefits; and at least 20 million more needing full time employment. Obviously there’s some overlap, but the total number of people living on the margins of subsistence pushes 30% of the population.

For these, they face an immediate “Final Solution”… not exactly direct extermination, but death by deprivation, illness etc. Can work camps be far off for these tens of millions and the many millions more living paycheck to paycheck? This population and their sympathizers comprise the tinder for “civil unrest”. Hence the corollary to the famous “Collect it all” (communications) is “control it all” (civil disorder following further economic collapse).

Furthermore, prolonged neglect of key infrastructure will lead inevitably to severe food, water and electric power access shortages — another source of civil unrest potential.

Of course, overseas the totalitarian police state eliminates all expression of opposition that can change policies in the quest for “Permanent War” and “full spectrum” military dominance. This ends in global military confrontation… just as the financial crisis of the 30’s gave rise to another World War… only this time around world war will pitch towards thermonuclear war in short order. That’s how totalitarian regimes collapse into catastrophe, dragging the rest of us to an unpleasant demise.

Unfortunately, I don’t think there’s a damn thing any of us can do to arrest this beserk Levithan…

tongorad, July 20, 2013 at 3:21 pm

This is America, not Denmark. In this country, tens of millions of people choose to watch FoxNews not simply because Americans are credulous idiots or at the behest of some right-wing corporate cabal, but because average Americans respect viciousness.

They are attracted to viciousness for a lot of reasons. In part, it reminds them of their bosses, whom they secretly adore. Americans hate themselves for the way they behave in public, always smiling and nodding their heads with accompanying really?s and uh-huhs to show that they’re listening to the other person, never having the guts to say what they really feel. So they vicariously scream and bully others into submission through right-wing surrogate-brutes. Spending time watching Sean Hannity is enough for your average American white male to feel less cowardly than he really is.

The left won’t accept this awful truth about the American soul, a beast that they believe they can fix “if only the people knew the Truth.”

But what if the Truth is that Americans don’t want to know the Truth? What if Americans consciously choose lies over truth when given the chance–and not even very interesting lies, but rather the blandest, dumbest and meanest lies? What if Americans are not a likeable people? The left’s wires short-circuit when confronted with this terrible possibility; the right, on the other hand, warmly embraces Middle America’s rank soul and exploits it to their full advantage. The Republicans know Americans better than the left. They know that it’s not so much Goering’s famous “bigger lie” that works here, but the dumber and meaner the lie, the more the public wants to hear it repeated.”

“We, The Spiteful” by Mark Ames

http://exiledonline.com/we-the-spiteful/

Dave, July 20, 2013 at 8:18 pm

Please consider that the “right” is far more realistic in their assessment of human nature. The “left” wants things to be according to what they think it should be, mostly because of their left wing educators. The majority of humans are not perfectible.

Even Asians, with their highly socialized societies, have behaved very badly towards those outside their country.

This tendency of self-deception of "blue color America" and resonating of Republican Party ideas within "working poor" and lower middle class, two strata of the US society that typically votes against its own economic interests is analyzed in   What's the matter with Kansas  And to fight neoliberal machine is not easy as media dominance is total, and on a new technological level, which does not require silencing of opponents, just ignoring them, approach the level typical for the USSR or Nazi Germany.  And even if some people question the system, like (at the very beginning) Tea Party did, or later "Occupy Wall Street" movement did, they are mercilessly co-opted or crashed by well paid guard labor. The latter is one of the few  types of employment which prospers under neoliberal empire. See  The Rise of Guard Labor (dollarsandsense.org)

The reality is that many rich countries including the USA now face two problems. One is a shortage of jobs, especially middle class jobs.  The other is stagnant (or falling) wages for those outside top 1%.  This is not a temporary problem. Despite all the propaganda smoke this is an immanent feature of neoliberal regimes that now dominate in the USA and most other countries.  Neoliberalism requires high unemployment as a way to keep workers in check and prevent attempts to slow down redistribution of wealth toward the top.

As George Bush Sr . noted in November 1992 neoliberalism is "the continuous consolidation of money and power into higher, tighter and righter hands". The essence is  the consolidation of money and power to the top 0.1% or even 0.01%.  In a very deep sense our new lords from financial and political oligarchy are not that different from feudal aristocracy, may be only less educated, more prone to avoid military service and much more greedy. 

Unlike Keynesian economy which put middle class in the center of society serving a buffer between rich and poor,  under neoliberalism  middle class is no longer needed as a buffer between aristocracy and proles, as repressive power of the state and regime of total surveillance (National Security State) makes an organized opposition practically impossible. The fate of "Occupy Wall Street" movement is nice illustration here.

On the other hand neoliberalism as an ideology, while discredited by event of 2008 still does not have any viable alternative.  Socialism was discredited by collapse of the USSR (which in reality was a neoliberal counterrevolution by Soviet nomenklatura including part of KGB).  Authoritarian versions of state capitalism does not look too attractive, despite being quite effective as was proven by economic progress of "Asian tigers".

Other important factors are also in play. Technology has stripped away the ability for many to hold a job and the trend continues.  In other words automation eats jobs. Outsourcing eats jobs too. Between those two trends almost no job growth left. This is a structural situation, not transitional caused by recession due to aftermath of 2008 financial bubble bust.  In other words jobs that disappeared will never return. And jobs in construction sector and finance were artificial and unsustainable in any case, crisis or no crisis (as in "what can't last forever eventually stops." )

We are in the midst of slow motion employment collapse. Eurozone unemployment recently reached 12%. The US has probably 20% rate of involuntary unemployment now. The official unemployment "rate" is lower, but that is because both 60-65 years old and 20 to 24 year olds are dropping out of the wage force.

Add to this "peak energy" problem and the situation looks really bleak. That's the funny thing about oil and modern civilization -- almost everybody in large western urban centers is dependent on mass produced technology (much of which was invented before we were born) and cheap oil (and generally cheap energy), Those who live in those urban centers no longer have any direct control or ability to produce own food or transportation energy or heating. those three activities are completely outsourced. See Peak Oil Demand is Already a Huge Problem.

Globalization is yet another problem. I was actually surprised by how many jobs large corporations managed to shred during 2008-2013 without negatively affecting  profitability.  The impression is that it is no low limit.  Usual wisdom is that if you shred too much, this labor shortage will bite you in a couple of years. This is no longer the case in the USA. No visible backlash at all.  Even consumption that should be suffering due to destruction of middle class in this process is no suffering much, because it was already mostly top 1% game and, as such, is recession proof. Here is one interesting comment form Krugman column Globalization and Macroeconomics - NYTimes.com

Floxo Australia

The analysis is flawed. The issue is not goods trade - on its own, this is relatively benign. The real problem is the associated capital drain. Owners of capital will transfer productive capital abroad for better returns. This process creates deep structural problems for all developed economies. Here are some basic predictions:

Recessions are difficult to manage and may become protracted. In a downturn, capital formation dries up but the capital drain continues. This erodes the output gap. A fiscal stimulus now has less headroom for expansion. On top of that, an increase in domestic demand may be met by investment in productive capital abroad; the domestic investment response is missing. This may even cause a fall in labor productivity ( UK productivity puzzle?).

In short, globalization IS the problem.

Unemployment and well being

Recessions generate inequality in both income and well-being: people who lose their jobs bear a disproportionate burden of the recession.  As Kathleen Geier noted the impact of unemployment on well-being it’s even worse than you thought

While reading this odd and meandering New York Times op-ed this morning, I stumbled upon a link to a fascinating study from last year on the impact of unemployment on non-monetary well-being. It was conducted by Stanford sociologist Cristobal Young, who discovered that unemployment has an even more catastrophic effect on personal happiness that we thought.

The study produced three major findings. The first is the devastating impact job loss has on personal well-being. Job loss, says Young, “produces a large drop in subjective well-being”:

Job loss into unemployment, however, is a different matter; this brings on deep distress that is greater in magnitude than the effect of changes in family structure, home-ownership or parental status. The distress of job loss is also hard to ameliorate: family income does not help, unemployment insurance appears to do little and even reemployment does not provide a full recovery [italics mine].

The second finding is that while unemployment insurance (UI) is successful as a macroeconomic stabilizer, it doesn’t make unemployed people any happier. UI, says Young:

is not central to their sense of well-being… [Snip] …[ I]t does little to support their identity, sense of purpose or self-regard.

Third, job loss has a strong, lasting negative impact on well-being that may persist for years:

[J]ob loss has consequences that linger even after people return to work. Finding a job, on average, recovers only about two thirds of the initial harm of losing a job. It is not clear how long it takes for the nonpecuniary effect of unemployment to heal.

Other research suggests that what Young refers to as “the scarring effect” of job loss can last from three to five years, or even longer. He also notes that “the more generalized fear of becoming jobless” may persist.

Young’s discussion of these findings stresses the inequality theme. He points out that “recessions generate inequality in both income and well-being: people who lose their jobs bear a disproportionate burden of the recession.” He suggests job-sharing as a way to reduce the concentrated misery of unemployment. That’s a great idea that unfortunately never seems to go anywhere. Employers today seem more interested in squeezing as much labor out of employees as possible for the lowest cost. They’re looking to shrink their payroll rather than expand it. And unfortunately, there are very few public policies that promote job-sharing, let alone do it effectively.

The sheer human misery created by the economic downturn has been stunning. The economic damage is, in some ways, the least of it. Another study shows that the long-term unemployed experience shame, loss of self-respect, and strained relationships with friends and family. They even suffer significantly higher rates of suicide.

Yesterday, Paul Krugman and others discussed the impact of economic inequality vs. unemployment on income. Krugman argued that inequality has had the greater impact, and I agree. Among other things, inequality is also the root cause of the unemployment problem. Special interests which have disproportionate power in our political system prevented more stimulus and inflicted an austerity agenda, which has had a disastrous effect on employment. Enacting an economic equality agenda will be huge political challenge, but it’s the only way I can see of ultimately resetting the priorities of our government so that it starts working on behalf of ordinary Americans again.

Official measures of unemployment

There are two popular unemployment measured U3 (commonly cited as "official unemployment rate", which dramatically understates real unemployment) and U6, which is close to actual unemployment rate as was measured during the Great Depression. U3 is often as low as half of U6 (that's why it sometimes called 50 cents unemployment rate). As The Big Picture note in the entry Unemployment Reporting

Its been pretty obvious for sometime that the Financial Media are doing a disservice to their readers by only reporting U3, given how dramatically it understates Unemployment. Indeed, consumer sentiment reports are at deep negative levels that only occur when Unemployment is much than what U3 has been saying. It is painfully obvious that U3 does not paint an accurate view of the Employment situation.

Here's the experiment I propose: Let's start reporting both, with appropriate descriptions of each. Report U3, add U6, provide monthly and year over year changes. Let the reader see the full picture, via BLS data.

See Table A-12. Alternative measures of labor underutilization

Factors that make the current unemployment structural

I would like to stress it again: many factors point to the fact that the current level of unemployment is mostly structural. In other words jobs eliminated will not be coming back. Among the most important factors we can mention:

  1. Neoliberal ideology, which prevents strong government action and direct employment by government on infrastructure projects like during New Deal. Related to the dominance of neoliberalism the hypertrophy of financial sector lead to games with "Main street" after which high, self-sustainable (aka structural) unemployment for in now a destiny for millions. Making the whole society sick.
     
  2. Outsourcing (which partially is due to much better communication channels available and computerized navigation)
     
  3. Computerization (which directly "eats jobs" much like during industrial revolution in the UK).
     
  4. High price of energy, which serves as strong depressing factor. If I remember correctly, a decade ago price of oil above $100 was considered an equivalent to permanent recession. This is never mentioned today, but still might be as true today as it was ten years ago: with the high price of oil the economic recovery is simply impossible. The only option, the only trajectory for economy is permanent stagnation.
     
  5. Growth of "lumpen-proletariat". Narcoaddicts, alcoholics, single mothers from poor families with just high school diplomas,  people with "generosity-based" high school (considerable part of Afro-Americans) and university diplomas from "diploma mills" (essentially fake diplomas),  various categories of handicapped, people with criminal records (substantial part of Afro-American male population), etc.  

The first three factors changed the distribution of power between labor and capital in favor of capital; and those guys are not inclined to take prisoners, when there is a chance to fatten their pockets.  None of the first three factors will probably be reversed soon, although neoliberal ideology is after 2008 entered a zombie state.

Also computerization and Internet allowed capital and political forces behind it much better organize politically. So like in in previous human history well organized and wealthy minority dictates its will less-organized poor majority.

I think that financial capital might eventually experience some setbacks. This bacchanalia of greed with those hedge fund  which hack financial system left and right  might come to an abrupt end with the rise of the price of oil. Even now price of oil indirectly pressure "masters of the universe".  And remember famous slogan of 2008 "Jump suckers" ;-). It reflects the society attitude to financial oligarchy and as such entail certain dangers of "blowback" for all those derivatives games.

Not under Obama watch as he is essentially a sock puppet of financial oligarchy. But eventually setback for "big finance" can happen. At the end of the day it is oil that is the real convertible currency and when oil production is diminishing or flat,  financial oligarchy will be pushed back. 

Measures taken by political elite to save financial institutions after 2008 collapse means that unemployment is a part of a general political problem with neoliberalism as a social system. Under neoliberal regime the elite can't care less about long term unemployment. National Security State ensures the security of the neoliberal elite. Elections in the USA are a sham as two party system effectively blocks candidates outside the list approved by the current elite.  The latter might even see sharp division of the society into "have" and "have nots"  as a solution of oil depletion problem (Economist's View):

bakho:

Exactly.

Monetary policy does not operate in a vacuum. Monetary policy operates in an economic system that includes fiscal and regulatory tools. It is a mistake to lock the fiscal and regulatory tools in a shed.

Fiscal policy ALWAYS operates in a recession, at least in the form of automatic stabilizers, (UI, etc.) and sometimes in the form of additional stimulus.

The meagre automatic stabilizers currently in place are enough for a mild recession, but are woefully short of what is needed in a recession like the recent one.

The primary objection to fiscal policy manipulations is that fiscal policy is more easily politicized. This overlooks the fact that monetary policy is not only political, but bankers (who constitute a wealthy special interest) have an agenda that tilts monetary policy to their own self interests.

The primary objection to using fiscal stimulus to address our unemployment crisis is POLITICAL. Wealthy special interests want pay less taxes and short term stimulus would interfere with their political agenda to roll back spending and reduce spending as a percent of GDP.

Wealthy special interests have the upper hand at the moment because enough politicians are dependent on their campaign donations. However, this politicalization of fiscal policy, doing too little to address unemployment, is the prime force behind the Fed keeping interest rates low. If enough fiscal stimulus was enacted to quickly return to full employment and inflation at or slightly above the target, the Fed would not have to consider extraordinary measures.

Anyone unhappy about extraordinary monetary measures should be urging Congress to fix unemployment now. This is not what our elites are doing. They are complaining about extraordinary monetary measures AND about additional stimulus. This suggests that these policy elites care nothing about social problems of long term unemployment, are content to have the US become a divided nation between haves and have nots and are content to oversee the creation of an underclass in order to concentrate wealthy upward.

When one is saying that unemployment became a structural problem that means that it is immune to the business cycle. For example, during the last economic expansion (Jan 2002 -Dec 2007), the median US household income dropped by $2,000. In other words many Americans were worse off at the end of an economic cycle as jobs went outsourced to low wage countries due to wage arbitrage... 

Collapse of Casino Capitalism and unemployment

The collapse of “casino capitalism” model in 2008-2009 was so profound that all sectors of the economy became depressed. As securitization mess exploded in the face of their creators as it became clear to everybody that the king is naked. Debt overhand of financial industry is tremendous and it was just socialized, not removed. Essentially it became the problem of the USA government debt. In many ways problems the USA faces now are more serious then the problems the country faced during Great Depression because economic crisis doubles as the crisis of dominant ideology -- the ideology of neoliberalism.  And the Great Recession, despite Economic Cycle Institute premature desire to bury it, is still with us. Five years in the making as of 2013.

Ideology on which FIRE sector dominance was based is now questioned and that creates additional problems both nationally and internationally, much more internationally. Internationally it means a substantial loss of the USA "soft power", the factor that played tremendous role in the decade of 1990-2000.  When other country laugh at the US financial oligarchy tribulations it is difficult to open new markets selling old neoliberalism doctrine. due to debt overhand the US dollar is replaced by currency swaps in national currency for several major trading partners of China such as Brazil and Russia.   First of all that makes the crisis even deeper and analogies between the USSR and the USA more sinister. As with Stalinists in USSR who destroyed the country economically, there is a powerful block of republican dead enders and democratic supporters of financial oligarchy (blue dogs) who  will continue to promote the current neoliberal course with its deification of "free markets" (free as in "free shooting zone"), oblivious to consequences of neoliberal policies which eat the society and protected by the size of their accounts. There is nothing new here. Oligarchic  democracies can commit suicide. Actually none lasted long. And with such a formidable political wrecking crew in action and gridlock in Congress even over minor reforms that became less probable.

For all practical purposes two party system actually works like one-party system: democrats were also captured by FIRE industries to the extent that they should not be considered an independent party, but as a slightly more moderate wing of the Republican Party. Similarly by all accounts Obama is a moderate Republican with the policies to the right of such Republican Presidents as Dwight Eisenhower and Theodore Roosevelt. In a way, Democratic Party perform the role of spoiler: it exists for the sole purpose of attracting disgruntled left-wing electorate away from more radical parties. Republicans play symmetrical role for right wing crazies. None can or want to became the agent of change. In this sense Obama electoral slogan "change we can believe in" was a nasty, cruel joke of political insiders over political outsiders.  Note how unceremoniously Obama dumped labor after his reelection, while courting it during his reelection campaign.

As private sector is still downsizing, and government can't be the employer of last resort due to dominance of neoliberal ideology, the whole situation looks more and more like Japanese lost decade. The only area where government can expand workforce are defense contractors (military keysianism):

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

It is important to understand that the USA is not just coping with the largest financial crisis in history, the USA is also going through a major restructuring of the American economy as well as the world economy due to plato in oil extraction. This transformation, which was postponed by two decades due the collapse of the USSR (which gave the USA companies half billion of new consumers and huge area to dollarize and buy assets for pennies on a dollar), will be very long, very painful and very slow. One additional factor that complicates the picture of "peak oil", is that it is  more properly can be called "end of cheap oil", as at higher prices more oil became economically available. So this is  not a peak but long plato.

As GDP is highly correlated with the energy consumption, the side effect of peak oil will probably be stagnant (close to zero after inflation) growth and with it speed up in permanent decline of the standard of living for middle class 

Also complicating the situation is the status of baby boomers which lost significant part of their savings during last two bubble bursts and now need to retire or will be pushed out of workforce. Pensions are already cuts either directly or indirectly (via inflation). For example, defined benefit pensions almost disappeared outside of government job force. After housing crash middle class no longer has a realistic prospect to fund their retirement and need to work longer: that increases competition for jobs. For middle aged professionals who are unemployed now the odds of finding reasonably paid work are low and they create additional competition for young people entering work force from universities. People over 50 now face especially poor job prospects.

At the same time corporate executives became corporate aristocracy (with differences in pay raising from 10-20 to 100-200 more of average corporate salary; this is the differences close to what used to exist in feudal societies). Most corporations are taking a lazy way out of the crisis with relentless cost-cutting.  This is a self-defeating strategy as cost cuttings eventually returns back via supply chain and bite the corporation which performs it. But so far this did not happened.

In addition productive sectors of economy are now under pressure of rampant financial speculation which serves as a huge tax on productive sectors of economy. Financial system is controlled by small number of large firms that permanently shifted their main activity into gambling and hacking of the financial system. There is some justice that computers which fueled all this crazy gambling on the strength of global reserve currency led to outsourcing of IT professionals to the extent that this part of US economy was destroyed and became a shadow of its former self in just ten years (2000-2010).

Another important sign of stagnation is that new college graduates face extremely bad job market which squeezes out anybody without substantial experience so for them it's Catch 22. Only graduates form Ivy League colleges has real prospect to get a job after graduation. Plus those with good family connections. In a way education is no longer a guarantee for better paying job, the same situation what was typical for the USSR and other countries of Eastern block during Brezhnev's stagnation.

There is also an interesting transformation of the quality of the education that also parallel transformation  experienced by the USSR in post-war period, but in especially acute form, three decades before the collapse. Private education became more like subprime lending.  It's quality became fake, as the term "diploma mills" suggests.  This rat rate to the lowest possible quality (quality instead of quality) was the central tendency in Brezhnev's USSR. 

In the USA in addition to devaluation of education caused by low quality "everything passes, everybody graduates, just pay" modus operandi of diploma mills, graduates from lower middle class families are now overloaded with debt, which creates for them really difficult situation and push many of them into low level service jobs like waiting. In other words excessive debt after college make getting into workforce using acquired specialty even more difficult as there is no space for long job search, relocation is more difficult and so on and so forth. 

There is also huge criminal industry that flourished around people desperate attempts to find well paying jobs. Many educational scams like "we will make you an ultrasound technician in six month; 90% of our graduates found jobs that pay over $60K in the first month after graduation"  or " software tester in four month; 100% of our graduates find jobs" are trying to capitalize of people desperate to find job, any job and getting into crushing debt trying to improve their chances in job market. Those criminals are not prosecuted.  For more information see:

The main source on new jobs is service sector and the lion share of new positions are McJobs

The employment growth comes mainly from the service sector which feeds off of consumer spending. It was hit by outsourcing especially in such areas as IT. Manufacturing no longer create jobs – outsourcing and computers eat them and you no longer need more people to make more stuff. 

Peter Dornan at EconoSpeak has the following comment which perhaps looks deeper at why the elite is so indifferent to mass unemployment and growing poverty in the U.S.

“…The process is more complicated: where one sits in society and the kinds of problems one typically has to solve leads to a way of thinking, and this manner of thinking then informs politics.

For centuries, the finance perspective has played a central role in economic theorizing, and there is ordinarily a body of research to support it. What I am proposing is this: economic orthodoxy is regaining control over policy because it reflects the outlook of those who occupy the upper reaches of government and business….”

http://economistsview.typepad.com/economistsview/2010/05/a-political-economy-moment.html

IMHO to get the economy out of this mess, government should concentrate on direct job creation (like was the case with Roosevelt administration), not on propping zombie banks hoping that they will generate credit necessary for creation o new jobs. Growth of credit will not happen and if it will happen it will not generate new jobs: most of it  is pushed into speculation.  Spectacular rise of S&P500 in first half of 2013 is a pretty good illustration of the process.

Long term high unemployment is a disaster for the country and disaster for the people, despite the fact that it is irrelevant for banksters, too busy playing in the huge casino they created. Failure to address this problem directly by Obama administration (which in economic terms is the second Summers-Bush administration making a joke in the slogan "change we can believe in") make Obama a real serial betrayer of people who elected him, the role he seems enjoy playing. 

Additional factors the complicates the picture

There are several additional factors that makes addressing the problem of chronic, structural unemployment even more difficult:

  1. The economic crisis coincides with deep ideological and political crisis.

    One can't solve the current problems the US are facing without the reform of the political system and institutions. Power of lobbyists need to be curtailed. Senate needs to be reformed.  Republican Party probably should be dissolved or temporary prohibited like Communists after the dissolution of the USSR as it is unable to reform. As there is no political will for political changes the crisis is structural and little people have to suffer.
     

  2. Real economy was damaged by excessive growth of  FIRE sector and associated "fictional" economy.  Real economy can't support the current size of FIRE sector and it needs now to downsized. There is no smooth, painless route back to the easy-money based false prosperity of Reagan-Clinton-Bush era (age of leveraging). A new economy needs to be created for sustainable recovery because the old, FIRE-based was unsustainable. In 2010 housing probably will decline further. Both commercial and residential construction continues to decline. States continue to cut back budgets creating negative feedback loop. Personal bankruptcies are up, more defaults are on the horizon. The U.S. economy needs to be re-structured, both on the "technical" and inter-sectoral level. That amounts to a collective, system-wide Chapter 11 re-organization. Obama administration has totally failed to sell the public on the validity of "stimulus", however named. Suspicion that this administration is a puppet of big banks had grown sharply. Trying to kick the can down the road will yield Republican Congressional majorities in both houses.
  3. The USA is experiencing the process of separation of workforce into two-tiers, with an elite class of highly paid employees at top companies and a subclass of minimal wage and part time laborers who work for less pay, have less job security and receive fewer benefits.
  4. Foreign wars have substantial financial costs and are an important drag on the USA economy. In the book True Cost of the Iraq Conflict, Joseph Stiglitz was estimated he cost at three trillion dollars of which probably only one trillion was offset by looting of Iraq resources. Afghanistan is about  $2 billion a week, and unless all heroin trade is controlled by CIA there is little that can offset those costs. This is the longest ongoing conflict in U.S. history.  And since Joseph Stiglitz book was written things became worse.

    The disability rates are higher. The cost of caring for the disabled are higher. Almost one out of two people coming back from Iraq and Afghanistan are disabled. This is an unfunded liability of—we calculate now to be almost a trillion dollars, over $900 billion. So, one of the big ways of reducing our deficit is a—is cut back some expenditures....

    With Libya and Syria added to the list, the hidden costs of foreign wars will weight on weakened economics more heavily. Annual cost per soldier oversees is approximately $1 Million per year.
  5. Rent that hypertrophied financial sector  extracts from the rest of the society continues to be a serious drag on the economy. This drag adds to substantial drag caused by foreign wars and military bases as well as huge military industrial complex. While parasites are omnipresent in nature, two large parasites instead of one might spells trouble for the host. Moreover the ascendancy of the financial sector and the decline of manufacturing in the U.S. ("Casino Capitalism" ) has implications similar to consequences of an organized crime running the country.  The creation of tangible products whose utility/quality can be more or less objectively measured were phased out in favor of "financial products," whose utility/quality is much easier to conceal behind legal/technical jargon and junk economics. That created a huge new class of white collar criminals. While Blankfein is out claiming that GS is doing God’s work, the reality is quite different: it became a training ground for new type of ruthless criminals, much more dangerous then bank robbers. Killing of Glass-Steagall by Clinton and leverage obtained by financial sector operating without regulatory limit created prerequisites to the financial panic of 2008. Glass-Steagall enshrined two principles that were abandoned:

    The violation of the second principle directly leads to a regulatory capture in which anything goes and a corresponding observed "need" to accommodate indiscretions, as with the Greenspan/Bernanke put. It perhaps should be identified as THE primary cause, since it left Wall Street with the well-founded (LTCM, Latin America debt crisis, etc. ) and since-proved belief that prudence and capital were quite unnecessary, and that reckless, sociopathic deal making is profitable. Four examples :

  6. Capture of the government and the media by financial sector makes the necessary reforms unlikely. “Failed Regulatory Oversight” is a politically correct term for corruption. The latter was probably the second reason of the current high unemployment . See Toxic Sludge is Good For You: Lies, Damn Lies and the Public Relations Industry by John C. Stauber
  7. Effects of coming CRE crash on unemployment and economy in general might be underestimated of official forecasts.  The occupancy rate is the malls and commercial buildings is still declining. Many strip malls in the country are still are empty. Nice office buildings with signs "for rent" are feature of landscape in 2013. Many buildings, even large well designed buildings with datacenter infrastructure are vacant for years and eventually are demolished.  A full scale commercial real-estate crash can also hurt the economy in a way similar to residential home estate crash. Loans that were made in 2005-2007 were refinanced for three years in 2009-2011. And again in 2012-2013. But eventually they will be coming home to roost.  This also affects the construction  sector.  Only $400 billion of loans came due by the end of 2009, but nearly $2 trillion was refinanced by 2012.  

    The collapse in the U.S. commercial real estate market is fought by the government will maximum force but government resources to fight the crisis are diminishing too. in 2011 state financial crises led to cuts in state budget. In addition, in June 2013 municipal bonds came under fire, making financing more costly.  Commercial debt is approximately one third of the size of the total residential debt and it is concentrated in the same places creating double whammy. In Florida commercial loans, broadly defined, are bigger then residential. Unlike residential real estate, problem with commercial real estate are not solved by growth of population and creation of new families.

    Retail and white-collar positions will be directly impacted by CRE crash. As stores and offices close, mall and office building owners suffer from cuts in cash flow and severely limited prospects for new tenants. Insurance companies, hedge funds and regional banks are heavily invested in CRE and are next in line so some financial jobs will be lost too. Extend and pretend might work but the question is if there is enough liquidity to stretch loans.
     

  8. Computers eat people jobs. Automation and the recent advances in robotic and computers make more and more workers redundant.  The latest victims are cashiers in supermarkets. Manufacturing jobs continue to disappear not only due to outsourcing, but also due to new computerized technologies. The reality is that manufacturing employs a mere 11.5 million workers in the U.S.A., or 9% of the workforce and this percentage will never increase substantially.

    My feeling is that even in corporate IT after drastic cuts that were the standard game for large corporations in 2008-2009, additional cuts are possible. But the situation on the ground is somewhat paradoxical as real cuts runs deeper that you would assume from headcount: a lot of current IT personnel belongs to "untouchable" caste -- wives of somebody higher up in this or linked by the supply chain company, sons of somebody important and so on. I can't give you percentage, but probably 10%-20% of "untouchables" would be an educated guess. So removing of at least 10% of the current IT workforce means removal of 12% or more those who do actual work. 

    Another factor is that cuts in IT are one way street as they stimulate replacing of people with technology and there are still tremendous potential for computerization of many areas including first of all IT itself.

    For example all this cloud initiatives are in disguise politically correct way to move things in the direction of higher automation and outsourcing because under the surface there is not much innovation in those "new" technologies.
     

  9. Oil prices despite coming down in September 2011 are back to $85-$90 level.  That level is putting additional stress on manufacturing, transportation and agriculture. Solid US growth of the past decade and earlier was dependent on two factors:

    With the rising oil all bets for re-inflating the economy (aka kicking the can down the road) are off.
     

  10. Indirect job creation strategies via stimulus to businesses seized to produce meaningful job generation. Reaganomics has put the U.S. economy into a high-unemployment equilibrium when the high-rate of labor unemployment is reinforced by the shortage (or absence) of idle, but useful capital stock due to offshoring and  outsourcing as well as chronically low consumer demand due to high level of debt. Only service sector and financial jobs can be generated with minimum capital infrastructure (for financial jobs internet connection and computer are almost all that needed). Automation of production lead to less and less workers.
     
  11. Confidence is really low.  Businesses have no confidence that customers ever return, therefore are not hiring much and scaling down the production. This chicken-egg-chicken-egg cycle has to be broken, but I am really puzzled how that is going to happen without large government role in the economy, which is big no-no for ideological consideration (the USA preaches neoliberalism as a "civil religion" similarly like USSR and other "communist" countries preached Marxism). Without large government projects employees have no confidence in their jobs, therefore are not consuming much.
     
  12. In the face of growing unemployment the current administration proved to be as incompetent as Bush administration in case of Hurricane Katrina. And that means totally incompetent.

Effects on population

Unemployment is a very harsh condition, that traumatize the workers greatly (Sliding into the Great Depression)

At first the unemployed searched eagerly and diligently for alternative sources of work. But if four months or so passed without successful reemployment, the unemployed tended to become discouraged and distraught.

After eight months of continuous unemployment, the typical unemployed worker still searches for a job, but in a desultory fashion and without much hope.

And within a year of becoming unemployed the worker is out of the labor market for all practical purposes: a job must arrive at his or her door, grab him or her by the scruff of the neck, and through him or her back into the nine-to-five routine if he or she is to be employed again.

The USA as a whole is facing the worst labor market prospects since 1929. In terms of duration of elevated unemployment we already rival the early 80s. But in no way we can expect a steep decline in the rate of unemployment in the way that happened in 1983 when unemployment declined at a brisk 2%. And permanent high unemployment creates economic conditions that feel like the USA brought back slavery. The new reserve army of the unemployed drives wages down, while average productivity continues to rise, as a way to generate surpluses to be channeled into executive bonuses. The whole sectors like IT were decimated by outsourcing. Unfortunately given the current overcapacity and ample supply of qualified job seekers in many occupations, I certainly don't expect labor arrangements and employment conditions to become more favorable.

Looks like 7% unemployment is going to become the "new normal". In any case government statistics is very suspect (see Fake Employment Statistics) and actually unemployment is higher. For example, the declining participation in work force means that actual unemployment rate is higher then reported.

Obama-Bush administration saved banks waiting most of taxpayers money and piling up debt in hopes that they restore credit flow in the economy. But this was a fallacy: banks aren’t lending to prospective home buyers, small businesses and real estate developers because bankers recognize the obvious — many of those loans won’t get repaid. Of course, as bankers refuse to lend, the stagnation becomes a self-fulfilling prophecy. But since society is burdened with too much debt, piling on more debt would not be the solution in any case.

There is no smooth, painless route back to the easy-money based false prosperity of Reagan-Clinton-Bush era (age of leveraging). We entered the age of deleveraging. Obama’s “you owe us” message to the banks is the height of naïveté’ and tells us a lot about him. In 2013 our problems are worse than they were in 2007 before the crisis. Peak credit is as dangerous for the economy as peak oil...

Corruption of economic profession

The inability of the economics profession to forecast unemployment in the short, medium, or long run would be downright comical, if not for the human tragedy involved. While the Occam Razor approach suggests incompetence as a culprit, I think it's a manifestation of the corruption of the profession by financial interests (with some "don't rock the boat" variations).  First of all, economists much like elected officials and Wall Street executives have a vested interest in keeping the perception of a robust economy. The employment data announced each month are critical to this perception. That's why government "prints up jobs out of thin air" the same way the Federal Reserve prints money. This is economic propaganda and as such it is not that much different from the over-stated earnings practiced by companies of all striped and colors.

The second problem is that fiscal policy cannot solve the problem of job creation in all circumstances, especially in deleveraging environment. Position of people like The Fed Can Help, But Fiscal Policy Is The Key To Job Creation ) is a step in right direction. But without something like Jobs Corps to get out of the current situation is very difficult. In 1982 SETH S. KING wrote in NYT (PROPOSAL FOR JOB CORPS RECALLS ROOSEVELT PLAN):

Few of this city's recent celebrations of Franklin Delano Roosevelt's 100th birthday have passed without nostalgic references to the Civilian Conservation Corps, that President's cherished vehicle for getting thousands of jobless, hungry youths off the streets and putting them to work refurbishing the nation's parks and forests.

With today's unemployment rate nearing a postwar high and new thousands of young people again unable to find work, Congress is preparing to wrestle with the Reagan Administration for money to start a new youth job training program and reconstitute the Job Corps, the pale copy of the old C.C.C. that emerged in the Carter days.

But there is little in these plans that is likely to reproduce those Depression era pictures of sturdy, bare-chested young men planting trees, building bridges and saving the nation's battered farmlands.

Nor is today's procedure-encumbered Washington, where a year usually elapses between idea and action, likely to duplicate the astonishing start on the C.C.C., which four months after being conceived had been approved by Congress and had more than 300,000 young men being clothed, housed, fed and paid $30 a month while they breathed all that fresh air.

In this crisis the main lesson was that theologically captured by free market fundamentalism government can destroy economy at a really staggering rate. This is "Back in the USSR" situation. Eight years of Clinton and eight years of Bush administration (see The Economic Consequences of Mr. Bush, by Joseph E. Stiglitz) are as good proof of this as one can ever get. Clinton and Bush regimes (especially Rubin-Greenspan alliance and "vice president from an undisclosed location" activities)  proved to be a real wrecking crew. But that does not mean that government cannot put it weight on easing the unemployment burden. Incentives such a investment tax credit matters. Not tax cuts for the rich, but direct investment credit. direct job creation which is anathema to market fundamentalism would be even better and less costly. Roosevelt administration did it, so why not capitalize on positive experience and develop it further ?

In this crisis the main lesson was that theologically captured by free market fundamentalism government can destroy economy at a really staggering rate.

In any case socializing losses and privatizing gain (crony capitalism) should be downsized. Insurance for gambling by big banks should be cut.

As long as economists believe their report card is the rise in GDP (GDP Mania), we will remain in a failure mode. A country is not defined by GDP but by the quality of life of its citizens. And quality of life cannot be assessed by a simplistic, one-dimensional metric such as GDP. The key dimensions for well-being are: employment, earnings, wealth, health, infrastructure, and living conditions. In that particular order. With employment as the critical factor: the USA looks like an underdeveloped banana republic by the current measure of unemployment and in many respect has became such.

It looks like high persistent unemployment became the defining feature of this recession. Jobs creation prospect in 2014 look pretty grim -- there is no sector other then government that can absorb redundant workforce and automation in manufacturing makes sure that those who are unemployed right now will stay unemployed in the foreseeable future. Most jobs cut are permanent, not temporary, especially in such sectors as IT (structural shift). As Robert Reich noted:

...The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that's been going on for years but which the Great Recession has dramatically accelerated.

Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They’ve discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won’t be rehired unless they’re willing to settle for much lower wages and benefits. Today's official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay... Or they've lost higher-paying jobs and are now in a new ones that pays less.

The current crisis also means that financial services and real estate (FIRE) economy, this gigantic casino that the US government was trying to build for the last 25 years is now in trouble and shed workers in vast numbers (although working condition in financial industry are still good or very good depending on your position in the food chain). But the profitability of large banks and can achieved only by oversees expansion and derivatives games with foreign assets. The most profitable essentially converted themselves into hedge funds, getting most profits from trading operations, not from the traditional banking activities.

The simplest and the most obvious solution in the current situation is to cut work week and hours of work (4 days six hours a day). That will put enough people to work to make unemployment bearable and it might slightly help entertainment and hospitality industries which now is suffering more that others. From the other point of view if lower standard of living is inescapable, why not to make the transition smoother and more fun by cutting work hours.

Military Keynesianism no longer works

But that's not enough. The USA needs drastically cut military budget. Military Keynesianism no longer works as expected.  As John Maudin in his e-letter proposed (see Thoughts on the Economy- Problems and Solutions):

Mauldin: Unemployment is likely to continue to rise and last longer than ever before. We have to take care of the basic needs of those who want work but can't find it. Unemployment insurance should be extended to those who are still looking for work past the time for benefits to expire, and some program of local volunteer service should be instituted as the price for getting continued benefits after the primary benefits time period runs out. Not only will this help the community, but it will get the person out into the world where he is more likely to meet someone who can give him a job. But the costs of this program should be revenue-neutral. Something else has to be cut.

Mish: Can we deal with 15 million volunteers? Somehow I doubt it.

Mauldin: We have to re-think our military costs (I can't believe I am writing this!). We now spend almost 50% of the world's total military budget. Maybe we need to understand that we can't fight two wars and support hundreds of bases around the world. If we kill the goose, our ability to fight even one medium-sized war will be diminished. The harsh reality is that everything has to be re-evaluated. As an example, do we really need to be in Korea? If so, why can't Korea pay for much of the cost? They are now a rich nation. There are budgetary fiscal limits to being the policeman for the world.

Mish: Bingo. We can easily slash our military budget by 70% and still be the most powerful nation in the world. Moreover, it is time to declare the war in Iraq and Afghanistan over, pack our bags and leave. Gradually, over the next 5-8 years we should bring home all our troops from literally every county they are stationed.

This chart shows the absurdity of our spending.

Chart courtesy of Global Issues - World Military Spending.

By the way that chart does not include the latest increase in the US military budget. Please consider US lawmakers pass 680-billion-dollar defense budget bill

The US House of Representatives passed a 680-billion-dollar defense authorization bill on Thursday that includes funds to train Afghan security forces and more mine-resistant troop carriers.

Lawmakers defied President Barack Obama's veto threat and approved 560 million dollars to continue work on an alternative engine for the F-35 fighter jet built by General Electric and British manufacturer Rolls-Royce.

The compromise legislation would also raise military pay by 3.4 percent -- half a percentage point higher than Pentagon recommendations -- and assign 6.7 billion dollars for mine-resistant armored vehicles known as MRAPs, which is 1.2 billion dollars more than the administration had proposed.

Nearly $700 billion dollars of "defense" spending. The amount needed for actual defense is 20% of that at most, and more likely 5%. Balancing the budget is easy if you start here.

Mauldin: Glass-Steagall, or some form of it, should be brought back. Banks, which are subject to taxpayer bailouts, should not be in the investment banking and derivatives-creating business. Derivatives, especially credit default swaps, should be on an exchange, and too big to fail must go. Banks have enough risk just making loans. Leverage should be dialed down, and hedge funds selling what amounts to naked call options in any form, derivative or otherwise, should be regulated.

Mish: What we need to do is get rid of the Fed, FDIC, and fractional reserve lending. Regulation has failed every step of the way. Regulation created Fannie Mae, Freddie Mac, and the Fed. Regulation by the SEC anointed Moodys, Fitch, and the S&P as debt rating companies. We do not need more regulation, we need less regulation, a sound currency, and no Fed. Regulation is clearly the problem, yet the cries for still more regulation come from nearly every corner save the Austrian economists.

Mauldin: Let me see, is there any group I have not offended yet? But something like I am suggesting is going to have to be done at some point. There is no way we can continue forever on the current path. At some point, we will hit the wall. The fight between the bug and the windshield always ends in favor of the windshield. The bond market is going to have to see a credible effort to get back to a reasonable deficit, or we risk a very difficult economic environment. The longer we wait, the worse it will be.

Mish: "Is there any group I have not offended yet?" Yes. You failed to offend those on public pension plans. Not to fear, I did that myself in Five Major Pension Problems - One Simple Solution.

Unsolvable Problems


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

Index 2017 2016 2015 2014 2013 2012 2011 2010 2009

[Jun 10, 2018] It might well be that among the skilles to gain entrance in the Ivy colleges one is the acceptance of neoliberal ideology. Stray too far from the Clinton/Bush/Obama's neoliberalism and identity politics and your application goes into the garbage can and with it your chance of joining our governing elite

Notable quotes:
"... Perhaps, Lin, by voluntarily entering an establishment in order to alter one's consciousness- whether in Vietnam or America- you are signaling your surrender and defeat in the war on the "true nature of reality." ..."
Jun 10, 2018 | www.unz.com

unit472 , June 3, 2018 at 11:57 am GMT

I would agree that the America of the neighborhood tavern is dying but would not characterize our political leadership as a 'rootless, criminal cabal. Criminal they maybe but they are rooted in the Ivy League, principally Yale and Harvard, and the ideology to gain admission to those schools. I would say skills to gain entrance but, today, it is more a matter of ideology. Stray too far from the Clinton/Bush crony capitalist model or Obama's identity politics and your application goes into the garbage can and with it your chance of joining our governing elite.
TG , June 3, 2018 at 2:31 pm GMT
Indeed. I would say this from a slightly different angle: forget about the details of politics: constitutional monarchy, parliamentary democracy, a republic, democratic socialism, even marxism, checks and balances, an independent judiciary, an independent central bank, a written constitution all of these can be made to work, more or less, if the elites care about the nation as whole. And none of these will matter if the elites no longer care, if they value their own short-term profit over the long-term stability and strength of their nation.

Back under FDR etc., the elites of this nation were worried about communists, and anarchists, and then Nazis. That made them care about this nation, they feared that if the nation went down they would go down as well. So they cared about the working class. I am old enough to remember when we used to celebrate that we had the highest wages in the world – that was considered a magnificent joint accomplishment and proof of the greatness of this nation. Now high American wages are routinely derided as evil, as proof that Americans are selfish and lazy and they need to be replaced by all those wonderful third-world refugees who have no alternative but to work for sub-poverty wages

I think the core of this rot is that the elites are no longer afraid. They no longer have reason to care. They live in gated estates, they fly from private airports (even first class in a public airport is not good enough/removed enough from the masses for them!), and if things fall apart they will just sail away in their yachts, tut-tutting about how Americans no longer deserve their presence

Stonehands , June 3, 2018 at 10:21 pm GMT
Perhaps, Lin, by voluntarily entering an establishment in order to alter one's consciousness- whether in Vietnam or America- you are signaling your surrender and defeat in the war on the "true nature of reality."

The alcohol delusion amplifies greed hatred bondage.

And is anathema to wholesome higher insights.

Whether alcohol or heroin these self- ingrained defilements are an obstruction to the complete repose to the human spirit.

Dan , June 4, 2018 at 3:07 am GMT
@TG

Everything is financialized and the elites are supranational. End of story. Enjoy the little things.

JohnnyWalker123 , June 6, 2018 at 5:25 am GMT
@TG

Exactly. America's leaders behave criminally because they're not scared of the population. So there's nothing to constrain our leaders from behaving like grifters and conmen.

At some point, however, this will come to an end. Our massively skyrocketing national debt is totally unpayable, so investors will eventually stop buying our bonds. When that happens, our national economy and standard of living will collapse dramatically.

