Softpanorama

May the source be with you, but remember the KISS principle ;-)
Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Free vs Fair market

News Key Myths of Neoliberalism Neoliberalism Bookshelf Recommended Links The Great Transformation Deception as an art form Mayberry Machiavellians Neoclassical Pseudo Theories and Crooked and Bought Economists as Fifth Column of Financial Oligarchy
Small government smoke screen Universal quantification  "Starving the beast" bait and switch Invisible Hand Hypothesys: The Theory of Self-regulation of the Markets Shareholder value scam Neoliberal rationality Neoliberalism as secular religion, "idolatry of money" Over-consumption of Luxury Goods as Market Failure
Financization of everything in sight Machiavellism Deification of market Globalization of Financial Flows Pope Francis on danger of neoliberalism Neoliberalism credibility trap Greenspan humor Etc

The books to read on the subject are

23 Things They Don't Tell You About Capitalism - YouTube

 

The global economy lies in tatters. While fiscal and monetary stimulus of unprecedented scale has prevented the financial melt- down of 2008 from turning into a total collapse of the global economy, the 2008 global crash still remains the second-largest economic crisis in history, after the Great Depression. At the time of writing (March 2010), even as some people declare the end of the recession, a sustained recovery is by no means certain. In the absence of financial reforms, loose monetary and fiscal policies have led to new financial bubbles, while the real economy is starved of money. If these bubbles burst, the global economy could fall into another (‘double-dip’) recession. Even if the recov- ery is sustained, the aftermath of the crisis will be felt for years. It may be several years before the corporate and the household sectors rebuild their balance sheets. The huge budget deficits created by the crisis will force governments to reduce public investments and welfare entitlements significantly, negatively affecting economic growth, poverty and social stability - possibly for decades. Some of those who lost their jobs and houses during the crisis may never join the economic mainstream again. These are frightening prospects.

This catastrophe has ultimately been created by the tree-market ideology that has ruled the world since the 1980s. We have been told that, if left alone, markets will produce the most efficient and just outcome. Efficient, because individuals know best how to utilize the resources they command, and just, because the competitive market process ensures that individuals are rewarded according to their productivity. We have been told that business should be given maximum freedom. Firms, being closest to the market, know what is best for their businesses. If we let them do what they want, wealth creation will be maximized, benefiting the rest of society as well. We were told that government intervention in the markets would only reduce their efficiency.

Government intervention is often designed to limit the very scope of wealth creation for misguided egalitarian reasons. Even when it is not, governments cannot improve on market outcomes, as they have neither the necessary information nor the incentives to make good business decisions. In sum, we were told to put all our trust in the market and get out of its way.

Following this advice, most countries have introduced free- market policies over the last three decades — privatization of state-owned industrial and financial firms, deregulation of finance and industry, liberalization of international trade and investment, and reduction in income taxes and welfare payments. These policies, their advocates admitted, may temporarily create some problems, such as rising inequality, but ultimately they will make everyone better off by creating a more dynamic and wealthier society. The rising tide lifts all boats together, was the metaphor.

The result of these policies has been the polar opposite of what was promised. Forget for a moment the financial meltdown, which will scar the world for decades to come. Prior to that, and unbeknown to most people, free-market policies had resulted in slower growth, rising inequality and heightened instability in most countries. In many rich countries, these problems were masked by huge credit expansion; thus the fact that US wages had remained stagnant and working hours increased since the 1970s was conveniently fogged over by the heady brew of credit-fuelled consumer boom. The problems were bad enough in the rich countries, but they were even more serious for the developing world. Living standards in Sub-Saharan Africa have stagnated for the last three decades, while Latin America lias seen its per capita growth rate fall by two-thirds during the period. There were some devel- oping countries that grew fast (although with rapidly rising inequality) during this period, such as China and India, but these are precisely the countries that, while partially liberalizing, have refused to introduce full-blown ffcc-markct policies.