It's at that point when our leaders are either put in jail or flee the country.

Swan Knight , Website June 9, 2018 at 2:42 pm GMT
@unit472

Rootless criminal cabal sounds right to me. I would add psychopathic

m___ , June 9, 2018 at 2:59 pm GMT
@TG

Elites are global, Americans are locals.

m___ , June 9, 2018 at 3:29 pm GMT
@Dan

elites are supranational

Indeed so.

So is capital, when the dollar will have only limited reserve currency status to the rest of the world, the American locals will be proportionately ruled by Russian oligarchs and Chinese priviledge.

American locals are just bulk humanity to these supranationals, they are defined by global consumerism of the same crap the elites despise. They sweat corn syrup and palm oil and seem to look "Pinker Steve" happy when digitally masturbating and being chemically subdued, encased in concrete scenarios.

Now after consumerism, since it is offset by limited resources of our planet, it will be real misery, as in plowing concrete. That must be mostly indifferent to our supranationals. Bulk humanity is basically obsolete, and extra-ordinary lucky. If it were for the supranational nuclei to have a long term policy, we the deplorables would be wiped away, say three quarters of us.

They are though eagerly observing, if we not, as always, will do it ourselves to us. The problem would die on itself. The ethnic White middle class down to the street is pointing the way.

[Jun 10, 2018] Hiding the Real Number of Unemployed by Pete Dolack

Notable quotes:
"... The Globe and Mail ..."
"... The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China ..."
Jun 08, 2018 | www.counterpunch.org

... ... ...

Nonetheless, you might have noticed that happy days aren't exactly here again. The real U.S. unemployment figure -- all who are counted as unemployed in the "official" rate, plus discouraged workers, the total of those employed part-time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up) -- is 7.6 percent . (This is the "U-6" rate.) That total, too, is less than half of its 2010 peak and is the lowest in several years. But this still doesn't mean the number of people actually working is increasing.

Fewer people at work and they are making less

A better indication of how many people have found work is the "civilian labor force participation rate." By this measure, which includes all people age 16 or older who are not in prison or a mental institution, only 62.7 percent of the potential U.S. workforce was actually in the workforce in May, and that was slightly lower than the previous month. This is just about equal to the lowest this statistic has been since the breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3 percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor participation was lower. This number was consistently lower in the 1950s and 1960s, but in those days one income was sufficient to support a family. Now everybody works and still can't make ends meet.

And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the percentage of the U.S. gross domestic product going to wages has fallen to 43 percent , according to research by the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past five years has been the lowest it has been since 1929 , according to a New York Times report. And within the inequality of wages that don't keep up with inflation or productivity gains, the worse-off are doing worse.

The Economic Policy Institute noted , "From 2000 to 2017, wage growth was strongest for the highest-wage workers, continuing the trend in rising wage inequality over the last four decades." The strongest wage growth was for those in the top 10 percent of earnings, which skewed the results sufficiently that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may have been low, but it wasn't as low as that -- the typical U.S. worker thus suffered a de facto wage decrease last year.

What this sobering news tells us is that good-paying jobs are hard to come by. An EPI researcher, Elise Gould, wrote :

"Slow wage growth tells us that employers continue to hold the cards, and don't have to offer higher wages to attract workers. In other words, workers have very little leverage to bid up their wages. Slow wage growth is evidence that employers and workers both know there are still workers waiting in the wings ready to take a job, even if they aren't actively looking for one."

The true unemployment rates in Canada and Europe

We find similar patterns elsewhere. In Canada, the official unemployment rate held at 5.8 percent in April , the lowest it has been since 1976, although there was a slight decrease in the number of people working in March, mainly due to job losses in wholesale and retail trade and construction. What is the actual unemployment rate? According to Statistics Canada's R8 figure , it is 8.6 percent. The R8 counts count people in part-time work, including those wanting full-time work, as "full-time equivalents," thus underestimating the number of under-employed.

At the end of 2012, the R8 figure was 9.4 percent , but an analysis published by The Globe and Mail analyzing unemployment estimated the true unemployment rate for that year to be 14.2 percent. If the current statistical miscalculation is proportionate, then the true Canadian unemployment rate currently must be north of 13 percent. "[T]he narrow scope of the Canadian measure significantly understates labour underutilization," the Globe and Mail analysis conclude.

Similar to its southern neighbor, Canada's labor force participation rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7 percent in 2003.

The most recent official unemployment figure in Britain 4.2 percent. The true figure is rather higher. How much higher is difficult to determine, but a September 2012 report by Sheffield Hallam University found that the total number of unemployed in Britain was more than 3.4 million in April of that year although the Labour Force Survey, from which official unemployment statistics are derived, reported only 2.5 million. So if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is about 5.7 percent.

The European Union reported an official unemployment rate of 7.1 percent (with Greece having the highest total at 20.8 percent). The EU's Eurostat service doesn't provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately provide totals for under-employed part-time workers and "potential additional labour force"; adding these two would effectively double the true EU rate of unemployed and so the actual figure must be about 14 percent.

Australia's official seasonally adjusted unemployment rate is 5.6 percent , according to the country's Bureau of Statistics. The statistic that would provide a more realistic measure, the "extended labour force under-utilisation" figure, seems to be well hidden. The most recent figure that could be found was for February 2017, when the rate was given as 15.4 percent. As the "official" unemployment rate at the time was 5.8 percent, it is reasonable to conclude that the real Australian unemployment rate is currently above 15 percent.

Mirroring the pattern in North America, global employment is on the decline. The International Labour Organization estimated the world labor force participation rate as 61.9 percent for 2017, a steady decline from the 65.7 percent estimated for 1990.

Stagnant wages despite productivity growth around the world

Concomitant with the high numbers of people worldwide who don't have proper employment is the stagnation of wages. Across North America and Europe, productivity is rising much faster than wages. A 2017 study found that across those regions median real wage growth since the mid-1980s has not kept pace with labor productivity growth.

Not surprisingly, the United States had the largest gap between wages and productivity. Germany was second in this category, perhaps not surprising, either, because German workers have suffered a long period of wage cuts (adjusted for inflation) since the Social Democratic Party codified austerity by instituting Gerhard Schröder's "Agenda 2010" legislation. Despite this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of economic weakness is due to wages not falling enough . Yes, the Fed believes your wages are too high.

The lag of wages as compared to rising productivity is an ongoing global phenomenon. A separate statistical analysis from earlier this decade also demonstrated this pattern for working people in Canada, the United States, Britain, France, Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of dollars less per week than they would if wages had kept up with productivity gains.

In an era of runaway corporate globalization, there is ever more precarity. On a global scale, having regular employment is actually unusual. Using International Labour Organization figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the "global reserve army of labor" -- workers who are underemployed, unemployed or "vulnerably employed" (including informal workers) -- totals 2.4 billion. In contrast, the world's wage workers total 1.4 billion. Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China , they write:

"It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well." [page 145]

Having conquered virtually every corner of the globe and with nowhere left to expand into nor new markets to take, capitalists will continue to cut costs -- in the first place, wages and benefits -- in their ceaseless scrambles to sustain their accustomed profits. There is no reform that can permanently alter this relentless internal logic of capitalism. Although she was premature, Rosa Luxemburg's forecast of socialism or barbarism draws nearer.

Pete Dolack writes the Systemic Disorder blog and has been an activist with several groups. His book, It's Not Over: Learning From the Socialist Experiment , is available from Zero Books.

[Jun 06, 2018] The Privilege of an Education

Notable quotes:
"... At this point, I'm wondering whether life was easier in the old days, when you could buy a spot in the elite university of your choice with cold cash. Then I remind myself that Grandfather lasted only one year at Yale. In those days, the Ivies kicked you out if you weren't ready for action. Today, you have to self-combust in a newsworthy way before they show you the door. ..."
"... Excellent Sheep ..."
"... The Price of Admission ..."
"... In the United States, the premium that college graduates earn over their non-college-educated peers in young adulthood exceeds 70 percent. ..."
"... All of this comes before considering the all-consuming difference between "good" schools and the rest. Ten years after starting college, according to data from the Department of Education, the top decile of earners from all schools had a median salary of $68,000 . But the top decile from the 10 highest-earning colleges raked in $220,000 -- make that $250,000 for No. 1, Harvard -- and the top decile at the next 30 colleges took home $157,000. (Not surprisingly, the top 10 had an average acceptance rate of 9 percent, and the next 30 were at 19 percent.) ..."
"... But the fact is that degree holders earn so much more than the rest not primarily because they are better at their job, but because they mostly take different categories of jobs. Well over half of Ivy League graduates, for instance, typically go straight into one of four career tracks that are generally reserved for the well educated: finance, management consulting, medicine, or law. To keep it simple, let's just say that there are two types of occupations in the world: those whose members have collective influence in setting their own pay, and those whose members must face the music on their own. It's better to be a member of the first group. Not surprisingly, that is where you will find the college crowd. ..."
"... The candy-hurling godfather of today's meritocratic class, of course, is the financial-services industry. Americans now turn over $1 of every $12 in GDP to the financial sector; in the 1950s, the bankers were content to keep only $1 out of $40. ..."
"... It isn't a coincidence that the education premium surged during the same years that membership in trade unions collapsed. In 1954, 28 percent of all workers were members of trade unions, but by 2017 that figure was down to 11 percent. ..."
"... Education -- the thing itself , not the degree -- is always good. A genuine education opens minds and makes good citizens. It ought to be pursued for the sake of society . In our unbalanced system, however, education has been reduced to a private good, justifiable only by the increments in graduates' paychecks. Instead of uniting and enriching us, it divides and impoverishes. ..."
"... If the system can be gamed, well then, our ability to game the system has become the new test of merit. ..."
Jun 06, 2018 | newrepublic.com

My 16-year-old daughter is sitting on a couch, talking with a stranger about her dreams for the future. We're here, ominously enough, because, she says, "all my friends are doing it." For a moment, I wonder whether we have unintentionally signed up for some kind of therapy. The professional woman in the smart-casual suit throws me a pointed glance and says, "It's normal to be anxious at a time like this." She really does see herself as a therapist of sorts. But she does not yet seem to know that the source of my anxiety is the idea of shelling out for a $12,000 "base package" of college-counseling services whose chief purpose is apparently to reduce my anxiety. Determined to get something out of this trial counseling session, I push for recommendations on summer activities. We leave with a tip on a 10-day "cultural tour" of France for high schoolers. In the college-application business, that's what's known as an "enrichment experience." When we get home, I look it up. The price of enrichment: $11,000 for the 10 days.

That's when I hear the legend of the SAT whisperer. If you happen to ride through the yellow-brown valleys of the California coast, past the designer homes that sprout wherever tech unicorns sprinkle their golden stock offerings, you might come across him. His high-school classmates still remember him, almost four decades later, as one of the child wonders of the age. Back then, he and his equally precocious siblings showed off their preternatural verbal and musical talents on a local television program. Now his clients fly him around the state for test-prep sessions with their 16-year-olds. You can hire him for $750, plus transportation, per two-hour weekend session. (There is a weekday discount.) Some of his clients book him every week for a year.

Affirmative-action programs are to some degree an extension of the system of wealth preservation. They indulge rich people in the belief that their college is open to all.

At this point, I'm wondering whether life was easier in the old days, when you could buy a spot in the elite university of your choice with cold cash. Then I remind myself that Grandfather lasted only one year at Yale. In those days, the Ivies kicked you out if you weren't ready for action. Today, you have to self-combust in a newsworthy way before they show you the door.

Inevitably, I begin rehearsing the speech for my daughter. It's perfectly possible to lead a meaningful life without passing through a name-brand college, I'm going to say. We love you for who you are. We're not like those tacky strivers who want a back-windshield sticker to testify to our superior parenting skills. And why would you want to be an investment banker or a corporate lawyer anyway? But I refrain from giving the speech, knowing full well that it will light up her parental-bullshit detector like a pair of khakis on fire.

The skin colors of the nation's elite student bodies are more varied now, as are their genders, but their financial bones have calcified over the past 30 years. In 1985, 54 percent of students at the 250 most selective colleges came from families in the bottom three quartiles of the income distribution. A similar review of the class of 2010 put that figure at just 33 percent. According to a 2017 study, 38 elite colleges -- among them five of the Ivies -- had more students from the top 1 percent than from the bottom 60 percent . In his 2014 book, Excellent Sheep , William Deresiewicz, a former English professor at Yale, summed up the situation nicely: "Our new multiracial, gender-neutral meritocracy has figured out a way to make itself hereditary."

The wealthy can also draw on a variety of affirmative-action programs designed just for them. As Daniel Golden points out in The Price of Admission , legacy-admissions policies reward those applicants with the foresight to choose parents who attended the university in question. Athletic recruiting, on balance and contrary to the popular wisdom, also favors the wealthy, whose children pursue lacrosse, squash, fencing, and the other cost-intensive sports at which private schools and elite public schools excel. And, at least among members of the 0.1 percent, the old-school method of simply handing over some of Daddy's cash has been making a comeback. ( Witness Jared Kushner, Harvard graduate .)

The mother lode of all affirmative-action programs for the wealthy, of course, remains the private school. Only 2.2 percent of the nation's students graduate from nonsectarian private high schools, and yet these graduates account for 26 percent of students at Harvard and 28 percent of students at Princeton. The other affirmative-action programs, the kind aimed at diversifying the look of the student body, are no doubt well intended. But they are to some degree merely an extension of this system of wealth preservation. Their function, at least in part, is to indulge rich people in the belief that their college is open to all on the basis of merit.

The plummeting admission rates of the very top schools nonetheless leave many of the children of the 9.9 percent facing long odds. But not to worry, junior 9.9 percenters! We've created a new range of elite colleges just for you. Thanks to ambitious university administrators and the ever-expanding rankings machine at U.S. News & World Report , 50 colleges are now as selective as Princeton was in 1980, when I applied. The colleges seem to think that piling up rejections makes them special. In fact, it just means that they have collectively opted to deploy their massive, tax-subsidized endowments to replicate privilege rather than fulfill their duty to produce an educated public.

The only thing going up as fast as the rejection rates at selective colleges is the astounding price of tuition. Measured relative to the national median salary, tuition and fees at top colleges more than tripled from 1963 to 2013. Throw in the counselors, the whisperers, the violin lessons, the private schools, and the cost of arranging for Junior to save a village in Micronesia, and it adds up. To be fair, financial aid closes the gap for many families and keeps the average cost of college from growing as fast as the sticker price. But that still leaves a question: Why are the wealthy so keen to buy their way in?

The short answer, of course, is that it's worth it.

In the United States, the premium that college graduates earn over their non-college-educated peers in young adulthood exceeds 70 percent. The return on education is 50 percent higher than what it was in 1950, and is significantly higher than the rate in every other developed country. In Norway and Denmark, the college premium is less than 20 percent; in Japan, it is less than 30 percent; in France and Germany, it's about 40 percent.

All of this comes before considering the all-consuming difference between "good" schools and the rest. Ten years after starting college, according to data from the Department of Education, the top decile of earners from all schools had a median salary of $68,000 . But the top decile from the 10 highest-earning colleges raked in $220,000 -- make that $250,000 for No. 1, Harvard -- and the top decile at the next 30 colleges took home $157,000. (Not surprisingly, the top 10 had an average acceptance rate of 9 percent, and the next 30 were at 19 percent.)

It is entirely possible to get a good education at the many schools that don't count as "good" in our brand-obsessed system. But the "bad" ones really are bad for you. For those who made the mistake of being born to the wrong parents, our society offers a kind of virtual education system. It has places that look like colleges -- but aren't really. It has debt -- and that, unfortunately, is real. The people who enter into this class hologram do not collect a college premium; they wind up in something more like indentured servitude.

So what is the real source of this premium for a "good education" that we all seem to crave?

One of the stories we tell ourselves is that the premium is the reward for the knowledge and skills the education provides us. Another, usually unfurled after a round of drinks, is that the premium is a reward for the superior cranial endowments we possessed before setting foot on campus. We are, as some sociologists have delicately put it, a "cognitive elite."

Behind both of these stories lies one of the founding myths of our meritocracy. One way or the other, we tell ourselves, the rising education premium is a direct function of the rising value of meritorious people in a modern economy. That is, not only do the meritorious get ahead, but the rewards we receive are in direct proportion to our merit.

But the fact is that degree holders earn so much more than the rest not primarily because they are better at their job, but because they mostly take different categories of jobs. Well over half of Ivy League graduates, for instance, typically go straight into one of four career tracks that are generally reserved for the well educated: finance, management consulting, medicine, or law. To keep it simple, let's just say that there are two types of occupations in the world: those whose members have collective influence in setting their own pay, and those whose members must face the music on their own. It's better to be a member of the first group. Not surprisingly, that is where you will find the college crowd.

why do America's doctors make twice as much as those of other wealthy countries? Given that the United States has placed dead last five times running in the Commonwealth Fund's ranking of health-care systems in high-income countries, it's hard to argue that they are twice as gifted at saving lives. Dean Baker, a senior economist with the Center for Economic and Policy Research, has a more plausible suggestion : "When economists like me look at medicine in America -- whether we lean left or right politically -- we see something that looks an awful lot like a cartel." Through their influence on the number of slots at medical schools, the availability of residencies, the licensing of foreign-trained doctors, and the role of nurse practitioners, physicians' organizations can effectively limit the competition their own members face -- and that is exactly what they do.

Lawyers (or at least a certain elite subset of them) have apparently learned to play the same game. Even after the collapse of the so-called law-school bubble, America's lawyers are No. 1 in international salary rankings and earn more than twice as much, on average, as their wig-toting British colleagues. The University of Chicago law professor Todd Henderson, writing for Forbes in 2016, offered a blunt assessment : "The American Bar Association operates a state-approved cartel."

Similar occupational licensing schemes provide shelter for the meritorious in a variety of other sectors. The policy researchers Brink Lindsey and Steven Teles detail the mechanisms in The Captured Economy . Dentists' offices, for example, have a glass ceiling that limits what dental hygienists can do without supervision, keeping their bosses in the 9.9 percent. Copyright and patent laws prop up profits and salaries in the education-heavy pharmaceutical, software, and entertainment sectors. These arrangements are trifles, however, compared with what's on offer in tech and finance, two of the most powerful sectors of the economy.

By now we're thankfully done with the tech-sector fairy tales in which whip-smart cowboys innovate the heck out of a stodgy status quo. The reality is that five monster companies -- you know the names -- are worth about $3.5 trillion combined, and represent more than 40 percent of the market capital on the nasdaq stock exchange. Much of the rest of the technology sector consists of virtual entities waiting patiently to feed themselves to these beasts.

Let's face it: This is Monopoly money with a smiley emoji. Our society figured out some time ago how to deal with companies that attempt to corner the market on viscous substances like oil. We don't yet know what to do with the monopolies that arise out of networks and scale effects in the information marketplace. Until we do, the excess profits will stick to those who manage to get closest to the information honeypot. You can be sure that these people will have a great deal of merit.

The candy-hurling godfather of today's meritocratic class, of course, is the financial-services industry. Americans now turn over $1 of every $12 in GDP to the financial sector; in the 1950s, the bankers were content to keep only $1 out of $40. The game is more sophisticated than a two-fisted money grab, but its essence was made obvious during the 2008 financial crisis. The public underwrites the risks; the financial gurus take a seat at the casino; and it's heads they win, tails we lose. The financial system we now have is not a product of nature. It has been engineered, over decades, by powerful bankers, for their own benefit and for that of their posterity.

Who is not in on the game? Auto workers, for example. Caregivers. Retail workers. Furniture makers. Food workers. The wages of American manufacturing and service workers consistently hover in the middle of international rankings. The exceptionalism of American compensation rates comes to an end in the kinds of work that do not require a college degree.

You see, when educated people with excellent credentials band together to advance their collective interest, it's all part of serving the public good by ensuring a high quality of service, establishing fair working conditions, and giving merit its due. That's why we do it through "associations," and with the assistance of fellow professionals wearing white shoes. When working-class people do it -- through unions -- it's a violation of the sacred principles of the free market. It's thuggish and anti-modern. Imagine if workers hired consultants and "compensation committees," consisting of their peers at other companies, to recommend how much they should be paid. The result would be -- well, we know what it would be, because that's what CEOs do.

It isn't a coincidence that the education premium surged during the same years that membership in trade unions collapsed. In 1954, 28 percent of all workers were members of trade unions, but by 2017 that figure was down to 11 percent.

Education -- the thing itself , not the degree -- is always good. A genuine education opens minds and makes good citizens. It ought to be pursued for the sake of society . In our unbalanced system, however, education has been reduced to a private good, justifiable only by the increments in graduates' paychecks. Instead of uniting and enriching us, it divides and impoverishes. Which is really just a way of saying that our worthy ideals of educational opportunity are ultimately no match for the tidal force of the Gatsby Curve. The metric that has tracked the rising college premium with the greatest precision is -- that's right -- intergenerational earnings elasticity, or IGE. Across countries, the same correlation obtains: the higher the college premium, the lower the social mobility.

As I'm angling all the angles for my daughter's college applications -- the counselor is out, and the SAT whisperer was never going to happen -- I realize why this delusion of merit is so hard to shake. If I -- I mean, she -- can pull this off, well, there's the proof that we deserve it! If the system can be gamed, well then, our ability to game the system has become the new test of merit.

So go ahead and replace the SATs with shuffleboard on the high seas, or whatever you want. Who can doubt that we'd master that game, too? How quickly would we convince ourselves of our absolute entitlement to the riches that flow directly and tangibly from our shuffling talent? How soon before we perfected the art of raising shuffleboard wizards? Would any of us notice or care which way the ship was heading?

Let's suppose that some of us do look up. We see the iceberg. Will that induce us to diminish our exertions in supreme child-rearing? The grim truth is that, as long as good parenting and good citizenship are in conflict, we're just going to pack a few more violins for the trip.

[Jun 06, 2018] Top 10 percent of US households control nearly 75 percent of all wealth Average Americans pretend to be temporarily embarrassed millionaires by going further into debt

Top ten percent are millionaires. you need approximately 1,2 million dollars of net worth to get into this category. United States Net Worth Brackets, Percentiles, and Top One Percent - DQYDJ
Jun 06, 2018 | www.mybudget360.com

We currently exist in a land of financial contradictions. US household incomes adjusting for inflation are back to levels last seen in the late 1980s. However, holiday spending is going strongly largely by people going into big debt . Many are going to be paying for the holiday season of 2013 deep into years to come. More troubling than spending via debt is the record level of wealth inequality in the United States.

We would need to go back to the Gilded Age to find similar levels of wealth inequality.

The latest data shows that roughly 75 percent of the financial wealth in America is held in the hands of the top 10 percent of households. Or to invert this, 25 percent of all US wealth is divided up amongst the bottom 90 percent of the population.

Wealth is the true measure of financial stability. It used to be the case that housing was the one safe store of wealth for Americans but Wall Street has hijacked this asset class and has converted it to another commodity to speculate on. Yet by looking at spending habits and financial behavior many Americans think they are simply temporarily embarrassed millionaires.

They act against their own interests while wealth inequality rages on.

[Jun 06, 2018] The Birth of the New American Aristocracy

Images were deleted. Refer to the original link for full text.
Notable quotes:
"... According to Miles Corak, an economics professor at the City University of New York, half a century ago IGE in America was less than 0.3 . Today, it is about 0.5. In America, the game is half over once you've selected your parents. IGE is now higher here than in almost every other developed economy. On this measure of economic mobility, the United States is more like Chile or Argentina than Japan or Germany. ..."
"... Social Register ..."
"... Obesity, diabetes, heart disease, kidney disease, and liver disease are all two to three times more common in individuals who have a family income of less than $35,000 than in those who have a family income greater than $100,000. Among low-educated, middle-aged whites, the death rate in the United States -- alone in the developed world -- increased in the first decade and a half of the 21st century. Driving the trend is the rapid growth in what the Princeton economists Anne Case and Angus Deaton call "deaths of despair" -- suicides and alcohol- and drug-related deaths. ..."
"... Why can't they get their act together? ..."
"... This article appears in the June 2018 print edition with the headline "The Birth of a New American Aristocracy." ..."
Jun 06, 2018 | www.theatlantic.com

... ... ...

At the end of each week, we would return to our place. My reality was the aggressively middle-class world of 1960s and '70s U.S. military bases and the communities around them. Life was good there, too, but the pizza came from a box, and it was Lucky Charms for breakfast. Our glory peaked on the day my parents came home with a new Volkswagen camper bus. As I got older, the holiday pomp of patriotic luncheons and bridge-playing rituals came to seem faintly ridiculous and even offensive, like an endless birthday party for people whose chief accomplishment in life was just showing up. I belonged to a new generation that believed in getting ahead through merit, and we defined merit in a straightforward way: test scores, grades, competitive résumé-stuffing, supremacy in board games and pickup basketball, and, of course, working for our keep. For me that meant taking on chores for the neighbors, punching the clock at a local fast-food restaurant, and collecting scholarships to get through college and graduate school. I came into many advantages by birth, but money was not among them.

The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people's children.

I've joined a new aristocracy now, even if we still call ourselves meritocratic winners. If you are a typical reader of The Atlantic , you may well be a member too. (And if you're not a member, my hope is that you will find the story of this new class even more interesting -- if also more alarming.) To be sure, there is a lot to admire about my new group, which I'll call -- for reasons you'll soon see -- the 9.9 percent. We've dropped the old dress codes, put our faith in facts, and are (somewhat) more varied in skin tone and ethnicity. People like me, who have waning memories of life in an earlier ruling caste, are the exception, not the rule.

By any sociological or financial measure, it's good to be us. It's even better to be our kids. In our health, family life, friendship networks, and level of education, not to mention money, we are crushing the competition below. But we do have a blind spot, and it is located right in the center of the mirror: We seem to be the last to notice just how rapidly we've morphed, or what we've morphed into.

Related Story

The meritocratic class has mastered the old trick of consolidating wealth and passing privilege along at the expense of other people's children. We are not innocent bystanders to the growing concentration of wealth in our time. We are the principal accomplices in a process that is slowly strangling the economy, destabilizing American politics, and eroding democracy. Our delusions of merit now prevent us from recognizing the nature of the problem that our emergence as a class represents. We tend to think that the victims of our success are just the people excluded from the club. But history shows quite clearly that, in the kind of game we're playing, everybody loses badly in the end.

2. The Discreet Charm of the 9.9 Percent

Let's talk first about money -- even if money is only one part of what makes the new aristocrats special. There is a familiar story about rising inequality in the United States, and its stock characters are well known. The villains are the fossil-fueled plutocrat, the Wall Street fat cat, the callow tech bro, and the rest of the so-called top 1 percent. The good guys are the 99 percent, otherwise known as "the people" or "the middle class." The arc of the narrative is simple: Once we were equal, but now we are divided. The story has a grain of truth to it. But it gets the characters and the plot wrong in basic ways.

It is in fact the top 0.1 percent who have been the big winners in the growing concentration of wealth over the past half century. According to the UC Berkeley economists Emmanuel Saez and Gabriel Zucman, the 160,000 or so households in that group held 22 percent of America's wealth in 2012 , up from 10 percent in 1963. If you're looking for the kind of money that can buy elections, you'll find it inside the top 0.1 percent alone.


A Tale of Three Classes ( Figure 1 ):
The 9.9 percent hold most of the wealth in the United States.

Saez / Zucman

Every piece of the pie picked up by the 0.1 percent, in relative terms, had to come from the people below. But not everyone in the 99.9 percent gave up a slice. Only those in the bottom 90 percent did. At their peak, in the mid-1980s, people in this group held 35 percent of the nation's wealth. Three decades later that had fallen 12 points -- exactly as much as the wealth of the 0.1 percent rose.

In between the top 0.1 percent and the bottom 90 percent is a group that has been doing just fine. It has held on to its share of a growing pie decade after decade. And as a group, it owns substantially more wealth than do the other two combined. In the tale of three classes (see Figure 1), it is represented by the gold line floating high and steady while the other two duke it out. You'll find the new aristocracy there. We are the 9.9 percent.

So what kind of characters are we, the 9.9 percent? We are mostly not like those flamboyant political manipulators from the 0.1 percent. We're a well-behaved, flannel-suited crowd of lawyers, doctors, dentists, mid-level investment bankers, M.B.A.s with opaque job titles, and assorted other professionals -- the kind of people you might invite to dinner. In fact, we're so self-effacing, we deny our own existence. We keep insisting that we're "middle class."

As of 2016, it took $1.2 million in net worth to make it into the 9.9 percent; $2.4 million to reach the group's median; and $10 million to get into the top 0.9 percent. (And if you're not there yet, relax: Our club is open to people who are on the right track and have the right attitude.) "We are the 99 percent" sounds righteous, but it's a slogan, not an analysis. The families at our end of the spectrum wouldn't know what to do with a pitchfork.

We are also mostly, but not entirely, white. According to a Pew Research Center analysis, African Americans represent 1.9 percent of the top 10th of households in wealth; Hispanics, 2.4 percent; and all other minorities, including Asian and multiracial individuals, 8.8 percent -- even though those groups together account for 35 percent of the total population.

One of the hazards of life in the 9.9 percent is that our necks get stuck in the upward position. We gaze upon the 0.1 percent with a mixture of awe, envy, and eagerness to obey. As a consequence, we are missing the other big story of our time. We have left the 90 percent in the dust -- and we've been quietly tossing down roadblocks behind us to make sure that they never catch up.

Let's suppose that you start off right in the middle of the American wealth distribution. How high would you have to jump to make it into the 9.9 percent? In financial terms, the measurement is easy and the trend is unmistakable. In 1963, you would have needed to multiply your wealth six times. By 2016, you would have needed to leap twice as high -- increasing your wealth 12-fold -- to scrape into our group. If you boldly aspired to reach the middle of our group rather than its lower edge, you'd have needed to multiply your wealth by a factor of 25 . On this measure, the 2010s look much like the 1920s.

If you are starting at the median for people of color, you'll want to practice your financial pole-vaulting. The Institute for Policy Studies calculated that, setting aside money invested in "durable goods" such as furniture and a family car, the median black family had net wealth of $1,700 in 2013, and the median Latino family had $2,000, compared with $116,800 for the median white family. A 2015 study in Boston found that the wealth of the median white family there was $247,500, while the wealth of the median African American family was $8. That is not a typo. That's two grande cappuccinos. That and another 300,000 cups of coffee will get you into the 9.9 percent.

Video: America's Class Problem

https://www.youtube.com/embed/hb28kAavh0M?enablejsapi=1

N one of this matters, you will often hear, because in the United States everyone has an opportunity to make the leap: Mobility justifies inequality. As a matter of principle, this isn't true. In the United States, it also turns out not to be true as a factual matter. Contrary to popular myth, economic mobility in the land of opportunity is not high, and it's going down.

Imagine yourself on the socioeconomic ladder with one end of a rubber band around your ankle and the other around your parents' rung. The strength of the rubber determines how hard it is for you to escape the rung on which you were born. If your parents are high on the ladder, the band will pull you up should you fall; if they are low, it will drag you down when you start to rise. Economists represent this concept with a number they call "intergenerational earnings elasticity," or IGE, which measures how much of a child's deviation from average income can be accounted for by the parents' income. An IGE of zero means that there's no relationship at all between parents' income and that of their offspring. An IGE of one says that the destiny of a child is to end up right where she came into the world.

According to Miles Corak, an economics professor at the City University of New York, half a century ago IGE in America was less than 0.3 . Today, it is about 0.5. In America, the game is half over once you've selected your parents. IGE is now higher here than in almost every other developed economy. On this measure of economic mobility, the United States is more like Chile or Argentina than Japan or Germany.

The story becomes even more disconcerting when you see just where on the ladder the tightest rubber bands are located. Canada, for example, has an IGE of about half that of the U.S. Yet from the middle rungs of the two countries' income ladders, offspring move up or down through the nearby deciles at the same respectable pace. The difference is in what happens at the extremes. In the United States, it's the children of the bottom decile and, above all, the top decile -- the 9.9 percent -- who settle down nearest to their starting point. Here in the land of opportunity, the taller the tree, the closer the apple falls.

All of this analysis of wealth percentiles, to be clear, provides only a rough start in understanding America's evolving class system. People move in and out of wealth categories all the time without necessarily changing social class, and they may belong to a different class in their own eyes than they do in others'. Yet even if the trends in the monetary statistics are imperfect illustrations of a deeper process, they are nonetheless registering something of the extraordinary transformation that's taking place in our society.

A few years ago, Alan Krueger, an economist and a former chairman of the Obama administration's Council of Economic Advisers, was reviewing the international mobility data when he caught a glimpse of the fundamental process underlying our present moment . Rising immobility and rising inequality aren't like two pieces of driftwood that happen to have shown up on the beach at the same time, he noted. They wash up together on every shore. Across countries, the higher the inequality, the higher the IGE (see Figure 2). It's as if human societies have a natural tendency to separate, and then, once the classes are far enough apart, to crystallize.


The Great Gatsby Curve ( Figure 2 ): Inequality and class immobility go together.

Miles Corak

Economists are prudent creatures, and they'll look up from a graph like that and remind you that it shows only correlation, not causation. That's a convenient hedge for those of us at the top because it keeps alive one of the founding myths of America's meritocracy: that our success has nothing to do with other people's failure. It's a pleasant idea. But around the world and throughout history, the wealthy have advanced the crystallization process in a straightforward way. They have taken their money out of productive activities and put it into walls. Throughout history, moreover, one social group above all others has assumed responsibility for maintaining and defending these walls. Its members used to be called aristocrats. Now we're the 9.9 percent. The main difference is that we have figured out how to use the pretense of being part of the middle as one of our strategies for remaining on top.

Krueger liked the graph shown in Figure 2 so much that he decided to give it a name: the Great Gatsby Curve. It's a good choice, and it resonates strongly with me. F. Scott Fitzgerald's novel about the breakdown of the American dream is set in 1922, or right around the time that my great-grandfather was secretly siphoning money from Standard Oil and putting it into a shell company in Canada. It was published in 1925, just as special counsel was turning up evidence that bonds from that company had found their way into the hands of the secretary of the interior. Its author was drinking his way through the cafés of Paris just as Colonel Robert W. Stewart was running away from subpoenas to testify before the United States Senate about his role in the Teapot Dome scandal. We are only now closing in on the peak of inequality that his generation achieved, in 1928. I'm sure they thought it would go on forever, too.

3. The Origin of a Species

Money can't buy you class, or so my grandmother used to say. But it can buy a private detective. Grandmother was a Kentucky debutante and sometime fashion model (kind of like Daisy Buchanan in The Great Gatsby , weirdly enough), so she knew what to do when her eldest son announced his intention to marry a woman from Spain. A gumshoe promptly reported back that the prospective bride's family made a living selling newspapers on the streets of Barcelona. Grandmother instituted an immediate and total communications embargo. In fact, my mother's family owned and operated a large paper-goods factory. When children came, Grandmother at last relented. Determined to do the right thing, she arranged for the new family, then on military assignment in Hawaii, to be inscribed in the New York Social Register .

Sociologists would say, in their dry language, that my grandmother was a zealous manager of the family's social capital -- and she wasn't about to let some Spanish street urchin run away with it. She did have a point, even if her facts were wrong. Money may be the measure of wealth, but it is far from the only form of it. Family, friends, social networks, personal health, culture, education, and even location are all ways of being rich, too. These nonfinancial forms of wealth, as it turns out, aren't simply perks of membership in our aristocracy. They define us.

We are the people of good family, good health, good schools, good neighborhoods, and good jobs. We may want to call ourselves the "5Gs" rather than the 9.9 percent. We are so far from the not-so-good people on all of these dimensions, we are beginning to resemble a new species. And, just as in Grandmother's day, the process of speciation begins with a love story -- or, if you prefer, sexual selection.

The polite term for the process is assortative mating . The phrase is sometimes used to suggest that this is another of the wonders of the internet age, where popcorn at last meets butter and Yankees fan finds Yankees fan. In fact, the frenzy of assortative mating today results from a truth that would have been generally acknowledged by the heroines of any Jane Austen novel: Rising inequality decreases the number of suitably wealthy mates even as it increases the reward for finding one and the penalty for failing to do so. According to one study, the last time marriage partners sorted themselves by educational status as much as they do now was in the 1920s .

For most of us, the process is happily invisible. You meet someone under a tree on an exclusive campus or during orientation at a high-powered professional firm, and before you know it, you're twice as rich. But sometimes -- Grandmother understood this well -- extra measures are called for. That's where our new technology puts bumbling society detectives to shame. Ivy Leaguers looking to mate with their equals can apply to join a dating service called the League. It's selective, naturally: Only 20 to 30 percent of New York applicants get in. It's sometimes called "Tinder for the elites."


From Our June 2018 Issue

Subscribe to The Atlantic and support 160 years of independent journalism

Subscribe

It is misleading to think that assortative mating is symmetrical, as in city mouse marries city mouse and country mouse marries country mouse. A better summary of the data would be: Rich mouse finds love, and poor mouse gets screwed. It turns out -- who knew? -- that people who are struggling to keep it all together have a harder time hanging on to their partner. According to the Harvard political scientist Robert Putnam, 60 years ago just 20 percent of children born to parents with a high-school education or less lived in a single-parent household; now that figure is nearly 70 percent. Among college-educated households, by contrast, the single-parent rate remains less than 10 percent. Since the 1970s, the divorce rate has declined significantly among college-educated couples, while it has risen dramatically among couples with only a high-school education -- even as marriage itself has become less common. The rate of single parenting is in turn the single most significant predictor of social immobility across counties, according to a study led by the Stanford economist Raj Chetty.

None of which is to suggest that individuals are wrong to seek a suitable partner and make a beautiful family. People should -- and presumably always will -- pursue happiness in this way. It's one of the delusions of our meritocratic class, however, to assume that if our actions are individually blameless, then the sum of our actions will be good for society. We may have studied Shakespeare on the way to law school, but we have little sense for the tragic possibilities of life. The fact of the matter is that we have silently and collectively opted for inequality, and this is what inequality does. It turns marriage into a luxury good, and a stable family life into a privilege that the moneyed elite can pass along to their children. How do we think that's going to work out?

This divergence of families by class is just one part of a process that is creating two distinct forms of life in our society. Stop in at your local yoga studio or SoulCycle class, and you'll notice that the same process is now inscribing itself in our own bodies. In 19th-century England, the rich really were different. They didn't just have more money; they were taller -- a lot taller. According to a study colorfully titled "On English Pygmies and Giants," 16-year-old boys from the upper classes towered a remarkable 8.6 inches, on average, over their undernourished, lower-class countrymen. We are reproducing the same kind of division via a different set of dimensions.

Obesity, diabetes, heart disease, kidney disease, and liver disease are all two to three times more common in individuals who have a family income of less than $35,000 than in those who have a family income greater than $100,000. Among low-educated, middle-aged whites, the death rate in the United States -- alone in the developed world -- increased in the first decade and a half of the 21st century. Driving the trend is the rapid growth in what the Princeton economists Anne Case and Angus Deaton call "deaths of despair" -- suicides and alcohol- and drug-related deaths.

The sociological data are not remotely ambiguous on any aspect of this growing divide. We 9.9 percenters live in safer neighborhoods, go to better schools, have shorter commutes, receive higher-quality health care, and, when circumstances require, serve time in better prisons. We also have more friends -- the kind of friends who will introduce us to new clients or line up great internships for our kids.

These special forms of wealth offer the further advantages that they are both harder to emulate and safer to brag about than high income alone. Our class walks around in the jeans and T‑shirts inherited from our supposedly humble beginnings. We prefer to signal our status by talking about our organically nourished bodies, the awe-inspiring feats of our offspring, and the ecological correctness of our neighborhoods. We have figured out how to launder our money through higher virtues.

Most important of all, we have learned how to pass all of these advantages down to our children. In America today, the single best predictor of whether an individual will get married, stay married, pursue advanced education, live in a good neighborhood, have an extensive social network, and experience good health is the performance of his or her parents on those same metrics.

We're leaving the 90 percent and their offspring far behind in a cloud of debts and bad life choices that they somehow can't stop themselves from making. We tend to overlook the fact that parenting is more expensive and motherhood more hazardous in the United States than in any other developed country, that campaigns against family planning and reproductive rights are an assault on the families of the bottom 90 percent, and that law-and-order politics serves to keep even more of them down. We prefer to interpret their relative poverty as vice: Why can't they get their act together?

New forms of life necessarily give rise to new and distinct forms of consciousness. If you doubt this, you clearly haven't been reading the "personal and household services" ads on Monster.com. At the time of this writing, the section for my town of Brookline, Massachusetts, featured one placed by a "busy professional couple" seeking a "Part Time Nanny." The nanny (or manny -- the ad scrupulously avoids committing to gender) is to be "bright, loving, and energetic"; "friendly, intelligent, and professional"; and "a very good communicator, both written and verbal." She (on balance of probability) will "assist with the care and development" of two children and will be "responsible for all aspects of the children's needs," including bathing, dressing, feeding, and taking the young things to and from school and activities. That's why a "college degree in early childhood education" is "a plus."

In short, Nanny is to have every attribute one would want in a terrific, professional, college-educated parent. Except, of course, the part about being an actual professional, college-educated parent. There is no chance that Nanny will trade places with our busy 5G couple. She "must know the proper etiquette in a professionally run household" and be prepared to "accommodate changing circumstances." She is required to have "5+ years experience as a Nanny," which makes it unlikely that she'll have had time to get the law degree that would put her on the other side of the bargain. All of Nanny's skills, education, experience, and professionalism will land her a job that is "Part Time."

The ad is written in flawless, 21st-century business-speak, but what it is really seeking is a governess -- that exquisitely contradictory figure in Victorian literature who is both indistinguishable in all outward respects from the upper class and yet emphatically not a member of it. Nanny's best bet for moving up in the world is probably to follow the example of Jane Eyre and run off with the lord (or lady) of the manor.

If you look beyond the characters in this unwritten novel about Nanny and her 5G masters, you'll see a familiar shape looming on the horizon. The Gatsby Curve has managed to reproduce itself in social, physiological, and cultural capital. Put more accurately: There is only one curve, but it operates through a multiplicity of forms of wealth.

Rising inequality does not follow from a hidden law of economics, as the otherwise insightful Thomas Piketty suggested when he claimed that the historical rate of return on capital exceeds the historical rate of growth in the economy. Inequality necessarily entrenches itself through other, nonfinancial, intrinsically invidious forms of wealth and power. We use these other forms of capital to project our advantages into life itself. We look down from our higher virtues in the same way the English upper class looked down from its taller bodies, as if the distinction between superior and inferior were an artifact of nature. That's what aristocrats do.

... ... ...

5. The Invisible Hand of Government

As far as Grandfather was concerned, the assault on the productive classes began long before the New Deal. It all started in 1913, with the ratification of the Sixteenth Amendment. In case you've forgotten, that amendment granted the federal government the power to levy a direct personal-income tax. It also happens that ratification took place just a few months after Grandfather was born, which made sense to me in a strange way. By far the largest part of his lifetime income was attributable to his birth.

Grandfather was a stockbroker for a time. I eventually figured out that he mostly traded his own portfolio and bought a seat at the stock exchange for the purpose. Politics was a hobby, too. At one point, he announced his intention to seek the Republican nomination for lieutenant governor of Connecticut. (It wasn't clear whether anybody outside the clubhouse heard him.) What he really liked to do was fly. The memories that mattered most to him were his years of service as a transport pilot during World War II. Or the time he and Grandmother took to the Midwestern skies in a barnstorming plane. My grandparents never lost faith in the limitless possibilities of a life free from government. But in their last years, as the reserves passed down from the Colonel ran low, they became pretty diligent about collecting their Social Security and Medicare benefits.

There is a page in the book of American political thought -- Grandfather knew it by heart -- that says we must choose between government and freedom. But if you read it twice, you'll see that what it really offers is a choice between government you can see and government you can't. Aristocrats always prefer the invisible kind of government. It leaves them free to exercise their privileges. We in the 9.9 percent have mastered the art of getting the government to work for us even while complaining loudly that it's working for those other people.

Consider, for starters, the greatly exaggerated reports of our tax burdens. On guest panels this past holiday season, apologists for the latest round of upwardly aimed tax cuts offered versions of Mitt Romney's claim that the 47 percent of Americans who pay no federal income tax in a typical year have "no skin in the game." Baloney. Sure, the federal individual-income tax, which raised $1.6 trillion last year, remains progressive. But the $1.2 trillion raised by the payroll tax hits all workers -- but not investors, such as Romney -- and it hits those making lower incomes at a higher rate, thanks to a cap on the amount of income subject to the tax. Then there's the $2.3 trillion raised by state and local governments, much of it collected through regressive sales and property taxes. The poorest quintile of Americans pays more than twice the rate of state taxes as the top 1 percent does , and about half again what the top 10 percent pays.