Thus, what we were told by the free-marketeers — or, as they arc often called, neo-liberal economists - was at best only partially true and at worst plain wrong. As I will show throughout this book, the ‘truths’ peddled by free-market ideologues are based on lazy assumptions and blinkered visions, if not necessarily self- serving notions. My aim in this book is to tell you some essential truths about capitalism that the free-marketeers won’t. This book is not an anti-capitalist manifesto. Being critical of free-market ideology is not the same as being against capitalism. Despite its problems and limitations, I believe that capitalism is still the best economic system that humanity has invented. My criticism is of a particular version of capitalism that has domi- nated the world in the last three decades, that is, frce-markct capitalism. This is not the only way to run capitalism, and certainly not the best, as the record of the last three decades shows. The book shows that there are ways in which capitalism should, and can, be made better.

Even though the 2008 crisis has made us seriously question the way in which our economies are run, most of us do not pursue such questions because we think that they are ones for the experts. Indeed they are — at one level. The precise answers do require knowledge on many technical issues, many of them so compli- cated that the experts themselves disagree on them. It is then natural that most of us simply do not have the time or the neces- sary training to learn all the technical details before we can pronounce our judgements on the effectiveness of TARP (Trou- bled Asset Relief Program), the necessity of G20, the wisdom of bank nationalization or the appropriate levels of executive salaries. And when it comes to things like poverty in Africa, the workings of the World Trade Organization, or the capital adequacy rules of the Bank for International Settlements, most of us are frankly lost.

However, it is not necessary for us to understand all the tech- nical details in order to understand what is going on in the world and exercise what I call an ‘active economic citizenship’ to demand the right courses of action from those in decision-making positions. After all, we make judgements about all sorts of other issues despite lacking technical expertise. We don’t need to be expert epidemiologists in order to know that there should be hygiene standards in food factories, butchers and restaurants. Making judgements about economics is no different: once you know the key principles and basic facts, you can make some robust judgements without knowing the technical details. The only prerequisite is that you are willing to remove those rose- tinted glasses that neo-liberal ideologies like you to wear every day. The glasses make the world look simple and pretty. But lift them off and stare at the clear harsh light of reality.

Unce you know that there is really no such thing as a tree market, you won’t be deceived by people who denounce a regula- tion on the grounds that it makes the market ‘unfree’ (see Thing i). When you learn that large and active governments can promote, rather than dampen, economic dynamism, you will see that the widespread distrust of government is unwarranted (see Things 12 and 21). Knowing that we do not live in a post-industrial knowl- edge economy will make you question the wisdom of neglecting, or even implicitly welcoming, industrial decline of a country, as some governments have done (see Things 9 and 17). Once you real- ize that trickle-down economics does not work, you will see the excessive tax cuts for the rich for what they are — a simple upward redistribution of income, rather than a way to make all of us richer, as we were told (see Things ij and 20).

Thing I : There is no such thing as a free market

What they tell you Markets need to be free.

When the government interferes to dictate what market participants can or cannot do, resources cannot flow to their most efficient use. If people cannot do the things that they find most profitable, they lose the incentive to invest and innovate. Thus, if the government puts a cap on house rents, landlords lose the incentive to maintain their properties or build new ones. Or, if the government restricts the kinds of finan- cial products that can be sold, two contracting parties that may both have benefited from innovative transactions that fulfil their idiosyncratic needs cannot reap the potential gains of free contract. People must be left ‘free to choose’, as the title of free-market visionary Milton Friedman’s famous book goes.

What they don’t tell you: The free market doesn’t exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restric- tions that we fail to see them. How ‘free’ a market is cannot be objectively defined. It is a political definition. The usual claim by free-market economists that they are trying to defend the market from politically motivated interference by the government is false. Government is always involved and those free-marketeers are as politically motivated as anyone. Overcoming the myth that there is such a thing as an objectively defined ‘free market’ is the first step towards understanding capitalism.

Labour ought to be free

In 1819 new legislation to regulate child labour, the Cotton Factories Regulation Act, was tabled in the British Parliament. The proposed regulation was incredibly ‘light touch’ by modern standards. It would ban the employment of young children - that is, those under the age of nine. Older children (aged between ten and sixteen) would still be allowed to work, but with their work- ing hours restricted to twelve per day (yes, they were really going soft on those kids). The new rules applied only to cotton factories, which were recognized to be exceptionally hazardous to work- ers’ health.