Our false protests about paying all the taxes, however, sound like songs of innocence compared with our mastery of the art of having the taxes returned to us. The income-tax system that so offended my grandfather has had the unintended effect of creating a highly discreet category of government expenditures. They're called "tax breaks," but it's better to think of them as handouts that spare the government the inconvenience of collecting the money in the first place. In theory, tax expenditures can be used to support any number of worthy social purposes, and a few of them, such as the earned income-tax credit, do actually go to those with a lower income. But more commonly, because their value is usually a function of the amount of money individuals have in the first place, and those individuals' marginal tax rates, the benefits flow uphill.

Let us count our blessings: Every year, the federal government doles out tax expenditures through deductions for retirement savings (worth $137 billion in 2013); employer-sponsored health plans ($250 billion); mortgage-interest payments ($70 billion); and, sweetest of all, income from watching the value of your home, stock portfolio, and private-equity partnerships grow ($161 billion). In total, federal tax expenditures exceeded $900 billion in 2013. That's more than the cost of Medicare, more than the cost of Medicaid, more than the cost of all other federal safety-net programs put together. And -- such is the beauty of the system -- 51 percent of those handouts went to the top quintile of earners, and 39 percent to the top decile.

The best thing about this program of reverse taxation, as far as the 9.9 percent are concerned, is that the bottom 90 percent haven't got a clue. The working classes get riled up when they see someone at the grocery store flipping out their food stamps to buy a T-bone. They have no idea that a nice family on the other side of town is walking away with $100,000 for flipping their house.

But wait, there's more! Let's not forget about the kids. If the secrets of a nation's soul may be read from its tax code, then our nation must be in love with the children of rich people. The 2017 tax law raises the amount of money that married couples can pass along to their heirs tax-free from a very generous $11 million to a magnificent $22 million. Correction: It's not merely tax-free; it's tax-subsidized. The unrealized tax liability on the appreciation of the house you bought 40 years ago, or on the stock portfolio that has been gathering moths -- all of that disappears when you pass the gains along to the kids. Those foregone taxes cost the United States Treasury $43 billion in 2013 alone -- about three times the amount spent on the Children's Health Insurance Program.

Grandfather's father, the Colonel, died in 1947, when the maximum estate-tax rate was a now-unheard-of 77 percent. When the remainder was divvied up among four siblings, Grandfather had barely enough to pay for the Bentley and keep up with dues at the necessary clubs. The government made sure that I would grow up in the middle class. And for that I will always be grateful.

... ... ...

8. The Politics of Resentment

The political theology of the meritocracy has no room for resentment. We are taught to run the competition of life with our eyes on the clock and not on one another, as if we were each alone. If someone scores a powerboat on the Long Island waterways, so much the better for her. The losers will just smile and try harder next time.

In the real world, we humans are always looking from side to side. We are intensely conscious of what other people are thinking and doing, and conscious to the point of preoccupation with what they think about us. Our status is visible only through its reflection in the eyes of others.

Perhaps the best evidence for the power of an aristocracy is to be found in the degree of resentment it provokes. By that measure, the 9.9 percent are doing pretty well indeed. The surest sign of an increase in resentment is a rise in political division and instability. We're positively acing that test. You can read all about it in the headlines of the past two years.

The 2016 presidential election marked a decisive moment in the history of resentment in the United States. In the person of Donald Trump, resentment entered the White House. It rode in on the back of an alliance between a tiny subset of super-wealthy 0.1 percenters (not all of them necessarily American) and a large number of 90 percenters who stand for pretty much everything the 9.9 percent are not.

According to exit polls by CNN and Pew, Trump won white voters by about 20 percent. But these weren't just any old whites (though they were old, too). The first thing to know about the substantial majority of them is that they weren't the winners in the new economy. To be sure, for the most part they weren't poor either. But they did have reason to feel judged by the market -- and found wanting. The counties that supported Hillary Clinton represented an astonishing 64 percent of the GDP, while Trump counties accounted for a mere 36 percent. Aaron Terrazas, a senior economist at Zillow, found that the median home value in Clinton counties was $250,000, while the median in Trump counties was $154,000. When you adjust for inflation, Clinton counties enjoyed real-estate price appreciation of 27 percent from January 2000 to October 2016; Trump counties got only a 6 percent bump.

The residents of Trump country were also the losers in the war on human health. According to Shannon Monnat, an associate professor of sociology at Syracuse, the Rust Belt counties that put the anti-government-health-care candidate over the top were those that lost the most people in recent years to deaths of despair -- those due to alcohol, drugs, and suicide. To make all of America as great as Trump country, you would have to torch about a quarter of total GDP, wipe a similar proportion of the nation's housing stock into the sea, and lose a few years in life expectancy. There's a reason why one of Trump's favorite words is unfair . That's the only word resentment wants to hear.

Even so, the distinguishing feature of Trump's (white) voters wasn't their income but their education, or lack thereof. Pew's latest analysis indicates that Trump lost college-educated white voters by a humiliating 17 percent margin. But he got revenge with non-college-educated whites, whom he captured by a stomping 36 percent margin. According to an analysis by Nate Silver, the 50 most educated counties in the nation surged to Clinton : In 2012, Obama had won them by a mere 17 percentage points; Clinton took them by 26 points. The 50 least educated counties moved in the opposite direction; whereas Obama had lost them by 19 points, Clinton lost them by 31. Majority-minority counties split the same way: The more educated moved toward Clinton, and the less educated toward Trump.

The historian Richard Hofstadter drew attention to Anti-intellectualism in American Life in 1963; Susan Jacoby warned in 2008 about The Age of American Unreason ; and Tom Nichols announced The Death of Expertise in 2017. In Trump, the age of unreason has at last found its hero. The "self-made man" is always the idol of those who aren't quite making it. He is the sacred embodiment of the American dream, the guy who answers to nobody, the poor man's idea of a rich man. It's the educated phonies this group can't stand. With his utter lack of policy knowledge and belligerent commitment to maintaining his ignorance, Trump is the perfect representative for a population whose idea of good governance is just to scramble the eggheads. When reason becomes the enemy of the common man, the common man becomes the enemy of reason.

Did I mention that the common man is white? That brings us to the other side of American-style resentment. You kick down, and then you close ranks around an imaginary tribe. The problem, you say, is the moochers, the snakes, the handout queens; the solution is the flag and the religion of your (white) ancestors. According to a survey by the political scientist Brian Schaffner, Trump crushed it among voters who "strongly disagree" that "white people have advantages because of the color of their skin," as well as among those who "strongly agree" that "women seek to gain power over men." It's worth adding that these responses measure not racism or sexism directly, but rather resentment. They're good for picking out the kind of people who will vehemently insist that they are the least racist or sexist person you have ever met, even as they vote for a flagrant racist and an accused sexual predator.

No one is born resentful. As mass phenomena, racism, xenophobia, anti-intellectualism, narcissism, irrationalism, and all other variants of resentment are as expensive to produce as they are deadly to democratic politics. Only long hours of television programming, intelligently manipulated social-media feeds, and expensively sustained information bubbles can actualize the unhappy dispositions of humanity to the point where they may be fruitfully manipulated for political gain. Racism in particular is not just a legacy of the past, as many Americans would like to believe; it also must be constantly reinvented for the present. Mass incarceration, fearmongering, and segregation are not just the results of prejudice, but also the means of reproducing it.

The raging polarization of American political life is not the consequence of bad manners or a lack of mutual understanding. It is just the loud aftermath of escalating inequality. It could not have happened without the 0.1 percent (or, rather, an aggressive subset of its members). Wealth always preserves itself by dividing the opposition. The Gatsby Curve does not merely cause barriers to be built on the ground; it mandates the construction of walls that run through other people's minds.

But that is not to let the 9.9 percent off the hook. We may not be the ones funding the race-baiting, but we are the ones hoarding the opportunities of daily life. We are the staff that runs the machine that funnels resources from the 90 percent to the 0.1 percent. We've been happy to take our cut of the spoils. We've looked on with smug disdain as our labors have brought forth a population prone to resentment and ripe for manipulation. We should be prepared to embrace the consequences.

The first important thing to know about these consequences is the most obvious: Resentment is a solution to nothing. It isn't a program of reform. It isn't "populism." It is an affliction of democracy, not an instance of it. The politics of resentment is a means of increasing inequality, not reducing it. Every policy change that has waded out of the Trump administration's baffling morass of incompetence makes this clear. The new tax law; the executive actions on the environment and telecommunications, and on financial-services regulation; the judicial appointments of conservative ideologues -- all will have the effect of keeping the 90 percent toiling in the foothills of merit for many years to come.

The second thing to know is that we are next in line for the chopping block. As the population of the resentful expands, the circle of joy near the top gets smaller. The people riding popular rage to glory eventually realize that we are less useful to them as servants of the economic machine than we are as model enemies of the people. The anti-blue-state provisions of the recent tax law have miffed some members of the 9.9 percent, but they're just a taste of the bad things that happen to people like us as the politics of resentment unfolds.

The past year provides ample confirmation of the third and most important consequence of the process: instability. Unreasonable people also tend to be ungovernable. I won't belabor the point. Just try doing a frequency search on the phrase constitutional crisis over the past five years. That's the thing about the Gatsby Curve. You think it's locking all of your gains in place. But the crystallization process actually has the effect of making the whole system more brittle. If you look again at history, you can get a sense of how the process usually ends.

10. The Choice

I like to think that the ending of The Great Gatsby is too down-beat. Even if we are doomed to row our boats ceaselessly back into the past, how do we know which part of the past that will be?

History shows us a number of aristocracies that have made good choices. The 9.9 percenters of ancient Athens held off the dead tide of the Gatsby Curve for a time, even if democracy wasn't quite the right word for their system of government. America's first generation of revolutionaries was mostly 9.9 percenters, and yet they turned their backs on the man at the very top in order to create a government of, by, and for the people. The best revolutions do not start at the bottom; they are the work of the upper-middle class.

These exceptions are rare, to be sure, and yet they are the story of the modern world. In total population, average life expectancy, material wealth, artistic expression, rates of violence, and almost every other measure that matters for the quality of human life, the modern world is a dramatically different place than anything that came before. Historians offer many complicated explanations for this happy turn in human events -- the steam engine, microbes, the weather -- but a simple answer precedes them all: equality. The history of the modern world is the unfolding of the idea at the vital center of the American Revolution.

The defining challenge of our time is to renew the promise of American democracy by reversing the calcifying effects of accelerating inequality. As long as inequality rules, reason will be absent from our politics; without reason, none of our other issues can be solved. It's a world-historical problem. But the solutions that have been put forward so far are, for the most part, shoebox in size.

Well-meaning meritocrats have proposed new and better tests for admitting people into their jewel-encrusted classrooms. Fine -- but we aren't going to beat back the Gatsby Curve by tweaking the formulas for excluding people from fancy universities. Policy wonks have taken aim at the more-egregious tax-code handouts, such as the mortgage-interest deduction and college-savings plans. Good -- and then what? Conservatives continue to recycle the characterological solutions, like celebrating traditional marriage or bringing back that old-time religion. Sure -- reforging familial and community bonds is a worthy goal. But talking up those virtues won't save any families from the withering pressures of a rigged economy. Meanwhile, coffee-shop radicals say they want a revolution. They don't seem to appreciate that the only simple solutions are the incredibly violent and destructive ones.

The American idea has always been a guide star, not a policy program, much less a reality. The rights of human beings never have been and never could be permanently established in a handful of phrases or old declarations. They are always rushing to catch up to the world that we inhabit. In our world, now, we need to understand that access to the means of sustaining good health, the opportunity to learn from the wisdom accumulated in our culture, and the expectation that one may do so in a decent home and neighborhood are not privileges to be reserved for the few who have learned to game the system. They are rights that follow from the same source as those that an earlier generation called life, liberty, and the pursuit of happiness.


Related Stories

Yes, the kind of change that really matters is going to require action from the federal government. That which creates monopoly power can also destroy it; that which allows money into politics can also take it out; that which has transferred power from labor to capital can transfer it back. Change also needs to happen at the state and local levels. How else are we going to open up our neighborhoods and restore the public character of education?

It's going to take something from each of us, too, and perhaps especially from those who happen to be the momentary winners of this cycle in the game. We need to peel our eyes away from the mirror of our own success and think about what we can do in our everyday lives for the people who aren't our neighbors. We should be fighting for opportunities for other people's children as if the future of our own children depended on it. It probably does.


This article appears in the June 2018 print edition with the headline "The Birth of a New American Aristocracy."

[Jun 06, 2018] What is the "optimum" level of inequality in the society?

Jun 06, 2018 | discussion.theguardian.com

Janeee -> Jas636 , 3 Jun 2018 21:52

There are many societies that tolerate a certain degree of economic inequality, but still provide decent living conditions, services and infrastructure for most citizens. The notion that we either have extreme inequality or extreme poverty is empirically and morally empty.

[Jun 05, 2018] "'Greater education and the need for more workers to receive it are not adequate explanations of inequality

Jun 05, 2018 | twitter.com

The decline in union density is.' @LipstickEcon on new research that links declining unionization to rising #inequality, via @Slate https://slate.com/human-interest/2018/05/study-unions-increasingly-represent-educated-workers.html #EGgrantee..."

[May 16, 2018] How university economic theories are failing us all RT -- Renegade Inc.

Notable quotes:
"... "When the facts change, I change my mind. What do you do, sir?" ..."
May 14, 2018 | www.rt.com

The economist John Maynard Keynes said "When the facts change, I change my mind. What do you do, sir?" But many students continue to be deceived by their professors who, even after the great financial crisis, refuse to change their mind and continue to actively peddle theories that are plain wrong. So on the show we ask if the academics are failing us, how do we begin to reverse such a heavily entrenched education system? Host Ross Ashcroft is joined by Professor Steve Keen and the author and economist Steven Payson.

[Apr 24, 2018] How neoliberal economics in universities achieve tenure

They achieve it by serving the financial oligarchy...
Few things are as dangerous as economists with physics envy [aeon.co].
Notable quotes:
"... "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning. ..."
Apr 24, 2018 | www.nakedcapitalism.com

marku52 , April 20, 2018 at 3:57 pm

Stumbling and Mumbling has a good riff on this topic:
". Economics, for me, is not about armchair theorizing. It should begin with the facts, and especially the big ones. The facts are that share buy-backs do usually matter, so thought experiments that say otherwise are wrong from the off. Similarly, the fact that wage inflation has been low for years (pdf) is much more significant than any theorizing about Phillips curves."

The comments are good as well:
"That's a category error: you don't define "Economics", tenure committees define it, and they award tenure to people who have a long record of publishing "internally consistent" ("armchair theorizing") papers."
"I found myself sitting next to a very likable young middle-aged academic tenured at an elite British university, whom henceforth I will refer to as Doctor X and whose field is closely associated with this blog. Every year I publish papers in the top journals and they're pure shit." Doctor X, who by now had had a glass or two, felt bad about this, not least because "students these days are so idealistic and eager to learn; they're really wonderful." Furthermore Doctor X could and would like "to write serious papers but what would be the point?" "
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/04/facts-vs-hand-waving-in-economics.html#comments

hemeantwell , April 20, 2018 at 4:59 pm

Yeah. I'm inclined to think the author needs to curb his enthusiasms and take up dejected drinking.

The nub of his presentation was a model in which consumers, due to cognitive limitations, were unable to fully examine every single product they purchased. The result was that regulations guaranteeing a certain standard of safety, quality and the like could improve competition by giving people more time to shop around instead of having to devote so much time to investigate specific products. Thus, regulation would improve markets and competition

This is Nobel-level work? It amounts to finding a way to pitch a product to anti-regulation dogmatists. I'm sure that you could find similar arguments being made during the Progressive era regulatory push. Only they would have been framed more as "people will have more time to shop around if they're not killed by previous ingestion of the product."

Ape , April 22, 2018 at 3:32 am

Dude – they aren't actually doing fancy math. Linear regression – like it's 1850!

Most of their important proofs are irrelevant crap with wholes. The math is mostly undergraduate math! The emperor has no clothes!

The problem isn't just math trickery – it's not even proper ingenuity.

Just read a Summer or Krugman paper – it's 70 pages of words, 3 graphs of imaginary numbers and stats 2 equations. That's not mathematization.

Larry Motuz , April 22, 2018 at 4:34 pm

What I mean by 'mathemagics' is the misuse of mathematics –even simple mathematics -- to create the illusion that 'utility' or 'indifference curves' actually pertain to real concepts. In reality, they 'mathematize' gobbledygook passed off as coherent concepts. There is nothing so conceptually barren as 'utility' or 'indifference curve' analytics. The notion that one can derive any coherent 'demand' analysis for any one consumer that is individual human being (or life form of any kind) for any product, or that one can aggregate these up is mathematical junk.

Sound of the Suburbs , April 22, 2018 at 9:08 am

The Classical Economists used the broader political economy rather than today's narrow economics.

The Washington Consensus dreamed of a world run by the laws of economics.

The laws of economics worked in China's favour and the Western economies got hollowed out.

Disposable income = wages – (taxes + the cost of living)

Maximising profit required minimising wages.

The minimum wage is set when disposable income equals zero.

The minimum wage = taxes + the cost of living

China had it made and the West had tilted the playing field against itself.

The US eventually woke up the geopolitical consequences of a world governed by the laws of economics that had worked in China's favour.

Trump has just made things worse with his tax cuts.

Theory:
If we reduce taxes on the wealthy they will create more jobs and wages.

Reality:
If we reduce taxes on the wealthy they will create more jobs and wages in Asia where they can make more profit. They can then ship the stuff back here increasing Western trade deficits.

Sound of the Suburbs , April 22, 2018 at 9:09 am

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning. " Warren Buffet, 25 May 2005

Did your class think about the geopolitics?
I don't think so.

Sound of the Suburbs , April 22, 2018 at 9:17 am

William White (BIS, OECD) is on board for the benefits of the broader political economy.

https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s

[Apr 24, 2018] Neoliberal indoctrination at universities

Notable quotes:
"... First, we need to accept that there is no such thing as "value-free" analysis of the economy. As I've explained, neoclassical economics pretends to be ethically neutral while smuggling in an individualistic, anti-social ethos " – Howard Reed ..."
"... Fundamentally, economics is a religion, with priests, high priests, creed, dogma, punishment for heretics, and all the other trappings of a religion. But the pay is good, so Clive's rule for middle class jobs applies. ..."
"... Fooled by Randomness ..."
Apr 24, 2018 | www.nakedcapitalism.com

Economics conducted a curriculum review of 174 modules at 7 Russell Group universities -- rightly or wrongly considered the 'top' universities in the UK -- and we found that the uncritical acceptance of one type of economics begins with education. Under 10% of modules even mentioned anything other than mainstream or 'neoclassical' economics; in econometrics, over 90% of modules devoted more than two-thirds of their lectures to linear regression. Only 24% of exam questions required critical or independent thinking (i.e. were open-ended); this dropped to 8% if you only counted the compulsory macro and micro modules that form the core of economics education.

We have previously called this 'indoctrination', and while this may seem dramatic the dictionary definition of indoctrination is to "teach a person or set of people to accept a set of beliefs uncritically", which we think adequately characterises the results of the review, as well as our own experience and many widely used economics textbooks. Given this education, it is no wonder that economists remain wedded to the fundamental precepts of choice models and linear regression no matter where they turn their attention. By putting the method first, the implicit assumption becomes that answering a question using this framework is prima facie interesting, and critical evaluation of these tools against others is made unthinkable.


Jim Haygood , , April 20, 2018 at 11:01 am

For nearly thirty years after the Efficient Market Hypothesis (EMH) became received gospel in the mid-1960s, the claim that stock prices exhibited momentum (which shouldn't be true in a perfectly efficient market) was roundly mocked by mainstream economists.

Then in 1993, Jegadeesh and Titman published a paper titled "Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency" in the Journal of Finance . Its evidence for a momentum effect was impossible to refute.

So economists bolted en masse to the opposite side of the boat. Today there are thousands of papers on momentum, often presenting some fairly trivial arithmetic that home-based amateurs have long used. But it's formulated into equations with Greek letters, and a [totally boring] statistical panel appears in the Appendix to prove some statistical significance.

A few professors actually exploited their discoveries to get rich. Cliff Asness, a U of Chicago PhD (but a practitioner, not a professor) offers some light-hearted commentary on his mentor Eugene Fama:

Of course the book The Fama Portfolio also contains contributions by other authors (or how the heck did I get in there?) that reflect, directly or indirectly, on Gene's work.

Being able to read Gene's originals and some of the major papers by others that explore his work in one volume is both a treat and incredibly useful (these contributors, unlike John Liew and myself, are themselves serious academic luminaries!).

OK, enough shilling. If you love finance and don't immediately pine for this book, I can't help you any further☺

https://www.aqr.com/Insights/Perspectives/Add-More-Fama-to-Your-Portfolio

skippy , April 20, 2018 at 3:47 pm

Mr. Haygood

If it was only like the movie THX1138.

Where the police were call off their pursuit, when within a finger nail of – helping – their subject. Because the economic perimeters their models produced, with the help of computational machines, gave a ridged defined view of the operation. Seems the subject was operating outside the econometric perimeters due to mental illness – was a patient whom escaped at the time.

Alas we never get to see what he saw when he popped out on the surface, save a blinding orb.

In retrospect did they do the underground thingy to better control, could nature itself be a threat to the model, hence the need to control every aspect of environment for behavioral reasons.

Anywho I'll just leave this on my way to work:

"If we accept that we need fundamental reform, what should the new economics -- "de-conomics" as I'm calling it -- look like?

First, we need to accept that there is no such thing as "value-free" analysis of the economy. As I've explained, neoclassical economics pretends to be ethically neutral while smuggling in an individualistic, anti-social ethos " – Howard Reed

https://www.prospectmagazine.co.uk/magazine/the-case-for-a-new-economics

Synoia , April 20, 2018 at 11:33 am

Linear regression is economists' preferred empirical technique

That's really a powerful tool in a world which is chaotic.

The trouble with embracing chaos and catastrophe theory is the "chaos" part of predicting the future. But economists, being human and liking their paychecks, are not interested in any predictions which do not cater, or pander, to the needs of their bosses or paymasters.

Why, that might suggest the boss is wrong! Such heresy leads to a quick execution!

Fundamentally, economics is a religion, with priests, high priests, creed, dogma, punishment for heretics, and all the other trappings of a religion. But the pay is good, so Clive's rule for middle class jobs applies.

Disclaimer: My view of Religion is similar: Why?
1. You'll get your reward in the afterlife, after you are dead!
2. We know this is true, because we've never had a complaint.

Chris , April 20, 2018 at 12:22 pm

Linear regression certainly is a powerful tool for examining linear distributions, but it essential to first confirm that the distribution is linear, and to remember that on occasion, samples drawn from random (unrelated) distributions can show a spurious correlation.

Synoia , April 20, 2018 at 1:53 pm

but it essential to first confirm that the distribution is linear

Very true, but how is this proven? In nature and economics are there any linear distributions? If so over what range?

I notice a preponderance of using straight lines instead of growth curves. I also notice chaos, or noise, in behaviors, coupled with a complete non-understanding of entropy.

In nature linear behavior is unlikely. If it were linear we'd see straight branches on trees, rainfall evenly distributed and the wind would always blow at constant speed, with predictable eddies.

I suppose a rock dropped would exhibit linear behaviors until it hits the ground, and at that point in time the "dropping rock" system become decidedly chaotic, from stuck in the mud, to bouncing in a random direction, to bursting into pieces, pieces who's destiny is completely uncertain.

blennylips , April 20, 2018 at 2:40 pm

― Nassim Nicholas Taleb, Antifragile: Things That Gain from Disorder

I've debated many economists who claim to specialize in risk and probability: when one takes them slightly outside their narrow focus, but within the discipline of probability, they fall apart, with the disconsolate face of a gym rat in front of a gangster hit man."

Nassim, I think covers all this better than anyone else. Would love to hear of similarly comprehensive works.

https://www.penguinrandomhouse.com/series/INO/incerto

Fooled by Randomness covers problems with assumed linearity and normal distributions.

[Apr 07, 2018] Richest one percent will own two-thirds of all wealth by 2030 by Michael Savage

Neoliberalism as a social system is self-destructive -- similar to Trotskyism from which it was derived.
World leaders urged to act as anger over inequality reaches a 'tipping point'
Typical neoliberal mantra "need to rise productivity" is a typical neoliberal fake: look at Amazon for shining example here.
Notable quotes:
"... The real focus of our taxation system should be to tax wealth and recipients of silly amounts of annual income. ..."
"... Ur talking about something called "Reagan-nomics" or what was commonly and lovingly referred to as "trickle down economics". After the destruction of unionized labor, years of globalization, record profits for corporations & wall street and a high octane doze of Reagan / Thatcher Neoliberalism, "trickle down" has obviously been a complete failure. ..."
Apr 07, 2018 | www.theguardian.com

An alarming projection produced by the House of Commons library suggests that if trends seen since the 2008 financial crash were to continue, then the top 1% will hold 64% of the world's wealth by 2030. Even taking the financial crash into account, and measuring their assets over a longer period, they would still hold more than half of all wealth.

Since 2008, the wealth of the richest 1% has been growing at an average of 6% a year – much faster than the 3% growth in wealth of the remaining 99% of the world's population. Should that continue, the top 1% would hold wealth equating to $305tn (£216.5tn) – up from $140tn today.


BrianSand , 7 Apr 2018 14:53

The population of third world countries is skyrocketing. The population of developed countries, outside the importation of poor immigrants, is static. The top 1% of world population will continuously become comparatively richer as long as this is the case.
feliciafarrel -> apaliteno , 7 Apr 2018 14:50

but there's no way the UK has 10 million of the world's richest 75 million.

You need £550,000 to be in the top 1% in the world.

In the UK there are 27m households with an average of 1.94 adults per household.

25% of households have £550,000 or more.

That means 6.75m households are in the top 1% of the world, At 1.94 adults per household, that's 13,000,000 people.

However, assuming households are not 'legal people' but the adults within them are, then you'd have to divide household income by the number of adults (1.94) to get the wealth per person. So to reach £550,000 per person, a household would have to have net wealth of £1.067m, and only 10% of households have that wealth.

10% of 27m is 2.7m and that equates to only 5,240,000 people.

So in terms of households we easily reach 10m mark, but in terms of individual people, you are correct, it is 'only' 5.24m. Still and awful lot of people though.

Landlord52 -> Whattayagonnado huh , 7 Apr 2018 14:46
A single mother get £20k on benefits per years. Over 18 years that is £360,000. She has two kids, so that iwill cost £3,000 in education per years. 2 kids x 14 years x £3,500 per years = £98,000. We pay for child birth costs, free vaccinations, anti-natal care, free prescriptions, free eye care, free dental care, free school meals, we pay her countal tax bil. Plus if she is lucky, she get a free £450,000 council home.

Even if she works for a few years, it will never be enough to pay what she has received from the state. PLus we have to make provisions for her pension and her elderly care, meals on wheels, elderly health care etc...

That is easily £1m to £2million per single mother....

yeah... we are such a terrible society....

PotholeKid -> counttrumpage , 7 Apr 2018 14:45
The plebs are well on the way to figuring it out alright and so have the 1%. That's we now live under a militarized surveillance state which serves the elites.. Think again if voting will ever change this.. Bernie was doomed from the getgo.
hundredhander , 7 Apr 2018 14:42
I think the principle here is that the longer this goes on and the greater inequality becomes then the more extreme will be the countervailing force.

It is in everybody's interest that the world becomes fairer. That governments govern in the interests of as many people as possible. That public services like health and education are available to all regardless. That taxes are progressive and that governments have international treaties to deal with tax avoidance and evasion. That our democratic processes are as robust as possible and that all our organs of state are as transparent as possible and open to scrutiny to the public.

If the accumulation of wealth on this scale continues unabated it will end in tears... inevitably.

Furthermore I believe that there is a relationship between inequality - and all the things that go with it and follow from it - and environmental degradation.

Greater fairness between individuals and between countries is, in my opinion, one of the essential requirements for us to surmount the epic problems that we face in the world today.

DogsLivesMatter , 7 Apr 2018 14:41
I think most of us have are aware of what really happens at Davos. The wealthy and powerful are cooking up more schemes to screw the 99% over. Your Bono's and your Bill Gates are no friends to the working class or the working poor. Take Jeff Bezos for example. He has a mass of wealth totaling $112 Billion.

Jeff Bezos, or even Bill Gates could do that in an instant and still have Billions to spare. The super rich don't care about "regular" people, and never have.


Peter Rabbit ComfortablyPlumb 7 Apr 2018 14:25

This is the Osborne analogy regurgitated.

If you live in a £2.5 million house, you are wealthy, not average or poor. To be wealthy is not some form of human rights entitlement, especially if it is at the cost of the overwhelming majority. This concept is known as "greed" and "selfishness". Obviously your mantra is that of Gordon Gekko "greed is good".

The real focus of our taxation system should be to tax wealth and recipients of silly amounts of annual income.

All these arguments are dated and are applicable to the Thatcher era of the early 1980s which has long gone and is not going to return. The problem facing our society currently is run away social and economic inequality and the entrenchment of substantial wealth for a very small number of people which is fuelling generational social and inequality.


TakoradiMan BrotherLead 7 Apr 2018 14:24

I presume that most those living in the U.K. will fall within top 1% which the Guardianista loath so much.

I'm sorry but this post is utterly clueless.

To be in the top 1% you need to have a household income of well over £50k per annum (closer to £100k I suspect - no one here has yet given very authoritative figures); only a fraction of the UK population are that well off.

AnneK1 Landlord52 7 Apr 2018 14:24

Except that they don't and the charities have to come along and ask us for more money because the public sector haven't used tax revenue efficiently. I would say Britain's ineffective public sector are the greatest threat to Corbyn's chances of forming the government we need to rid us of these dangerous Tories.

PeterlooSunset 7 Apr 2018 14:24

The richest 1% own the corporate media (including the private equity firms keeping the Guardian afloat) that keep telling us we have to focus our attention on identity politics while they loot all the wealth.


prematureoptimsim -> Inthesticks 7 Apr 2018 14:23

Ur talking about something called "Reagan-nomics" or what was commonly and lovingly referred to as "trickle down economics". After the destruction of unionized labor, years of globalization, record profits for corporations & wall street and a high octane doze of Reagan / Thatcher Neoliberalism, "trickle down" has obviously been a complete failure.

U need proof ? Just examine recent history of presidential elections. . . .

  1. Barack Obama - ( Mr. Hope and Change )
  2. Donald Trump - ( Mr. Make America Great Again ).

And in the end it's the same as it ever was. The rich get richer and. . . . Well u know the rest. Good luck to u. Enjoy ur crumbs.

[Apr 04, 2018] Elite universities are selling themselves – and look who s buying by Grif Peterson and Yarden Katz

Notable quotes:
"... Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace". ..."
Mar 30, 2018 | www.theguardian.com

Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace".

This market rationality extends even to the way research is evaluated – which the Saudi government has been gaming. To give one example, it paid highly cited mathematicians at universities around the world to list King Abdulaziz University as an affiliation, thereby making it the seventh "best" mathematics department worldwide in the 2014 US News and World Report university rankings .

Here, the Saudi government is only playing by the rules of a game designed by western elites. This is the same logic that has been used to allow corporations, nonprofits and the military to steadily buy out chunks of academia to the point where it makes little sense to presume clear boundaries exist between these entities. As a result, numerous partnerships entangle MIT researchers with Bin Salman. On his Boston tour, he also visited IBM's Cambridge research facility, which recently partnered with MIT to form an artificial intelligence research laboratory in exchange for a $240m commitment to the university. Boston Dynamics , an MIT partner that builds robots for the US military, also offered a demonstration. Such alliances ought to cast doubt on MIT's promise to understand the "societal and ethical" implications of AI and build socially beneficial technologies.

The terms of all of these partnerships are essentially opaque, while the secrecy that surrounds them denies the community the chance to deliberate and take action. The growth of unaccountable university partnerships, like other crises facing educational institutions, stems from the absence of democratic engagement. When universities decide to sell themselves to the highest bidder, they become deaf to the interests of their students and the wider societies in which they operate. Subservience to war criminals and corporate overlords tends to follow.

[Apr 04, 2018] Elite universities are selling themselves and look who's buying

Apr 04, 2018 | www.theguardian.com

Bin Salman's affair with academia isn't a fluke – it's a result of the neoliberal logic by which universities increasingly operate. As the journalist David Dickson noted in 1984, American universities and corporations have "teamed up to challenge the democratic control of knowledge" by delegating control over academic research to "the marketplace".

This market rationality extends even to the way research is evaluated – which the Saudi government has been gaming. To give one example, it paid highly cited mathematicians at universities around the world to list King Abdulaziz University as an affiliation, thereby making it the seventh "best" mathematics department worldwide in the 2014 US News and World Report university rankings .

Here, the Saudi government is only playing by the rules of a game designed by western elites. This is the same logic that has been used to allow corporations, nonprofits and the military to steadily buy out chunks of academia to the point where it makes little sense to presume clear boundaries exist between these entities. As a result, numerous partnerships entangle MIT researchers with Bin Salman. On his Boston tour, he also visited IBM's Cambridge research facility, which recently partnered with MIT to form an artificial intelligence research laboratory in exchange for a $240m commitment to the university. Boston Dynamics , an MIT partner that builds robots for the US military, also offered a demonstration. Such alliances ought to cast doubt on MIT's promise to understand the "societal and ethical" implications of AI and build socially beneficial technologies.

The terms of all of these partnerships are essentially opaque, while the secrecy that surrounds them denies the community the chance to deliberate and take action. The growth of unaccountable university partnerships, like other crises facing educational institutions, stems from the absence of democratic engagement. When universities decide to sell themselves to the highest bidder, they become deaf to the interests of their students and the wider societies in which they operate. Subservience to war criminals and corporate overlords tends to follow.

[Apr 02, 2018] For First Time, Tuition Is Public College's Biggest Revenue Source by Sophie Quinton

Notable quotes:
"... In over half of states, the share was higher. In Vermont, New Hampshire, Delaware and Pennsylvania, over 70 percent of higher education funding came from tuition dollars last year. ..."
Mar 30, 2018 | www.governing.com

State colleges and universities are relying more on tuition dollars to fund their operations even as state funding rises and colleges come under pressure to keep tuition low.

Last fiscal year, for the first time, tuition revenue outpaced government appropriations for higher education in the majority of states, according to the annual higher education finance report from the State Higher Education Executive Officers Association. The association represents chief executives of statewide governing, policy and coordinating boards of postsecondary education.

Tuition dollars are becoming a more important revenue source as more students head to college, tuition prices rise, and state lawmakers struggle to return higher education funding to the per-student levels seen before the Great Recession.

The report looked at net tuition revenue, which it defined as tuition and fees minus medical student tuition, state and institutional financial aid and other waivers and discounts. It found that tuition dollars paid by families -- a figure that includes federal grants and loans -- made up 46 percent of funding for U.S. public colleges and universities in fiscal 2017, almost double tuition's share of higher education funding in 1990.

In over half of states, the share was higher. In Vermont, New Hampshire, Delaware and Pennsylvania, over 70 percent of higher education funding came from tuition dollars last year.

Nationwide, net tuition revenue peaked as a funding source for public higher education in 2013, after the collapsing economy sent a wave of students back to school at the same time as state lawmakers were cutting funding for colleges. Since then, enrollments have fallen and state investments in higher education and financial aid have increased.

RELATED Explaining the Cost of College Tuition in Every State

[Apr 02, 2018] How Many Opioid Overdoses Are Suicides

Notable quotes:
"... By Martha Bebinger of WBUR. Originally published at Kaiser Health News ..."
"... The National Suicide Prevention Lifeline is 800-273-8255. ..."
"... This story is part of a partnership that includes WBUR , NPR and Kaiser Health News. ..."
Apr 02, 2018 | www.nakedcapitalism.com

Posted on March 30, 2018 by Yves Smith Yves here. See also this related Kaiser Health News story: Omissions On Death Certificates Lead To Undercounting Of Opioid Overdoses .

It takes a lot of courage for an addict to recover and stay clean. And it is sadly not news that drug addiction and high levels of prescription drug use are signs that something is deeply broken in our society. There are always some people afflicted with deep personal pain but our system is doing a very good job of generating unnecessary pain and desperation.

By Martha Bebinger of WBUR. Originally published at Kaiser Health News

Mady Ohlman was 22 on the evening some years ago when she stood in a friend's bathroom looking down at the sink.

"I had set up a bunch of needles filled with heroin because I wanted to just do them back-to-back-to-back," Ohlman recalled. She doesn't remember how many she injected before collapsing, or how long she lay drugged-out on the floor.

"But I remember being pissed because I could still get up, you know?"

She wanted to be dead, she said, glancing down, a wisp of straight brown hair slipping from behind an ear across her thin face.

At that point, said Ohlman, she'd been addicted to opioids -- controlled by the drugs -- for more than three years.

"And doing all these things you don't want to do that are horrible -- you know, selling my body, stealing from my mom, sleeping in my car," Ohlman said. "How could I not be suicidal?"

For this young woman, whose weight had dropped to about 90 pounds, who was shooting heroin just to avoid feeling violently ill, suicide seemed a painless way out.

"You realize getting clean would be a lot of work," Ohlman said, her voice rising. "And you realize dying would be a lot less painful. You also feel like you'll be doing everyone else a favor if you die."

Ohlman, who has now been sober for more than four years, said many drug users hit the same point, when the disease and the pursuit of illegal drugs crushes their will to live. Ohlman is among at least 40 percent of active drug users who wrestle with depression, anxiety or another mental health issue that increases the risk of suicide.

Measuring Suicide Among Patients Addicted To Opioids

Massachusetts, where Ohlman lives, began formally recognizing in May 2017 that some opioid overdose deaths are suicides. The state confirmed only about 2 percent of all overdose deaths as suicides, but Dr. Monica Bhare l, head of the Massachusetts Department of Public Health, said it's difficult to determine a person's true intent.

"For one thing, medical examiners use different criteria for whether suicide was involved or not," Bharel said, and the "tremendous amount of stigma surrounding both overdose deaths and suicide sometimes makes it extremely challenging to piece everything together and figure out unintentional and intentional."

Research on drug addiction and suicide suggests much higher numbers.

"[Based on the literature that's available], it looks like it's anywhere between 25 and 45 percent of deaths by overdose that may be actual suicides," said Dr. Maria Oquendo , immediate past president of the American Psychiatric Association.

Oquendo pointed to one study of overdoses from prescription opioids that found nearly 54 percent were unintentional. The rest were either suicide attempts or undetermined.

Several large studies show an increased risk of suicide among drug users addicted to opioids, especially women. In a study of about 5 million veterans, women were eight times as likely as others to be at risk for suicide, while men faced a twofold risk.

The opioid epidemic is occurring at the same time suicides have hit a 30-year high , but Oquendo said few doctors look for a connection.

"They are not monitoring it," said Oquendo, who chairs the department of psychiatry at the University of Pennsylvania. "They are probably not assessing it in the kinds of depths they would need to prevent some of the deaths."

That's starting to change. A few hospitals in Boston, for example, aim to ask every patient admitted about substance use, as well as about whether they've considered hurting themselves.

"No one has answered the chicken and egg [problem]," said Dr. Kiame Mahaniah , a family physician who runs the Lynn Community Health Center in Lynn, Mass. Is it that patients "have mental health issues that lead to addiction, or did a life of addiction then trigger mental health problems?"

With so little data to go on, "it's so important to provide treatment that covers all those bases," Mahaniah said.

'Deaths Of Despair'

When doctors do look deeper into the reasons patients addicted to opioids become suicidal, some economists predict they'll find deep reservoirs of depression and pain.

In a seminal paper published in 2015, Princeton economists Angus Deaton and Anne Case tracked falling marriage rates, the loss of stable middle-class jobs and rising rates of self-reported pain. The authors say opioid overdoses, suicides and diseases related to alcoholism are all often "deaths of despair."

"We think of opioids as something that's thrown petrol on the flames and made things infinitely worse," Deaton said, "but the underlying deep malaise would be there even without the opioids."

Many economists agree on remedies for that deep malaise. Harvard economics professor David Cutle r said solutions include a good education, a steady job that pays a decent wage, secure housing, food and health care.

"And also thinking about a sense of purpose in life," Cutler said. "That is, even if one is doing well financially, is there a sense that one is contributing in a meaningful way?"

Tackling Despair In The Addiction Community

"I know firsthand the sense of hopelessness that people can feel in the throes of addiction," said Michael Botticelli , executive director of the Grayken Center for Addiction at Boston Medical Center; he is in recovery for an addiction to alcohol.

Botticelli said recovery programs must help patients come out of isolation and create or recreate bonds with family and friends.

"The vast majority of people I know who are in recovery often talk about this profound sense of re-establishing -- and sometimes establishing for the first time -- a connection to a much larger community," Botticelli said.

Ohlman said she isn't sure why her attempted suicide, with multiple injections of heroin, didn't work.

"I just got really lucky," Ohlman said. "I don't know how."

A big part of her recovery strategy involves building a supportive community, she said.

"Meetings; 12-step; sponsorship and networking; being involved with people doing what I'm doing," said Ohlman, ticking through a list of her priorities.

There's a fatal overdose at least once a week within her Cape Cod community, she said. Some are accidental, others not. Ohlman said she's convinced that telling her story, of losing and then finding hope, will help bring those numbers down.

The National Suicide Prevention Lifeline is 800-273-8255.

This story is part of a partnership that includes WBUR , NPR and Kaiser Health News.

[Mar 27, 2018] Over One Fifth of Student Borrowers Used Loans to Gamble on Cryptocurrencies

Notable quotes:
"... res ipsa loquitur ..."
"... I doubt you could find 20% of college students who even know where to buy crypto. Maybe, maybe ..."
Mar 27, 2018 | www.nakedcapitalism.com

res ipsa loquitur although as one wag said, this news tidbit does seem to disprove the claim that young people aren't risk takers. But it may establish that they are innumerate or more specifically, bad at statistics. One of Nassim Nicholas Taleb's recommendations about investing boils down to "Be paranoid" and "Don't be greedy" and leveraged cryptocurrency speculation is the opposite of that.

This sort of thing does not help the image of student borrowers, although it does strengthen the case for regulating cryptocurrencies far more strictly. Given the decline in the status of cab drivers, who historically have been indicators of market peaks (when cab drivers talk about their stocks, it's usually sign of a bubble), this finding may also be a proof of Peak Cryptocurrency.

From Investopedia :

According to a study by The Student Loan Report, over one-fifth of current university students with student loan debt indicated that they used their student loan money to invest in digital currency such as bitcoin.

The student loan news and information website found that 21.2% of the 1,000 students they surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, Student Loan Report indicates that there are currently no rules against it. College students are able to use loans for "living expenses," a flexible category that covers a wide range of potential necessities.

Given that 70% of retail investors in futures lose money, there's not a strong reason for thinking that latecomers to the cryptocurrency party would be stellar traders. I wonder how many students who lose so much money on bad cryptocurrency wagers that it undermines their ability to finish their course of study (presumably they really did need at least some of that "living expense" money for bona fide living expenses) will be willing to 'fess up to that fact.


JTMcPhee , March 27, 2018 at 9:40 pm

I guess that means that almost 4/5ths of students did NOT use "loan" proceeds (which are part of the whole Casino enterprise, after all) to gamble invest "expose themselves to market risk" by moving those bits representing "money" into the block chain spurt

And I also guess that means that the Puritans among us, and the mopes who want to make sure everyone else gets as screwed by "the system" as they have been by so diligently paying off those student loans/debt millstones, will now have a new line of argument about why the Banksters and the scum among the legislators and "loan servicers" and kickback-collecting higher-education administrators should be fully armed to go after mope students and graduates-without-portfolios-but-with-lots-of-"credentials" and their parents and other "guarantors" to extract that last full measure of blood from the turnipheads who signed on the dotted line without much of a clue that the "contract" was drafted by some Shylock named "Mephistopheles "

Say it loud, say it clear -- "#juststoppaying. No other way to end the game, is there? And yes, there will be blood, economically speaking, in the Street

djrichard , March 27, 2018 at 11:14 pm

It's not so much the banksters that issued these student loans as it is the Fed Gov. http://www.privatestudentloanfacts.com/the-private-student-loan-market.html

But think how it helped stimulate the economy. Except that unlike other Fed Gov spending, the Fed Gov wants this money back. D'oh! And as we know, it's very difficult to discharge student loans through bankruptcy (which at least gives the economy more slack for other debt to be paid off).