The proposal caused huge controversy. Opponents saw it as undermining the sanctity of freedom of contract and thus destroying the very foundation of the free market. In debating this legislation, some members of the Flouse of Lords objected to it on the grounds that ‘labour ought to be free’. Their argu- ment said: the children want (and need) to work, and the factory owners want to employ them; what is the problem? Today, even the most ardent free-market proponents in Brit- ain or other rich countries would not think of bringing child labour back as part of the market liberalization package that they so want. However, until the late nineteenth or the early twenti- eth century, when the first serious child labour regulations were introduced in Europe and North America, many respectable people judged child labour regulation to be against the principles of the free market.

Thus seen, the ‘freedom’ of a market is, like beauty, in the eyes of the beholder. If you believe that the right of children not to have to work is more important than the right of factory owners to be able to hire whoever they find most profitable, you will not see a ban on child labour as an infringement on the freedom of the labour market. If you believe the opposite, you will see an ‘unfree’ market, shackled by a misguided government regulation. We don’t have to go back two centuries to see regulations we take for granted (and accept as the ‘ambient noise’ within the free market) that were seriously challenged as undermining the free market, when first introduced. When environmental regulations (e.g., regulations on car and factory emissions) appeared a few decades ago, they were opposed by many as seri- ous infringements on our freedom to choose. Their opponents asked: if people want to drive in more polluting cars or if facto- ries find more polluting production methods more profitable, why should the government prevent them from making such choices? Today, most people accept these regulations as ‘natural’. They believe that actions that harm others, however unintention- ally (such as pollution), need to be restricted. They also understand that it is sensible to make careful use of our energy resources, when many of them are non-renewable. They may believe that reducing human impact on climate change makes sense too. If the same market can be perceived to have varying degrees of freedom by different people, there is really no objective way to define how free that market is. In other words, the free market is an illusion. If some markets look free, it is only because we so totally accept the regulations that are propping them up that they become invisible.

Piano wires and leungfu masters

Like many people, as a child I was fascinated by all those gravity-defying kungfu masters in Hong Kong movies. Like many kids, I suspect, I was bitterly disappointed when I learned that those masters were actually hanging on piano wires. The free market is a bit like that. We accept the legitimacy of certain regulations so totally that we don’t see them. More carefully examined, markets are revealed to be propped up by rules — and many of them.

To begin with, there is a huge range of restrictions on what can be traded; and not just bans on ‘obvious’ tilings such as narcotic drugs or human organs. Electoral votes, government jobs and legal decisions are not for sale, at least openly, in modern economies, although they were in most countries in the past. University places may not usually be sold, although in some nations money can buy them — either through (illegally) paying the selectors or (legally) donating money to the university. Many countries ban trading in firearms or alcohol. Usually medicines have to be explicitly licensed by the government, upon the proof of their safety, before they can be marketed. All these regulations are potentially controversial - just as the ban on selling human beings (the slave trade) was one and a half centuries ago.

There are also restrictions on who can participate in markets. Child labour regulation now bans the entry of children into the labour market. Licences are required for professions that have significant impacts on human life, such as medical doctors or lawyers (which may sometimes be issued by professional associa- tions rather than by the government). Many countries allow only companies with more than a certain amount of capital to set up banks. Even the stock market, whose under-regulation has been a cause of the 2008 global recession, has regulations on who can trade. You can’t just turn up in the New York Stock Exchange (NYSE) with a bag of shares and sell them. Companies must fulfil listing requirements, meeting stringent auditing standards over a certain number of years, before they can offer their shares for trading. Trading of shares is only conducted by licensed brokers and traders.

Conditions of trade are specified too. One of the things that surprised me when I first moved to Britain in the mid 1980s was that one could demand a full refund for a product one didn’t like, even if it wasn’t faulty. At the time, you just couldn’t do that in Korea, except in the most exclusive department stores. In Britain, the consumer’s right to change her mind was considered more important than the right of the seller to avoid the cost involved in returning unwanted (yet functional) products to the manufac- turer. There are many other rules regulating various aspects of the exchange process: product liability, failure in delivery, loan default, and so on. In many countries, there are also necessary permissions for the location of sales outlets - such as restrictions on street-vending or zoning laws that ban commercial activities in residential areas.

Then there are price regulations. I am not talking here just about those highly visible phenomena such as rent controls or minimum wages that free-market economists love to hate. Wages in rich countries are determined more by immigration control than anything else, including any minimum wage legis- lation. How is the immigration maximum determined? Not by the ‘free’ labour market, which, if left alone, will end up replac- ing 80—90 per cent of native workers with cheaper, and often more productive, immigrants. Immigration is largely settled by politics. So, if you have any residual doubt about the massive role that the government plays in the economy’s free market, then pause to reflect that all our wages are, at root, politically deter- mined (see Thing 3).

Following the 2008 financial crisis, the prices of loans (if you can get one or if you already have a variable rate loan) have become a lot lower in many countries thanks to the continuous slashing of interest rates. Was that because suddenly people didn’t want loans and the banks needed to lower their prices to shift them? No, it was the result of political decisions to boost demand by cutting interest rates. Even in normal times, interest rates are set in most countries by the central bank, which means that political considerations creep in. In other words, interest rates are also determined by politics.

If wages and interest rates are (to a significant extent) politically determined, then all the other prices are politically determined, as they affect all other prices.

Is free trade fair?

We see a regulation when we don’t endorse the moral values behind it. The nineteenth-century high-tariff restriction on free trade by the U S federal government outraged slave-owners, who at the same time saw nothing wrong with trading people in a free market. To those who believed that people can be owned, banning trade in slaves was objectionable in the same wav as restricting trade in manufactured goods. Korean shopkeepers of the 1980s would probably have thought the requirement for ‘unconditional return’ to be an unfairly burdensome government regulation restricting market freedom.

This clash of values also lies behind the contemporary debate on free trade vs. fair trade. Many Americans believe that China is engaged in international trade that may be free but is not fair. In their view, by paying workers unacceptably low wages and making them work in inhumane conditions, China competes unfairly. The Chinese, in turn, can riposte that it is unacceptable that rich countries, while advocating free trade, try to impose artificial barriers to China’s exports by attempting to restrict the import of ‘sweatshop’ products. They find it unjust to be prevented from exploiting the only resource they have in greatest abundance — cheap labour.

 


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Dec 04, 2017] The neoliberal framework in antitrust is based on pecifically its pegging competition to consumer welfare, defined as short-term price effects and as such s unequipped to capture the architecture of market power in the modern economy

Notable quotes:
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Feb 12, 2017 | economistsview.typepad.com
anne : February 11, 2017 at 11:43 AM , 2017 at 11:43 AM
http://www.yalelawjournal.org/article/amazons-antitrust-paradox

January, 2017

Amazon's Antitrust Paradox
By Lina M. Khan

Abstract

Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust scrutiny.

This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.

Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit information collected on companies using its services to undermine them as competitors.

This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties.

[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 07, 2017] Upward mobility in the United States is largely an illusion, and the living standard for the middle class has hardly moved in decades; it has declined, if anything, relative to progress in the 1960's.

Notable quotes:
"... Seventy per cent of people born into the bottom quintile of income distribution never make it into the middle class, and fewer than ten per cent get into the top quintile. Forty per cent are still poor as adults. ..."
Nov 07, 2017 | marknesop.wordpress.com

marknesop , November 7, 2017 at 6:39 pm

Upward mobility in the United States is largely an illusion , and the living standard for the middle class has hardly moved in decades; it has declined, if anything, relative to progress in the 1960's.

Seventy per cent of people born into the bottom quintile of income distribution never make it into the middle class, and fewer than ten per cent get into the top quintile. Forty per cent are still poor as adults.

You are correct, though, that economics is immensely complicated and turns on almost-infinite variables. People who don't like the way things are turning out often just re-define the metrics, or pick a different set.