So ultimately it doesn't stimulate the economy. It just feeds various maws: the education industry and its bubble, the corporations and their inflated requirements for hiring for jobs. Edit: And the cryptocurrency bubble who knew? While subtracting from other maws: housing starts, family starts, etc.

As Mosler puts it, still the same amount of dogs chasing down the same amount of bones: https://www.youtube.com/watch?v=2vTjLwYCi24

ocop , March 27, 2018 at 11:12 pm

Come on, no way this passes the smell test. Online "mobile-friendly" polling outfit (Pollfish), no additional info even in the actual source article.

https://studentloans.net/financial-aid-funding-cryptocurrency-investments/

I doubt you could find 20% of college students who even know where to buy crypto. Maybe, maybe you could find 20% who are more aware than "heard about it on the news".

[Mar 27, 2018] Cutting 'Old Heads' at IBM

Mar 27, 2018 | news.slashdot.org

(propublica.org) As the world's dominant technology firm, payrolls at International Business Machines swelled to nearly a quarter-million U.S. white-collar workers in the 1980s. Its profits helped underwrite a broad agenda of racial equality, equal pay for women and an unbeatable offer of great wages and something close to lifetime employment, all in return for unswerving loyalty. But when high tech suddenly started shifting and companies went global, IBM faced the changing landscape with a distinction most of its fiercest competitors didn't have: a large number of experienced and aging U.S. employees .

The company reacted with a strategy that, in the words of one confidential planning document, would "correct seniority mix." It slashed IBM's U.S. workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas. ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those years. In making these cuts, IBM has flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination, according to a ProPublica review of internal company documents, legal filings and public records, as well as information provided via interviews and questionnaires filled out by more than 1,000 former IBM employees.

[Mar 22, 2018] https://www.weforum.org/agenda/2016/12/the-world-s-top-economy-the-us-vs-china-in-five-charts/

Mar 22, 2018 | www.weforum.org

https://www.cbsnews.com/news/usa-china-income-inequality-economic-research/

"Before accounting for taxes and transfers, the U.S. ranked 10th in income inequality; among the countries with more unequal income distributions were France, the U.K. and Ireland. But after taking taxes and transfers into account, the U.S. had the second-highest level of inequality, behind only Chile. "

http://www.pewresearch.org/fact-tank/2013/12/19/global-inequality-how-the-u-s-compares/

" The five countries with the worst income inequality -- Chile, Mexico, Turkey, the United States, and Israel -- also had the five highest poverty rates in the OECD. The relationship is not perfect, however. The United Kingdom fell just outside the five worst countries for income equality, but its poverty rate was 13th lowest among developed nations."

https://247wallst.com/special-report/2015/05/29/countries-with-the-widest-gap-between-the-rich-and-the-poor/

Trust:

Suggest flipping to slide 13:

https://www.edelman.com/research/2017-trust-barometer-global-results

https://thediplomat.com/2013/06/government-for-the-people-in-china/ Reply 21 March 2018 at 11:41 AM JamesT said in reply to Terry... Terry

I've been thinking about this as well. I went looking for a graph of median income in China and the US over the last 20 years ... and could not find one. What I would really like to see is a graph of median income increases over the last 20 years - I would argue this is more relevant than the easy to find graphs of GDP increases.

Median income in Russia increased something like 270% in inflation adjusted terms during the first 10 years that Putin was in power. The Economist claims this was solely due to the increase in oil prices. I went looking at countries that had comparable oil-production-per-person and found that Canada (whose oil production per person is essentially identical to Russia) saw its median income increase only 9% in the same period.

This isn't to say that Putin's leadership is necessarily good in the long term, but the western press are clearly ignoring important economic statistics regarding both China and Russia. Reply 21 March 2018 at 03:10 PM Fred said in reply to Terry... Terry,

"by some measures" If you torture the data long inenough it confesses. So the US is one of the five worst in income inequality? Maybe those Chineese imigrants should all stay in China to enjoy their "percentages". Of course they might first ask just what the 400% increase in Chineese income means. Oh, that's right, the 400% increase from almost nothing to 4 times almost nothing. The negative 1% reduction in bottom 50% of income distribuiton in the US over that 4 decades resulted in:

"Median individual income for all earners in the workforce was $37,610.00, and the breakpoint to be a one-percenter (99th percentile) was $300,800.00."

https://dqydj.com/united-states-income-brackets-percentiles/

So the 50% percentile in the US has a 37K icome. What is it for China, it certainly isn't 37K. That's right, acording to the link you provided it's 14,600 USD. In China, with the official exchange rate.


James T,

"but the western press are clearly ignoring important economic statistics regarding both China and Russia."

Yes indeed, they ignore the actual data and repeat out percentages with no idea of the underlying facts of how those percentages were created and not bothering to ask how they were calculated. Reply 21 March 2018 at 09:11 PM

[Mar 12, 2018] There is no democracy without economic democracy by Jason Hirthler

Highly recommended!
Like many high demand cults neoliberalism is a trap, from which it is very difficult to escape...
Notable quotes:
"... A large, open-border global free market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism. ..."
"... Globalists, as neoliberal capitalists are often called, also understood that democracy, defined by a smattering of individual rights and a voting booth, was the ideal vehicle to usher neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes no demands in the economic sphere. Socialism does. Communism does. These models directly address ownership of the means of production. Not so democratic capitalism. This permits the globalists to continue to own the means of production while proclaiming human rights triumphant in nations where interventions are staged. ..."
"... The enduring lie is that there is no democracy without economic democracy. ..."
turcopolier.typepad.com

Part 3 - A False Promise

This 'Washington Consensus' is the false promise promoted by the West. The reality is quite different. The crux of neoliberalism is to eliminate democratic government by downsizing, privatizing, and deregulating it. Proponents of neoliberalism recognize that the state is the last bulwark of protection for the common people against the predations of capital. Remove the state and they'll be left defenseless .

Think about it. Deregulation eliminates the laws. Downsizing eliminates departments and their funding. Privatizing eliminates the very purpose of the state by having the private sector take over its traditional responsibilities.

Ultimately, nation-states would dissolve except perhaps for armies and tax systems. A large, open-border global free market would be left, not subject to popular control but managed by a globally dispersed, transnational one percent. And the whole process of making this happen would be camouflaged beneath the altruistic stylings of a benign humanitarianism.

Globalists, as neoliberal capitalists are often called, also understood that democracy, defined by a smattering of individual rights and a voting booth, was the ideal vehicle to usher neoliberalism into the emerging world. Namely because democracy, as commonly practiced, makes no demands in the economic sphere. Socialism does. Communism does. These models directly address ownership of the means of production. Not so democratic capitalism. This permits the globalists to continue to own the means of production while proclaiming human rights triumphant in nations where interventions are staged.

The enduring lie is that there is no democracy without economic democracy.

What matters to the one percent and the media conglomerates that disseminate their worldview is that the official definitions are accepted by the masses. The real effects need never be known. The neoliberal ideology (theory) thus conceals the neoliberal reality (practice). And for the masses to accept it, it must be mass produced. Then it becomes more or less invisible by virtue of its universality.

Source, links:

https://www.counterpunch.org/2018/03/02/colonizing-the-western-mind/
[ 1 ] [ 2 ]

[Mar 03, 2018] Strange science, economics. Judging from the titles, much of it consists of neoliberal cheerleading

Neoliberal economists are a new type of clergy. As simple as this. Neoliberal God is great that's what they are preaching to students.
Notable quotes:
"... Bronze Age: Greatest Age EVAH! ..."
"... It's surprising economists feel the need to engage in happy talk, considering that markets are supposed to be natural, just, and efficient. Like clergy preaching to a perpetually backsliding laity about the one true God, Whom only a fool would doubt. If God were so great, there'd be no need to harp on it. In any case, this goes some way toward accounting for Bennet's statement. ..."
"... It takes a half-educated person to say something like that. First you get the ideas by way of a certain education, and then you don't think about them, in part because the educators discourage that kind of thing. ..."
Mar 03, 2018 | www.nakedcapitalism.com

Paul Cardan , March 2, 2018 at 3:12 pm

"[Capitalism] has been the greatest engine of, it's been the greatest anti-poverty program and engine of progress that we've seen."

I can almost smell the economics section of my local bookstore. Strange science, economics. Judging from the titles, much of it consists of cheerleading. Very different from history, anthropology, or sociology.

I never see history titles like Bronze Age: Greatest Age EVAH! It's surprising economists feel the need to engage in happy talk, considering that markets are supposed to be natural, just, and efficient. Like clergy preaching to a perpetually backsliding laity about the one true God, Whom only a fool would doubt. If God were so great, there'd be no need to harp on it. In any case, this goes some way toward accounting for Bennet's statement.

It takes a half-educated person to say something like that. First you get the ideas by way of a certain education, and then you don't think about them, in part because the educators discourage that kind of thing.

[Feb 25, 2018] Divide and Rule

Notable quotes:
"... "Liberals" stopped caring about those things after Clinton showed them the "third way," which was really just a way to be kinder, gentler conservatives. ..."
"... the best and most well-founded causations history I've come across directly relating to "Divide & Rule". ..."
Feb 22, 2018 | angrybearblog.com

Karl Kolchak, February 21, 2018 11:38 pm

" liberals are concerned about minorities and the poor."

What a joke. "Liberals" stopped caring about those things after Clinton showed them the "third way," which was really just a way to be kinder, gentler conservatives.

LEFTISTS still care about minorities and the poor, which is why liberals do everything in their power to keep them from ever getting elected and would rather throw an election to someone like Trump than let Bernie Sanders be president.

Longtooth , February 22, 2018 8:04 pm

Here's paper that economistsview just linked to today. It traces the events leading to Trump -- or shall I say leading to the recognition by those that have been economically disenfranchised which led to Trump.
http://www.cesifo-group.de/DocDL/cesifo1_wp6868.pdf

In it's composite as well as most (though not all) causes the paper describes, it is the best and most well-founded causations history I've come across directly relating to "Divide & Rule".

[Feb 23, 2018] On the Link between US Pay and Productivity

Notable quotes:
"... American Prospect ..."
Feb 23, 2018 | economistsview.typepad.com

On the link between US pay and productivity, by Anna Stansbury and Lawrence Summers, VoxEU :

Pay growth for middle class workers in the US has been abysmal over recent decades – in real terms, median hourly compensation rose only 11% between 1973 and 2016. 1 At the same time, hourly labour productivity has grown steadily, rising by 75%.

This divergence between productivity and the typical worker's pay is a relatively recent phenomenon. Using production/nonsupervisory compensation as a proxy for median compensation (since there are no data on the median before 1973), Bivens and Mishel (2015) show that typical compensation and productivity grew at the same rate over 1948-1973, and only began to diverge in 1973 (see Figure 1).

Figure 1 Labour productivity, average compensation, and production/nonsupervisory compensation 1948-2016

Stansbury20febfig1

Notes : Labour productivity: total economy real output per hour (constructed from BLS and BEA data). Average compensation: total economy compensation per hour (constructed from BLS data). Production/nonsupervisory compensation: real compensation per hour, production and nonsupervisory workers (Economic Policy Institute).

What does this stark divergence imply about the relationship between productivity and typical compensation? Since productivity growth has been so much faster than median pay growth, the question is how much does productivity growth benefit the typical worker? 2
A number of authors have raised these questions in recent years. Harold Meyerson, for example, wrote in American Prospect in 2014 that "for the vast majority of American workers, the link between their productivity and their compensation no longer exists", and the Economist wrote in 2013 that "unless you are rich, GDP growth isn't doing much to raise your income anymore". Bernstein (2015) raises the concern that "[f]aster productivity growth would be great. I'm just not at all sure we can count on it to lift middle-class incomes." Bivens and Mishel (2015) write "although boosting productivity growth is an important long-run goal, this will not lead to broad-based wage gains unless we pursue policies that reconnect productivity growth and the pay of the vast majority".
Has typical compensation delinked from productivity?
Figure 1 appears to suggest that a one-to-one relationship between productivity and typical compensation existed before 1973, and that this relationship broke down after 1973. On the other hand, just as two time series apparently growing in tandem does not mean that one causes the other, two series diverging may not mean that the causal link between the two has broken down. Rather, other factors may have come into play which appear to have severed the connection between productivity and typical compensation.
As such there is a spectrum of possibilities for the true underlying relationship between productivity and typical compensation. On one end of the spectrum – which we call 'strong delinkage' – it's possible that factors are blocking the transmission mechanism from productivity to typical compensation, such that increases in productivity don't feed through to pay. At the opposite end of the spectrum – which we call 'strong linkage' – it's possible that productivity growth translates fully into increases in typical workers' pay, but even as productivity growth has been acting to raise pay, other factors (orthogonal to productivity) have been acting to reduce it. Between these two ends of the spectrum is a range of possibilities where some degree of linkage or delinkage exists between productivity and typical compensation.
In a recent paper, we estimate which point on this linkage-delinkage spectrum best describes the productivity-typical compensation relationship (Stansbury and Summers 2017). Using medium-term fluctuations in productivity growth, we test the relationship between productivity growth and two key measures of typical compensation growth: median compensation, and average compensation for production and nonsupervisory workers.
Simply plotting the annual growth rates of productivity and our two measures of typical compensation (Figure 2) suggests support for quite substantial linkage – the series seem to move together, although typical compensation growth is almost always lower.

Figure 2 Change in log productivity and typical compensation, three-year moving average

Stansbury20febfig2

Notes : Data from BLS, BEA and Economic Policy Institute. Series are three-year backward-looking moving averages of change in log variable.

Making use of the high frequency changes in productivity growth over one- to five-year periods, we run a series of regressions to test this link more rigorously. We find that periods of higher productivity growth are associated with substantially higher growth in median and production/nonsupervisory worker compensation – even during the period since 1973, where productivity and typical compensation have diverged so much in levels. A one percentage point increase in the growth rate of productivity has been associated with between two-thirds and one percentage point higher growth in median worker compensation in the period since 1973, and with between 0.4 and 0.7 percentage points higher growth in production/nonsupervisory worker compensation. These results suggest that there is substantial linkage between productivity and median compensation (even the strong linkage view cannot be rejected), and that there is a significant degree of linkage between productivity and production/nonsupervisory worker compensation.
How is it possible to find this relationship when productivity has clearly grown so much faster than median workers' pay? Our findings imply that even as productivity growth has been acting to push workers' pay up , other factors not associated with productivity growth have acted to push workers' pay down . So while it may appear on first glance that productivity growth has not benefited typical workers much, our findings imply that if productivity growth had been lower, typical workers would have likely done substantially worse.
If the link between productivity and pay hasn't broken, what has happened?
The productivity-median compensation divergence can be broken down into two aspects of rising inequality: the rise in top-half income inequality (divergence between mean and median compensation) which began around 1973, and the fall in the labour share (divergence between productivity and mean compensation) which began around 2000.
For both of these phenomena, technological change is often invoked as the primary cause. Computerisation and automation have been put forward as causes of rising mean-median income inequality (e.g. Autor et al. 1998, Acemoglu and Restrepo 2017); and automation, falling prices of investment goods, and rapid labour-augmenting technological change have been put forward as causes of the fall in the labour share (e.g. Karabarbounis and Neiman 2014, Acemoglu and Restrepo 2016, Brynjolffson and McAfee 2014, Lawrence 2015).
At the same time, non-purely technological hypotheses for rising mean-median inequality include the race between education and technology (Goldin and Katz 2007), declining unionisation (Freeman et al. 2016), globalisation (Autor et al. 2013), immigration (Borjas 2003), and the 'superstar effect' (Rosen 1981, Gabaix et al. 2016). Non-technological hypotheses for the falling labour share include labour market institutions (Levy and Temin 2007, Mishel and Bivens 2015), market structure and monopoly power (Autor et al. 2017, Barkai 2017), capital accumulation (Piketty 2014, Piketty and Zucman 2014), and the productivity slowdown itself (Grossman et al. 2017).
While we do not analyse these theories in detail, a simple empirical test can help distinguish the relative importance of these two categories of explanation – purely technology-based or not – for rising mean-median inequality and the falling labour share. More rapid technological progress should cause faster productivity growth – so, if some aspect of faster technological progress has caused inequality, we should see periods of faster productivity growth come alongside more rapid growth in inequality.
We find very little evidence for this. Our regressions find no significant relationship between productivity growth and changes in mean-median inequality, and very little relationship between productivity growth and changes in the labour share. In addition, as Table 1 shows, the two periods of slower productivity growth (1973-1996 and 2003-2014) were associated with faster growth in inequality (an increasing mean/median ratio and a falling labour share).
Taken together, this evidence casts doubt on the idea that more rapid technological progress alone has been the primary driver of rising inequality over recent decades, and tends to lend support to more institutional and structural explanations.

Table 1 Average annual growth rates of productivity, the labour share and the mean/median ratio during the US' productivity booms and productivity slowdowns


mulp , February 20, 2018 at 12:08 PM

The 70s was when the ideology of free lunch economics was born and then rose to take over virtually the entirety of economics.

Even Krugman adopts a lot of free lunch economics.

In free lunch economics, costs are dependent on price, not price dependent on costs. And profits rising on maximum efficiency, maximum factor utilization, not profits going to zero when factor utilization and efficiency are maximized.

Free lunch economics is the opposite of Keynesian principles. Free lunch economists prescribe the opposite of what Keynes prescribed in similar circumstances.

Keynes called for maximizing aggregate labor costs. Free lunch economists call for minimizing aggregate labor costs.

As all real economic costs are labor costs, everything else being profits and rents, when Bernie bros call for lower costs, or oppose higher costs, they are arguing for lower labor costs, lower wages. Economics is zero sum.

Food costs are low because of government subsidies and government policies promoting low labor costs, low wages.

Progressives should be opposed to SNAP and food banks which are directly or indirectly government funded/subsidized. The solution is to ensure jobs are available than pay wages high enough to buy food that farmers sell at high prices which allow them to pay all their bills.

FDR and Congress set price floors for many goods, and paid workers living wages to do productive work. Conservatives fought these measures to increase costs. Note Hoover was very interested in building capital assets, but he wanted workers to be paid as little as possible, and as few as possible. He promoted working workers to death to cut costs, even when the assets built would certainly generate high returns over their useful lives.

Friedman created the intellectual free lunch theory to justify Hoover's business theory applied to government policy.

Friedman invented the free lunch welfare handout to make the free lunch economy work, because he knew economies are zero sum. Instead of SNAP which is restricted cash, he called for unrestricted cash so labor costs could be cut to increase profits, with government free lunch handouts given to workers to pay the high profits on the goods they were paid to produce.

Again, this is contrary to Keynes and FDR.

Yet Bernie progressives call for Friedman's free lunch economics subsidy of profits in consumer spending subsidies to enable low wages and high profits.

This research and paper merely provide evidence that Friedman's free lunch economics have driven public policy and private sector investment.

Milton Friedman's free lunch economics principles have successfully driven lower productivity growth as he intended, based on his Newsweek articles circa 1970, and based on other 70s era statements and lectures.

Christopher H. , February 20, 2018 at 04:13 PM
What does Summers propose to do to increase productivity? Work the workers harder?

The low hanging fruit is full employment which as Dean Baker and others have discussed will spur productivity growth.

We are seeing an experiment right now with low unemployment.

RGC , February 21, 2018 at 04:07 AM
Unions lost bargaining power since Reagan.

Illegal immigrant labor took menial jobs (meatpacking, landscaping, construction).

The government stopped prosecuting employers for hiring illegal immigrants.

Manufacturing jobs went overseas.

Foreign manufacturers located in right-to-work states.

US Manufacturers stopped competing with foreigners because it was too hard and the profit was too low (GE).

The potential drop in GDP was replaced by borrowing:

https://fred.stlouisfed.org/series/CMDEBT

llisa2u2 , February 21, 2018 at 04:50 AM
OMG- how many understatements can be written, without acknowledging basic facts and truth.

A good place to start would be a similar, I mean really similar, and use CEO pay. Come on lets see a CEO pay VS productivity - the CEO's sure aren't doing the work, and neither are the midline managers. Come on lets see some real good charts on "divergence" factors starting in 1973. Quit the BS. The economy is presently increasing based on human predation. Ignore it, til it stares you in the face, upfront and personal.

llisa2u2 , February 21, 2018 at 05:06 AM
https://www.advisorperspectives.com/dshort/updates/2018/02/15/five-decades-of-middle-class-wages-january-2017-update
RGC , February 21, 2018 at 05:10 AM
http://www.slate.com/articles/business/the_united_states_of_debt/2016

I couldn't find one at FRED.

Maybe this:

Five Charts That Show Americans Families' Debt Crisis

U.S. households owe trillions in student loans, credit card loans, auto loans, and mortgages.

By Chris Kirk

http://www.slate.com/culture/2018/02/trevor-noah-has-some-terrible-ideas-for-addressing-school-shootings.html

llisa2u2 , February 21, 2018 at 05:11 AM
https://www.advisorperspectives.com/dshort/updates/2017/09/19/u-s-household-incomes-a-50-year-perspective

Spinning, Spinning- yeah let's hear some more from left and right!

llisa2u2 , February 21, 2018 at 05:13 AM
Trickling down is NON-FACT.

SUCKING UP is "INDEED" the real fact of the economic dynamics over the last 50 years.

llisa2u2 , February 21, 2018 at 05:22 AM
In my effort to help counter the blatant irresponsibility of not only..... but also, practically every leading economist worldwide- here EV- start interviewing and publishing this man's works- https://www.sciencedirect.com/science/article/pii/S1057521914001070
llisa2u2 , February 21, 2018 at 05:32 AM
From cited link- for those who want the reason why, I even posted a link on banking, when this article is on labor divergence etc. etc.

5.4.1. Implications for economic theory

The empirical evidence shows that of the three theories of banking, it is the one that today has the least influence and that is being belittled in the literature that is supported by the empirical evidence. Furthermore, it is the theory which was widely held at the end of the 19th century and in the first three decades of the twentieth. It is sobering to realise that since the 1930s, economists have moved further and further away from the truth, instead of coming closer to it. This happened first via the half-truth of the fractional reserve theory and then reached the completely false and misleading financial intermediation theory that today is so dominant. Thus this paper has found evidence that there has been no progress in scientific knowledge in economics, finance and banking in the 20th century concerning one of the most important and fundamental facts for these disciplines. Instead, there has been a regressive development. The known facts were unlearned and have become unknown. This phenomenon deserves further research. For now it can be mentioned that this process of unlearning the facts of banking could not possibly have taken place without the leading economists of the day having played a significant role in it. The most influential and famous of all 20th century economists, as we saw, was a sequential adherent of all three theories, which is a surprising phenomenon. Moreover, Keynes used his considerable clout to slow scientific analysis of the question whether banks could create money, as he instead engaged in ad hominem attacks on followers of the credit creation theory. Despite his enthusiastic early support for the credit creation theory (Keynes, 1924), only six years later he was condescending, if not dismissive, of this theory, referring to credit creation only in inverted commas. He was perhaps even more dismissive of supporters of the credit creation theory, who he referred to as being part of the "Army of Heretics and Cranks, whose numbers and enthusiasm are extraordinary", and who seem to believe in "magic" and some kind of "Utopia" (Keynes, 1930, vol. 2, p. 215).33

Needless to mention, such rhetoric is not conducive to scientific argument. But this technique was followed by other economists engaged in advancing the fractional reserve and later financial intermediation theories. US Federal Reserve staffer Alhadeff (1954) argued similarly during the era when economists worked on getting the fractional reserve theory established:
"One complication worth discussing concerns the alleged "creation" of money by bankers. It used to be claimed that bankers could create money by the simple device of opening deposit accounts for their business borrowers. It has since been amply demonstrated that under a fractional reserve system, only the totality of banks can expand deposits to the full reciprocal of the reserve ratio. [Original footnote: 'Chester A. Phillips, Bank Credit (New York: Macmillan, 1921), chapter 3, for the classical refutation of this claim.'] The individual bank can normally expand to an amount about equal to its primary deposits" (p. 7).


The creation of credit by banks had become, in the style of Keynes (1930), an "alleged 'creation'", whereby rhetorically it was suggested that such thinking was simplistic and hence could not possibly be true. Tobin used the rhetorical device of abductio ad absurdum to denigrate the credit creation theory by incorrectly suggesting it postulated a 'widow's cruse', a miraculous vessel producing unlimited amounts of valuable physical goods, and thus its followers were believers in miracles or utopias.

This same type of rhetorical denigration of and disengagement with the credit creation theory is also visible in the most recent era. For instance, the New Palgrave Money (Eatwell et al., 1989), is an influential 340-page reference work that claims to present a 'balanced perspective on each topic' (Eatwell et al., 1989, p. viii). Yet the financial intermediation theory is dominant, with a minor representation of the fractional reserve theory. The credit creation theory is not presented at all, even as a possibility. But the book does include a chapter entitled "Monetary cranks". In this brief chapter, Keynes' (1930) derogatory treatment of supporters of the credit creation theory is updated for use in the 1990s, with sharpened claws: Ridicule and insult is heaped on several fateful authors that have produced thoughtful analyses of the economy, the monetary system and the role of banks, such as Nobel laureate Sir Frederick Soddy (1934) and C.H. Douglas (1924). Even the seminal and influential work by Georg Friedrich Knapp (1905), still favourably cited by Keynes (1936), is identified as being created by a 'crank'. What these apparently wretched authors have in common, and what seems to be their main fault, punishable by being listed in this inauspicious chapter, is that they are adherents of the credit creation theory. But, revealingly, their contributions are belittled without it anywhere being stated what their key tenets are and that their analyses centre on the credit creation theory, which itself remains unnamed and is never spelled out. This is not a small feat, and leaves one pondering the possibility that the Eatwell et al. (1989) tome was purposely designed to ignore and distract from the rich literature supporting the credit creation theory. Nothing lost, according to the authors, who applaud the development that due to
"the increased emphasis given to monetary theory by academic economists in recent decades, the monetary cranks have largely disappeared from public debate " (p. 214).


And so has the credit creation theory. Since the tenets of this theory are never stated in Eatwell et al. (1989), the chapter on 'Cranks' ends up being a litany of ad hominem denigration, defamation and character assassination, liberally distributing labels such as 'cranks', 'phrase-mongers', 'agitators', 'populists', and even 'conspiracy theorists' that believe in 'miracles' and engage in wishful thinking, ultimately deceiving their readers by trying to "impress their peers with their apparent understanding of economics, even though they had no formal training in the discipline" (p. 214). All that we learn about their actual theories is that, somehow, these ill-fated authors are "opposed to private banks and the 'Money Power' without their opposition leading to more sophisticated political analysis" (p. 215). Any reading of the highly sophisticated Soddy (1934) quickly reveals such labels as unfounded defamation.

To the contrary, the empirical evidence presented in this paper has revealed that the many supporters of the financial intermediation theory and also the adherents of the fractional reserve theory are flat-earthers that believe in what is empirically proven to be wrong and which should have been recognisable as being impossible upon deeper consideration of the accounting requirements. Whether the authors in Eatwell et al. (1989) did in fact know better is an open question that deserves attention in future research. Certainly the unscientific treatment of the credit creation theory and its supporters by such authors as Keynes, who strongly endorsed the theory only a few years before authoring tirades against its supporters, or by the authors in Eatwell et al. (1989), raises this possibility.

5.4.2. Implications for government policy

There are other, far-reaching ramifications of the finding that banks individually create credit and money when they do what is called 'lending money'. It is readily seen that this fact is important not only for monetary policy, but also for fiscal policy, and needs to be reflected in economic theories. Policies concerning the avoidance of banking crises, or dealing with the aftermath of crises require a different shape once the reality of the credit creation theory is recognised. They call for a whole new paradigm in monetary economics, macroeconomics, finance and banking (for details, see for instance Werner, 1997, 2005, 2012, 2013a,b) that is based on the reality of banks as creators of the money supply. It has potentially important implications for other disciplines, such as accounting, economic and business history, economic geography, politics, sociology and law.

5.4.3. Implications for bank regulation

The implications are far-reaching for bank regulation and the design of official policies. As mentioned in the Introduction, modern national and international banking regulation is predicated on the assumption that the financial intermediation theory is correct. Since in fact banks are able to create money out of nothing, imposing higher capital requirements on banks will not necessarily enable the prevention of boom–bust cycles and banking crises, since even with higher capital requirements, banks could still continue to expand the money supply, thereby fuelling asset prices, whereby some of this newly created money can be used to increase bank capital. Based on the recognition of this, some economists have argued for more direct intervention by the central bank in the credit market, for instance via quantitative credit guidance (Werner, 2002, 2003a, 2005).

5.4.4. Monetary reform

The Bank of England's (2014b) recent intervention has triggered a public debate about whether the privilege of banks to create money should in fact be revoked (Wolf, 2014). The reality of banks as creators of the money supply does raise the question of the ideal type of monetary system. Much research is needed on this account. Among the many different monetary system designs tried over the past 5000 years, very few have met the requirement for a fair, effective, accountable, stable, sustainable and democratic creation and allocation of money. The view of the author, based on more than twenty-three years of research on this topic, is that it is the safest bet to ensure that the awesome power to create money is returned directly to those to whom it belongs: ordinary people, not technocrats. This can be ensured by the introduction of a network of small, not-for-profit local banks across the nation. Most countries do not currently possess such a system. However, it is at the heart of the successful German economic performance in the past 200 years. It is the very Raiffeisen, Volksbank or Sparkasse banks – the smaller the better – that were helpful in the implementation of this empirical study that should serve as the role model for future policies concerning our monetary system. In addition, one can complement such local public bank money with money issued by local authorities that is accepted to pay local taxes, namely a local public money that has not come about by creating debt, but that is created for services rendered to local authorities or the community. Both forms of local money creation together would create a decentralised and more accountable monetary system that should perform better (based on the empirical evidence from Germany) than the unholy alliance of central banks and big banks, which have done much to create unsustainable asset bubbles and banking crises (Werner, 2013a,b).


AND, be sure to read why a lot of present economist's are so OFF "talking points" that they don't know they are even off the fundamental talking points, and way off track! You have to start reading the Werner article from the beginning to understand that preceding exclamatory sentence.

Christopher H. , February 21, 2018 at 09:54 AM
Here's something for the Neolibros who desperately want an excuse for why Hillary lost to the orange clown.

https://www.politico.com/magazine/story/2018/02/18/confessions-of-a-russiagate-skeptic-217024

Confessions of a Russiagate Skeptic

Why I have my doubts about whether Trump colluded with Moscow.

By BLAKE HOUNSHELL February 18, 2018

f, like me, you've been following every twist and turn of the Russia investigations, you've probably wrestled with the same question that has been gnawing at me for more than a year now: What if there's nothing there?

No, I'm not denying the voluminous evidence that Russia, at Kremlin strongman Vladimir Putin's personal direction, sought to meddle in the 2016 election, and that Donald Trump was clearly his man. The indictment on Friday of 13 Russians -- and the incredible forensic detail in the 37-page complaint filed by Special Counsel Robert Mueller's team -- ought to have convinced any reasonable person that the Russia investigation is definitely a somethingburger. But what kind of somethingburger is it?


President Trump has seized on Deputy Attorney General Rod Rosenstein's statement that "there is no allegation in the indictment that any American was a knowing participant in this illegal activity" to say that the special counsel has vindication his oft-repeated refrain that there was "NO COLLUSION" between Russia and the Trump campaign. This is obviously nonsense -- the key words in Rosenstein's remarks being "in the indictment," which in any case dealt only with a sliver of Russian efforts to tilt the election in Trump's favor.

Of course, Mueller has put some serious points on the board. In addition to the 13 Russians and three Russian organizations from Friday's indictments, we've also seen two indictments of Trump associates thus far -- former Trump campaign chairman/manager Paul Manafort and his wingman Rick Gates -- and two plea bargains, from sometime national security adviser Michael Flynn and volunteer campaign adviser George Papadapoulos. There is also other stuff hanging out there -- most of all Donald Trump Jr.'s infamous meeting in Trump Tower, the one he enthusiastically scheduled after being told the Russians on offer had dirt on Hillary Clinton. Mueller's team has had nothing to say -- yet? -- about the hacked emails of the Democratic National Committee or Clinton campaign chairman John Podesta. And there is no indication, despite the professed optimism of White House lawyer Ty Cobb, that they are wrapping up anytime soon.

There are, of course, odd aspects of Trump's behavior that arouse suspicions. His obsequious praise of Putin. The aborted effort to roll back the old Russia sanctions, and the failure to enforce the new ones. His refusal to accept that Moscow meddled in the election, despite the conclusions of his own staff, the intelligence community and pretty much everyone looking at the evidence in good faith. Firing his FBI director and reportedly ordering the firing of the special counsel. His constant fulminations against the "Russia hoax." The fact that he hasn't directed any effort to safeguard the 2018 midterms. If Trump is guilty, he sure is acting like it.

And there is the fact Trump aides have repeatedly lied about the fact, and extent, of contact between campaign officials and Russia. If the Trump Tower meeting was as innocuous as Donald Jr. says it was, for instance, why the misleading claim that it was about "adoptions"?

I keep coming back the slapdash nature of Trump's 2016 operation, and the chaos and dysfunction that everyone who covered that campaign saw play out each day. Like the Trump White House, the Trump campaign was a viper's nest of incompetence and intrigue, with aides leaking viciously against one another almost daily. So much damaging information poured out of Trump Tower that it's hard to believe a conspiracy to collude with Moscow to win the election never went public. If there was such a conspiracy, it must have been a very closely guarded secret.

Then there's the Trump factor to consider. Here's a man who seems to share every thought that enters his head, almost as soon as he enters it. He loves nothing more than to brag about himself, and he's proven remarkably indiscreet in the phone calls he makes with "friends" during his Executive Time -- friends who promptly share the contents of those conversations with D.C. reporters. If Trump had cooked up a scheme to provide some favor to Putin in exchange for his election, wouldn't he be tempted to boast about it to someone?

And there are aspects of the Russia scandal, too, that don't quite add up for me. Take Flynn's plea bargain. As Preet Bharara, the former U.S. attorney for the Southern District of New York, noted after the deal became public, prosecutors usually prefer to charge participants in a conspiracy with charges related to the underlying crime. But Flynn pleaded guilty only to lying to the FBI, which Bharara surmised suggests might mean Mueller didn't have much on him. It certainly seems unlikely that any prosecutor would charge Flynn for violating the 219-year-old Logan Act, a constitutionally questionable law that has never been tested in court, for his chats with the Russian ambassador. It's not even clear if the (stupid) idea of using secure Russian communications gear, as Flynn and Trump's son-in-law Jared Kushner reportedly considered doing, would have been a crime.

Then there is Papadopoulos, the hapless campaign volunteer who drunkenly blabbed to the Australian ambassador to London that the Russians were sitting on loads of hacked emails. He, likewise, confessed only to lying to the FBI. Papadopoulos desperately tried to arrange meetings between Trump or top Trump officials and Russians, which apparently never happened. Papadopoulos has been cooperating with Mueller for months, but how much does he really have to offer? He seems like an attention-seeking wannabe -- the kind who puts "Model U.N. participant" on his resume.

Speaking of attention-seeking wannabes, Carter Page was another volunteer campaign adviser who was enthusiastic about collaborating with Russia. His writings and comments suggest he has been a Putin apologist for years. But anyone who has seen Page's TV interviews or read through his congressional testimony can tell that there's something not quite right about him. He's apparently broke, doesn't have a lawyer, and has issued lengthy, bizarre statements comparing himself to Martin Luther King, Jr. Back in 2013, when a Russian agent tried to recruit Page, he described him as too much of an "idiot" to bother with. This is the mastermind of the Russia scandal?

As for Manafort and Gates, the charges against them are serious and detailed. They stand accused of failing to register as foreign agents for their overseas work, as well as various offenses related to money laundering. But Mueller has yet to charge them with any crimes related to their work on the Trump campaign. Gates is reportedly working out a cooperation deal with Mueller's team -- perhaps he has stories to tell. And we can't rule out the idea that Mueller is prepared to file superseding charges against either or both of the two men. But so far, their alleged crimes seem unrelated to 2016.

There is, of course, plenty of public evidence that Trump was all too happy to collude with Putin. "Russia, if you're listening, I hope you're able to find the 30,000 emails that are missing," springs to mind, not to mention Trump's endless invocation of WikiLeaks in the closing weeks of the 2016 campaign. What's particularly eerie, too, is how Trump's divisive racial rhetoric and claims about how the election was going to be "rigged" in favor of Hillary Clinton echoes the messages described in Mueller's latest indictment. Not to mention the voluminous fodder Trump has given Mueller for a (very) hypothetical obstruction of justice case.

Mueller's team doesn't leak, and he's repeatedly surprised us, as he did again on Friday. But I'm still waiting for a smoking gun -- and the special counsel hasn't shown us one yet, assuming he ever will.

Christopher H. said in reply to kurt... , February 21, 2018 at 06:24 PM
We'll see when Mueller finally wraps up his investigation, but we know that garbage people like you and Yggies are taking this opportunity to attack the Left even though there is on evidence for it.

Bernie and Jill Stein supporters aren't implicated at all and only scum like you would suggest so. No doubt you are paid by DNC Super PACs.

https://www.jacobinmag.com/2018/02/russiagate-bernie-sanders-jill-stein-msnbc

Russiagate Targets the Left
BY
BRANKO MARCETIC
Liberal conspiracy theorists are using Russiagate to smear Bernie Sanders and Jill Stein. How long until they come for you?

id Russia conspire to put its thumb on the scales for Bernie Sanders and Jill Stein in 2016?

If you've paid any attention to mainstream coverage of Robert Mueller's indictment of the Russians involved in running an online troll farm that opposed Hillary Clinton's campaign, then you're probably certain the answer is "yes." There's been no shortage of headlines declaring that the accused -- typically referred to simply as "Russians" -- "tried to help" or "aimed to help" the two left-wing candidates, or that they "appear to have been helped by Russian election interference." Even the New York Times, the paper of record, declared that the company, Internet Research Agency, aimed to "bolster" Sanders and Stein's candidacies.

You'll find this same narrative on the nominally liberal MSNBC. Stein was grilled on MSNBC about the Russian attempt to "boost" her campaign. Meanwhile, Ari Melber, one of the network's pundits, seemed to suggest there was something fishy going on between Sanders and the Russian trolls with an innuendo-laden question to Democratic Sen. Richard Blumenthal.

"It says in here that Donald Trump was the main intended beneficiary, and Bernie Sanders was the other major party candidate who was a beneficiary," said Melber. "Neither of them have clearly stood up today and said: 'I don't want that help from the Russians, please don't do that kind of thing for me, and anything that happened, I disclaim.'"

It all sounds pretty damning. Until you read the actual indictment.


Fast and Loose
The sole reference to Stein in the nearly 10,000-word document is a sentence that mentions one single Instagram post from Blacktivist, an account controlled by the company, saying: "Choose peace and vote for Jill Stein. Trust me, it's not a wasted vote."

Sanders, meanwhile, appears twice. The first mention is when the document states the company's work was "primarily intended to communicate derogatory information about Hillary Clinton and to support Bernie Sanders and then-candidate Donald Trump." The second is a few lines down, when it provides an example of this support: an outline of themes for future content that was circulated around the company, urging employees to "use any opportunity to criticize Hillary and the rest (except Sanders and Trump -- we support them)." The indictment doesn't specify anything else, including any examples of material support for Sanders's campaign.

These scant references comprise the sole basis for headline after headline about the Kremlin-backed trolls working for Sanders and Stein's campaigns. Some Clinton backers such as Joy-Ann Reid uncritically spread the narrative that "Russia was helping Jill Stein and Sanders," while others used it as a launching pad to suggest Sanders was knowingly in cahoots with the Russian efforts.

MSNBC's Melber has been particularly dogged in pushing this narrative. Despite the lack of evidence in the indictment, Melber claimed on his show that "Mueller has shown that [the Russians] spent 2016 pushing another campaign to elect Bernie Sanders."

When Sanders, appearing on Meet the Press, said that the trolls only began flooding pro-Sanders Facebook pages with anti-Clinton content after she had already won the nomination -- a claim backed up by previous reporting -- Melber pushed back.

"That may be how Sanders remembers it," said Melber. "But now we know it began much earlier with those February marching orders, and the very next month a Sanders volunteer, John Mattes, says a 'huge wave of fake news stories' slamming Clinton from abroad targeted Sanders supporters."

The quote that Melber is referring to -- "huge wave of fake news stories" -- comes from this Guardian piece from July 2017. It also happens to have been wildly misrepresented by Melber.

For one, the words were never uttered by Mattes, a Sanders campaign volunteer in California and investigative journalist who played a role in bringing the Iran-Contra scandal to light in the 1980s. Rather, the phrase was used by the Guardian article's author, Julian Borger. Secondly, at no point is it stated that this "wave" was targeting Sanders supporters. In fact, reading the whole passage it's clear that neither Borger nor Mattes was saying that the "wave" had anything to do with Sanders at all. Here is the passage in full:

A huge wave of fake news stories originating from eastern Europe began washing over the presidential election months earlier, at the height of the primary campaign. John Mattes, who was helping run the outline campaign for the Democratic candidate Bernie Sanders from San Diego, said it really took off in March 2016.

"In a 30-day period, dozens of full-blown sites appeared overnight, running full level productions posts. It screamed out to me that something strange was going on," Mattes said. Much of the material was untraceable, but he tracked 40 percent of the new postings back to eastern Europe.

In fact, publicly available interviews with Mattes make this clear, such as this NBC 7 interview in which Mattes explains what led him to look into the troll activity in the first place.

"Hundreds and hundreds of people were joining Bernie Sanders pages on Facebook for a campaign that was over. It made no sense," he told the network.

I spoke to Mattes, who confirmed as much.

"I did not do that, at all," he said about the claim that he looked into troll activity on pro-Sanders pages during the primaries. "Anybody who says that I knew what was happening in March 2016 is misconstruing what I've said publicly."

Mattes, who says he was never consulted by MSNBC about Melber's use of his quote, adds that he has "not seen any reporting that there was material assistance that would have helped" Sanders during the primaries. While he does say that he found Sanders page administrators around the country complaining about fake news sites being posted on their pages, that was in May, and was largely haphazard. The trolls didn't appear to target California, for instance, even though it was clear by at least mid-May that the state was the Sanders's campaign's last hope.

"Had there been an outrageous blasting of Hillary Clinton on our Facebook pages in the outrageous manner that occurred after the convention, I would've noticed it," says Mattes. "If the Russians had really wanted to help Bernie, our last stand was in California, and I didn't see it."

As of the time of writing, Melber's segment is still available for viewing online on the MSNBC website, even though Mattes says he contacted MSNBC to register his objections regarding the misquote. I reached out to Melber and MSNBC and asked them if they plan on issuing a public retraction. This story will be updated with their response.

It appears, then, that the widespread claim that "the Russians" were helping Sanders's campaign, and did so during the primaries, is fake news -- much like the kind that those advancing this narrative accuse the Kremlin of spreading to subvert American democracy.

What appears to have happened here is a marked collapse of basic journalistic standards. Various news outlets and pundits have created a narrative about Russian material support for left-wing presidential candidates based on precisely three references in a thirty-seven-page document that don't actually provide evidence of such a thing. Ari Melber, meanwhile, misattributed and misrepresented a quote from a year-old article and never bothered to speak to the individual he was supposedly quoting -- all for the purposes of quickly and falsely debunking Sanders's defense of his campaign.

A less charitable interpretation is that the media -- unfriendly towards Sanders, uncritical of the national security establishment, and predisposed to run sensational stories about Russian interference -- ran headfirst into a story that seemed to be an ideal blend of these two trends, facts be damned.

Who's Next?
The widespread adoption of this narrative as a cudgel wielded against prominent left-wing political figures, often by liberals, shows the danger of the current political climate, in which liberal anchors openly speculate whether their political opponents are foreign agents. The moment such accusations are turned leftward is never far away.

Look at what's happening in the Mexican presidential race. The current front-runner is a left-wing, anti-Trump populist running on a platform promising to renegotiate NAFTA, establish a universal pension, pump billions into infrastructure spending, and undo the current president's privatization of gas and oil fields. One Bloomberg op-ed charged he would be an ideal beneficiary of a Putin-backed disinformation campaign. Another, this time at the Washington Post, asserted that Putin "may" be working to help him, an unsupported charge repeated by one of his opponent's aides in January.

Those hostile to left-wing causes have also made use of the accusation of Russia meddling. Texas Republican Lamar Smith, a man saturated with the fumes of fossil fuel industry money, has accused anti-fracking environmental groups and Facebook ads of being funded by the Kremlin. Others have also hyped up the work of Russian troll farms in promoting black activism and the Dakota Access Pipeline protests. It brings to mind the intelligence assessment released by the Directorate of National Intelligence last January, which, in lieu of detailing evidence for the Russian hacking of the DNC, instead cited Russia Today's coverage of US wealth inequality, police brutality, mass surveillance, corruption, fracking, and more as examples of Russian propaganda.

And in the future, such attacks can easily be turned on the liberals now weaponizing Russiagate. What would happen if and when a Kremlin-backed disinformation campaign appeared to come to the aid of the Democrats in a future election? It's not so far-fetched: the legal analysis website Law & Crime recently reported that the pundit most retweeted by the trolls indicted by Robert Mueller was MSNBC's very own Joy-Ann Reid, who received around ten times more retweets than Sanders from the same trolls. It remains to be seen if news outlets will claim that Reid was being "helped" by the Russian disinformation campaign, or if Ari Melber will ask for her to renounce their aid.

Liberals should be wary of continuing to use Russiagate for partisan purposes, and of abandoning reporting standards to punish their ideological challengers, whether consciously or not. Weapons, after all, have a way of getting into other people's hands.

kurt -> Christopher H.... , February 22, 2018 at 09:51 AM
Oh lookie - the troll found someone who wrote an article with sketchy references that ignores evidence - but he posted it because he agrees with it!
Eric377 , February 21, 2018 at 12:40 PM
Employers have spent a lot of effort understanding their processes in greater and greater detail over the past 25 years. "Labor productivity" is very, very gross measure and does not have much meaning to the employer. What exactly in the process is generating improvements and can an employee effectively withhold their contribution to the improvement are key questions that are pursued very aggressively. If the new layout of the fabrication cells drives a lot of extra productivity or if a redesign of the product itself increases producibility, the human labor in the process is not going to be compensated very much regardless of the aggregate shift in labor productivity. If you can hire someone out of a fast food restaurant and hit the 95% productivity target by the close of his/her first shift, well the incumbent worker in the position is not going to be getting a big slice of general productivity measures. On the whole, firms are assessing situations accurately and taking actions that are in their profit interests. If they were getting this wrong a lot they would make changes. Employers are usually very pragmatic and if higher compensation makes them more money, they do not hesitate. But it usually does not make them more money.
Christopher H. said in reply to Eric377... , February 21, 2018 at 06:20 PM
"Employers are usually very pragmatic and if higher compensation makes them more money, they do not hesitate."

LMAO

This is not the case at all.

Longtooth , February 22, 2018 at 02:22 AM
I don't know whether other commenters have already made this observation, but in case they haven't:

The paper can be summarized by the relationship of median wage growth to productivity growth as the sum of two variables A & B:

c(3)W = c(1)A + c(2)B

where c(i) are the coefficients of the relations of each term to productivity growth.

What the authors implied is that c(1) is positive and c(2) is negative by a much greater absolute value than c(1), resulting in a very low but positive c(3).

For this to be the case, then variable B must be the composite weighted sum of all factors besides those with positive coefficients included in A.

The authors did not identify those factors the sum of which are B.

But, that identification only matters to identify what if any of those factors can be adjusted, eliminated, or substantially modified. And since they are each related to Productivity growth but still sum to a composite weighted negative coefficient c(2) they must adjustable, or eliminatable, or modifiable such that in composite the coefficient c(2) sums to near zero.

The simple fact that the coefficient of B has increasingly become more negative over time strongly suggests that many or most or even all of these factors that sum to B may not in fact be adjustable, eliminatable, or modifiable to any appreciable degree, since otherwise they would have already been identified and adjustments, etc. made (1973 to 2018 is nearly two generations of time).

In other words the coefficients of factors B that sum to c(2) must clearly also have strong positive weighted coefficients that relate to other than productivity growth but which are each still related to productivity growth.

It is obvious then that the other relationships (non-productivity growth) of factors B weigh positively (since 1973 and increasingly so since then) far more than those that sum to coefficients c(2) which only relate to productivity growth.

Simply stated the other relationships of B to non-productivity growth terms have had increasingly greater priority than those related to productivity growth .. enough so to fully counteract them at an increasingly greater rate with time.

I submit that Summers et.al. know this already and even what the major drivers are, but intentionally left them in their Posted "economics" as unknowns to keep from upsetting the apple cart.

Longtooth , February 22, 2018 at 02:49 AM
"This divergence between productivity and the typical worker's pay is a relatively recent phenomenon.."

Only if you consider 46 years (1973 to 2018) "recent". Most economists would reject that assertion. Most non-economists would reject that assertion. Most laypersons would reject that assertion.

So on what basis can Summers et.al. possibly assert it as true?

The period since the end of WWII completely changed global and domestic economies and that period is 73 years of time, so that the most recent 45 years comprises 61% of it or well over half the period since WWII's end has been in effect.

Basically the most recent 45 years begins a few short years after LBJ's administration and the Nixon's failed admin -- but which was followed by Ford, Carter, and Reagan's.

Longtooth -> Longtooth... , February 22, 2018 at 02:59 AM
I'm not indicting the presidential administrations only using them to show that "recent" begins in the post LBJ / Nixon time-frame. I don't know anybody that would refer to Nixon's presidency as a "recent" administration, including me (and I was born in 1945). My 40 something offspring and their cousins and all their friends refer to that as "ancient history". Summers was born nearly a decade after I was, and so must be using a hugely different concept of "recent" than I do or than my children and their generation do.

Historians have a different concept of "recent" since their operating time frames cover at least from the Industrial revolution and more often than not several centuries more.

RC AKA Darryl, Ron , February 22, 2018 at 03:23 AM
"On the link between US pay and productivity" is more a matter of the link between Anna Stansbury and Larry Summers than a matter of analytical elegance. OTOH, Anna is quite elegant.
Christopher H. , February 22, 2018 at 05:51 AM
https://www.bloomberg.com/news/articles/2018-02-22/fed-staff-pondered-inflation-puzzle-and-came-away-none-the-wiser

Fed Staff Pondered Inflation Puzzle and Came Away None the Wiser
By Matthew Boesler
February 22, 2018, 12:00 AM EST

Former Federal Reserve Chair Janet Yellen has called low inflation a bit of a "mystery." So it was appropriate that at her final Fed meeting, she and her colleagues received a special briefing on what had gone wrong with the computer models they use to forecast price pressures.

The conclusion of the briefing: The models aren't great for forecasting, but alternative options aren't obvious either. Perhaps even more troubling for policy makers is that inflation appears to be anchored below the Fed's 2 percent target.

The presentations by Fed staff economists were described in the minutes of the policy-setting Federal Open Market Committee's Jan. 30-31 meeting published Wednesday. The failure to anticipate last year's decline in inflation, despite a tightening labor market, was chalked up to transitory factors like a one-time drop in the price of cell-phone services.

No alternative frameworks for understanding inflation beyond the Fed's reliance on the decades-old Phillips Curve relationship -- which relies on the level of the unemployment rate and household inflation expectations -- were uncovered.

"The staff found little compelling evidence for the possible influence of other factors such as a more competitive pricing environment or a change in the markup of prices over unit labor costs," according to the minutes of the gathering, which took place just before Jerome Powell succeeded Yellen as chairman. "The prediction errors in recent years were larger than those observed during the 2001-07 period but were consistent with historical norms."

On one hand, the findings arm Fed officials with ammunition in the debate about whether inflation will pick up again this year as unemployment remains low. "Almost all" FOMC participants continued to see the Phillips Curve relationship between unemployment and inflation as a useful guide, according to the minutes, which reinforces the case for gradually raising interest rates even with relatively slow price increases.

But the news was not all good.

"Two of the briefings presented findings that the longer-run trend in inflation, absent cyclical disturbances or transitory fluctuations, had been stable in recent years at a little below 2 percent," according to the minutes.

Evans Dissent
The findings echoed a concern that led Chicago Fed President Charles Evans to dissent against the FOMC's most recent rate hike in December. After that meeting, he explained his decision on the grounds that U.S. households' expectations for inflation may have fallen below 2 percent, which may make it harder for actual inflation to rise.

Fed officials' preferred inflation gauge has been below 2 percent throughout most of the last six years. Prices rose 1.7 percent in the 12 months through December, according to the Commerce Department index.

But in the discussion among FOMC participants that followed the briefings, there was no indication that Evans's concerns were becoming more widespread, despite the staff's findings. Only "a few" said inflation expectations appeared to have fallen below 2 percent, though "a number" noted the importance of stressing the symmetric nature of the Fed's inflation goal.

RGC , February 22, 2018 at 06:24 AM
Dorian Bon reviews a collection of essays by socialist authors and journalists, many of them SW contributors, that asks tough questions about Trumpism--and answers them.

...............................................

Trump and the crisis that caused him

...................................

"In 2008, Obama rode a wave of popular enthusiasm into the White House. "Two years later," Selfa writes, "the formerly discredited and out-of-touch Republican Party scored a historic landslide in the 2010 midterm election. In the largest congressional midterm victory since 1938, the Republicans captured sixty-three seats, ending the four-year Democratic majority in the House of Representatives."

"How did this happen? When Obama took office two years before, with the Democrats controlling both houses of Congress, his administration quickly proceeded to appoint Bush-era officials to top positions in the Treasury and Pentagon.

The fiscal stimulus law passed weeks after Obama's inauguration, while significant, excluded jobs programs to ease rising unemployment. The administration imposed sweeping concessions on unionized workers through the auto industry bailout, even while corporate executives continued to be rewarded with lavish payoffs.

As the business elite found a willing partner in the new White House, poll after poll showed that Americans had begun to associate Obama and the Democratic Party with big finance."

...........................................................

https://socialistworker.org/2018/02/16/trump-and-the-crisis-that-caused-him

[Feb 23, 2018] The Rothschild Organ And Octoputin - Projection or Envy

Feb 23, 2018 | www.moonofalabama.org

ger | Feb 22, 2018 11:40:39 AM | 2

In an uninformed America, fake news organization like NYT, Wapo and Economist can peddle fake news about fake news with nary a question of its accuracy. A dangerous time for the world. MORONS R/U$

A P , Feb 22, 2018 11:50:18 AM | 3

"I care not what puppet is placed on the throne of England to rule the Empire, ... The man that controls Britain's money supply controls the British Empire. And I control the money supply."
Baron Nathan Mayer Rothschild

Bearing mind that the US Federal Reserve is a private consortium of Rothschild-linked banks and it was another Rothschild that basically wrote the Balfour Declaration...

"Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority; still more when you superadd the tendency of the certainty of corruption by authority." Lord Acton

Add in Zimbardo (Stanford Prison Experiment) and Milgram (Shock Experiments) revealing how the influence machine operatesand you have the schema behind what passes for crony capitalism that infests the world. The icing on the oligarchic system is Bernays-inspired propaganda.

Perfect storm.

james , Feb 22, 2018 12:03:16 PM | 4
well octopi are very intelligent as i understand it.. so they got that right!

i agree with @2 ger and @3 A P.. this constant mantra to get russia is a real interesting set up if you ask me... someone hopes to make a ton of money off war.... these same people don't care about the death of others either... not pretty..

test , Feb 22, 2018 12:05:26 PM | 5
Sigh, nothing but racism against Russians, MSM really wants ww3 with Russia and unfortunately they will probably get it if their hatred, hysteria soar coming months, years.

As b said earlier this week, all for the click-bait.

Also,
Woman threatened online after CNN publicly confronts her on her porch for "siding with Russian trolls"
https://www.scoopnest.com/user/RT_com/966693158724792320-woman-threatened-online-after-cnn-publicly-confronts-her-for-siding-with-russian-trolls

James lake , Feb 22, 2018 12:22:27 PM | 6
Russiagate is the means the USA are using to manufacture consent for war.

A war that is not based on any real cause - just the Neo cons agenda. That is what the Meuller enquiry is designed to with the cooperation of the media - to make Americans hate Russia enough for war to be on the agenda

Putin is demonised - like with Saddam Hussein and Bin Laden and Ghaddafi

It started with obama and the demonisation of Putin.

Hillary was meant to continue this - Trump (Macmasters, Haley, Tillerson and the gang) are following the plan set out by the Neo-cons.

The question is will Europe follow - the UK and France and Poland may the Baltic's are dumb enough but I am not so sure about the rest of Europe.

golom , Feb 22, 2018 12:29:46 PM | 7
Octopus ist a Symbol like any other, depicting for example methods of surveilance states. If Sueddeutsche got attacked for using nazi symbolism, this is mosty due to the strong influence of zionist groups in germany, showing off on their power. Bruce schneier likely confirms this, even he though he uses a slightly different symbol: the squid.
test , Feb 22, 2018 12:38:16 PM | 8
James lake


"The question is will Europe follow - the UK and France and Poland may the Baltic's are dumb enough but I am not so sure about the rest of Europe".

Unfortunately you are misinformed, the anti-russian hatred is probably worse in europe than in america. Remember economist is a brittish/european news magazine.

Jo Garcia , Feb 22, 2018 12:40:16 PM | 9
Who most likely resembles an octopus, and acts more likely as one, is George Soros. Have never seen his likeness mocked in any publication. It is far overdue.
psychohistorian , Feb 22, 2018 1:12:19 PM | 10
This is amazing Big Lie projection by the elite. It shows their current weakness when they project their ability onto others as b clearly shows.....has private banking been reeled in since 1894 or has it grown to project more power and control?

Please remember folks that it is our social contract that needs to change rather than punish some individuals and leave finance in private hands. Have we "evolved" enough to be able to manage finance as a public utility? Like with gun (aggression) control, if we can get some adults to lead the discussion and evolution instead of the psychopaths leadership we have currently, there shouldn't be a problem.

hopehely , Feb 22, 2018 1:32:37 PM | 11
Posted by: test | Feb 22, 2018 12:38:16 PM | 8
the anti-russian hatred is probably worse in europe than in america. Remember economist is a brittish/european news magazine.

Not in whole Europe. In Southern/Mediterranean Europe for example you do not find hatred towards Russia. And how much Britain is European anyways, they call us 'continentals' after all.
ben , Feb 22, 2018 1:37:30 PM | 12
james @ 4 said:"i agree with @2 ger and @3 A P.. this constant mantra to get russia is a real interesting set up if you ask me... someone hopes to make a ton of money off war.... these same people don't care about the death of others either... not pretty.."

Couldn't have said it any better james, kudos...

bevin , Feb 22, 2018 1:37:56 PM | 13
The picture of Putin as meddling octopus attacking democracies is of course dumb nonsense. There is no evidence that the Russian government was in any way involved in the U.S. election..."
No evidence either that the US, where electors choose between Trump and Clinton, Democrat neo-cons and republican neo-cons, is a democracy.
Perhaps The Economist is re-cycling Karl Marx's old, 1848, charge against 'that power, whose head is in Moscow and whose hand is in every cabinet in Europe' a charge that today fits the arbiter of all wannabe, whose head is in Washington. to a tee.
Skeletor , Feb 22, 2018 2:17:34 PM | 14
@ B

The link to the NYT article is broken....or more likely they have removed the article.

Good reporting as always above. Thank you.

Anonymous , Feb 22, 2018 2:44:10 PM | 15
"well octopi are very intelligent as i understand it.. so they got that right!" James @4

They are also very good at spraying black ink indiscriminately in order to make their escape or mask their presence.

test , Feb 22, 2018 2:57:53 PM | 16
hopehely

I cant see any difference between southern states like Spain, France vs northern like Holland and Norway.
The media is even more hawkish than the folks also.

jo6pac , Feb 22, 2018 3:15:34 PM | 17
No comment needed. Enjoy.

https://www.mintpressnews.com/hillary-clinton-begs-forgiveness-rothschilds-leaked-email/221570/

jo6pac , Feb 22, 2018 3:17:04 PM | 18
Another one because I'm having fun.

https://www.globalresearch.ca/hillary-clintons-intimate-relationship-with-the-rothschild-banking-dynasty-the-shadowy-network-of-super-elites/5542966

This is a nice piece of the German journalist Norbert Häring about Soros:

http://norberthaering.de/de/27-german/news/67-das-inet-von-george-soros-instrument-zur-weltverbesserung-oder-trojanisches-pferd-der-finanzoligarchie

He carefully sorted out what seems to be fact and what is gossip. Alt right people here hate this approach.

Hausmeister , Feb 22, 2018 3:26:09 PM | 19


This is a nice piece of the German journalist Norbert Häring about Soros:
http://norberthaering.de/de/27-german/news/67-das-inet-von-george-soros-instrument-zur-weltverbesserung-oder-trojanisches-pferd-der-finanzoligarchie
He carefully sorted out what seems to be fact and what is gossip. Alt right people here hate this approach.
augusto , Feb 22, 2018 3:59:21 PM | 20
The famous british weather forecast in never a past thing: ", ladies & gentelment a heavy thick mist this morning covers the Channel, thus isolating the European continent...''
mauisurfer , Feb 22, 2018 4:18:30 PM | 21
Haus
Here it is in english
http://norberthaering.de/en/32-english/news/944-soros-inet
psychohistorian , Feb 22, 2018 4:49:58 PM | 22
@ mauisurfer with the english translation of the Soros and INET piece....Thanks!

Most of my undergraduate study was in macro economics which showed the myth behind the religion of private finance/property and ongoing inheritance. I was one of the folks in class that asked too many questions and would never get invited to an INET gathering but was a computer nerd by then anyway.

The point that struck me about the situation is that to overturn private finance also means dealing with the excesses of patriarchy ....sigh We are a species that has advanced amazingly so in so many ways and yet here we are with a multi-century pattern of private finance controlling the lifeblood of human commerce like a vampire. This may have made some sense in the feudal era but we are past that aren't we?

I hope we don't destroy ourselves trying to evolve.

Lester , Feb 22, 2018 5:02:21 PM | 23
Putin works for the Rothschilds. Putin is the bankers' faithful employee. Putin was just a low-level KGB member and suddenly he becomes Russia's president? Just like Obama the unknown became the US president?

http://www.conspirazzi.com/tag/jewish-mother/

http://vladimirsuchan.blogspot.com.tr/2016/01/who-rules-russia-its-system-is-set-up.html?m=1

karlof1 , Feb 22, 2018 5:21:15 PM | 24
And before the Octopus there was the Hydra and its related mythology .

In one sense it's certainly projection. I imagine the text is full of falsifications and allegations offered with no facts to back them, which is what we've seen from all other media and linked governments. Clearly, Russia is seen as an easier target than China thanks to the years of Cold War brainwashing. But when we're confronted with such excrement, what's the message we see being sent? I see an elaborate Ponzi Scheme built on a slowly disintegrating foundation of lies in the process of imploding. The so-called Masters of the Universe no longer hold any Truths and must thus rely on their seemingly infinite lies broadcast via the Propaganda System. Meanwhile, The Resistance holds all the Truths and refutes the lies easily. The Resistance rapidly gains the credibility the Masters once wielded.

The Hydra in Greek Mythology is killed in several differing ways. But the most important aspect of its being is the reason for its existence: Hera raised it specifically to kill Heracles--it's a tool of the Elite made to kill one of the Elite's main challengers. Yet, it was a member of the Elite--Athena--who provides Heracles with the ultimate weapon to slay the Hydra. Yes, Truth is stranger than Fiction; and it must be recalled that Mythology always is constructed around a core of Truth.

Formerly T-Bear , Feb 22, 2018 5:31:30 PM | 25
@ psychohistorian | Feb 22, 2018 4:49:58 PM | 22

What? No cognitive dissonance? Look closely again! Rothschild is exactly what your "Private Finance" looks like. I would have thought you would highly approve. Are you sure you took Economics 101? or just had a bad reaction to a pizza?

Ivan , Feb 22, 2018 7:24:46 PM | 26
It is interesting that the host "b", who is scrupulous about anti-semitic biases, has now to acknowledge at least tangentially that the anti-semites got some things right. The anti-semites may have gone overboard with their accusations, but as always there is a kernel of truth. The Jewish opinion-makers have no sense of moderation, or fairplay and that has always turned off anyone who thinks about these things. I myself have turned away from being a raging 110% Zionist to total indifference now.
Don Bacon , Feb 22, 2018 8:24:11 PM | 27
Whose tentacles control the world?
From the Iran Deputy FM on the nuclear deal :
The world will be plunged into a new nuclear crisis if Donald Trump continues to sabotage the Iran nuclear deal, the country's deputy foreign minister has warned. Abbas Araghchi, a deputy foreign minister, accused Mr Trump's administration of violating the agreement by threatening to reimpose sanctions and said Tehran could walk away from the deal if it did not begin to see economic benefits from the deal.

" I don't think the deal can survive in this way, if the atmosphere of confusion continues, if companies or banks will not cooperate with Iran . We cannot stay in a deal in which there is no benefit for us," he said. "That's a fact." . . . here

countries that are parties to the JCPOA--
China
European Union
France
Germany
Iran
Russian Federation
United Kingdom
United States .. .The meddler

So Trump, not Putin, menaces Western democracies. Change the head on that octopus.

che , Feb 22, 2018 8:29:40 PM | 28
U.S. Mainstream news television and print has become boring predicable relentless propaganda nonsense, pure hype. Half is pure hype propaganda and the other is mostly advertisement selling products like pharmaceuticals any news item is product placement, LOL. It is Frightening at the same time hard to believe that the American Public is still falling for the same shell game, evil dictator, etc. This Defraud of the American Public, relentless and diabolical misinformation mind control, and Mr. Obama and his ilk insist they will decide what is true or not, fake news or not. And they will marginalize criminalize or physically damage the outliers.
saul alilinsky sachscoburg gotha , Feb 22, 2018 8:37:18 PM | 29
i live on rothschild street it is very nice and safe already no arab spring here as we removed them and sent them to munchen,garmischpartenkirken,scotland,wales london and norway sweden barbera lerner spector sorted the shipping out for us super better thsn dhl logistics already.


"The great Ideal of Judaism is ...that the whole world shall be imbued with Jewish teachings, and that in a Universal Brotherhood of Nations - a greater Judaism, in fact -- all the separate races and religions [and nations] shall disappear."

https://www.henrymakow.com/

Grieved , Feb 22, 2018 8:44:32 PM | 30
@24 karlof1

Mythology contains its core of truth because, I submit, events and symbols both arise from the same source, and share the same pattern.

In plain terms: we are too self-important to think we put the connections together. The connections come already made, we just ascertain them.

In useful terms: the mythologies contain patterns of existence that remain alive even if we only see the patterns from mythologies that owe their fame to past events. Whatever a story evokes, it also invokes. It can happen again because it never went away. The pattern is universal, enduring, primordial. Plus ca change...

And your Hydra story is wonderful. And hopeful :)

Jen , Feb 22, 2018 9:03:50 PM | 31
Karlofi @ 24: In a way, the Hydra did kill Heracles (the mortal part of him). Heracles shot a centaur who was menacing his second wife Deianira with one of his arrows (which he had previously dipped in the Hydra's blood). The centaur told Deianira to dip a shirt into his blood (the centaur's blood, that is), falsely claiming that his blood could be used as a love potion. Some time in the future, Heracles' eye starts to wander and Deianira remembers the centaur's last words. She gives Heracles the bloodstained shirt to wear. The Hydra poison in the shirt starts killing Heracles and he cannot take it off.
Debsisdead , Feb 22, 2018 9:23:13 PM | 32
It is vital to acknowledge that animus towards zionists is culturally driven rather than racially motivated. Saturday morning Hebrew classes - frequently instructed by fresh outta the IDF young israelis, has been an essential part of the indoctrination of jews into zionism. Without that it would have been impossible to develop the cohort of fervently pro-Israeli jews. Wind the clock back 5 or 6 decades and you will find that among the wider jewish population zionists were outnumbered by a mixture of secular jews who wanted integration and those orthodox jews who believed zionism to be contrary to established teaching. Not now.
However there is another major downside to the accepted indoctrinations. Spend time with a third generation arab american, italian- american or Greek-american and you will find that aside from the surname they appear just as any amerikan would. Not so for Amerikan jews, whose brainwashing has served to seperate them from the wider population.
This is particularly apparent in attitudes towards women. Over the early years of emigration to the "New World" there have been numerous instances of recent migrants from Italy Greece and the ME being involved in some dreadful activities against local women. Now, these have frequent been used by a racist media to persuade fools that the particular nationality in question is deviant, violent and will 'steal our womenfolk'. After a couple decades of local Italian-amerikans, Greek-amerikans and Arab-amerikans it all settles down into a crime rate within the usual boundaries of citizens.

That hasn't prevented race-baiting by third generation feminists, the worst example being englander Labour Party MP Sarah Champion claiming that all muslims were misogynist after a gang of 1st & 2nd generation Pakistani-englanders were convicted of grooming 'young white girls'. The link which certainly doesn't represent my view on this gives a flavour of how the englander media published racist tropes while pretending to be opposed to racism.

I mention the Champion case because one group of englanders and amerikans are always given a free pass on sexism, even though they, unlike descendants of xtian and islamic immigrants, continue with their belief in gender based oppression into all subsequent generations of amerikans.

Take a look at the primary perpetrators in the #ME TOO tweeting? Harvey Weinstein, Woody Allen, Roman Polanski to name a tiny percentage of the Hollywood "heavy Hitters" who have been accused of sexual harassment and/or rape and who happen to be Jews.
I have always held that the combination of "we are the chosen people" rhetoric combined with the "all goy women are easy" [I mean to say married goyim don't even wear a sheitel ) nonsense has encouraged jews to hang on to gender based prejusices long after the societies which other migrants came from ditched such tosh.

Yet there have been no articles on the rate of Judaism amongst sex pests and rapists. Why not?

I'm not highlighting this because I reckon the world needs more racist propaganda, but because a well-researched article which considered all the issues properly could put these 'hebrew classes' that let's face it, are the judaic equivalent of wahabi Madrasa brainwashing, under pressure to reform the curriculum away the anti-=women, anti-islam - hell anti anyone/anything which isn't judaic- and into less socially divisive anti-hate speech stuff.

Looking at any of the problems across this rock in 2018 with a race-based mindset is wasteful and untrue. amerikans of all colours and creeds cheer on the destruction of the 'undeveloped' world not because of their hair or skin colour, but because they have had their minds filled with garbage ever since someone first turned on a vid tube to 'distract' them.

hopehely , Feb 22, 2018 9:51:48 PM | 33
Posted by: Ivan | Feb 22, 2018 7:24:46 PM | 26
to acknowledge at least tangentially that the anti-semites got some things right.

What things?
I myself have turned away from being a raging 110% Zionist to total indifference now.

What happened? Moved to Israel and didn't like it there? Too quiet on Saturdays?

[Feb 23, 2018] Life in the Sweatbox, Personal Bankruptcy, and the Narrative of Utilitarian Calculus by Lambert Strether

Notable quotes:
"... The Importance of Being Earnest ..."
"... By Lambert Strether of Corrente . ..."
"... Notre Dame Law Review ..."
Feb 22, 2018 | www.nakedcapitalism.com
"Really, if the lower orders don't set us a good example, what on earth is the use of them? They seem, as a class, to have absolutely no sense of moral responsibility." –Oscar Wilde, The Importance of Being Earnest

By Lambert Strether of Corrente .

Credit Slips informs us of an important new study, "Life in the Sweatbox," by Pamela Foohey, Robert M. Lawless, Katherine M. Porter, and Deborah Thorne, forthcoming from the Notre Dame Law Review , and available for download now at SSRN . Foohey summarizes the article:

"Sweatbox" refers to the financial sweatbox -- the time before people file bankruptcy, which is when they often are on the brink of defaulting on their debts and lenders can charge high interest and fees. In the article, we focus on debtors' descriptions of their time in the sweatbox.

Based on CBP data, we find that people are living longer in the sweatbox before filing bankruptcy than they have in the past. Two-thirds of people who file bankruptcy reported struggling with their debts for two or more years before filing. One-third of people reported struggling for more than five years, double the frequency from the CBP's survey of people who filed bankruptcy in 2007. For those people who struggle for more than two years before filing -- the "long strugglers" -- we find that their time in the sweatbox is marked by persistent debt collection calls, the loss of homes and other property, and going without healthcare, food, and utilities. And although long strugglers do not file bankruptcy until long after the benefits outweigh the costs, they still report being ashamed of needing to file.

Foohey concludes:

Our results suggest that the bankruptcy system, at present, cannot deliver its promised "fresh start" to many of the families that seek its protection.

In this brief post, I'll look at one aspect of how the bankruptcy system came to be as it is: The narrative that debtors perform a "utilitarian calculus" in deciding whether or not to seek bankruptcy. This narrative is false, based the results of "Life in the Sweatbox." Since it will crop up again if bankruptcy reform efforts gain traction -- as they should -- it's important to debunk it now. This subject matter is new to me, so I will primarily quote from and contextualize Foohey, Lawless, Porter, and Thorne.

First, let's define the "sweatbox.' Foohey et al., page 1:

The time before a person files bankruptcy is sometimes called the financial "sweatbox." People in the financial sweatbox are on the brink of defaulting on their debts, which is when their lenders can charge high interest rates and fees and otherwise profit from their customers' financial misery.

Ka-ching.

Although the term "sweatbox" often is connected with bankruptcy, how long people spend in the sweatbox before filing and what it means to live in the sweatbox has yet to be carefully examined. Understanding what people endure while in the sweatbox is crucial to evaluating the longstanding belief that people decide to file bankruptcy based on a strategic, financial calculation.

Second, current personal bankruptcy law is premised on the narrative that people seek personal bankruptcy out of self-interest (the "utilitarian calculus"). Foohey et al., page 2:

The term "financial sweatbox" came out of the debates leading to the 2005 passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a major amendment to the Bankruptcy Code designed to decrease consumer bankruptcy filings by making filing more difficult, expensive, and timeconsuming. The consumer credit industry insisted that changes to bankruptcy were needed because bankruptcy courts were full of deadbeat, "can-pay" debtors who filed "bankruptcies of convenience" to try to escape their rightful obligations and who felt no shame in "abusing" the system. This story contradicted the overwhelming expert consensus that the bankruptcy system functioned well, abuse was rare, and there was no need for drastic overhaul.

And from page 12:

To make its case for restricting access to bankruptcy and thus extend the time consumers spend in the sweatbox, the consumer credit industry painted a picture of profligate spending and uninhibited use of bankruptcy. This picture was not new. Rather, it was updated and embellished for more than a decade. Proponents of this picture argued that reforms were necessary because the "rising tide of bankruptcy filings" cost every moral, bill-paying family $400 a year, a figure that made for "the best sound-bite in the debate." Proponents further linked people's supposed propensity to file at the first sign of financial trouble to a purported drastic decline in bankruptcy's stigma.

None of proponents' claims were supported by evidence . Proponents never substantiated the often-cited "fact" that bankruptcy was costing every American family $400 a year. The claim that bankruptcy courts were filled with "can-pay" debtors was contradicted by decades of robust empirical evidence that people file bankruptcy after experiencing exogenous shocks, such as decline in income, increased expenses, job loss, divorce, and medical problems. Based on this evidence, the related claim that bankruptcy's stigma had disappeared became suspect. If anything, comparing levels of consumer debt and the number of bankruptcy filings, the stigma of filing may have increased over past decades.

Nonetheless, lured by tales of a $400 bankruptcy "tax," Congress embraced the consumer credit industry's assertion that restricting eligibility to and otherwise making it harder to file bankruptcy was the best policy.

(The politics of bankruptcy legislation, it seems, make the politics of health care law look like deliberations at Aristotle's Lyceum .) So now you have been inocculated against the talking points from the credit "industry" (so-called), especially that virulent "$400 a year" one. I'm about to give the article's internal logic on why these talking points are false, but the article is lavishly footnoted and you can run down plenty of additional material for yourself.

Third, the struggle to avoid bankruptcy involves immense suffering. Page 39:

To squeeze a few more dollars out of their lives, people work overtime, forego basic necessities, face serious health consequences, deal with persistent debt collection calls, end up in court, lose homes, and sell what little they own .

Financial misery hurts families. For couples, financial distress is "complicated by the internal dynamic of the household." Struggling with unmanageable debts can strain marriages and relationships. Fights over how to make ends meet, shifting of responsibilities for dealing with ever-worsening finances, and watching loved ones deal with the emotional distress that comes with money troubles may lead to separation and divorce. Splitting one household into two only worsens the financial problems .

For parents, financial troubles are compounded with worries over how the kids cope with the hardships. If homes are foreclosed, children are displaced along with their parents, and may switch schools, possibly more than once as their parents find a workable living situation. Home loss is linked with educational regression. Even if children are not displaced, they notice their parents' financial distress. Schedules change, diets change, and activities are scaled back as parents cut spending. Such changes can confuse children, resulting in behavioral and emotional problems. The effects of prolonged financial problems extend beyond families to workplaces and communities. Existing in a state of money scarcity damages people's ability to lead productive lives. Merely determining how one will survive day to day depletes people's mental resources. This leaves little energy for attending to anything else, including one's job, threatening people's livelihoods and leading to further economic drain. People withdraw from society, adding to their isolation. And the costs of life in the sweatbox are magnified by people's reported underutilization of health-related services and insurance, which can permanently harm people's health.

(The article does not mention Case-Deaton's "deaths of despair," but I'm sure all these hellish stressors have measurable health effects; see NC's discussion of "embodiment." )

Fourth, many prolong the struggle to avoid bankrupcty long after it's in their interest to do so. Page 3:

[T]wo-thirds of people who file bankruptcy report that they seriously struggled with their debts for more than two years prior to bankruptcy. Almost one-third report that they seriously struggled for more than five years, double the frequency from the CBP's survey of people who filed bankruptcy in 2007. For those people who struggle for more than two years before filing bankruptcy -- the "long strugglers" -- their time in the sweatbox is particularly damaging, distinguishing them from other debtors. They lose their homes to foreclosure, sell other property, report going without food and other necessities, all while employing multiple tactics to try to make ends meet and dealing with persistent debt collection calls and lawsuits. When long strugglers finally file, they enter bankruptcy with fewer assets than other debtors and overwhelming unsecured debts. Long strugglers would have benefitted financially from filing months or years before they did . Yet seven out of ten long strugglers say they felt shame upon filing bankruptcy. These debtors' reports about their prebankruptcy lives suggest a model of deciding to file based on something beyond just dollars and cents .

Finally and finally, QED. Debtors, especially long strugglers, cannnot be presumed to perfom a "utilitarian calculus." Page 42:

Debtors' presumed utilitarian calculation that underlies debates about access to bankruptcy supposes more knowledge about law and shrewdness about timing than our data suggest people have. People's willingness to file is diminished further by feelings of shame about using bankruptcy even when filing is clearly financially beneficial. Combined, the bankruptcy system is severely hampered in delivering the fresh start it is assumed to bestow on struggling families.

And from page 38:

Far from being a first resort, bankruptcy is the last refuge for struggling families, and their decisions to file do not reflect the utilitarianism bankruptcy law .

At this point, I'm thinking that the situation in bankruptcy is so hellish that that loveable goof, Joe Biden, actually did student debtors a favor by not allowing them to file for it [hollow laughter].

It also occurs to me that since it's not obvious that our elites are likely to feel shame, and it's quite obvious that they're adept at utilitarian calculus (ka-ching), perhaps they're projecting their own values and behavior onto the rest of us?

This is an excellent article, far richer in data, ideas, and policy concepts than I've sought to convey here. Recommended reading . Grab a cup of coffee!

[Feb 07, 2018] Capitalism Collapsing from Inequality... Blame Russia! by Finian CUNNINGHAM

Nov 11, 2017 | www.strategic-culture.org

New figures published this week on obscene inequality show how the capitalist economic system has become more than ever deeply dysfunctional. Surely, the depraved workings of the system pose the greatest threat to societies and international security. Yet, Western leaders are preoccupied instead with other non-existent threats – like Russia.

Take British prime minister Theresa May who this week was speaking at a posh banquet in London. She told the assembled hobnobs, as they were sipping expensive wines, that "Russia is threatening the international order upon which we depend". Without providing one scrap of evidence, the British leader went to assert that Russia was interfering in Western democracies to "sow discord".

May's grandstanding is a classic case study of what behavioral scientists call "displacement activity" – that is, when animals find themselves in a state of danger they often react by displaying unusual behavior or making strange noises.

For indeed May and other Western political leaders are facing danger to their world order, even if they don't openly admit it as such. That danger is from the exploding levels of social inequality and poverty within Western societies, leading to anger, resentment, discontent and disillusionment among increasing masses of citizens. In the face of the inherent, imminent collapse of their systems of governance, Western leaders like May seek some relief by prattling on about Russia as a threat.

This week European bank Credit Suisse published figures showing that the wealth gap between rich and poor has reached even more grotesque and absurdist levels. According to the bank, the world's richest 1% now own as much wealth as half the population of the entire planet. The United States and Britain are among the top countries for residing multi-millionaires, while these two nations have also emerged as among the most unequal in the world.

The data calling out how dysfunctional the capitalist system has become keeps on coming. It is impossible to ignore the reality of a system in deep disrepair, yet British and American politicians in particular – apart from notable exceptions like Jeremy Corbyn and Bernie Sanders – have the audacity to block out this reality and to chase after risible phantoms. (The exercise makes perfect sense in a way.)

Last week, a report from the US-based Institute of Policy Studies found that just three of America's wealthiest men – Bill Gates, Jeff Bezos and Warren Buffett – own the same level of wealth as the poorest half of the entire US population. That is, the combined monetary worth of these three individuals – reckoned to be $250 billion – is equivalent to that possessed by 160 million citizens.

What's more, the study also estimates that if the Trump administration pushes through its proposed tax plans, the gap between rich elite and the vast majority will widen even further. This and other studies have found that over 80% of the tax benefits from Trump's budget will go to enrich the top 1% in society.

All Western governments, not just May's or Trump's, have over the past decades overseen an historic trend of siphoning wealth from the majority of society to a tiny elite few. The tax burden has relentlessly shifted from the wealthy to the ordinary workers, who in addition have had to contend with decreasing wages, as well as deteriorating public serves and social welfare.

To refer to the United States or Britain as "democracies" is a preposterous misnomer. They are for all practical purposes plutocracies; societies run by and for a top strata of obscenely wealthy.

Intelligent economists, like the authors at the IPS cited above, realize that the state of affairs is unsustainable. Morally, and even from an empirical economics point of view, the distortion of wealth within Western societies and internationally is leading to social and political disaster.

On this observation, we must acknowledge the pioneering work of Karl Marx and Friedrich Engels who more than 150 years ago identified the chief failing of capitalism as being the polarization of wealth between a tiny few and the vast majority. The lack of consumption power among the masses owing to chronic poverty induced by capitalism would result in the system's eventual collapse. Surely, we have reached that point in history now, when a handful of individuals own as much wealth as half the planet.

Inequality, poverty and the denial of decent existence to the majority of people stands out as the clarion condemnation of capitalism and its organization of society under private profit. The human suffering, hardships, austerity and crippled potential that flow from this condition represent the crisis of our time. Yet instead of an earnest public debate and struggle to overcome this crisis, we are forced by our elites to focus on false, even surreal problems.

American politics has become paralyzed by an endless elite squabble over whether Russia meddled in the presidential elections and claims that Russian news media continue to interfere in American democracy. Of course, the US corporate-controlled news media, who are an integral part of the plutocracy, lend credibility to this circus. Ditto European corporate-controlled media.

Then we have President Donald Trump on a world tour berating and bullying other nations to spend more money on buying American goods and to stop cheating supposed American generosity over trade. Trump also is prepared to start a nuclear war with North Korea because the latter is accused of being a threat to global peace – on the basis that the country is building military defenses. The same for Iran. Trump castigates Iran as a threat to Middle East peace and warns of a confrontation.

This is the same quality of ludicrous distraction as Britain's premier Theresa May this week lambasting Russia for "threatening the world order upon which we all depend". By "we" she is really referring to the elites, not the mass of suffering workers and their families.

May and Trump are indulging in "perception management" taken to absurdity. Or more crudely, brainwashing.

How can North Korea or Iran be credibly presented as global threats when the American and British are supporting a genocidal blockade and aerial slaughter in Yemen? The complete disconnect in reality is testimony to the pernicious system of thought-control that the vast majority of citizens are enforced to live under.

The biggest disconnect is the obscene inequality of wealth and resources that capitalism has engendered in the 21 st century. That monstrous dysfunction is also causally related to why the US and its Western allies like Britain are pushing belligerence and wars around the planet. It is all part of their elitist denial of reality. The reality that capitalism is the biggest threat to humanity's future.

Do we let these mentally deficient, deceptive political elites and their media dictate the nonsense? Or will the mass of people do the right thing and sweep them aside?

[Jan 16, 2018] Angry Bear " Does the United States Have A "Poland Problem"

Notable quotes:
"... As it is, the "middle" 59% can replenish their pockets at the expense of top 1% income whose share has ballooned from 10% to 22.5% over recent (de-unionizing) decades. Just reintroduce confiscatory taxation of the kind existing in the Eisenhower era. Say, 90% over $2 million income -- and this time we really mean it -- very top incomes (CEOs, news anchors, er, quarterbacks) now 20X what they were since per capita income only doubled. I predict any social inertia (it's only human nature) on the part of the 59% to jack upper taxes up will be overcome by the friendly persuasion on the part of the 40% -- who want to jack up the price of that burger just a bit more. ..."
"... NY Times' Nate Cohn found that Trump won by trading places with Obama. Obama ran as the black guy (presumably working folks oriented -- were we wrong) against Wall Street Romney; Trump ran as blue collar-acting guy against Wall Street Hillary. True progressive Bernie would have stomped Trump. (Bernie hasn't caught on to re-stocking union density as the only real way to help working people yet -- but at least he won't get in the way while waiting to catch on.) ..."
"... I remember reading an interview of an older person. The interviewer asked what life was like during the Great Depression. And they replied that it wasn't bad if you had a job. ..."
"... This is similar to our situation today. It is not bad if you have a good paying full time job. In that case you have almost no understanding of what some others are complaining about. Income inequality is a sterile term for what happens to other people ..."
"... Candidate Trump addressed the major concern of those 'others', which was their declining spending power. He did that by addressing the economic threats posed by illegal immigration and free trade treaties which allowed companies to move production overseas. ..."
"... The businessman Mohamed El-Erian rejects the populist label for the current multi national voter rebellions, he prefers anti-establishment. And so do I. ..."
Jan 16, 2018 | angrybearblog.com

Denis Drew, January 11, 2018 10:25 am

"We all know that that the widely touted unemployment rate overstates the strength of the labor market given so many having dropped out of the labor force, and upward pressure on wages has remained weak, despite some improvement on that front recently."

Barkley, this understates (too typically I'm afraid) the depth of the "Great Wage Depression." Everybody (everybody progressive anyway) eternally points to economic growth benefiting only the upper few percent for decades -- then -- whenever they assess the effect of the economy upon voters (not you here) they skip right over sink hole wage rates and keyhole focus right on the unemployment rate (or if we're lucky the real employment rate) when what voters want is $20/hr jobs plain and simple: high (or at least really livable) wages.

[cut-and-paste]
Simply put, if fast food can pay $15/hr at 33% (!) labor costs, then, other retail should be able pay $20/hr at 10-15% labor costs, and, Walmart (God bless it) may be able to pay $25/hr at 7% labor costs. If this means shifting 10% of overall income to the bottom 40%, that means scratching 14% of their income from the "middle" 59% (who get roughly 70% of overall income) -- in higher prices. Which may mean we have been paying the 40% too little for too along. But if the 40% get labor union organized (where this little speech is going) we may find ourselves willing to up if we want them to show up at work.

I have always been willing to tell any gang banger (not that I ever run into any) that side-ways guns and gang signs and all that would look pretty funny in, say, Germany where they pay people to work. And, that if Walmart were paying $25/hr we wouldn't be hearing about any of this here.

As it is, the "middle" 59% can replenish their pockets at the expense of top 1% income whose share has ballooned from 10% to 22.5% over recent (de-unionizing) decades. Just reintroduce confiscatory taxation of the kind existing in the Eisenhower era. Say, 90% over $2 million income -- and this time we really mean it -- very top incomes (CEOs, news anchors, er, quarterbacks) now 20X what they were since per capita income only doubled. I predict any social inertia (it's only human nature) on the part of the 59% to jack upper taxes up will be overcome by the friendly persuasion on the part of the 40% -- who want to jack up the price of that burger just a bit more.

* * * * * *

Super easy way back [ONLY WAY BACK] is restoring healthy labor union density (6% unions outside gov equates to 20/10 bp). When Democrats take over Congress, we must institute mandatory union certification and re-certification elections at every work place (stealing a page from the Republican's anti-union playbook -- see Wisconsin gov workers). I would add the wrinkle of making the cycle one, three or five years -- plurality rules -- take a lot of potential rancor out of first time votes in some workplaces.