[Oct 17, 2017] Agents of Neoliberal Globalization Corporate Networks, State Structures, and Trade Policy by Michael C. Dreiling, Derek Y. Darve

Notable quotes:
"... Amid the global financial crisis of 2008, a new chapter in the history of neoliberal globalization emerged. Simple assumptions about markets as pure and neutral arbiters of economic transactions faced new challenges from beyond the pages of economic history and sociology. ..."
"... The apparent triumph of global capitalism came into temporary question, and with it, the reigning economic paradigm of neoliberalism. ..."
"... The specter of the Occupy movement in 1011, with its sweeping critique of corporate power, took root in ways not seen in the United States since the 1999 World Trade Organization protests in Seattle. ..."
"... In response, proponents of neoliberalism heightened their demands for a market-governed society, further tax cuts, deregulation, trade liberalization, and more. From the GOP and Tea Party's politics of austerity arose a fresh defense of free market politics in the United States, as well as a rcinvigorated denial of class as a structuring force in US society. These social tensions persist even as neoliberalism, as an ideology and a model for institutional restructuring, exhibits remarkable resilience. ..."
"... From the early 1980s onward, it provided the basic policy framework for "structural adjustment" in the global south, for "rescuing" the welfare state in the global north, and as a vision for a global economy unbound from centrally planned markets, dying industries, or rent-seeking interest groups. ..."
"... One cornerstone of this paradigm that remains mostly unchallenged among political elites is the principal of "free trade." Broadly speaking, neoliberalism and free trade have provided the ideological framework for most reciprocal trade agreements since the early 1980s, when President Reagan initiated a wave of new trade policies in February 1982 during a speech to the Organization of American States (OAS). ..."
"... This formulaic discourse of free markets, free trade, and personal liberty - hallmark features of Reagan's popular rhetoric - also captured what would later be acknowledged as core principles of an incipient neoliberal ideology that promised a restoration of US economic hegemony (Mudge 2008). Domestically and internationally, neoliberal trade proposals were generally presented in tandem with calls for privatization, deregulation, and a reduction in the size of government spending as a share of GDP. ..."
"... Was it the fever pitch of a new' policy ideology acted out by government partisans and policy makers committed to its mantra? Or did the very economic actors benefitting from market liberalization act politically and concertedly to unleash it? And if so, did this coordinated corporate political campaign arise from a reorganized and newly emboldened economic class, or simply through ad hoc alignments created by shared organizational interests? Specifically, can we detect class political signatures on the wave of free trade policies, like the CBI, the North American Free Trade Agreement (NAFTA), or the World Trade Organization (WTO), that erected the institutional framework of neoliberal globalization? 6 ..."
"... We believe that our approach, rooted in the "elite studies" and "power structure" research traditions, expands (and, in some areas, corrects) conventional explanations of neoliberal trade and globalization that emphasize market, institutional, and ideological factors, while neglecting to incorporate a concept of class political action ..."
Oct 17, 2017 | www.amazon.com

Amid the global financial crisis of 2008, a new chapter in the history of neoliberal globalization emerged. Simple assumptions about markets as pure and neutral arbiters of economic transactions faced new challenges from beyond the pages of economic history and sociology.

The apparent triumph of global capitalism came into temporary question, and with it, the reigning economic paradigm of neoliberalism. From the left wing of US politics, a newly invigorated discourse of class and income inequality began to challenge corporate power with calls for greater accountability on Wall Street. The specter of the Occupy movement in 1011, with its sweeping critique of corporate power, took root in ways not seen in the United States since the 1999 World Trade Organization protests in Seattle.

In response, proponents of neoliberalism heightened their demands for a market-governed society, further tax cuts, deregulation, trade liberalization, and more. From the GOP and Tea Party's politics of austerity arose a fresh defense of free market politics in the United States, as well as a rcinvigorated denial of class as a structuring force in US society. These social tensions persist even as neoliberalism, as an ideology and a model for institutional restructuring, exhibits remarkable resilience.

Neoliberalism - which promises to efficiently generate wealth while disciplining states and bureaucracies with market forces - took shape over the course of decades. As a kind of governing philosophy, it has been offered, variously, as a remedy for economic stagnation, bureaucratic bloat, corruption, inflation, and more (Bourdieu 1999; Mirowski and Plehwe 2009; Mudge 2008). From the early 1980s onward, it provided the basic policy framework for "structural adjustment" in the global south, for "rescuing" the welfare state in the global north, and as a vision for a global economy unbound from centrally planned markets, dying industries, or rent-seeking interest groups.