Why Not Hold Union Representation Elections on a Regular Schedule?
November 1st, 2017 – Andrew Strom
https://onlabor.org/why-not-hold-union-representation-elections-on-a-regular-schedule/

WHICH IS WHERE I CAME INTO THIS MOVIE

PS. NY Times' Nate Cohn found that Trump won by trading places with Obama. Obama ran as the black guy (presumably working folks oriented -- were we wrong) against Wall Street Romney; Trump ran as blue collar-acting guy against Wall Street Hillary. True progressive Bernie would have stomped Trump. (Bernie hasn't caught on to re-stocking union density as the only real way to help working people yet -- but at least he won't get in the way while waiting to catch on.)

JimH , January 11, 2018 10:39 am

First, I agree with your assessment that President Trump is claiming credit for things which he has not caused. But this economy is awful for those at the low end of the income scale. Low pay, high rent, and rising food costs. (Sometimes by subterfuge.)

I remember reading an interview of an older person. The interviewer asked what life was like during the Great Depression. And they replied that it wasn't bad if you had a job.

This is similar to our situation today. It is not bad if you have a good paying full time job. In that case you have almost no understanding of what some others are complaining about. Income inequality is a sterile term for what happens to other people.

And others, like all of the above, who see the prices of the things that they consume going up while the CPI is showing little inflation.

Some of those others live in the rust belt states where they have seen an extended economic decline.

Neither of the two major political parties addresses those 'others' issues. And because they are almost completely disconnected from their voters' issues, they did not perceive the building anger.

Candidate Trump addressed the major concern of those 'others', which was their declining spending power. He did that by addressing the economic threats posed by illegal immigration and free trade treaties which allowed companies to move production overseas.

President Trump lost in the polls and won the election. It doesn't really surprise me that he is continuing to score low in the polls.

Of course, the two major parties can continue on their current paths. And they can blame their losses on flawed voters. And eventually they will do their complaining from their homes.

The businessman Mohamed El-Erian rejects the populist label for the current multi national voter rebellions, he prefers anti-establishment. And so do I.

Varsovian , January 11, 2018 12:14 pm

Oh no, not another extrapolation based on the false economic stats Poland pumped out pre-2015!!

No-one takes the drastic choice of emigration lightly – especially if you know you're going to be bottom of the heap in the new country. Can't you find an American to talk about his forbears escaping poverty in Europe only to face hard times in the New World?

Two million Poles fled Poland's much touted "Economic Miracle". Funnily, they stopped emigrating when REAL economic growth, wage growth and the setting up of a welfare state started!

Hard Right crony capitalism with illegal fuel import deals with Putin and falsified public accounting didn't cause happiness. Despite the figures, Poland wasn't a world leader in the export of cellphones, for example.

Rosser continues to bark up the wrong tree! Worse – he's making some sort of social philosophy out of it.

Barkley Rosser , January 11, 2018 3:28 pm

Denis and Jim,

Generally agree.

Dave V.,

You and I have already been around on this, but I shall point out that the credibility of sources in Poland that you like to cite have collapsed since the Law and Justice Party you shill for took over.

The most believable data is that there has been no major economic change in the state of the Polish economy from before and after the political change, although some minor changes (which you have hyped while ignoring others not fitting your party line). The big bottom line is no noticeable change in overall GDP growth in Poland, basically chugging along unspectacularly in the 1-2% annual range with mild quarterly fluctuations.

So, sorry, I am going to stick with calling this the Poland problem." You folks are the poster boys for this. Tough, and good luck getting any world leader not also an authoritarian liar supporting your embarrassing government.

[Dec 28, 2017] Working Class w- No Living Wage The Absurd Math of US Income

Notable quotes:
"... less than $100 ..."
"... the International Institute for Sustainable Development ..."
"... gross domestic product ..."
"... GDP ..."
"... employment-rate ..."
"... gross national income ..."
"... (total employed) × (mean-average wages per-year) = 140,400,040 × $49,630 = $6,968,053,985,200 or ..."
"... ~$7 trillion ..."
"... managers, janitors, lawyers, nurses, librarians, bartenders, and everyone else who had a job in 2016 ..."
"... Total US Income = $18,750,000,000,000 Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200 Income from Federal Social Benefits = $2,039,300,000,000 ..."
"... Total Income - (Wages & Salaries + Benefits) = $9,763,546,014,800 ..."
"... every commodity ..."
"... every last grain ..."
"... every waste bin ..."
"... every single cappuccino ..."
"... Property income ..."
"... unearned income ..."
"... interest ..."
"... interest, rent, and corporate profits ..."
"... with ..."
"... just as valuable ..."
"... honest work ..."
"... In solidarity, John Laurits ..."
"... If you enjoy these posts, consider buying the writer a cup of coffee ..."
"... or making a monthly donation ..."
"... --  it's like a voluntary subscription directly to an artist & journalist ..."
"... I'm all about it! ..."
Dec 28, 2017 | extranewsfeed.com

Working Class w/ No Living Wage: The Absurd Math of US Income

As the stock market gleefully claws its way to more record-breaking highs, Forbes reports a full 56% of US Americans now have less than $1,000 to their names  --  and 25% have less than $100 . But the economy, as they say, is booming. Even with 165 million on the breadline and an hourly minimum wage of only $7.25 nationally, surging Amazon share prices have added $13 billion to Jeff Bezos' net-worth since mid-September. For perspective, $13 billion is enough to pay the student-loan debts of 432,000 millennials. It's also plenty to end world hunger for a year, according to the International Institute for Sustainable Development . And Bezos  --  now the world's richest man  --  smashes a bottle of organic champagne to celebrate his new wind-farm. The question is  --  how do markets grow as the wealth of the people shrinks and wages fall? What do the commentariat mean by "economic growth" when the nation's income can hardly keep half of its people's heads above water?

The National Income:
How Much Value is Created by the US Economy?

There are a lot of ways to measure economies  --  for example, gross domestic product or GDP is the value of everything a country produces ( minus the cost to produce it ) and the employment-rate measures the number of paying jobs. The gross national income or GNI is what you get after adding up all of the income earned by everyone. GNI includes every citizen ( even in other countries ) and every kind of income from wages or salaries to social security and unemployment benefits, investment returns, or the sale of assets like houses and cars.

GNI is basically the total value of all money paid to everyone, minus the expenses of doing the business everyone is getting paid for. According to the macroeconomic accounts on the Federal Reserve's website, the GNI was about $18.7 trillion dollars in 2016 for the US.

Gross National Wages:
Every Paycheck Combined

Now, how much of America's multi-trillion-dollar paycheck ends up in the pockets of people who work in the US? Since the "gross national wage" is apparently not as important to US media-outlets as Jeff Bezos' latest earnings or the many triumphs of the Dow Jones, this number is a bit more camouflaged. Luckily, the total number who are employed by all industries and their average wages or salaries can be found in the bowels of the Bureau of Labor Statistics' website. Multiplying these two numbers  --  the total employed by all industries and their mean-average yearly wages  --  gives the combined wages and salaries of everyone with a job in the US, from the clerks and mechanics to the brain-surgeons and corporate executives.

(total employed) × (mean-average wages per-year) =
140,400,040 × $49,630 = $6,968,053,985,200 or
~$7 trillion

$7 trillion dollars to split between all employed people in the United States. Everyone who built everything and provided every service  --   managers, janitors, lawyers, nurses, librarians, bartenders, and everyone else who had a job in 2016   --  collectively earned about $7 trillion of the $18.7 trillion national paycheck.

But who gets the remaining $11,781,946,014,800?

Federal Benefits & Social Welfare

The national income also includes money received from government benefits, such as disability, retirement, and social security. The Bureau of Labor Statistics lists the 2016 total federal benefits received at $2.0393 trillion.

Total US Income = $18,750,000,000,000
Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200
Income from Federal Social Benefits = $2,039,300,000,000
Total Income - (Wages & Salaries + Benefits) = $9,763,546,014,800

And about $9.8 trillion is still missing.

Literally All Working People Combined
Earn Less Than Half of American Income

According to the BLS data, there are an estimated 146 million people who hold some sort of job in the US. These 146 million workers create every commodity , serve every meal , harvest every last grain , empty every waste bin , teach every student , build every house , and pour milk into every single cappuccino in the nation. And together they take about 37.2% of the American pie. All of the so-called "handouts" from the federal government  --  social security, retirement, disability, and other benefits  --  only amount to another 10.8% of the GNI.

The combined income from all employment and federal benefits still only adds up to 48% of America's paycheck. And that means that the other 52% must be paid to someone  --  or some thing   --  without a job.

Unearned Income: Landlords, Industrial Capitalists, & Wall Street Investors

Property income   --  or, as the classical economists knew it, unearned income   --  is earned through ownership ( rather than wages , which are earned by time spent working ). There are three basic types of unearned income. Rent is paid to owners of land or other natural resources, profit is paid to owners of capital ( like factories, equipment, machines, etc. ), and interest is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion Jeff Bezos made when Amazon share prices increased, for example, was "earned" by owning something rather than creating something or providing some service.

This type of income is a bit harder to keep track of  --  especially considering that the wealthy seem to be in the habit of using offshore tax-havens and shell companies ( like those revealed in the Panama and Paradise Papers ) to stash their fortunes. With that being said, the US Department of Commerce's accounts show nearly $7 trillion   --  or about the same as 146 million working people made combined  --  paid out for interest, rent, and corporate profits . Another trillion and a half or so was paid to "proprietors" or, more colloquially, the owners.

And now we have a rough sketch of the great American paycheck:

Are Workers Worthy of Their Wages?
Not in the United States of America!

There are two basic components to the whole economic activity and wealth of human civilization  --   capital and labor . On one hand there is capital  --  all of the natural resources, materials, lands, machines, and everything that everything is made of and made with   --  and, on the other hand, there are the countless workers whose labor-power transforms that stuff into the societies we live in.

Without the time, energy, creativity, and sacrifices made by the 146 million human beings who make everything and offer every service, the wealth of people like Jeff Bezos would not exist. Business magnates like Jeff Bezos, Warren Buffet, and Bill Gates need working classes  --  working classes do not need them . And yet Bezos, Buffet, and Gates now possess more wealth than the bottom 50% of the nation combined. Through the prism of the American economy, people like Bezos, Buffet, and Gates are just as valuable as the poorest 160 million of the working classes who collectively labor billions of hours each week.

And that is unfair  --   that doesn't add up. The "American Dream"  --  the whole idea about how anyone willing to work hard should be able to prosper or, at the very least, make ends meet  --  is objectively untrue . The truth is  --  if you want to earn wealth in the US or even if you only want to earn enough to pay the bills on time  --   honest work is not a very good strategy.

In solidarity,
John Laurits

If you enjoy these posts, consider buying the writer a cup of coffee using PayPal or making a monthly donation using Patreon --  it's like a voluntary subscription directly to an artist & journalist

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.

  • Go to the profile of John Laurits John Laurits

    John Laurits is not an award-winning journalist. Follow to watch the comic futility of John's quest to defeat capitalism with art https://www.johnlaurits.com

  • Extra Newsfeed Extra Newsfeed

    the same political rants you see on Facebook, but they're well written.

  • More on Bernie Sanders from Extra Newsfeed The Day the Russians made Donna Brazile expose Hillary Clinton & the Democratic Party Go to the profile of CharliePeach🍑 CharliePeach🍑 Related reads 7 Effective Communication Techniques That Will Make You Excellent Go to the profile of Karim Elsheikh Karim Elsheikh Also tagged Politics Don't Count America Out Go to the profile of John McCain John McCain Responses Conversation between Martha Menard, PhD and John Laurits . Go to the profile of Martha Menard, PhD Martha Menard, PhD Dec 6

    Interesting article, John. I work for a financial tech company that provides personal financial planning to employees as part of their benefits package. A lot of people are struggling  --  about 80% of Americans live paycheck to paycheck, 50% of people can't handle a $500 unexpected expense without putting it on a credit card, and about 33% have saved 1 response Go to the profile of John Laurits John Laurits Dec 6


    Yes! Thank you for mentioning unpaid domestic labor, as well as the roles that racism and patriarchy play in the awful saga of inequality  --  these are more than crucial to any real class analysis. My biggest regret about this article is that I was unable to include a discussion of unpaid domestic labor and how it contributes to the greater picture of Conversation with John Laurits . Go to the profile of LaMar Going LaMar Going Nov 30


    I am weary of half-truths, lies and ignorance from writers like this.
    3 responses Go to the profile of John Laurits John Laurits Nov 30

    1. False dichotomy. Option C: In the haste of your search for some technicality to use in your attempt at attacking the article's credibility, you did not consider that the second half of my casual description of GDP as "value of everything a country produces minus the cost to produce it" refers to the exclusion of the value of intermediate goods 2 responses Conversation between Joshua Shepard and John Laurits . Go to the profile of Joshua Shepard Joshua Shepard Dec 1


    Great breakdown! This is something I could see myself busting out with some investigative reporting. You took the macro budget and broke it down into the major segments and the makeup of each segment  --  wouldn't it be a great college project to have students across the country further breakdown each segment, using tools to find the inefficiencies? We 1 response Go to the profile of John Laurits John Laurits Dec 7


    Hi! Thanks & I'm glad you found the article useful :)

    In response to your question about what I think about using tech to hold them accountable, I say  --  : I'm all about it! In my humble (yet frequently accurate) opinion, one of Marx's most important insights about how revolutionary change occurs was his description of new Conversation between Joe Psotka and John Laurits . Go to the profile of Joe Psotka Joe Psotka Dec 5


    I would like to see how this comparison of GNI into capital and wages has changed historically, and how it might continue to change with automation overwhelming us.

    However, I can't agree completely that the capitalists do nothing to merit their work. They too should be paid wages, just not the obscene one that they get now 1 response Go to the profile of John Laurits John Laurits Dec 5


    I'll be writing about automation and the US workweek in my next post :) And to clarify my position  --  as a Marxist libertarian-socialist, I have zero problems with the idea of people accumulating wealth created by their own efforts/labor (which I'd roughly define as the sacrifice of a person's time to create value). When Bezos or any human being 1 response Applause from John Laurits (author) Go to the profile of Allyson Saad Allyson Saad Nov 29


    Substantive piece. Applause from John Laurits (author) Go to the profile of Elsie Brown Elsie Brown Dec 6 interest is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion Jeff Bezos made when Amazon share prices increased, for example, was "earned" ...


    Those who own enough money get paid just for holding onto it. That seems deeply wrong. If money could decay in some way no one would hoard it. You'd rather have someone owe you $100 than have $100 in your pocket. 3 responses Conversation with John Laurits . Go to the profile of Regina Bash-Taqi Regina Bash-Taqi Dec 6


    Good information but I don't agree with your description of 'honest' work. The world is changing, so we all need to change with it. There will always be people who are ahead of the curve such as Gates, Bezos and Buffet, but I believe if all of us change our game -- we'll get our share and things will shift. 1 response Go to the profile of John Laurits John Laurits Dec 6


    So your solution is for the vast majority of the world's population, the working poor, to just 'change [their] game?' Applause from John Laurits (author) Go to the profile of alex carter alex carter Dec 2


    Great article. This is boiling up to some kind of a head.

    In other words, Got Guillotine? Conversation with John Laurits . Go to the profile of Rod Ruger Rod Ruger Dec 6


    If someone has an idea for a product or service and employs members of the working class to implement that idea, what portion of the resulting income does the dude with the idea get? No ideas/innovation means a stone age existence. 1 response Go to the profile of John Laurits John Laurits Dec 6


    Intellectual labor is totally a thing and people ought to be paid for doing that as well  --  and I'm curious as to which part of the post led you to think I might advocate withholding compensation from creatives, inventors, or idea-people? The BLS statistics I use in the post include everyone who sacrifices time from the 24 hours they all have each day Conversation with John Laurits . Go to the profile of Sceptical Meerkat Sceptical Meerkat Dec 9


    Why would somebody me pay more for an American worker if one can hire a Mexican illegal immigrant? 1 response Go to the profile of John Laurits John Laurits Dec 9


    Yeah, I'm sure the economic system will somehow result in a different and better outcome if we can only find a way to oppress the poorer, browner workers a bit more 1 response Go to the profile of Sceptical Meerkat Sceptical Meerkat Dec 9 Yeah, I'm sure the economic system will somehow result in a different and better outcome if we can only find a way to oppress the poorer, browner workers a bit more


    Depends better for whom.

    The low qualified qualified workers' wages are undercut by competition from cheaper immigrant workers, so they will win if immigration is controlled while would be immigrant will lose.

    Just wishful thinking and empty talk about the need to increase wagers from people who don't pay those wages is meaningless. 1 response Go to the profile of John Laurits John Laurits Dec 9


    Just wishful thinking and empty talk about the need to increase wagers from people who don't pay those wages is meaningless.

    Yep, that's what Czar Nicholas II kept thinking, too 1 response Conversation with John Laurits . Go to the profile of Rick Fischer Rick Fischer Dec 9


    Mr. Laurits slips a few things past us in all his details. His "worth it" criterion is a valid one, in my opinion. Income from doing something that is of value to society does make the income "worth it". (I'm really over-simplifying here. Try not to search too hard for some exception or other.) 1 response Go to the profile of John Laurits John Laurits Dec 9


    You wrote:

    "His descriptions of the red slice, about half the total income, are skimpy, and his examples leave the reader with the vague feeling that that half is not "worth it". Which I surmise is his intent. But it's not entirely true; mostly not true, in fact."

    [Dec 25, 2017] American Carnage by Brad Griffin

    Notable quotes:
    "... It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator. ..."
    Dec 24, 2017 | www.unz.com

    As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan "Better Way" agenda. I don't support neoliberal economics. I think we have been going in the wrong direction since the 1970s and don't want to continue going down this road.

    1. Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class has been hit the hardest by it. It is a "sea of despair" out there.
    2. White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide rate has soared since 2000:
    3. Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
    4. Real GDP: Since the late 1990s, real GDP and real median household income have parted ways:
    5. Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with productivity gains in the US economy:
    6. Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks, which is down from 65%. The average American has less than $1,000 in their combined checking and savings accounts.

    Do you know what this tells me?

    It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator.

    Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I can't but see how this is going to make an already bad situation for the White working class even worse.

    I'm not rightwing in the sense that these people are. I think their policies are harmful to the nation. I don't think they feel any sense of duty and obligation to the working class like we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers class division. We recoil at the evisceration of the social fabric whereas conservatives celebrate this blind march toward plutocracy.

    Do the wealthy need to own a greater share of the stock market? Do they need to own a greater share of our national wealth? Do we need to loosen up morals and the labor market? Do we need more White children growing up in financially stressed, broken homes on Christmas? Is the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the True Cons think so.

    Yeah, I don't think so. I also think it is a good thing right now that we aren't associated with the mainstream Right. In the long run, I bet this will pay off for us. I predict this platform they have been standing on for decades now, which they call the conservative base, is going to implode on them. Donald Trump was only the first sign that Atlas is about to shrug.

    (Republished from Occidental Dissent by permission of author or representative)

    [Dec 22, 2017] Beyond Cynicism America Fumbles Towards Kafka s Castle by James Howard Kunstler

    Highly recommended!
    Notable quotes:
    "... With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people. ..."
    "... They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats. ..."
    "... The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot. ..."
    "... Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43). ..."
    "... This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer. ..."
    "... The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth ! ..."
    "... Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades. ..."
    "... "Wow – is there ever negative!" ..."
    "... You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'. ..."
    "... My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece ..."
    "... "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor." ..."
    "... Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\ ..."
    "... It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's! ..."
    "... E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop. ..."
    "... The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.) ..."
    Dec 12, 2017 | www.theamericanconservative.com

    On America's 'long emergency' of recession, globalization, and identity politics.

    Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.

    A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008, despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.

    With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.

    Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA. They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.

    The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry anyone?

    The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot.

    In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting! In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny is suddenly so popular on the liberal left.

    Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).

    The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy, where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally "people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed" and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).

    This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer.

    I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of ill feeling throughout the land, and quite a bit of acting out on both sides.

    The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.

    What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain to invite that fate.

    Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically, this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births, drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing him to pose as their champion.

    The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !

    Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism -- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings and the belief that only raw power has meaning.

    Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore, including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them around to get their world working again. And even that may not avail.

    James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking, Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at Kunstler.com .

    Whine Merchant December 20, 2017 at 10:49 pm

    Wow – is there ever negative!
    Celery , says: December 20, 2017 at 11:33 pm
    I think I need to go listen to an old-fashioned Christmas song now.

    The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.

    Merry Christmas!

    Fran Macadam , says: December 20, 2017 at 11:55 pm
    Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that comes after, won't be the miniature sunrise of a nuclear conflagration.
    KD , says: December 21, 2017 at 6:02 am
    Eat, Drink, and be Merry, you can charge it on your credit card!
    Rock Stehdy , says: December 21, 2017 at 6:38 am
    Hard words, but true. Kunstler is always worth reading for his common-sense wisdom.
    Helmut , says: December 21, 2017 at 7:04 am
    An excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this strange death spiral?
    I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.
    Liam , says: December 21, 2017 at 7:38 am
    "The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth, is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced considerable anxiety among black citizens over the new disposition of things, for one reason or another."

    Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades.

    Peter , says: December 21, 2017 at 8:34 am
    I have some faith that the American people can recover from an excursion into unreality. I base it on my own survival to the end of this silly rant.
    SteveM , says: December 21, 2017 at 9:08 am
    Re: Whine Merchant, "Wow – is there ever negative!"

    Can't argue with the facts

    P.S. Merry Christmas.

    Dave Wright , says: December 21, 2017 at 9:22 am
    Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion of real estate speculation with borrowed money. Speculation with borrowed money never ends well.

    I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.

    Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness will shine forth, and the glorious Godless utopia will naturally result.

    Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."

    When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to say that there aren't other issues, but until we return to God, there's not much hope for improvement.

    NoahK , says: December 21, 2017 at 10:15 am
    It's like somebody just got a bunch of right-wing talking points and mashed them together into one incohesive whole. This is just lazy.
    Andrew Imlay , says: December 21, 2017 at 10:36 am
    Hmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia, or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights. Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry, anyone?

    You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.

    I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation, not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.

    But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take a second look at familiar ideas. I won't be back.

    peter in boston , says: December 21, 2017 at 10:48 am
    Love Kunstler -- and love reading him here -- but he needs a strong editor to get him to turn a formless harangue into clear essay.
    Someone in the crowd , says: December 21, 2017 at 11:07 am
    I disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.

    The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream of consciousness style, veer away from that theme. Hence it is cohesive.

    As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative -- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.

    My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece. QED.

    Jon , says: December 21, 2017 at 11:10 am
    This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols engenders this tension, this angst.

    Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has been played out since the dawn of man and well documented when the written word emerged.

    The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call to arms.

    Joe the Plutocrat , says: December 21, 2017 at 11:27 am
    "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor."

    And to whom do we hand the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately, under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?

    Russia and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the USA it's b*tch (excuse prison reference, but that's where we're headed folks).

    And one more irony. Only in American, could Christianity, which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial, and even legal).

    The scientist 880 , says: December 21, 2017 at 11:48 am
    "Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress on the steps of the Lincoln Memorial in 1963."

    Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would give lie to the idea that blacks are more pessimistic about life today than in the 1960's.

    Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's, much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\

    It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!

    Here is the direct quote;

    "In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant -- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners -- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)

    I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality, what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100 years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"

    https://www.politico.com/story/2016/05/obamas-howard-commencement-transcript-222931

    https://www.google.com/amp/s/m.huffpost.com/us/entry/us_58cf1d9ae4b0ec9d29dcf283/amp

    Adam , says: December 21, 2017 at 11:57 am
    I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market. In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government, just a different piece of legislation.
    SteveM , says: December 21, 2017 at 12:29 pm
    Kunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that demonstrate it didn't have to be this way.

    E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop.

    The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)

    P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects the actual wealth of the middle class is left over.

    One Guy , says: December 21, 2017 at 1:10 pm
    Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people AND the government. The truth is that many parties were to blame.
    LouB , says: December 21, 2017 at 1:14 pm
    One of the things I love about this rag is that almost all of the comments are included. You may be sure that similar commenting privilege doesn't exist most anywhere else.

    Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.

    tzx4 , says: December 21, 2017 at 1:57 pm
    I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.

    If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.

    Jeeves , says: December 21, 2017 at 2:09 pm
    Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad doesn't represent usual fare at TAC. So do come back.

    Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous serving of Weltschmerz is just what the season calls for.

    Wezz , says: December 21, 2017 at 2:44 pm
    America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.

    Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances. Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising from birth selling illusion.

    Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even capable of normal thought?

    Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling the Truth, every one else is lying and that he is their friend.

    Is it possible we are just plane doomed and there's no way out?

    John Blade Wiederspan , says: December 21, 2017 at 4:26 pm
    I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three years to go.
    EarlyBird , says: December 21, 2017 at 5:23 pm
    Sheesh. Should I shoot myself now, or wait until I get home?
    dvxprime , says: December 21, 2017 at 5:46 pm
    Mr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.

    The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.

    Slooch , says: December 21, 2017 at 7:03 pm
    Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar and roll of rhetoric that was thrilling to be immersed in. Good work!
    jp , says: December 21, 2017 at 8:09 pm
    aah, same old Kunstler, slightly retailored for the Trump years.

    for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices at the pump would be $10 a gallon or somesuch.

    in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give a tired horse a rest.

    c.meyer , says: December 21, 2017 at 8:30 pm
    So what else is new. Too 'clever', overwritten, no new ideas. Can't anyone move beyond clichés?
    Active investor , says: December 22, 2017 at 12:35 am
    Kunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic, at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one of which could be the geyser that brings on catastrophic failure.

    However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:

    But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies the concept of a national common culture.

    The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.

    Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a 'victim group.'

    While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made in China).

    JonF , says: December 22, 2017 at 9:52 am
    Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act

    Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist). To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards until 2005 and even then relied on wall Street to vet the subprime loans they were buying.

    To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue, but you get the picture.

    We have met the enemy and he was us.

    kevin on the left , says: December 22, 2017 at 10:49 am
    "The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."

    Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.

    [Dec 19, 2017] Mark Ames Kathy Lally Was Caught Trying To Censor Journalism In Russia and Now Deceitfully Claims She's a Victim

    Dec 19, 2017 | www.nakedcapitalism.com

    We accompanied that with a prank in which we posed as Potanin calling the Washington Wizards for courtside seats, Harvard University business school to purchase a degree, and the Augusta National Golf Club -- brandishing Hiatt's article for access:

    eXile : I am Russian banker, so-called robber baron capitalist, am interested in purchasing your degree.

    Harvard : ( pause ) Uh, sir, you can't buy the degree, but you can enroll in our program. It's an intensive 9 week program, and you receive a certificate, not a degree.

    eXile : No, this is no good. Do you realize who I am? Fred Hiatt wrote about me in today Washington Post, that I am not typical robber baron. I am ze baby billionaire.

    Harvard : We read a lot about Russia and it sounds very exciting.

    eXile : Of course it exciting. Now I vant Harvard degree.

    Harvard : You can't buy a degree.

    eXile : Maybe instead I build nice cafe for you on campus. Or I can donate small nightclub for Harvard degree.

    Harvard : Sir, Harvard is a 350-year-old institution. It's not all just about money. We've turned down princes.

    eXile : NOT ABOUT MONEY? Hah!

    [Dec 15, 2017] The Crisis Ahead The U.S. Is No Country for Older Men and Women

    Notable quotes:
    "... The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse. ..."
    "... It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net. ..."
    "... Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does. ..."
    "... As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill." ..."
    "... Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare . ..."
    "... Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones. ..."
    "... Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. ..."
    "... The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com. ..."
    "... yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can. ..."
    "... Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue. ..."
    "... Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy. ..."
    "... The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes. ..."
    "... Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map. ..."
    "... I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening. ..."
    "... Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus. ..."
    "... The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically. ..."
    "... "Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125 ..."
    "... yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me. ..."
    "... As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not. ..."
    "... This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do. ..."
    Dec 14, 2017 | www.nakedcapitalism.com

    Yves here. I imagine many readers are acutely aware of the problems outlined in this article, if not beset by them already. By any rational standard, I should move now to a much cheaper country that will have me. I know individuals who live most of the year in third-world and near-third world countries, but they have very cheap ways of still having a toehold in the US and not (yet or maybe ever) getting a long-term residence visa. Ecuador is very accommodating regarding retirement visas, and a Social Security level income goes far there, but yours truly isn't retiring any time soon. And another barrier to an international move (which recall I did once, so I have some appreciation for what it takes), is that one ought to check out possible destinations but if you are already time and money and energy stressed, how do you muster the resources to do that at all, let alone properly?

    Aside from the potential to greatly reduce fixed costs, a second impetus for me is Medicare. I know for most people, getting on Medicare is a big plus. I have a very rare good, very old insurance policy. When you include the cost of drug plans, Medicare is no cheaper than what I have now, and considerably narrows my network. Moreover, I expect it to be thoroughly crapified by ten years from now (when I am 70), which argues for getting out of Dodge sooner rather than later.

    And that's before you get to another wee problem Lambert points out that I would probably not be happy in a third world or high end second world country. But the only bargain "world city" I know of is Montreal. I'm not sure it would represent enough of an all-in cost saving to justify the hassle of an international move and the attendant tax compliance burdens .and that charitably assumes I could even find a way to get permanent residence. Ugh.

    By Alex Henderson, who has written for the L.A. Weekly, Billboard, Spin, Creem, the Pasadena Weekly and many other publications. Follow him on Twitter @alexvhenderson. Originally published at Alternet

    Millions can no longer afford to retire, and may never be able when the GOP passes its tax bill.

    The news is not good for millions of aging Baby Boomers and Gen Xers in the United States who are moving closer to retirement age. According to the Employee Benefit Research Institute's annual report on retirement preparedness for 2017, only 18 percent of U.S.-based workers feel "very confident" about their ability to retire comfortably ; Craig Copeland, senior research associate for EBRI and the report's co-author, cited "debt, lack of a retirement plan at work, and low savings" as "key factors" in workers' retirement-related anxiety. The Insured Retirement Institute finds a mere 23 percent of Baby Boomers and 24 percent of Gen Xers are confident that their savings will last in retirement. To make matters worse, more than 40 percent of Boomers and over 30 percent of Gen Xers report having no retirement savings whatsoever .

    The U.S. has a retirement crisis on its hands, and with the far right controlling the executive branch and both houses of Congress, as well as dozens of state governments, things promise to grow immeasurably worse.

    It wasn't supposed to be this way. Past progressive presidents, notably Franklin D. Roosevelt and Lyndon B. Johnson, took important steps to make life more comfortable for aging Americans. FDR signed the Social Security Act of 1935 into law as part of his New Deal, and when LBJ passed Medicare in 1965, he established a universal health care program for those 65 and older. But the country has embraced a neoliberal economic model since the election of Ronald Reagan, and all too often, older Americans have been quick to vote for far-right Republicans antagonistic to the social safety net.

    In the 2016 presidential election, 55 percent of voters 50 and older cast their ballots for Donald Trump against just 44 percent for Hillary Clinton. (This was especially true of older white voters; 90 percent of black voters 45 and older, as well as 67 percent of Latino voters in the same age range voted Democratic.)

    Sen. Bernie Sanders' (I-VT) economic proposals may have been wildly popular with millennials, but no demographic has a greater incentive to vote progressive than Americans facing retirement. According to research conducted by the American Association of Retired Persons, the three greatest concerns of Americans 50 and older are Social Security, health care costs and caregiving for loved ones -- all areas that have been targeted by Republicans.

    House of Representatives Speaker Paul Ryan, a devotee of social Darwinist Ayn Rand , has made no secret of his desire to privatize Social Security and replace traditional Medicare with a voucher program. Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.

    Since then, Ryan has doubled down on his delusion that the banking sector can manage Social Security and Medicare more effectively than the federal government. Republican attacks on Medicare have become a growing concern: according to EBRI, only 38 percent of workers are confident the program will continue to provide the level of benefits it currently does.

    The GOP's obsession with abolishing the Affordable Care Act is the most glaring example of its disdain for aging Americans. Yet Obamacare has been a blessing for Boomers and Gen Xers who have preexisting conditions. The ACA's guaranteed issue plans make no distinction between a 52-year-old American with diabetes, heart disease or asthma and a 52-year-old who has never had any of those illnesses. And AARP notes that under the ACA, the uninsured rate for Americans 50 and older decreased from 15 percent in 2013 to 9 percent in 2016.

    According to the Congressional Budget Office, the replacement bills Donald Trump hoped to ram through Congress this year would have resulted in staggering premium hikes for Americans over 50. The CBO's analysis of the American Health Care Act, one of the earlier versions of Trumpcare, showed that a 64-year-old American making $26,500 per year could have gone from paying $1,700 annually in premiums to just over $16,000. The CBO also estimated that the GOP's American Health Care Act would have deprived 23 million Americans of health insurance by 2026.

    As 2017 winds down, Americans with health problems are still in the GOP's crosshairs -- this time because of so-called tax reform. The Tax Cuts and Jobs Act (both the House and Senate versions) includes provisions that would undermine Obamacare and cause higher health insurance premiums for older Americans. According to AARP, "Older adults ages 50-64 would be at particularly high risk under the proposal, facing average premium increases of up to $1,500 in 2019 as a result of the bill."

    The CBO estimates that the bill will cause premiums to spike an average of 10 percent overall, with average premiums increasing $890 per year for a 50-year-old, $1,100 per year for a 55-year-old, $1,350 per year for a 60-year-old and $1,490 per year for a 64-year-old. Premium increases, according to the CBO, would vary from state to state; in Maine, average premiums for a 64-year-old would rise as much as $1,750 per year.

    Countless Americans who are unable to afford those steep premiums would lose their insurance. The CBO estimates that the Tax Cuts and Jobs Act would cause the number of uninsured under 65 to increase 4 million by 2019 and 13 million by 2027. The bill would also imperil Americans 65 and over by cutting $25 billion from Medicare .

    As morally reprehensible as the GOP's tax legislation may be, it is merely an acceleration of the redistribution of wealth from the bottom to the top that America has undergone since the mid-1970s. (President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care.) Between the decline of labor unions, age discrimination, stagnant wages, an ever-rising cost of living, low interest rates, and a shortage of retirement accounts, millions of Gen Xers and Baby Boomers may never be able to retire.

    Traditional defined-benefit pensions were once a mainstay of American labor, especially among unionized workers. But according to Pew Charitable Trusts, only 13 percent of Baby Boomers still have them (among millennials, the number falls to 6 percent). In recent decades, 401(k) plans have become much more prominent, yet a majority of American workers don't have them either.

    Analyzing W2 tax records in 2012, U.S. Census Bureau researchers Michael Gideon and Joshua Mitchell found that only 14 percent of private-sector employers in the U.S. were offering a 401(k) or similar retirement packages to their workers. That figure was thought to be closer to 40 percent, but Gideon and Mitchell discovered the actual number was considerably lower when smaller businesses were carefully analyzed, and that larger companies were more likely to offer 401(k) plans than smaller ones.

    Today, millions of Americans work in the gig economy who don't have full-time jobs or receive W2s, but instead receive 1099s for freelance work. Tax-deferred SEP-IRAs were once a great, low-risk way for freelancers to save for retirement without relying exclusively on Social Security, but times have changed since the 1980s and '90s when interest rates were considerably higher for certificates of deposit and savings accounts. According to Bankrate.com, average rates for one-year CDs dropped from 11.27 percent in 1984 to 8.1 percent in 1990 to 5.22 percent in 1995 to under 1 percent in 2010, where it currently remains.

    The combination of stagnant wages and an increasingly high cost of living have been especially hellish for Americans who are trying to save for retirement. The United States' national minimum wage, a mere $7.25 per hour, doesn't begin to cover the cost of housing at a time when rents have soared nationwide. Never mind the astronomical prices in New York City, San Francisco or Washington, D.C. Median rents for one-bedroom apartments are as high as $1,010 per month in Atlanta, $960 per month in Baltimore, $860 per month in Jacksonville and $750 per month in Omaha, according to ApartmentList.com.

    That so many older Americans are renting at all is ominous in its own right. FDR made home ownership a primary goal of the New Deal, considering it a key component of a thriving middle class. But last year, the Urban Institute found that 19 million Americans who previously owned a home are now renting, 31 percent between the ages of 36 and 45. Laurie Goodman, one of the study's authors, contends the Great Recession has "permanently raised the number of renters," and that the explosion of foreclosures has hit Gen Xers especially hard.

    The severity of the U.S. retirement crisis is further addressed in journalist Jessica Bruder's new book "Nomadland: Surviving America in the 21st Century," which follows Americans in their 50s, 60s and even 70s living in RVs or vans , barely eking out a living doing physically demanding, seasonal temp work from harvesting sugar beets to cleaning toilets at campgrounds. Several had high-paying jobs before their lives were blown apart by the layoffs, foreclosures and corporate downsizing of the Great Recession. Bruder speaks with former college professors and software professionals who now find themselves destitute, teetering on the brink of homelessness and forced to do backbreaking work for next to nothing. Unlike the big banks, they never received a bailout.

    These neo-nomads recall the transients of the 1930s, themselves victims of Wall Street's recklessness. But whereas FDR won in a landslide in 1932 and aggressively pursued a program of progressive economic reforms, Republicans in Congress have set out to shred what little remains of the social safety net, giving huge tax breaks to millionaires and billionaires . The older voters who swept Trump into office may have signed their own death warrants.

    If aging Americans are going to be saved from this dystopian future, the U.S. will have to forge a new Great Society. Programs like Social Security, Medicare and Medicaid will need to be strengthened, universal health care must become a reality and age discrimination in the workplace will have to be punished as a civil rights violation like racial and gender-based discrimination. If not, millions of Gen Xers and Boomers will spend their golden years scraping for pennies.

    Expat , , December 14, 2017 at 6:29 am

    I certainly will never go back to the States for these and other reasons. I have a friend, also an American citizen, who travels frequently back to California to visit his son. He is truly worried about getting sick or having an accident when he is there since he knows it might bankrupt him. As he jokes, he would be happy to have another heart attack here in France since it's free!

    For those of you who have traveled the world and talked to people, you probably know that most foreigners are perplexed by America's attitude to health care and social services. The richest nation in the world thinks that health and social security (in the larger sense of not being forced into the street) are not rights at all. Europeans scratch their heads at this.

    The only solution is education and information, but they are appalling in America. America remains the most ignorant and worst educated of the developed nations and is probably beaten by many developing nations. It is this ignorance and stupidity that gets Americans to vote for the likes of Trump or any of the other rapacious millionaires they send to office every year.

    A first step would be for Americans to insist that Congress eliminate its incredibly generous and life-long healthcare plans for elected officials. They should have to do what the rest of Americans do. Of course, since about 95% of Congress are millionaires, it might not be effective. But it's a start.

    vidimi , , December 14, 2017 at 6:40 am

    France has its share of problems, but boy do they pale next to the problems in America or even Canada. Life here is overall quite pleasant and I have no desire to go back to N.A.

    Marco , , December 14, 2017 at 6:46 am

    Canada has problems?

    WobblyTelomeres , , December 14, 2017 at 7:47 am

    Was in Yellowknife a couple of years ago. The First Nations people have a rough life. From what I've read, such extends across the country.

    vidimi , , December 14, 2017 at 8:03 am

    yeah, Canada has a neoliberal infestation that is somewhere between the US and the UK. France has got one too, but it is less advanced. I'll enjoy my great healthcare, public transportation, and generous paid time off while I can.

    JEHR , , December 14, 2017 at 1:46 pm

    The newest neoliberal effort in Canada was put forward by our Minister of Finance (a millionaire) who is touting a bill that will get rid of defined benefit pension plans given to public employees for so-called target benefit pension plans. The risk for target plans is taken by the recipient. Morneau's former firm promotes target benefit pension plans and the change could benefit Morneau himself as he did not put his assets from his firm in a blind trust. At the very least, he has a conflict of interest and should probably resign.

    There is always an insidious group of wealthy people here who would like to re-make the world in their own image. I fear for the future.

    JEHR , , December 14, 2017 at 1:55 pm

    Yes, I agree. There is an effort to "simplify" the financial system of the EU to take into account the business cycle and the financial cycle .

    Dita , , December 14, 2017 at 8:25 am

    Europeans may scratch their heads, but they should recall their own histories and the long struggle to the universal benefits now enjoyed. Americans are far too complacent. This mildness is viewed by predators as weakness and the attacks will continue.

    jefemt , , December 14, 2017 at 10:02 am

    We really should be able to turn this around, and have an obligation to ourselves and our 'nation state' , IF there were a group of folks running on a fairness, one-for-all, all-for-one platform. That sure isn't the present two-sides-of-the-same-coin Democraps and Republicrunts.

    Not sure if many of the readers here watch non-cable national broadcast news, but Pete Peterson and his foundation are as everpresent an advertiser as the pharma industry. Peterson is the strongest, best organized advocate for gutting social services, social security, and sending every last penny out of the tax-mule consumer's pocket toward wall street. The guy needs an equivalent counterpoint enemy.

    Check it out, and be vigilant in dispelling his message and mission. Thanks for running this article.

    Running away: the almost-haves run to another nation state, the uber-wealthy want to leave the earth, or live in their private Idaho in the Rockies or on the Ocean. What's left for the least among us? Whatever we create?
    https://www.pgpf.org/

    Scramjett , , December 14, 2017 at 1:43 pm

    I think pathologically optimistic is a better term than complacent. Every time someone dumps on them, their response is usually along the lines of "Don't worry, it'll get better," "Everything works itself out in the end," "maybe we'll win the lottery," my personal favorite "things will get better, just give it time" (honestly it's been 40 years of this neoliberal bullcrap, how much more time are we supposed to give it?), "this is just a phase" or "we can always bring it back later and better than ever." The last one is most troubling because after 20 years of witnessing things in the public sphere disappearing, I've yet to see a single thing return in any form at all.

    I'm not sure where this annoying optimism came from but I sure wish it would go away.

    sierra7 , , December 14, 2017 at 8:45 pm

    The "optimism" comes from having a lack of historical memory. So many social protections that we have/had is seen as somehow coming out of the ether benevolently given without any social struggles. The lack of historical education on this subject in particular is appalling. Now, most would probably look for an "APP" on their "dumbphones" to solve the problem.

    The social advantages that we still enjoy were fought in the streets, and on the "bricks" flowing with the participants blood. 8 hr. day; women's right to vote; ability and right for groups of laborers to organize; worker safety laws ..and so many others. There is no historical memory on how those rights were achieved. We are slowly slipping into an oligarchy greased by the idea that the physical possession of material things is all that matters. Sheeple, yes.

    Jeremy Grimm , , December 14, 2017 at 4:44 pm

    WOW! You must have been outside the U.S. for a long time. Your comment seems to suggest we still have some kind of democracy here. We don't get to pick which rapacious millionaires we get to vote for and it doesn't matter any way since whichever one we pick from the sad offerings ends up with policies dictated from elsewhere.

    Expat , , December 14, 2017 at 6:10 pm

    Mmm, I think American voters get what they want in the end. They want their politicians because they believe the lies. 19% of Americans believe they are in the top 1% of wealth. A huge percentage of poor people believe they or their kids will (not can, but will) become wealthy. Most Americans can't find France on a map.

    So, yes, you DO get to pick your rapacious millionaire. You send the same scumbags back to Washington every year because it's not him, it the other guys who are the problem. One third of Americans support Trump! Really, really support him. They think he is Jesus, MacArthur and Adam Smith all rolled up into one.

    I may have been gone for about thirty years, but that has only sharpened my insights into America. It's very hard to see just how flawed America is from the inside but when you step outside and have some perspective, it's frightening.

    Disturbed Voter , , December 14, 2017 at 6:29 am

    The Democrat party isn't a reform party. Thinking it is so, is because of the "No Other Choice" meme. Not saying that the Republican party works in my favor. They don't. Political reform goes deeper than reforming either main party. It means going to a European plurality system (with its own downside). That way growing Third parties will be viable, if they have popular, as opposed to millionaire, support. I don't see this happening, because of Citizens United, but if all you have is hope, then you have to go with that.

    Carolinian , , December 14, 2017 at 8:05 am

    Had George W. Bush had his way and turned Social Security over to Wall Street, the economic crash of September 2008 might have left millions of senior citizens homeless.

    Substitute Bill Clinton for George Bush in that sentence and it works just as well. Neoliberalism is a bipartisan project.

    And many of the potential and actual horrors described above arise from the price distortions of the US medical system with Democratic acquiescence in said system making things worse. The above article reads like a DNC press release.

    And finally while Washington politicians of both parties have been threatening Social Security for years that doesn't mean its third rail status has been repealed. The populist tremors of the last election -- which have caused our elites to lose their collective mind -- could be a mere prelude to what will happen in the event of a full scale assault on the safety net.

    KYrocky , , December 14, 2017 at 12:05 pm

    Substitute Obama's quest for a Grand Bargain as well.

    Our government, beginning with Reagan, turned its back on promoting the general welfare. The wealthy soon learned that their best return on investment was the "purchase" of politicians willing to pass the legislation they put in their hands. Much of their investment included creating the right wing media apparatus.

    The Class War is real. It has been going on for 40 years, with the Conservative army facing virtually no resistance. Conservatives welcome Russia's help. Conservatives welcome barriers to people voting. Conservatives welcome a populace that believes lies that benefit them. Conservatives welcome the social and financial decline of the entire middle class and poor as long as it profits the rich financially, and by extension enhances their power politically.

    If retirees flee our country that will certainly please the Conservatives as that will be fewer critics (enemies). Also less need or demand for social programs.

    rps , , December 14, 2017 at 5:01 pm

    "Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing [a people] to slavery" Thomas Jefferson. Rights of British America, 1774 ME 1:193, Papers 1:125

    tegnost , , December 14, 2017 at 8:59 am

    yes, my problem with the post as well, completely ignores democrat complicity the part where someone with a 26k salary will pay 16k in insurance? No they won't, the system would collapse in that case which will be fine with me.

    Marco , , December 14, 2017 at 6:55 am

    "President Richard Nixon may have been a paranoid right-winger with authoritarian tendencies, but he expanded Medicare and supported universal health care."

    "Gimme that old time Republican!"

    One of the reasons I love NC is that most political economic analysis is often more harsh on the Democrats than the Repubs so I am a bit dismayed how this article is way too easy on Team D. How many little (and not so little) knives in the back from Clinton and Obama? Is a knife in the chest that much worse?

    OpenThePodBayDoorsHAL , December 14, 2017 at 3:57 pm

    This entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless to do anything at all about it so are just trying to leave.

    But "People should not fear the government; the government should fear the people"

    tagio , December 14, 2017 at 4:39 pm

    It's more than a feeling, HAL. https://www.newyorker.com/news/john-cassidy/is-america-an-oligarchy Link to the academic paper embedded in article.

    As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not.

    This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because, you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others about what opinion to have, is about the limit of what they are willing, or know how to do.

    [Dec 13, 2017] A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute

    Notable quotes:
    "... And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer. ..."
    Dec 13, 2017 | www.nakedcapitalism.com

    Livius Drusus , December 13, 2017 at 2:44 pm

    I thought this was an interesting article. Apologies if this has been posted on NC already.

    A stunning 33% of job seekers ages 55 and older are long-term unemployed, according to the AARP Public Policy Institute. The average length of unemployment for the roughly 1.2 million people 55+ who are out of work: seven to nine months. "It's emotionally devastating for them," said Carl Van Horn, director of Rutgers University's John J. Heldrich Center for Workforce Development, at a Town Hall his center and the nonprofit WorkingNation held earlier this year in New Brunswick, N.J.

    ... ... ...

    The fight faced by the long-term unemployed

    And, recent studies have shown, the longer you're out of work - especially if you're older and out of work - the harder it becomes to get a job offer.

    The job-finding rate declines by roughly 50% within eight months of unemployment, according to a 2016 paper by economists Gregor Jarosch of Stanford University and Laura Pilossoph of the Federal Reserve Bank of New York. "Unemployment duration has a strongly negative effect on the likelihood of subsequent employment," wrote researchers from the University of Maryland and the U.S. Census Bureau in another 2016 paper.

    "Once upon a time, you could take that first job and it would lead to the next job and the job after that," said Town Hall panelist John Colborn, chief operating officer at the nonprofit JEVS Human Services, of Philadelphia. "The notion of a career ladder offered some hope of getting back into the labor market. The rungs of the ladder are getting harder and harder to find and some of them are broken."

    In inner cities, said Kimberly McClain, CEO of The Newark Alliance, "there's an extra layer beyond being older and out of work. There are issues of race and poverty and being defined by your ZIP Code. There's an incredible sense of urgency."

    ... ... ...

    Filling a work gap

    If you are over 50, unemployed and have a work gap right now, the Town Hall speakers said, fill it by volunteering, getting an internship, doing project work, job-shadowing someone in a field you want to be in or taking a class to re-skill. These kind of things "make a candidate a lot more attractive," said Colborn. Be sure to note them in your cover letter and résumé.

    Town Hall panelist Amanda Mullan, senior vice president and chief human resources officer of the New Jersey Resources Corp. (a utility company based in Wall, N.J.), said that when her company is interviewing someone who has been out of work lately, "we will ask: 'What have you done during that time frame?' If we get 'Nuthin,' that shows something about the individual, from a motivational perspective."

    ... ... ...

    The relief of working again

    Finally finding work when you're over 50 and unemployed for a stretch can be a relief for far more than financial reasons.

    "Once I landed my job, the thing I most looked forward to was the weekend," said Konopka. "Not to relax, but because I didn't have to think about finding a job anymore. That's 24/7 in your head. You're always thinking on a Saturday: 'If I'm not doing something to find a job, will there be a posting out there?'"

    Full article: https://www.marketwatch.com/story/jobs-are-everywhere-just-not-for-people-over-55-2017-12-08

    [Dec 13, 2017] Stress of long-term unemployment takes a toll on thousands of Jerseyans who are out of work by Leslie Kwoh

    Notable quotes:
    "... Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147. ..."
    Jun 13, 2010 | www.nj.com

    At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone and notepad like silverware across the kitchen table.

    And then he waits.

    Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and sends out another flurry of resumes and cheery cover letters.

    But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski -- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.

    "You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever, Charlie, until his wife returns from work.

    "The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails haven't come through."

    Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.

    Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.

    In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for more than a year.

    But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts say.

    Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.

    "The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses, the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."

    And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work, envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.

    "When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed out on unemployment benefits several months ago.

    "They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care and now they want to get away from you."


    SECOND TIME AROUND

    Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing years to find new work -- by then, she had refashioned herself into a web designer.

    That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?

    "It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular outings with friends. "Everything is about the interviews."

    And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough. The remarks always hit Kafalas with a pang.

    In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress, anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.

    "They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers, and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."

    Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.

    Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government food stamps and forgoing health care, according to the study.

    More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends. Six in 10 said they had problems sleeping.

    Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding the treadmill until she feels tired enough to fall asleep.

    "Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting is the toughest part."


    AGE A FACTOR

    Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between 16 and 24 made up just 14 percent.

    Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his sales job at Best Buy a year and half ago.

    Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out the garbage, washing dishes, sweeping floors and doing laundry.

    Still, he often feels inadequate.

    "All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank, who dreams of starting a social media company.

    When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."


    LESSONS LEARNED

    Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.

    He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly -- he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and reuploading his resume to job sites, his entry appears fresh.

    "It's almost like a game," he said, laughing. "You are desperate, but you can't show it."

    But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.

    "That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.

    The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around the corner.

    "You always have to hope that that morning when you get up, it's going to be the day," he said.

    "Today is going to be the day that something is going to happen."

    Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147.

    DrBuzzard Jun 13, 2010

    I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i tried to claim my week this week i was notified. SURPRISE, talk about stress.

    berganliz Jun 13, 2010

    This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!

    rp121 Jun 13, 2010

    For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately, it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many of us are cut off at 26 wks. No tier 1, 2 -nothing.

    [Dec 13, 2017] Unemployment health hazard and stress

    The longer you are unemployed, the more you are effected by those factors.
    Notable quotes:
    "... The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects. ..."
    "... Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system. ..."
    "... Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises. ..."
    "... Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem. ..."
    "... One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available. ..."
    "... Depression is universally hated by anyone who's ever had it. ..."
    "... Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either. ..."
    "... You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard. ..."
    Dec 13, 2017 | www.cvtips.com

    It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences, including suicide, and, some would say worse, chronic depression.

    There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often badly.

    The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals. Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what you can do about them.

    The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects.

    For others, there are a series of issues, and the big three are:

    Stress

    Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system.

    Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.

    Anger, and other negative emotions

    Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises.

    If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep a sense of perspective. Clear thinking isn't easy when under constant stress.

    Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem.

    One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available.

    If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.

    Depression

    Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life threatening.

    The common symptoms are:

    It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.

    Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:

    Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.

    Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with all those stress hormones.

    If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million times worse.

    Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.

    Unemployment and staying healthy

    The above is what you need to know about the risks of unemployment to your health and mental well being.

    These situations are avoidable.

    Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.

    We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the more strength you have to cope with situations.

    Basic health is actually pretty easy to achieve:

    Diet

    Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.

    Give yourself a good selection of food that you like, that's also worth eating.

    The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.

    You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.

    Exercise

    You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard.

    Don't just sit and suffer

    If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed to get worse.

    For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's causing you problems, get rid of it.

    Nobody who's been through the blender of unemployment thinks it's fun.

    Anyone who's really done it tough will tell you one thing:

    Don't be a victim. Beat the problem, and you'll really appreciate the feeling.

    [Dec 13, 2017] Being homeless is better than working for Amazon by Nichole Gracely

    Notable quotes:
    "... According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion ..."
    "... toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen. ..."
    "... ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring. ..."
    "... I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance ..."
    "... That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. ..."
    "... I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps. ..."
    Nov 28, 2014 | theguardian.com

    wa8dzp:

    Nichole Gracely has a master's degree and was one of Amazon's best order pickers. Now, after protesting the company, she's homeless.

    I am homeless. My worst days now are better than my best days working at Amazon.

    According to Amazon's metrics, I was one of their most productive order pickers -- I was a machine, and my pace would accelerate throughout the course of a shift. What they didn't know was that I stayed fast because if I slowed down for even a minute, I'd collapse from boredom and exhaustion.

    During peak season, I trained incoming temps regularly. When that was over, I'd be an ordinary order picker once again, toiling in some remote corner of the warehouse, alone for 10 hours, with my every move being monitored by management on a computer screen.

    Superb performance did not guarantee job security. ISS is the temp agency that provides warehouse labor for Amazon and they are at the center of the SCOTUS case Integrity Staffing Solutions vs. Busk. ISS could simply deactivate a worker's badge and they would suddenly be out of work. They treated us like beggars because we needed their jobs. Even worse, more than two years later, all I see is: Jeff Bezos is hiring.

    I have never felt more alone than when I was working there. I worked in isolation and lived under constant surveillance. Amazon could mandate overtime and I would have to comply with any schedule change they deemed necessary, and if there was not any work, they would send us home early without pay. I started to fall behind on my bills.

    At some point, I lost all fear. I had already been through hell. I protested Amazon. The gag order was lifted and I was free to speak. I spent my last days in a lovely apartment constructing arguments on discussion boards, writing articles and talking to reporters. That was 2012 and Amazon's labor and business practices were only beginning to fall under scrutiny. I walked away from Amazon's warehouse and didn't have any other source of income lined up.

    I cashed in on my excellent credit, took out cards, and used them to pay rent and buy food because it would be six months before I could receive my first unemployment compensation check.

    I received $200 a week for the following six months and I haven't had any source of regular income since those benefits lapsed. I sold everything in my apartment and left Pennsylvania as fast as I could. I didn't know how to ask for help. I didn't even know that I qualified for food stamps.

    I furthered my Amazon protest while homeless in Seattle. When the Hachette dispute flared up I "flew a sign," street parlance for panhandling with a piece of cardboard: "I was an order picker at amazon.com. Earned degrees. Been published. Now, I'm homeless, writing and doing this. Anything helps."

    I have made more money per word with my signs than I will probably ever earn writing, and I make more money per hour than I will probably ever be paid for my work. People give me money and offer well wishes and I walk away with a restored faith in humanity.

    I flew my protest sign outside Whole Foods while Amazon corporate employees were on lunch break, and they gawked. I went to my usual flying spots around Seattle and made more money per hour protesting Amazon with my sign than I did while I worked with them. And that was in Seattle. One woman asked, "What are you writing?" I told her about the descent from working poor to homeless, income inequality, my personal experience. She mentioned Thomas Piketty's book, we chatted a little, she handed me $10 and wished me luck. Another guy said, "Damn, that's a great story! I'd read it," and handed me a few bucks.

    [snip]

    [Dec 12, 2017] Can Uber Ever Deliver Part Eleven Annual Uber Losses Now Approaching $5 Billion

    Notable quotes:
    "... Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. ..."
    "... Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins. ..."
    "... In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week. ..."
    "... An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8] ..."
    "... Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017. ..."
    "... Socialize the losses, privatize the gains, VC-ize the subsidies. ..."
    "... The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. ..."
    "... "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs ..."
    Dec 12, 2017 | www.nakedcapitalism.com

    Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5 billion in 2017.

    The top line on the table below shows is total passenger payments, which must be split between Uber corporate and its drivers. Driver gross earnings are substantially higher than actual take home pay, as gross earning must cover all the expenses drivers bear, including fuel, vehicle ownership, insurance and maintenance.

    Most of the "profit" data released by Uber over time and discussed in the press is not true GAAP (generally accepted accounting principles) profit comparable to the net income numbers public companies publish but is EBIDTAR contribution. Companies have significant leeway as to how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation, amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly from quarter to quarter, given the impact of one-time expenses such as legal settlements and stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd quarters of 2017, but have EBIDTAR contribution numbers for all other periods. [5]

    Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of 132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year ending September 2015 presented in part one of the NC Uber series over a year ago.

    No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4 billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5 billion.

    While many Silicon Valley funded startups suffered large initial losses, none of them lost anything remotely close to $2.6 billion in their sixth year of operation and then doubled their losses to $5 billion in year eight. Reversing losses of this magnitude would require the greatest corporate financial turnaround in history.

    No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had to reverse these cuts in 2017.

    Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. These driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins.

    In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week.

    An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8]

    A business model where profit improvement is hugely dependent on wage cuts is unsustainable, especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus has always been the rate of growth in gross passenger revenue, as this has been a major justification for its $68 billion valuation. This growth rate came under enormous pressure in 2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell, [9] and the avalanche of adverse publicity it was facing.

    Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017.

    MKS , December 12, 2017 at 6:19 am

    "Uber's business model can never produce sustainable profits"

    Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute statement in an non-absolute environment. The same environment that has produced the "Silicon Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of money for a company with no underlying fundamentals you damn right they will! Please stop with the I know all no body knows anything, especially the psychology and irrationality of markets which are made up of irrational people/investors/traders.

    JohnnySacks , December 12, 2017 at 7:34 am

    My thoughts exactly. Seems the only possible recovery for the investors is a perfectly engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there and many who would also like to get on board early in the ride in fear of missing out on all the money to be hoovered up from the greater fools. Count me out.

    SoCal Rhino , December 12, 2017 at 8:30 am

    The author clearly distinguishes between GAAP profitability and valuations, which is after all rather the point of the series. And he makes a more nuanced point than the half sentence you have quoted without context or with an indication that you omitted a portion. Did you miss the part about how Uber would have a strong incentive to share the evidence of a network effect or other financial story that pointed the way to eventual profit? Otherwise (my words) it is the classic sell at a loss, make it up with volume path to liquidation.

    tegnost , December 12, 2017 at 9:52 am

    apples and oranges comparison, nvidia has lots and lots of patented tech that produces revenue, facebook has a kajillion admittedly irrational users, but those users drive massive ad sales (as just one example of how that company capitalizes itself) and tesla makes an actual car, using technology that inspires it's buyers (the put your money where your mouth is crowd and it can't be denied that tesla, whatever it's faults are, battery tech is not one of them and that intellectual property is worth a lot, and tesla's investors are in on that real business, profitable or otherwise)

    Uber is an iphone app. They lose money and have no path to profitability (unless it's the theory you espouse that people are unintelligent so even unintelligent ideas work to fleece them). This article touches on one of the great things about the time we now inhabit, uber drivers could bail en masse, there are two sides to the low attachment employees who you can get rid of easily. The drivers can delete the uber app as soon as another iphone app comes along that gets them a better return

    allan , December 12, 2017 at 6:52 am

    Yet another source (unintended) of subsidies for Uber, Lyft, etc., which might or might not have been mentioned earlier in the series:

    Airports Are Losing Money as Ride-Hailing Services Grow [NYT]

    For many air travelers, getting to and from the airport has long been part of the whole miserable experience. Do they drive and park in some distant lot? Take mass transit or a taxi? Deal with a rental car?

    Ride-hailing services like Uber and Lyft are quickly changing those calculations. That has meant a bit less angst for travelers.

    But that's not the case for airports. Travelers' changing habits, in fact, have begun to shake the airports' financial underpinnings. The money they currently collect from ride-hailing services do not compensate for the lower revenues from the other sources.

    At the same time, some airports have had to add staff to oversee the operations of the ride-hailing companies, the report said. And with more ride-hailing vehicles on the roads outside terminals,
    there's more congestion.

    Socialize the losses, privatize the gains, VC-ize the subsidies.

    Thuto , December 12, 2017 at 6:55 am

    The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. The only question is how long can they keep the show going before the lights go out, slick marketing and propaganda can only take you so far, and one assumes the dumb money has a finite supply of patience and will at some point begin asking the tough questions.

    Louis Fyne , December 12, 2017 at 8:35 am

    The irony is that Uber would have been a perfectly fine, very profitable mid-sized company if Uber stuck with its initial model -- sticking to dense cities with limited parking, limiting driver supply, and charging a premium price for door-to-door delivery, whether by livery or a regular sedan. And then perhaps branching into robo-cars.

    But somehow Uber/board/Travis got suckered into the siren call of self-driving cars, triple-digit user growth, and being in the top 100 US cities and on every continent.

    Thuto , December 12, 2017 at 11:30 am

    I've shared a similar sentiment in one of the previous posts about Uber. But operating profitably in decent sized niche doesn't fit well with ambitions of global domination. For Uber to be "right-sized", an admission of folly would have to be made, its managers and investors would have to transcend the sunk cost fallacy in their strategic decision making, and said investors would have to accept massive hits on their invested capital. The cold, hard reality of being blindsided and kicked to the curb in the smartphone business forced RIM/Blackberry to right-size, and they may yet have a profitable future as an enterprise facing software and services company. Uber would benefit from that form of sober mindedness, but I wouldn't hold my breath.

    David Carl Grimes , December 12, 2017 at 6:57 am

    The question is: Why did Softbank invest in Uber?

    Michael Fiorillo , December 12, 2017 at 9:33 am

    I know nothing about Softbank or its management, but I do know that the Japanese were the dumb money rubes in the late '80's, overpaying for trophy real estate they lost billions on.

    Until informed otherwise, that's my default assumption

    JimTan , December 12, 2017 at 10:50 am

    Softbank possibly looking to buy more Uber shares at a 30% discount is very odd. Uber had a Series G funding round in June 2016 where a $3.5 billion investment from Saudi Arabia's Public Investment Fund resulted in its current $68 billion valuation. Now apparently Softbank wants to lead a new $6 billion funding round to buy the shares of Uber employees and early investors at a 30% discount from this last "valuation". It's odd because Saudi Arabia's Public Investment Fund has pledged $45 billion to SoftBank's Vision Fund , an amount which was supposed to come from the proceeds of its pending Aramco IPO. If the Uber bid is linked to SoftBank's Vision Fund, or KSA money, then its not clear why this investor might be looking to literally 'double down' from $3.5 billion o $6 billion on a declining investment.

    Yves Smith Post author , December 12, 2017 at 11:38 am

    SoftBank has not yet invested. Its tender is still open. If it does not get enough shares at a price it likes, it won't invest.

    As to why, I have no idea.

    Robert McGregor , December 12, 2017 at 7:04 am

    "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs of efficiency, and hopes of greater efficiency, and make most people just overlook the essential fact that Uber is the most unprofitable company of all time!

    divadab , December 12, 2017 at 7:19 am

    What comprises "Uber Expenses"? 2014 – $1.06 billion; 2015 $3.33 billion; 2016 $9.65 billion; forecast 2017 $11.418 billion!!!!!! To me this is the big question – what are they spending $10 billion per year on?

    ALso – why did driver share go from 68% in 2016 to 80% in 2017? If you use 68% as in 2016, 2017 Uber revenue is $11.808 billion, which means a bit better than break-even EBITDA, assuming Uber expenses are as stated $11.428 billion.

    Perhaps not so bleak as the article presents, although I would not invest in this thing.

    Phil in Kansas City , December 12, 2017 at 7:55 am

    I have the same question: What comprises over 11 billion dollars in expenses in 2017? Could it be they are paying out dividends to the early investors? Which would mean they are cannibalizing their own company for the sake of the VC! How long can this go on before they'll need a new infusion of cash?

    lyman alpha blob , December 12, 2017 at 2:37 pm

    The Saudis have thrown a few billion Uber's way and they aren't necessarily known as the smart money.

    Maybe the pole dancers have started chipping in too as they are for bitcoin .

    Vedant Desai , December 12, 2017 at 10:37 am

    Oh article does answer your 2nd question. Read this paragraph:-

    Since mass driver defections would cause passenger volume growth to collapse completely , Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017.

    As for the 1st, read this line in the article:-

    There are undoubtedly a number of things Uber could do to reduce losses at the margin, but it is difficult to imagine it could suddenly find the $4-5 billion in profit improvement needed merely to reach breakeven.

    Louis Fyne , December 12, 2017 at 8:44 am

    in addition to all the points listed in the article/comments, the absolute biggest flaw with Uber is that Uber HQ conditioned its customers on (a) cheap fares and (b) that a car is available within minutes (1-5 if in a big city).

    Those two are not mutually compatible in the long-term.

    Alfred , December 12, 2017 at 9:49 am

    Thus (a) "We cost less" and (b) "We're more convenient" -- aren't those also the advantages that Walmart claims and feeds as a steady diet to its ever hungry consumers? Often if not always, disruption may repose upon delusion.

    Martin Finnucane , December 12, 2017 at 11:06 am

    Uber's business model could never produce sustainable profits unless it was able to exploit significant anti-competitive market power.

    Upon that dependent clause hangs the future of capitalism, and – dare I say it? – its inevitable demise.

    Altandmain , December 12, 2017 at 11:09 am

    When this Uber madness blows up, I wonder if people will finally begin to discuss the brutal reality of Silicon Valley's so called "disruption".

    It is heavily built in around the idea of economic exploitation. Uber drivers are often, especially when the true costs to operate an Uber including the vehicle depreciation are factored in, making not very much per hour driven, especially if they don't get the surge money.

    Instacart is another example. They are paying the deliver operators very little.

    Jim A. , December 12, 2017 at 12:21 pm

    At a fundamental level, I think that the Silicon Valley "disruption" model only works for markets (like software) where the marginal cost for production is de minimus and the products can be protected by IP laws. Volume and market power really work in those cases. But out here in meat-space, where actual material and labor are big inputs to each item sold, you can never just sit back on your laurels and rake in the money. Somebody else will always be able to come and and make an equivalent product. If they can do it more cheaply, you are in trouble.

    Altandmain , December 12, 2017 at 5:40 pm

    There aren't that many areas in goods and services where the marginal costs are very low.

    Software is actually quite unique in that regard, costing merely the bandwidth and permanent storage space to store.

    Let's see:

    1. From the article, they cannot go public and have limited ways to raise more money. An IPO with its more stringent disclosure requirements would expose them.

    2. They tried lowering driver compensation and found that model unsustainable.

    3. There are no benefits to expanding in terms of economies of scale.

    From where I am standing, it looks like a lot of industries gave similar barriers. Silicon Valley is not going to be able to disrupt those.

    Tesla, another Silicon Valley company seems to be struggling to mass produce its Model 3 and deliver an electric car that breaks even, is reliable, while disrupting the industry in the ways that Elon Musk attempted to hype up.

    So that basically leaves services and manufacturing out for Silicon Valley disruption.

    Joe Bentzel , December 12, 2017 at 2:19 pm

    UBER has become a "too big to fail" startup because of all the different tentacles of capital from various Tier 1 VCs and investment bankers.

    VCs have admitted openly that UBER is a subsidized business, meaning it's product is sold below market value, and the losses reflect that subsidization. The whole "2 sided platform" argument is just marketecture to hustle more investors. It's a form of service "dumping" that puts legacy businesses into bankruptcy. Back during the dotcom bubble one popular investment banker (Paul Deninger) characterized this model as "Terrorist Competition", i.e. coffers full of invested cash to commoditize the market and drive out competition.

    UBER is an absolute disaster that has forked the startup model in Silicon Valley in order to drive total dependence on venture capital by founders. And its current diversification into "autonomous vehicles", food delivery, et al are simply more evidence that the company will never be profitable due to its whacky "blitzscaling" approach of layering on new "businesses" prior to achieving "fit" in its current one.

    It's economic model has also metastasized into a form of startup cancer that is killing Silicon Valley as a "technology" innovator. Now it's all cargo cult marketing BS tied to "strategic capital".

    UBER is the victory of venture capital and user subsidized startups over creativity by real entrepreneurs.

    It's shadow is long and that's why this company should be ..wait for it UNBUNDLED (the new silicon valley word attached to that other BS religion called "disruption"). Call it a great unbundling and you can break up this monster corp any way you want.

    Naked Capitalism is a great website.

    Phil in KC , December 12, 2017 at 3:20 pm

    1. I Agree with your last point.

    2. The elevator pitch for Uber: subsidize rides to attract customers, put the competition out of business, and then enjoy an unregulated monopoly, all while exploiting economically ignorant drivers–ahem–"partners."

    3. But more than one can play that game, and

    4. Cab and livery companies are finding ways to survive!

    Phil in KC , December 12, 2017 at 3:10 pm

    If subsidizing rides is counted as an expense, (not being an accountant, I would guess it so), then whether the subsidy goes to the driver or the passenger, that would account for the ballooning expenses, to answer my own question. Otherwise, the overhead for operating what Uber describes as a tech company should be minimal: A billion should fund a decent headquarters with staff, plus field offices in, say, 100 U.S. cities. However, their global pretensions are probably burning cash like crazy. On top of that, I wonder what the exec compensation is like?

    After reading HH's initial series, I made a crude, back-of-the-envelope calculation that Uber would run out of money sometime in the third fiscal quarter of 2018, but that was based on assuming losses were stabilizing in the range of 3 billion a year. Not so, according to the article. I think crunch time is rapidly approaching. If so, then SoftBank's tender offer may look quite appetizing to VC firms and to any Uber employee able to cash in their options. I think there is a way to make a re-envisioned Uber profitable, and with a more independent board, they may be able to restructure the company to show a pathway to profitability before the IPO. But time is running out.

    A not insignificant question is the recruitment and retention of the front line "partners." It would seem to me that at some point, Uber will run out of economically ignorant drivers with good manners and nice cars. I would be very interested to know how many drivers give up Uber and other ride-sharing gigs once the 1099's start flying at the beginning of the year. One of the harsh realities of owning a business or being an contractor is the humble fact that you get paid LAST!

    Jan Stickle , December 12, 2017 at 5:00 pm

    We became instant Uber riders while spending holidays with relatives in San Diego. While their model is indeed unique from a rider perspective, it was the driver pool that fascinates me. These are not professional livery drivers, but rather freebooters of all stripes driving for various reasons. The remuneration they receive cannot possibly generate much income after expenses, never mind the problems associated with IRS filing as independent contractors.

    One guy was just cruising listening to music; cooler to get paid for it than just sitting home! A young lady was babbling and gesticulating non stop about nothing coherent and appeared to be on some sort of stimulant. A foreign gentleman, very professional, drove for extra money when not at his regular job. He was the only one who had actually bought a new Prius for this gig, hoping to pay it off in two years.

    This is indeed a brave new world. There was a period in Nicaragua just after the Contra war ended when citizens emerged from their homes and hit the streets in large numbers, desperately looking for income. Every car was a taxi and there was a bipedal mini Walmart at every city intersection as individuals sold everything and anything in a sort of euphoric optimism towards the future. Reality just hadn't caught up with them yet .

    [Dec 09, 2017] November Jobs Report: good month, same caveats

    Notable quotes:
    "... U6 underemployment rate rose +0.1% from 7.9% to 8.0% ..."
    Dec 09, 2017 | bonddad.blogspot.com

    So U6 is almost 10% of population. Scary...

    HEADLINES : Here are the headlines on wages and the chronic heightened underemployment: Wages and participation rates Holding Trump accountable on manufacturing and mining jobs

    Trump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping this promise?

    September was revised upward by +20,000. October was revised downward by -17,000, for a net change of +3,000.

    1. likbez December 9, 2017 7:52 pm

      There are now large categories of jobs, both part-time and full time, that can't provide for living and are paying below or close to minimum wage (plantation economy jobs). it looks like under neoliberalism this is the fastest growing category of jobs.

      Examples are Uber and Lift jobs (which are as close to predatory scam as one can get) . Many jobs in service industry, especially retail. See for example

      https://www.huffingtonpost.com/2013/02/16/jobs-earn-less-than-minimum-wage_n_2689419.html

      They should probably be calculated separately as "distressed employment", or something like that.

      Also in view of "seasonal adjustments" the number of created jobs is probably meaningless.

    [Dec 03, 2017] Business Has Killed IT With Overspecialization by Charlie Schluting

    Highly recommended!
    Notable quotes:
    "... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
    "... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
    "... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
    "... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
    Apr 07, 2010 | Enterprise Networking Planet

    What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these people could save a business in times of disaster.

    Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye.

    Specialization

    You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is run by people who specialize in those elements. Everything is taken care of.

    Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.

    If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get. Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they indicate specialization or compensation for lack of experience.

    Resource Competition

    Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is.

    The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue.

    Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT groups.

    With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction. Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing groups, a viable option.

    Blamestorming

    The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality. Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time, so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone else to blame when things get delayed makes it all too easy to simply stop working for a while.

    More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system outage.

    Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose the problem. The server team doesn't even know how the application runs.

    See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care of all the other pieces.

    I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge and also get to know other people, which should lessen the propensity to view them as outsiders

    [Dec 03, 2017] Nokia Shareholders Fight Back

    On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not.
    Notable quotes:
    "... On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not. ..."
    Slashdot

    noc007 (633443)

    On the topic of outsourcing, IMO it can be cheaper if done right. On paper it always seems like a great idea, but in practice it's not always the best idea financially and/or getting the same or better result in comparison to keeping it in-house. I've worked for companies where they have outsourced a particular department/function to companies where I am the one the job is outsourced to. My observation has been the success of getting projects done (e.g.: programing) or facilitating a role (e.g.: sys admin) rely on a few factors regardless of outsourcing or not.

    The first is a golden rule of sorts on doing anything:

    You can only pick two; NO exceptions. I've encountered so many upper management types that foolishly think they can get away with having all three. In my experience 9/10 of the time it turns out a lack of quality bites them in the butt sometime down the road when they assumed they somehow managed to achieve all three.

    The second is communication. Mostly everyone in at least the US has experienced the pain of being subjected to some company's outsourced customer service and/or tech support that can't effectively communicate with both parties on the same page of understanding one another. I really shouldn't need to explain why communication, understanding one another is so important. Sadly this is something I have to constantly explain to my current boss with events like today where my non-outsourced colleague rebooted a number of production critical servers when he was asked to reboot just one secondary server.

    Third is the employee's skill in doing the job. Again, another obvious one, but I've observed that it isn't always on the hiring menu. Additionally I've seen some people that interview well, but couldn't create a "Hello World" HTML page for a web developer position as an example. There's no point in hiring or keeping a hired individual to do a job that they lack the skill to do; even if it's an entry-level position with training, that person should be willing to put for the effort to learn and take notes. I accept that everyone has their own unique skills that can aide or hinder their ability to learn and be proficient with a particular task. However, I firmly believe anyone can learn to do anything as long as they put their mind to it. I barely have any artistic ability and my drawing skills are stick figures at best (XKCD is miles ahead of me); if I were to put forth the effort to learn how to draw and paint, I could become a good artist. I taught an A+ technician certification class at a tech school a while back and I had a retired Marine that served in the Vietnam War as one of my students. One could argue his best skill was killing and blowing stuff up. He worked hard and learned to be a technician and passed CompTIA's certification test without a problem. That leads me to the next point.

    Lastly is attitude of the end employee doing the actual work. It boggles my mind how so many managers loose the plot when it comes to employee morale and motivation. Productivity generally is improved when those two are improved and it usually doesn't have to involve spending a bunch of money. The employee's attitude should be getting the work done correctly in a reasonable amount of time. Demanding it is a poor approach. Poisoning an employee will result in poisoning the company in a small manner all the way up to the failure of the company. Employees should be encouraged through actual morale improvements, positive motivation, and incentives for doing more work at the same and/or better quality level.

    Outsourcing or keeping things in house can be successful and possibly economical if approached correctly with the appropriate support of upper management.

    Max Littlemore (1001285)

    How dramatic? Isn't outsourcing done (like it or not) to reduce costs?

    Outsourcing is done to reduce the projected costs that PHBs see. In reality, outsourcing can lead to increased costs and delays due to time zone differences and language/cultural barriers.

    I have seen it work reasonably well, but only when the extra effort and delays caused by the increased need for rework that comes from complex software projects. If you are working with others on software, it is so much quicker to produce quality software if the person who knows the business requirements is sitting right next to the person doing design and the person cutting code and the person doing the testing, etc, etc.

    If these people or groups are scattered around the world with different cultures and native languages, communication can suffer, increasing misunderstanding and reducing the quality. I have personally seen this lead to massive increase in code defects in a project that went from in house development to outsourced.

    Also, time zone differences cause problems. I have noticed that the further west people live, the less likely they are to take into account how far behind they are. Working with people who fail to realise that their Monday morning is the next day for someone else, or that by the time they are halfway through Friday, others are already on their weekend is not only frustrating, it leads to slow turn around of bug fixes, etc.

    Yeah, I'm told outsourcing keeps costs down, but I am yet to see conclusive evidence of that in the real world. At least in complex development. YMMV for support/call centre stuff.

    -- I don't therefore I'm not.

    [Nov 30, 2017] Will Robots Kill the Asian Century

    This aritcle is two years old and not much happned during those two years. But still there is a chance that highly authomated factories can make manufacturing in the USA again profitable. the problme is that they will be even more profible in East Asia;-)
    Notable quotes:
    "... The National Interest ..."
    The National Interest

    The rise of technologies such as 3-D printing and advanced robotics means that the next few decades for Asia's economies will not be as easy or promising as the previous five.

    OWEN HARRIES, the first editor, together with Robert Tucker, of The National Interest, once reminded me that experts-economists, strategists, business leaders and academics alike-tend to be relentless followers of intellectual fashion, and the learned, as Harold Rosenberg famously put it, a "herd of independent minds." Nowhere is this observation more apparent than in the prediction that we are already into the second decade of what will inevitably be an "Asian Century"-a widely held but rarely examined view that Asia's continued economic rise will decisively shift global power from the Atlantic to the western Pacific Ocean.

    No doubt the numbers appear quite compelling. In 1960, East Asia accounted for a mere 14 percent of global GDP; today that figure is about 27 percent. If linear trends continue, the region could account for about 36 percent of global GDP by 2030 and over half of all output by the middle of the century. As if symbolic of a handover of economic preeminence, China, which only accounted for about 5 percent of global GDP in 1960, will likely surpass the United States as the largest economy in the world over the next decade. If past record is an indicator of future performance, then the "Asian Century" prediction is close to a sure thing.

    [Nov 29, 2017] Secular Stagnation: The Time for One-Armed Policy is Over

    Highly recommended!
    Stagnation that is gripping several of the world's largest economies should be viewed as a secular, long term phenomenon, not something transient. It is connected with the neoliberalism entering a new phase of its development, when New Deal was already devoured, 90% or so of population standard of living slides and thus there are no direct mechanisms to increase consumer demand.
    Notable quotes:
    "... Stagnation is gripping several of the world's largest economies and many view this as secular, not transient. ..."
    "... Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics. ..."
    "... For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. ..."
    "... In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare. ..."
    "... Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed. ..."
    "... How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? ..."
    "... It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income. ..."
    "... It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession. ..."
    "... I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand. ..."
    "... The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. ..."
    "... In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine. ..."
    Jun 05, 2015 | economistsview.typepad.com
    Willem Buiter, Ebrahim Rahbari, Joe Seydl at Vox EU:

    Secular stagnation: The time for one-armed policy is over: Stagnation is gripping several of the world's largest economies and many view this as secular, not transient.

    This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure investment.

    Selected Skeptical Comments

    Sandwichman -> anne:

    Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing -- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you can get out of me.

    This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt yourselves!"

    Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place. Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.

    Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics.

    Dan Kervick:

    Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:

    1. Ineffective economic organization, both inside corporate firms and outside of them.

    a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles of short-term value extraction for their absurdly over-incentivized key stakeholders.

    b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains". There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future looks like, risk trumps confidence everywhere and nobody knows what to invest in.

    2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything, the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.

    3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities. For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.

    4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who despite their constant kvetching at one another all share in common the view that progress is self-organizing.

    On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.

    On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.

    In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare.

    5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded 21st century planet.

    George H. Blackford:

    Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.

    There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the concentration of income has created stagnation for lack of investment opportunities.

    How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going to be left holding the bag when this system collapses again?

    It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income.

    We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great Depression.

    And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five years after 1940.

    It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession.

    What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern age, namely, the trade deficit and the concentration of income.

    See:

    likbez:

    I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand.

    An economic cycle enters recession when total spending falls below expected by producers and they realize that production level is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.

    The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized.

    The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature of the US economy, not a transitory state.

    "Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign that gambit is abandoned.

    In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine.

    Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession from the USSR by threatening to unleash the nuclear war.

    [Nov 29, 2017] The week after Open Access week by Ingrid Robeyns

    Notable quotes:
    "... knowledge is for sharing ..."
    Oct 30, 2017 | crookedtimber.org

    It was Open Access week last week, but I was too busy trying to meet the deadline today for submitting my book manuscript to Open Book Publishers . That sounds like a good excuse if one cares about open access, right? I slept too little for too many days, so don't expect any creative thoughts or subtle analyses from me tonight. But here's two interesting things I discovered while having a look on the web figuring out whether anything interesting happend during Open Access week.

    First, Cambridge University digitalised the PhD dissertation of Stephen Hawking and put it online. Apparently the website crashed when that got announced. Any Cambridge University alumni who want to make their PhD dissertation Open Access are invited doing so (no more need to go to the reading room and sign a fat notebook that one has accessed a particular PhD dissertation, as I once did. Although, I should confess, it felt like an adventure. But it's highly inefficient obviously).

    Second, for some weeks now, Open Book Publishers has been offering the PDFs of all of their books open access, to celebrate the 100th book they published (their regular regime is to have the books as html open access and selling the PDFs for a few pounds, or else the author can pay a fee for making the PDF open access).

    Importantly, this may only last for another a day or two (I am drawing from my memory when I saw a tweet on that about two months ago), so while it lasts it may be worth checking out their collection of books in the humanities and the social sciences, such as Naom Chomsky's Delhi Lectures , Ruth Finnegan's book on Oral literature in Africa or textbooks on maths for university .

    All for nothing. Because, as their slogan goes, knowledge is for sharing .

    ccc 10.30.17 at 10:54 pm ( 1 )

    Worth mentioning in this context: the CORE project released the final version of their impressive economics textbook "The Economy", freely (as in CC by-nc-dd licensed) available at http://www.core-econ.org/the-economy/

    A great writeup about it by Samuel Bowles and Wendy Carlin (two of the authors) is here
    http://voxeu.org/article/new-paradigm-introductory-course-economics

    Ingrid Robeyns 10.31.17 at 7:25 am ( 2 )
    thanks ccc! I didn't know about this and it looks great.

    Anyone should feel free to post other major "Open Access week additions" in this thread.

    Steve 10.31.17 at 11:32 am ( 3 )
    I think that having open access publishers is great, and I would love to have books published this way. Here's the concern: I suspect that my University's promotions committee, etc, will view this kind of publication as "inferior" to one with some snazzy University Press.

    I was wondering whether anyone has any advice about how to handle the fact that there are perverse incentives to publish your work in a format which will cost someone £70, rather than for free?

    Harry 10.31.17 at 1:23 pm ( 4 )
    I don't see a way of changing the situation Steve mentions except by having well established scholars who don't need to worry about those kinds of thing take the lead. Eg, Ingrid. and David Velleman (who has two books with Open Book, which I greedily downloaded). And Sam Bowles! -- thanks for the tip ccc, I knew about this from Bowles and had seen parts of it, but not the whole thing which looks great!
    Ingrid Robeyns 10.31.17 at 6:31 pm ( 5 )
    Steve, I fully understand the worry – and even for me (tenured full professor) there is a "status cost" to be paid by not publishing with an established University Press. But it's a vicious circle that has to be broken – and I agree with Harry, that those of us who can "afford" to publish Open Access, should do so, in order to try to contribute to the status of the Open Access Press.

    I should say that in terms of refereeing – I've published two co-edited books, one with OUP, one with CUP – and the refereeing process at Open Books was the same, if not better. And a very important advantage of publishing with a publisher such as Open Books is the much shorter time between delivering the final manuscript and publication – if you do all your work properly, it's a matter of weeks or a few months, not, as with the established University Presses, (almost) a year (I've always wondered what the hell happens in that year, especially if they turn back the proofs which are full with typo's!)

    I've been thinking someone should write a paper with the title: "If you have tenure, why don't you publish Open Access?"

    SusanC 10.31.17 at 7:45 pm ( 6 )
    @3,4: Possibly the switch to open access needs to be done at an institutional level, rather than by individuals.

    e.g. A declaration by government evaluations such as the REF that publications won't be counted unless they are open access, followed by a declaration by your department that publications from now onwards won't be counted for promotions unless they are open access, might create the right incentives.

    [There are potential issues regarding fairness towards academics who are moving between universities . how do you fairly compare job candidates when one is from a university that demanded open access publication, and another is from a university that didn't?]

    John Quiggin 11.02.17 at 7:46 am ( 7 )

    Not to make too much of the obvious, given that I'm writing a blog comment, but blogs offer some great opportunities here.

    CT readers got to see nearly all of Zombie Economics before the book appeared, and if I ever finish Economics in Two Lessons it will be long after much of it was posted here.

    [Nov 28, 2017] The Stigmatization of the Unemployed

    "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills" . In the IT job markets such postings are often called purple squirrels
    Notable quotes:
    "... In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero ..."
    "... That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population. ..."
    "... The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is. ..."
    Mar 20, 2011 | naked capitalism

    Spencer Thomas:

    Very good post. Thank you.

    Over the past three decades, large parts of our culture here in the US have internalized the lessons of the new Social Darwinism, with a significant body of literature to explain and justify it. Many of us have internalized, without even realizing it, the ideas of "dog eat dog", "every man for himself", "society should be structured like the animal kingdom, where the weak and sick simply die because they cannot compete, and this is healthy", and "everything that happens to you is your own fault. There is no such thing as circumstance that cannot be overcome, and certainly no birth lottery."

    The levers pulled by politicians and the Fed put these things into practice, but even if we managed get different (better) politicians or Fed chairmen, ones who weren't steeped in this culture and ideology, we'd still be left with the culture in the population at large, and things like the "unemployed stigma" are likely to die very, very hard. Acceptance of the "just-world phenomenon" here in the US runs deep.

    perfect stranger:

    "Religion is just as vulnerable to corporate capture as is the government or the academy."

    This is rather rhetorical statement, and wrong one. One need to discern spiritual aspect of religion from the religion as a tool.

    Religion, as is structured, is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institutions such as Supreme – and non-supreme – Court(s). It is a form of PR of the ruling class for the governing class.

    DownSouth:

    perfect stranger,

    Religion, just like human nature, is not that easy to put in a box.

    For every example you can cite where religion "is complicit: in empoverishment, obedience, people's preconditioning, and legislative enabler in the institution," I can point to an example of where religion engendered a liberating, emancipatory and revolutionary spirit.

    Examples:

    •Early Christianity •Nominalism •Early Protestantism •Gandhi •Martin Luther King

    Now granted, there don't seem to be any recent examples of this of any note, unless we consider Chris Hedges a religionist, which I'm not sure we can do. Would it be appropriate to consider Hedges a religionist?

    perfect stranger:

    Yes, that maybe, just maybe be the case in early stages of forming new religion(s). In case of Christianity old rulers from Rome were trying to save own head/throne and the S.P.Q.R. imperia by adopting new religion.

    You use examples of Gandhi and MLK which is highly questionable both were fighters for independence and the second, civil rights. In a word: not members of establishment just as I said there were (probably) seeing the religion as spiritual force not tool of enslavement.

    Matt:

    This link may provide some context:

    http://en.wikipedia.org/wiki/Prosperity_theology

    In particular, there seems to be an extremely popular variant of the above where the starting proposition "God makes moral people rich" is improperly converted to "Rich people are more moral" which is then readily negated to "Poor people are immoral" and then expanded to "Poor people are immoral, thus they DESERVE to suffer for it". It's essentially the theological equivalent of dividing by zero

    DownSouth:

    Rex,

    I agree.

    Poll after poll after poll has shown that a majority of Americans, and a rather significant majority, reject the values, attitudes, beliefs and opinions proselytized by the stealth religion we call "neoclassical economics."

    That said, the ranks of the neoliberals are not small. They constitute what Jonathan Schell calls a "mass minority." I suspect the neoliberals have about the same level of popular support that the Nazis did at the time of their takeover of Germany in 1932, or the Bolsheviks had in Russia at the time of their takeover in 1917, which is about 20 or 25% of the total population.

    The ranks of the neoliberals are made to appear far greater than they really are because they have all but exclusive access to the nation's megaphone. The Tea Party can muster a handful of people to disrupt a town hall meeting and it gets coast to coast, primetime coverage. But let a million people protest against bank bailouts, and it is ignored. Thus, by manipulation of the media, the mass minority is made to appear to be much larger than it really is.

    The politicians love this, because as they carry water for their pet corporations, they can point to the Tea Partiers and say: "See what a huge upwelling of popular support I am responding to."

    JTFaraday:

    Well, if that's true, then the unemployed are employable but the mass mediated mentality would like them to believe they are literally and inherently unemployable so that they underestimate and under-sell themselves.

    This is as much to the benefit of those who would like to pick up "damaged goods" on the cheap as those who promote the unemployment problem as one that inheres in prospective employees rather than one that is a byproduct of a bad job market lest someone be tempted to think we should address it politically.

    That's where I see this blame the unemployed finger pointing really getting traction these days.

    attempter:

    I apologize for the fact that I only read the first few paragraphs of this before quitting in disgust.

    I just can no longer abide the notion that "labor" can ever be seen by human beings as a "cost" at all. We really need to refuse to even tolerate that way of phrasing things. Workers create all wealth. Parasites have no right to exist. These are facts, and we should refuse to let argument range beyond them.

    The only purpose of civilization is to provide a better way of living and for all people. This includes the right and full opportunity to work and manage for oneself and/or as a cooperative group. If civilization doesn't do that, we're better off without it.

    psychohistorian:

    I am one of those long term unemployed.

    I suppose my biggest employment claim would be as some sort of IT techie, with numerous supply chain systems and component design, development, implementation, interfaces with other systems and ongoing support. CCNP certification and a history of techiedom going back to WEYCOS.

    I have a patent (6,209,954) in my name and 12+ years of beating my head against the wall in an industry that buys compliance with the "there is no problem here, move on now" approach.

    Hell, I was a junior woodchuck program administrator back in the early 70's working for the Office of the Governor of the state of Washington on CETA PSE or Public Service Employment. The office of the Governor ran the PSE program for 32 of the 39 counties in the state that were not big enough to run their own. I helped organize the project approval process in all those counties to hire folk at ( if memory serves me max of $833/mo.) to fix and expand parks and provide social and other government services as defined projects with end dates. If we didn't have the anti-public congress and other government leadership we have this could be a current component in a rational labor policy but I digress.

    I have experience in the construction trades mostly as carpenter but some electrical, plumbing, HVAC, etc. also.

    So, of course there is some sort of character flaw that is keeping me and all those others from employment ..right. I may have more of an excuse than others, have paid into SS for 45 years but still would work if it was available ..taking work away from other who may need it more .why set up a society where we have to compete as such for mere existence???????

    One more face to this rant. We need government by the people and for the people which we do not have now. Good, public focused, not corporate focused government is bigger than any entities that exist under its jurisdiction and is kept updated by required public participation in elections and potentially other things like military, peace corps, etc. in exchange for advanced education. I say this as someone who has worked at various levels in both the public and private sectors there are ignorant and misguided folks everywhere. At least with ongoing active participation there is a chance that government would, once constructed, be able to evolve as needed within public focus .IMO.

    Ishmael:

    Some people would say I have been unemployed for 10 years. In 2000 after losing the last of my four CFO gigs for public companies I found it necessary to start consulting. This has lead to two of my three biggest winning years. I am usually consulting on cutting edge area of my profession and many times have large staffs reporting to me that I bring on board to get jobs done. For several years I subcontacted to a large international consulting firm to clean up projects which went wrong. Let me give some insight here.

    1. First, most good positions have gate keepers who are professional recruiters. It is near impossible to get by them and if you are unemployed they will hardly talk to you. One time talking to a recruiter at Korn Fery I was interviewing for a job I have done several times in an industry I have worked in several times. She made a statement that I had never worked at a well known company. I just about fell out of my chair laughing. At one time I was a senior level executive for the largest consulting firm in the world and lived on three continents and worked with companies on six. In addition, I had held senior positions for 2 fortune 500 firms and was the CFO for a company with $4.5 billion in revenue. I am well known at several PE firms and the founder of one of the largest mentioned in a meeting that one of his great mistakes was not investing in a very successful LBO (return of in excess of 20 multiple to investors in 18 months) I was the CFO for. In a word most recruiters are incompetent.
    2. Second, most CEO's any more are just insecure politicians. One time during an interview I had a CEO asked me to talk about some accomplishments. I was not paying to much attention as I rattled off accomplishments and the CEO went nuclear and started yelling at me that he did not know where I thought I was going with this job but the only position above the CFO job was his and he was not going anywhere. I assured him I was only interested in the CFO position and not his, but I knew the job was over. Twice feed back that I got from recruiters which they took at criticism was the "client said I seemed very assured of myself."
    3. Third, government, banking, business and the top MBA schools are based upon lying to move forward. I remember a top human resource executive telling me right before Enron, MCI and Sarbanes Oxley that I needed to learn to be more flexible. My response was that flexibility would get me an orange jump suit. Don't get me wrong, I have a wide grey zone, but it use to be in business the looked for people who could identify problems early and resolve them. Now days I see far more of a demand for people who can come up with PR spins to hide them. An attorney/treasurer consultant who partnered with me on a number of consulting jobs told me some one called me "not very charming." He said he asked what that meant, and the person who said that said, "Ish walks into a meeting and within 10 minutes he is asking about the 10,000 pound guerilla sitting in the room that no one wants to talk about." CEO do not want any challenges in their organization.
    4. Fourth, three above has lead to the hiring of very young and inexperienced people at senior levels. These people are insecure and do not want more senior and experienced people above them and than has resulted in people older than 45 not finding positions.
    5. Fifth, people are considered expendable and are fired for the lamest reasons anymore. A partner at one of the larger and more prestigious recruiting firms one time told me, "If you have a good consulting business, just stick with it. Our average placement does not last 18 months any more." Another well known recruiter in S. Cal. one time commented to me, "Your average consulting gig runs longer than our average placement."

    With all of that said, I have a hard time understanding such statements as "@attempter "Workers create all wealth. Parasites have no right to exist." What does that mean? Every worker creates wealth. There is no difference in people. Sounds like communism to me. I make a good living and my net worth has grown working for myself. I have never had a consulting gig terminated by the client but I have terminated several. Usually, I am brought in to fix what several other people have failed at. I deliver basically intellectual properties to companies. Does that mean I am not a worker. I do not usually lift anything heavy or move equipment but I tell people what and where to do it so does that make me a parasite.

    Those people who think everyone is equal and everyone deserves equal pay are fools or lazy. My rate is high, but what usually starts as short term projects usually run 6 months or more because companies find I can do so much more than what most of their staff can do and I am not a threat.

    I would again like to have a senior challenging role at a decent size company but due to the reasons above will probably never get one. However, you can never tell. I am currently consulting for a midsize very profitable company (grew 400% last year) where I am twice the age of most people there, but everyone speaks to me with respect so you can never tell.

    Lidia:

    Ishmael, you're quite right. When I showed my Italian husband's resume to try and "network" in the US, my IT friends assumed he was lying about his skills and work history.

    Contemporaneously, in Italy it is impossible to get a job because of incentives to hire "youth". Age discrimination is not illegal, so it's quite common to see ads that ask for a programmer under 30 with 5 years of experience in COBOL (the purple squirrel).

    Hosswire

    Some good points about the foolishness of recruiters, but a great deal of that foolishness is forced by the clients themselves. I used to be a recruiter myself, including at Korn Ferry in Southern California. I described the recruiting industry as "yet more proof that God hates poor people" because my job was to ignore resumes from people seeking jobs and instead "source" aka "poach" people who already had good jobs by dangling a higher salary in front of them. I didn't do it because I disparaged the unemployed, or because I could not do the basic analysis to show that a candidate had analogous or transferrable skills to the opening.

    I did it because the client, as Yves said, wanted people who were literally in the same job description already. My theory is that the client wanted to have their ass covered in case the hire didn't work out, by being able to say that they looked perfect "on paper." The lesson I learned for myself and my friends looking for jobs was simple, if morally dubious. Basically, that if prospective employers are going to judge you based on a single piece of paper take full advantage of the fact that you get to write that piece of paper yourself.

    Ishmael:

    Hosswire - I agree with your comment. There are poor recruiters like the one I sited but in general it is the clients fault. Fear of failure. All hires have at least a 50% chance of going sideways on you. Most companies do not even have the ability to look at a resume nor to interview. I did not mean to same nasty things about recruiters, and I even do it sometimes but mine.

    I look at failure in a different light than most companies. You need to be continually experimenting and changing to survive as a company and there will be some failures. The goal is to control the cost of failures while looking for the big pay off on a winner.

    Mannwich:

    As a former recruiter and HR "professional" (I use that term very loosely for obvious reasons), I can honestly say that you nailed it. Most big companies looking for mid to high level white collar "talent" will almost always take the perceived safest route by hiring those who look the best ON PAPER and in a suit and lack any real interviewing skills to find the real stars. What's almost comical is that companies almost always want to see the most linear resume possible because they want to see "job stability" (e.g. a CYA document in case the person fails in that job) when in many cases nobody cares about the long range view of the company anyway. My question was why should the candidate or employee care about the long range view if the employer clearly doesn't?

    Ishmael:

    Manwhich another on point comment. Sometimes either interviewing for a job or consulting with a CEO it starts getting to the absurd. I see all the time the requirement for stability in a persons background. Hello, where have they been the last 15 years. In addition, the higher up you go the more likely you will be terminated sometime and that is especially true if you are hired from outside the orgnanization. Companies want loyalty from an employee but offer none in return.

    The average tenure for a CFO anymore is something around 18 months. I have been a first party participant (more than once) where I went through an endless recruiting process for a company (lasting more than 6 months) they final hire some one and that person is with the company for 3 months and then resigns (of course we all know it is through mutual agreement).

    Ishmael:

    Birch:

    The real problem has become and maybe this is what you are referring to is the "Crony Capitalism." We have lost control of our financial situation. Basically, PE is not the gods of the universe that everyone thinks they are. However, every bankers secret wet dream is to become a private equity guy. Accordingly, bankers make ridiculous loans to PE because if you say no to them then you can not play in their sand box any more. Since the govt will not let the banks go bankrupt like they should then this charade continues inslaving everyone.

    This country as well as many others has a large percentage of its assets tied up in over priced deals that the bankers/governments will not let collapse while the blood sucking vampires suck the life out of the assets.

    On the other hand, govt is not the answer. Govt is too large and accomplishes too little.

    kevin de bruxelles:

    The harsh reality is that, at least in the first few rounds, companies kick to the curb their weakest links and perceived slackers. Therefore when it comes time to hire again, they are loath to go sloppy seconds on what they perceive to be some other company's rejects. They would much rather hire someone who survived the layoffs working in a similar position in a similar company. Of course the hiring company is going to have to pay for this privilege. Although not totally reliable, the fact that someone survived the layoffs provides a form social proof for their workplace abilities.

    On the macro level, labor has been under attack for thirty years by off shoring and third world immigration. It is no surprise that since the working classes have been severely undermined that the middle classes would start to feel some pressure. By mass immigration and off-shoring are strongly supported by both parties. Only when the pain gets strong enough will enough people rebel and these two policies will be overturned. We still have a few years to go before this happens.

    davver:

    Let's say I run a factory. I produce cars and it requires very skilled work. Skilled welding, skilled machinists. Now I introduce some robotic welders and an assembly line system. The plants productivity improves and the jobs actually get easier. They require less skill, in fact I've simplified each task to something any idiot can do. Would wages go up or down? Are the workers really contributing to that increase in productivity or is it the machines and methods I created?

    Lets say you think laying off or cutting the wages of my existing workers is wrong. What happens when a new entrant into the business employs a smaller workforce and lower wages, which they can do using the same technology? The new workers don't feel like they were cut down in any way, they are just happy to have a job. Before they couldn't get a job at the old plant because they lacked the skill, but now they can work in the new plant because the work is genuinely easier. Won't I go out of business?

    Escariot:

    I am 54 and have a ton of peers who are former white collar workers and professionals (project managers, architects, lighting designers, wholesalers and sales reps for industrial and construction materials and equipment) now out of work going on three years. Now I say out of work, I mean out of our trained and experienced fields.

    We now work two or three gigs (waiting tables, mowing lawns, doing free lance, working in tourism, truck driving, moving company and fedex ups workers) and work HARD, for much much less than we did, and we are seeing the few jobs that are coming back on line going to younger workers. It is just the reality. And for most of us the descent has not been graceful, so our credit is a wreck, which also breeds a whole other level of issues as now it is common for the credit record to be a deal breaker for employment, housing, etc.

    Strangely I don't sense a lot of anger or bitterness as much as humility. And gratitude for ANY work that comes our way. Health insurance? Retirement accounts? not so much.

    Mickey Marzick:

    Yves and I have disagreed on how extensive the postwar "pact" between management and labor was in this country. But if you drew a line from say, Trenton-Patterson, NJ to Cincinatti, OH to Minneapolis, MN, north and east of it where blue collar manufacturing in steel, rubber, auto, machinery, etc., predominated, this "pact" may have existed but ONLY because physical plant and production were concentrated there and workers could STOP production.

    Outside of these heavy industrial pockets, unions were not always viewed favorably. As one moved into the rural hinterlands surrounding them there was jealously and/or outright hostility. Elsewhere, especially in the South "unions" were the exception not the rule. The differences between NE Ohio before 1975 – line from Youngstown to Toledo – and the rest of the state exemplified this pattern. Even today, the NE counties of Ohio are traditional Democratic strongholds with the rest of the state largely Republican. And I suspect this pattern existed elsewhere. But it is changing too

    In any case, the demonization of the unemployed is just one notch above the vicious demonization of the poor that has always existed in this country. It's a constant reminder for those still working that you could be next – cast out into the darkness – because you "failed" or worse yet, SINNED. This internalization of the "inner cop" reinforces the dominant ideology in two ways. First, it makes any resistance by individuals still employed less likely. Second, it pits those still working against those who aren't, both of which work against the formation of any significant class consciousness amongst working people. The "oppressed" very often internalize the value system of the oppressor.

    As a nation of immigrants ETHNICITY may have more explanatory power than CLASS. For increasingly, it would appear that the dominant ethnic group – suburban, white, European Americans – have thrown their lot in with corporate America. Scared of the prospect of downward social mobility and constantly reminded of URBAN America – the other America – this group is trapped with nowhere to else to go.

    It's the divide and conquer strategy employed by ruling elites in this country since its founding [Federalist #10] with the Know Nothings, blaming the Irish [NINA - no Irish need apply] and playing off each successive wave of immigrants against the next. Only when the forces of production became concentrated in the urban industrial enclaves of the North was this strategy less effective. And even then internal immigration by Blacks to the North in search of employment blunted the formation of class consciousness among white ethnic industrial workers.

    Wherever the postwar "pact of domination" between unions and management held sway, once physical plant was relocated elsewhere [SOUTH] and eventually offshored, unemployment began to trend upwards. First it was the "rustbelt" now it's a nationwide phenomenon. Needless to say, the "pact" between labor and management has been consigned to the dustbin of history.

    White, suburban America has hitched its wagon to that of the corporate horse. Demonization of the unemployed coupled with demonization of the poor only serve to terrorize this ethnic group into acquiescence. And as the workplace becomes a multicultural matrix this ethnic group is constantly reminded of its perilous state. Until this increasingly atomized ethnic group breaks with corporate America once and for all, it's unlikely that the most debilitating scourge of all working people – UNEMPLOYMENT – will be addressed.

    Make no mistake about it, involuntary UNEMPLOYMENT/UNDEREMPLYEMT is a form of terrorism and its demonization is terrorism in action. This "quiet violence" is psychological and the intimidation wrought by unemployment and/or the threat of it is intended to dehumanize individuals subjected to it. Much like spousal abuse, the emotional and psychological effects are experienced way before any physical violence. It's the inner cop that makes overt repression unnecessary. We terrorize ourselves into submission without even knowing it because we accept it or come to tolerate it. So long as we accept "unemployment" as an inevitable consequence of progress, as something unfortunate but inevitable, we will continue to travel down the road to serfdom where ARBEIT MACHT FREI!

    FULL and GAINFUL EMPLOYMENT are the ultimate labor power.

    Eric:

    It's delicate since direct age discrimination is illegal, but when circumstances permit separating older workers they have a very tough time getting back into the workforce in an era of high health care inflation. Older folks consume more health care and if you are hiring from a huge surplus of available workers it isn't hard to steer around the more experienced. And nobody gets younger, so when you don't get job A and go for job B 2 weeks later you, you're older still!

    James:

    Yves said- "This overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills"

    In the IT job markets such postings are often called purple squirrels. The HR departments require the applicant to be expert in a dozen programming languages. This is an excuse to hire a foreigner on a temp h1-b or other visa.

    Most people aren't aware that this model dominates the sciences. Politicians scream we have a shortage of scientists, yet it seems we only have a shortage of cheap easily exploitable labor. The economist recently pointed out the glut of scientists that currently exists in the USA.

    http://www.economist.com/node/17723223

    This understates the problem. The majority of PhD recipients wander through years of postdocs only to end up eventually changing fields. My observation is that the top ten schools in biochem/chemistry/physics/ biology produce enough scientists to satisfy the national demand.

    The exemption from h1-b visa caps for academic institutions exacerbates the problem, providing academics with almost unlimited access to labor.

    The pharmaceutical sector has been decimated over the last ten years with tens of thousands of scientists/ factory workers looking for re-training in a dwindling pool of jobs (most of which will deem you overqualified.)

    http://pipeline.corante.com/archives/2011/03/03/a_postdocs_lament.php

    Abe, NYC:

    I wonder how the demonization of the unemployed can be so strong even in the face of close to 10% unemployment/20% underemployment. It's easy and tempting to demonize an abstract young buck or Cadillac-driving welfare queen, but when a family member or a close friend loses a job, or your kids are stuck at your place because they can't find one, shouldn't that alter your perceptions? Of course the tendency will be to blame it all on the government, but there has to be a limit to that in hard-hit places like Ohio, Colorado, or Arizona. And yet, the dynamics aren't changing or even getting worse. Maybe Wisconsin marks a turning point, I certainly hope it does

    damien:

    It's more than just stupid recruiting, this stigma. Having got out when the getting was good, years ago, I know that any corporate functionary would be insane to hire me now. Socialization wears off, the deformation process reverses, and the ritual and shibboleths become a joke. Even before I bailed I became a huge pain in the ass as economic exigency receded, every bosses nightmare. I suffered fools less gladly and did the right thing out of sheer anarchic malice.

    You really can't maintain corporate culture without existential fear – not just, "Uh oh, I'm gonna get fired," fear, but a visceral feeling that you do not exist without a job. In properly indoctrinated workers that feeling is divorced from economic necessity. So anyone who's survived outside a while is bound to be suspect. That's a sign of economic security, and security of any sort undermines social control.

    youniquelikeme:

    You hit the proverbial nail with that reply. (Although, sorry, doing the right thing should not be done out of malice) The real fit has to be in the corporate yes-man culture (malleable ass kisser) to be suited for any executive position and beyond that it is the willingness to be manipulated and drained to be able to keep a job in lower echelon.

    This is the new age of evolution in the work place. The class wars will make it more of an eventual revolution, but it is coming. The unemployment rate (the actual one, not the Government one) globalization and off shore hiring are not sustainable for much longer.

    Something has to give, but it is more likely to snap then to come easily. People who are made to be repressed and down and out eventually find the courage to fight back and by then, it is usually not with words.

    down and out in Slicon Valley:

    This is the response I got from a recruiter:

    "I'm going to be overly honest with you. My firm doesn't allow me to submit any candidate who hasn't worked in 6-12 months or more. Recruiting brokers are probably all similar in that way . You are going to have to go through a connection/relationship you have with a colleague, co-worker, past manager or friend to get your next job .that's my advice for you. Best of luck "

    I'm 56 years old with MSEE. Gained 20+ years of experience at the best of the best (TRW, Nortel, Microsoft), have been issued a patent. Where do I sign up to gain skills required to find a job now?

    Litton Graft :

    "Best of the Best?" I know you're down now, but looking back at these Gov'mint contractors you've enjoyed the best socialism money can by.

    Nortel/TRW bills/(ed) the Guvmint at 2x, 3x your salary, you can ride this for decades. At the same time the Inc is attached to the Guvmint ATM localities/counties are giving them a red carpet of total freedom from taxation. Double subsidies.

    I've worked many years at the big boy bandits, and there is no delusion in my mind that almost anyone, can do what I do and get paid 100K+. I've never understood the mindset of some folks who work in the Wermacht Inc: "Well, someone has to do this work" or worse "What we do, no one else can do" The reason no one else "can do it" is that they are not allowed to. So, we steal from the poor to build fighter jets, write code or network an agency.

    Hosswire:

    I used to work as a recruiter and can tell you that I only parroted the things my clients told me. I wanted to get you hired, because I was lazy and didn't want to have to talk to someone else next.

    So what do you do? To place you that recruiter needs to see on a piece of paper that you are currently working? Maybe get an email or phone call from someone who will vouch for your employment history. That should not be that hard to make happen.

    Francois T :

    The "bizarre way that companies now spec jobs" is essentially a coded way for mediocre managers to say without saying so explicitly that "we can afford to be extremely picky, and by God, we shall do so no matter what, because we can!"

    Of course, when comes the time to hire back because, oh disaster! business is picking up again, (I'm barely caricaturing here; some managers become despondent when they realize that workers regain a bit of the higher ground; loss of power does that to lesser beings) the same idiots who designed those "overly narrow hiring spec then leads to absurd, widespread complaint that companies can't find people with the right skills" are thrown into a tailspin of despair and misery. Instead of figuring out something as simple as "if demand is better, so will our business", they can't see anything else than the (eeeek!) cost of hiring workers. Unable to break their mental corset of penny-pincher, they fail to realize that lack of qualified workers will prevent them to execute well to begin with.

    And guess what: qualified workers cost money, qualified workers urgently needed cost much more.

    This managerial attitude must be another factor that explain why entrepreneurship and the formation of small businesses is on the decline in the US (contrary to the confabulations of the US officialdumb and the chattering class) while rising in Europe and India/China.

    Kit:

    If you are 55-60, worked as a professional (i.e., engineering say) and are now unemployed you are dead meat. Sorry to be blunt but thats the way it is in the US today. Let me repeat that : Dead Meat.

    I was terminated at age 59, found absolutely NOTHING even though my qualifications were outstanding. Fortunately, my company had an old style pension plan which I was able to qualify for (at age 62 without reduced benefits). So for the next 2+ years my wife and I survived on unemployment insurance, severance, accumulated vacation pay and odd jobs. Not nice – actually, a living hell.

    At age 62, I applied for my pension, early social security, sold our old house (at a good profit) just before the RE crash, moved back to our home state. Then my wife qualified for social security also. Our total income is now well above the US median.

    Today, someone looking at us would think we were the typical corporate retiree. We surely don't let on any differently but the experience (to get to this point) almost killed us.

    I sympathize very strongly with the millions caught in this unemployment death spiral. I wish I had an answer but I just don't. We were very lucky to survive intact.

    Ming:

    Thank you Yves for your excellent post, and for bringing to light this crucial issue.

    Thank you to all the bloggers, who add to the richness of the this discussion.

    I wonder if you could comment on this Yves, and correct me if I am wrong I believe that the power of labor was sapped by the massive available supply of global labor. The favorable economic policies enacted by China (both official and unofficial), and trade negotiations between the US government and the Chinese government were critical to creating the massive supply of labor.

    Thank you. No rush of course.

    Nexus:

    There are some odd comments and notions here that are used to support dogma and positions of prejudice. The world can be viewed in a number of ways. Firstly from a highly individualised and personal perspective – that is what has happened to me and here are my experiences. Or alternatively the world can be viewed from a broader societal perspective.

    In the context of labour there has always been an unequal confrontation between those that control capital and those that offer their labour, contrary to some of the views exposed here – Marx was a first and foremost a political economist. The political economist seeks to understand the interplay of production, supply, the state and institutions like the media. Modern day economics branched off from political economy and has little value in explaining the real world as the complexity of the world has been reduced to a simplistic rationalistic model of human behaviour underpinned by other equally simplistic notions of 'supply and demand', which are in turn represented by mathematical models, which in themselves are complex but merely represent what is a simplistic view of the way the world operates. This dogmatic thinking has avoided the need to create an underpinning epistemology. This in turn underpins the notion of free choice and individualism which in itself is an illusion as it ignores the operation of the modern state and the exercise of power and influence within society.

    It was stated in one of the comments that the use of capital (machines, robotics, CAD design, etc.) de-skills. This is hardly the case as skills rise for those that remain and support highly automated/continuous production factories. This is symptomatic of the owners of capital wanting to extract the maximum value for labour and this is done via the substitution of labour for capital making the labour that remains to run factories highly productive thus eliminating low skill jobs that have been picked up via services (people move into non productive low skilled occupations warehousing and retail distribution, fast food outlets, etc). Of course the worker does not realise the additional value of his or her labour as this is expropriated for the shareholders (including management as shareholders).

    The issue of the US is that since the end of WW2 it is not the industrialists that have called the shots and made investments it is the financial calculus of the investment banker (Finance Capital). Other comments have tried to ignore the existence of the elites in society – I would suggest that you read C.W.Mills – The Power Elites as an analysis of how power is exercised in the US – it is not through the will of the people.

    For Finance capital investments are not made on the basis of value add, or contribution through product innovation and the exchange of goods but on basis of the lowest cost inputs. Consequently, the 'elites' that make investment decisions, as they control all forms of capital seek to gain access to the cheapest cost inputs. The reality is that the US worker (a pool of 150m) is now part of a global labour pool of a couple of billion that now includes India and China. This means that the elites, US transnational corporations for instance, can access both cheaper labour pools, relocate capital and avoid worker protection (health and safety is not a concern). The strategies of moving factories via off-shoring (over 40,000 US factories closed or relocated) and out-sourcing/in-sourcing labour is also a representations of this.

    The consequence for the US is that the need for domestic labour has diminished and been substituted by cheap labour to extract the arbitrage between US labour rates and those of Chinese and Indians. Ironically, in this context capital has become too successful as the mode of consumption in the US shifted from workers that were notionally the people that created the goods, earned wages and then purchased the goods they created to a new model where the worker was substituted by the consumer underpinned by cheap debt and low cost imports – it is illustrative to note that real wages have not increased in the US since the early 1970's while at the same time debt has steadily increased to underpin the illusion of wealth – the 'borrow today and pay tomorrow' mode of capitalist operation. This model of operation is now broken. The labour force is now being demonized as there is a now surplus of labour and a need to drive down labour rates through changes in legislation and austerity programs to meet those of the emerging Chinese and Indian middle class so workers rights need to be broken. Once this is done a process of in-source may take place as US labour costs will be on par with overseas labour pools.

    It is ironic that during the Regan administration a number of strategic thinkers saw the threat from emerging economies and the danger of Finance Capital and created 'Project Socrates' that would have sought to re-orientate the US economy from one that was based on the rationale of Finance Capital to one that focused in productive innovation which entailed an alignment of capital investment, research and training to product innovative goods. Of course this was ignored and the rest is history. The race to the lowest input cost is ultimately self defeating as it is clear that the economy de-industrialises through labour and capital changes and living standards collapse. The elites – bankers, US transnational corporations, media, industrial military complex and the politicians don't care as they make money either way and this way you get other people overseas to work cheap for you.

    S P:

    Neoliberal orthodoxy treats unemployment as well as wage supression as a necessary means to fight "inflation." If there was too much power in the hands of organized labor, inflationary pressures would spiral out of control as supply of goods cannot keep up with demand.

    It also treats the printing press as a necessary means to fight "deflation."

    So our present scenario: widespread unemployment along with QE to infinity, food stamps for all, is exactly what you'd expect.

    The problem with this orthodoxy is that it assumes unlimited growth on a planet with finite resources, particularly oil and energy. Growth is not going to solve unemployment or wages, because we are bumping up against limits to growth.

    There are only two solutions. One is tax the rich and capital gains, slow growth, and reinvest the surplus into jobs/skills programs, mostly to maintain existing infrastructure or build new energy infrastructure. Even liberals like Krugman skirt around this, because they aren't willing to accept that we have the reached the end of growth and we need radical redistribution measures.

    The other solution is genuine classical liberalism / libertarianism, along the lines of Austrian thought. Return to sound money, and let the deflation naturally take care of the imbalances. Yes, it would be wrenching, but it would likely be wrenching for everybody, making it fair in a universal sense.

    Neither of these options is palatable to the elite classes, the financiers of Wall Street, or the leeches and bureaucrats of D.C.

    So this whole experiment called America will fail.

    [Nov 27, 2017] College Is Wildly Exploitative Why Arent Students Raising Hell

    Highly recommended!
    Notable quotes:
    "... By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet ..."
    "... Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. ..."
    "... Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free. ..."
    "... As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course. ..."
    "... New York Times ..."
    "... to the people making decisions ..."
    "... it's the executives and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards. ..."
    "... What is the benefit? What are the risks? ..."
    "... Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate . ..."
    "... "As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says. A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door. "That's really nice compared to community bathrooms that I lived in last year," Conley says. To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar? "Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder to recruit. " If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have available to offer, we were very far behind." Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says. They expect more privacy than previous generations - and more comforts. "These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at San Diego State University and author of the book "Generation Me." Those students could be in for some disappointment when they graduate , she says. "When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening." Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him. ..."
    "... "I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and get the dorm I'm in. It's perfectly fine." In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of its residence halls. ..."
    "... Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that "poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions. PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms ..."
    "... Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review, College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting to show up on those reviews, too. ..."
    "... While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer students resort-like amenities. ..."
    "... Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera. ..."
    "... Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing something comparable in the U.S. ..."
    "... Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job. ..."
    "... I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance . The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself. ..."
    "... My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still . ..."
    "... The reason students accept this has to be the absolutely demobilized political culture of the United States combined with what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving any kind of middle class income. ..."
    "... Straight bullshit, but remember our school was just following the national (Neoliberal) model. ..."
    Jun 26, 2015 | naked capitalism

    Yves here. In May, we wrote up and embedded the report on how NYU exploits students and adjuncts in "The Art of the Gouge": NYU as a Model for Predatory Higher Education. This article below uses that study as a point of departure for for its discussion of how higher education has become extractive.

    By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet

    Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power and exploitation. It benefits immensely from right-wing McCarthy wannabes, who in an effort to restrict academic freedom and silence political dissent, depict universities as left-wing indoctrination centers.

    But the reality is that while college administrators might affix "down with the man" stickers on their office doors, many prop up a system that is severely unfair to American students and professors, a shocking number of whom struggle to make ends meet. Even the most elementary level of political science instructs that politics is about power. Power, in America, is about money: who has it? Who does not have it? Who is accumulating it? Who is losing it? Where is it going?

    Four hundred faculty members at New York University, one of the nation's most expensive schools, recently released a report on how their own place of employment, legally a nonprofit institution, has become a predatory business, hardly any different in ethical practice or economic procedure than a sleazy storefront payday loan operator. Its title succinctly summarizes the new intellectual discipline deans and regents have learned to master: "The Art of The Gouge."

    The result of their investigation reads as if Charles Dickens and Franz Kafka collaborated on notes for a novel. Administrators not only continue to raise tuition at staggering rates, but they burden their students with inexplicable fees, high cost burdens and expensive requirements like mandatory study abroad programs. When students question the basis of their charges, much of them hidden during the enrollment and registration phases, they find themselves lost in a tornadic swirl of forms, automated answering services and other bureaucratic debris.

    Often the additional fees add up to thousands of dollars, and that comes on top of the already hefty tuition, currently $46,000 per academic year, which is more than double its rate of 2001. Tuition at NYU is higher than most colleges, but a bachelor's degree, nearly anywhere else, still comes with a punitive price tag. According to the College Board, the average cost of tuition and fees for the 2014–2015 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state residents attending public universities.

    Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. Lack of affordable health care is a crime, Reich argues, but at least new medicines, medical technologies, surgeries, surgery techs, and specialists can partially account for inflation. Higher education can claim no costly infrastructural or operational developments to defend its sophisticated swindle of American families. It is a high-tech, multifaceted, but old fashioned transfer of wealth from the poor, working- and middle-classes to the rich.

    Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free.

    Meanwhile, NYU has spent billions, over the past 20 years, on largely unnecessary real estate projects, buying property and renovating buildings throughout New York. The professors' analysis, NYU's US News and World Report Ranking, and student reviews demonstrate that few of these extravagant projects, aimed mostly at pleasing wealthy donors, attracting media attention, and giving administrators opulent quarters, had any impact on overall educational quality.

    As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course.

    Many schools offer rates far below the average, most especially community colleges paying only $1,000 to $1,500. Even at the best paying schools, adjuncts, as part time employees, are rarely eligible for health insurance and other benefits. Many universities place strict limits on how many courses an instructor can teach. According to a recent study, 25 percent of adjuncts receive government assistance.

    The actual scandal of "The Art of the Gouge" is that even if NYU is a particularly egregious offender of basic decency and honesty, most of the report's indictments could apply equally to nearly any American university. From 2003-2013, college tuition increased by a crushing 80 percent. That far outpaces all other inflation. The closest competitor was the cost of medical care, which in the same time period, increased by a rate of 49 percent. On average, tuition in America rises eight percent on an annual basis, placing it far outside the moral universe. Most European universities charge only marginal fees for attendance, and many of them are free. Senator Bernie Sanders recently introduced a bill proposing all public universities offer free education. It received little political support, and almost no media coverage.

    In order to obtain an education, students accept the paralytic weight of student debt, the only form of debt not dischargeable in bankruptcy. Before a young person can even think about buying a car, house or starting a family, she leaves college with thousands of dollars in debt: an average of $29,400 in 2012. As colleges continue to suck their students dry of every dime, the US government profits at $41.3 billion per year by collecting interest on that debt. Congress recently cut funding for Pell Grants, yet increased the budget for hiring debt collectors to target delinquent student borrowers.

    The university, once an incubator of ideas and entrance into opportunity, has mutated into a tabletop model of America's economic architecture, where the top one percent of income earners now owns 40 percent of the wealth.

    "The One Percent at State U," an Institute for Policy Studies report, found that at the 25 public universities with the highest paid presidents, student debt and adjunct faculty increased at dramatically higher rates than at the average state university. Marjorie Wood, the study's co-author, explained told the New York Times that extravagant executive pay is the "tip of a very large iceberg, with universities that have top-heavy executive spending also having more adjuncts, more tuition increases and more administrative spending.

    Unfortunately, students seem like passive participants in their own liquidation. An American student protest timeline for 2014-'15, compiled by historian Angus Johnston, reveals that most demonstrations and rallies focused on police violence, and sexism. Those issues should inspire vigilance and activism, but only 10 out of 160 protests targeted tuition hikes for attack, and only two of those 10 events took place outside the state of California.

    Class consciousness and solidarity actually exist in Chile, where in 2011 a student movement began to organize, making demands for free college. More than mere theater, high school and college students, along with many of their parental allies, engaged the political system and made specific demands for inexpensive education. The Chilean government announced that in March 2016, it will eliminate all tuition from public universities. Chile's victory for participatory democracy, equality of opportunity and social justice should instruct and inspire Americans. Triumph over extortion and embezzlement is possible.

    This seems unlikely to happen in a culture, however, where even most poor Americans view themselves, in the words of John Steinbeck, as "temporarily embarrassed millionaires." The political, educational and economic ruling class of America is comfortable selling out its progeny. In the words of one student quoted in "The Art of the Gouge," "they see me as nothing more than $200,000."

    washunate June 26, 2015 at 10:07 am

    Awesome question in the headline.

    At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual. Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the more unseemly parts of the US "justice" system.

    But I think this is changing. The pressure is building from the bottom as academia loses credibility as an institution capable of, never mind interested in, serving the public good rather than simply being another profit center for connected workers. It's actually a pretty exciting time. The kiddos are getting pretty fed up, and the authoritarians at the top of the hierarchy are running out of money with which to buy off younger technocratic enablers and thought leaders and other Serious People.

    washunate June 26, 2015 at 10:17 am

    P.S., the author in this post demonstrates the very answer to the question. He assumes as true, without any need for support, that the very act of possessing a college degree makes one worthy of a better place in society. That mindset is why colleges can prey upon students. They hold a monopoly on access to resources in American society. My bold:

    Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits.

    What does having a masters degree or PhD have to do with the moral claim of all human beings to a life of dignity and purpose?

    flora June 26, 2015 at 11:37 am

    There are so many more job seekers per job opening now than, say, 20 or thirty years ago that a degree is used to sort out applications. Now a job that formerly listed a high school degree as a requirement may now list a college degree as a requirement, just to cut down on the number of applications.

    So, no, a B.A. or B.S. doesn't confer moral worth, but it does open more job doors than a high school diploma, even if the actual work only requires high school level math, reading, science or technology.

    Ben June 26, 2015 at 1:11 pm

    I agree a phd often makes someone no more useful in society. However the behaviour of the kids is rational *because* employers demand a masters / phd.

    Students are then caught in a trap. Employers demand the paper, often from an expensive institution. The credit is abundant thanks to govt backed loans. They are caught in a situation where as a collective it makes no sense to join in, but as an individual if they opt out they get hurt also.

    Same deal for housing. It's a mad world my masters.

    What can we do about this? The weak link in the chain seems to me to be employers. Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value? I work as a programmer and I often think " if we could just 'see' the non-graduate diamonds in the rough".

    If employers had perfect knowledge of prospective employees *and* if they saw that a degree would make no difference to their performance universities would crumble overnight.

    The state will never stop printing money via student loans. If we can fix recruitment then universities are dead.

    washunate June 26, 2015 at 2:22 pm

    Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value?

    Yeah, I have thought a lot about that particular question of organizational behavior. It does make sense, conceptually, that somebody would disrupt the system and take people based on ability rather than credentials. Yet we are moving in the opposite direction, toward more rigidity in educational requirements for employment.

    For my two cents, I think the bulk of the answer lies in how hiring specifically, and management philosophy more generally, works in practice. The people who make decisions are themselves also subject to someone else's decisions. This is true all up and down the hierarchical ladder, from board members and senior executives to the most junior managers and professionals.

    It's true that someone without a degree may offer the same (or better) performance to the company. But they do not offer the same performance to the people making decisions, because those individual people also depend upon their own college degrees to sell their own labor services. To hire significant numbers of employees without degrees into important roles is to sabotage their own personal value.

    Very few people are willing to be that kind of martyr. And generally speaking, they tend to self-select away from occupations where they can meaningfully influence decision-making processes in large organizations.

    Absolutely, individual business owners can call BS on the whole scam. It is a way that individual people can take action against systemic oppression. Hire workers based upon their fit for the job, not their educational credentials or criminal background or skin color or sexual orientation or all of the other tests we have used. But that's not a systemic solution because the incentives created by public policy are overwhelming at large organizations to restrict who is 'qualified' to fill the good jobs (and increasingly, even the crappy jobs).

    Laaughingsong June 26, 2015 at 3:03 pm

    I am not so sure that this is so. So many jobs are now crapified. When I was made redundant in 2009, I could not find many jobs that fit my level of experience (just experience! I have no college degree), so I applied for anything that fit my skill set, pretty much regardless of level. I was called Overqualified. I have heard that in the past as well, but never more so during that stretch of job hunting. Remember that's with no degree. Maybe younger people don't hear it as much. But I also think life experience has something to do with it, you need to have something to compare it to. How many times did our parents tell us how different things were when they were kids, how much easier? I didn't take that on board, did y'all?

    sam s smith June 26, 2015 at 4:03 pm

    I blame HR.

    tsk June 27, 2015 at 4:42 pm

    For various reasons, people seeking work these days, especially younger job applicants, might not possess the habits of mind and behavior that would make them good employees – i.e., punctuality, the willingness to come to work every day (even when something more fun or interesting comes up, or when one has partied hard the night before), the ability to meet deadlines rather than make excuses for not meeting them, the ability to write competently at a basic level, the ability to read instructions, diagrams, charts, or any other sort of necessary background material, the ability to handle basic computation, the ability to FOLLOW instructions rather than deciding that one will pick and choose which rules and instructions to follow and which to ignore, trainability, etc.

    Even if a job applicant's degree is in a totally unrelated field, the fact that he or she has managed to complete an undergraduate degree–or, if relevant, a master's or a doctorate – is often accepted by employers as a sign that the applicant has a sense of personal responsibility, a certain amount of diligence and educability, and a certain level of basic competence in reading, writing, and math.

    By the same token, employers often assume that an applicant who didn't bother going to college or who couldn't complete a college degree program is probably not someone to be counted on to be a responsible, trainable, competent employee.

    Obviously those who don't go to college, or who go but drop out or flunk out, end up disadvantaged when competing for jobs, which might not be fair at all in individual cases, especially now that college has been priced so far out of the range of so many bright, diligent students from among the poor and and working classes, and now even those from the middle class.

    Nevertheless, in general an individual's ability to complete a college degree is not an unreasonable stand-in as evidence of that person's suitability for employment.

    Roland June 27, 2015 at 5:14 pm

    Nicely put, Ben.

    Students are first caught in a trap of "credentials inflation" needed to obtain jobs, then caught by inflation in education costs, then stuck with undischargeable debt. And the more of them who get the credentials, the worse the credentials inflation–a spiral.

    It's all fuelled by loose credit. The only beneficiaries are a managerial elite who enjoy palatial facilities.

    As for the employers, they're not so bad off. Wages are coming down for credentialled employees due to all the competition. There is such a huge stock of degreed applicants that they can afford to ignore anyone who isn't. The credentials don't cost the employer–they're not spending the money, nor are they lending the money.

    Modern money makes it possible for the central authorities to keep this racket going all the way up to the point of general systemic collapse. Why should they stop? Who's going to make them stop?

    Bobbo June 26, 2015 at 10:19 am

    The only reason the universities can get away with it is easy money. When the time comes that students actually need to pay tuition with real money, money they or their parents have actually saved, then college tuition rates will crash back down to earth. Don't blame the universities. This is the natural and inevitable outcome of easy money.

    Jim June 26, 2015 at 10:54 am

    Yes, college education in the US is a classic example of the effects of subsidies. Eliminate the subsidies and the whole education bubble would rapidly implode.

    washunate June 26, 2015 at 11:03 am

    I'm very curious if anyone will disagree with that assessment.

    An obvious commonality across higher education, healthcare, housing, criminal justice, and national security is that we spend huge quantities of public money yet hold the workers receiving that money to extremely low standards of accountability for what they do with it.

    tegnost June 26, 2015 at 11:38 am

    Correct, it's not the universities, it's the culture that contains the universities, but the universities are training grounds for the culture so it is the universities just not only the universities Been remembering the song from my college days "my futures so bright i gotta wear shades". getting rich was the end in itself, and people who didn't make it didn't deserve anything but a whole lot of student debt,creating perverse incentives. And now we all know what the A in type a stands for at least among those who self identify as such, so yes it is the universities

    Chris in Paris June 26, 2015 at 12:07 pm

    I don't understand why the ability to accept guaranteed loan money doesn't come with an obligation by the school to cap tuition at a certain percentage over maximum loan amount? Would that be so hard to institute?

    Ben June 26, 2015 at 1:53 pm

    Student loans are debt issuance. Western states are desperate to issue debt as it's fungible with money and marked down as growth.

    Borrow 120K over 3 years and it all gets paid into university coffers and reappears as "profit" now. Let some other president deal with low disposable income due to loan repayments. It's in a different electoral cycle – perfect.

    jrd2 June 26, 2015 at 11