One cornerstone of this paradigm that remains mostly unchallenged among political elites is the principal of "free trade." Broadly speaking, neoliberalism and free trade have provided the ideological framework for most reciprocal trade agreements since the early 1980s, when President Reagan initiated a wave of new trade policies in February 1982 during a speech to the Organization of American States (OAS). There, Reagan unilaterally called for a Caribbean Basin Initiative (CBI) that would "make use of the magic of the marketplace of the Americas, to earn their own way toward self-sustaining growth" (quoted in Polanyi-Levitt 1985: 232)/ This formulaic discourse of free markets, free trade, and personal liberty - hallmark features of Reagan's popular rhetoric - also captured what would later be acknowledged as core principles of an incipient neoliberal ideology that promised a restoration of US economic hegemony (Mudge 2008). Domestically and internationally, neoliberal trade proposals were generally presented in tandem with calls for privatization, deregulation, and a reduction in the size of government spending as a share of GDP. 5

Although a large and varied group of economists, policy wonks, and government leaders supported the general principles of neoliberal globalization, the "market fever" of the 1980s did not spread simply because certain individuals espoused free trade and domestic deregulation. The fact that many of these noncorporate actors assume a central role in many popular and academic accounts of this era does not reduce the many empirical problems with this view.

In particular, the problem with this "triumphant" vision of neoliberal history is the manner in which the very engines of capital behind the market mania - globalizing corporations appear as liberated historical agents acting out their market freedoms, not as class political actors foisting new institutional realities on the world. We contest this prevailing view and instead ask who liberated, or in Blyth's (2001) terminology, "disembedded," these markets from national social and political institutions?

Was it the fever pitch of a new' policy ideology acted out by government partisans and policy makers committed to its mantra? Or did the very economic actors benefitting from market liberalization act politically and concertedly to unleash it? And if so, did this coordinated corporate political campaign arise from a reorganized and newly emboldened economic class, or simply through ad hoc alignments created by shared organizational interests? Specifically, can we detect class political signatures on the wave of free trade policies, like the CBI, the North American Free Trade Agreement (NAFTA), or the World Trade Organization (WTO), that erected the institutional framework of neoliberal globalization? 6

The answer to these questions and, in particular, the role of class agency within these macroeconomic shifts, is not simply a question of whether one likes Karl Marx or Adam Smith. Notwithstanding the recent tendency to equate the mention of class with "class warfare," it is our contention that removing class from accounts of recent economic history creates, at best, a narrow and distorted perspective on this important era. The primary purpose of this book, then, is to introduce and empirically validate a concept of class agency that deepens our understanding of both the trade policy-making apparatus as well as the neoliberal globalization "project" more generally.

We believe that our approach, rooted in the "elite studies" and "power structure" research traditions, expands (and, in some areas, corrects) conventional explanations of neoliberal trade and globalization that emphasize market, institutional, and ideological factors, while neglecting to incorporate a concept of class political action .

Our general line of argument historicizes US trade policy and neoliberal globalization, highlighting the active and at times contradictory processes that shape the state and class relationships responsible for propelling institutions, like the WTO, into existence. Following McMichael (2001: 207), we concur that globalization is best understood as a "historical project rather than a culminating process." Treating neoliberal trade policies as part of a much larger historical project - made and remade by collective actors - offers a more realistic and empirically grounded framework for exploring the intersection of class and state actors in the political articulation of globalization.

Whereas much of the literature on globalization assigns an important role to the economic activity of multinational corporations, the force of their collective political agency in pressuring states to ratify trade agreements and enact institutional reforms is mostly attributed to narrow sectoral interests, like factor mobility', economies of scale, or various industry-specific characteristics...

[Oct 06, 2017] How Economists Turned Corporations into Predators

Highly recommended!
The idea the a scientist can be a gangster was probably first presented by Sir Arthur Conan Doyle in his famous Sherlock Holmes detective stories. Neoliberalism just made this a reality. Mass production of "scientific gangsters" is an immanent feature of neoliberalism.
Notable quotes:
"... By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense ..."
"... Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control that shows how most large manufacturing companies were initially run by engineers, then sales people, then finance people (as corporations came to be seen as bundles of assets as opposed to businesses). I think this transformation paralleled the rise of neoclassical economics. So, not so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's of manufacturing firms were still disproportionately engineers. ..."
"... a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile ..."
"... That means transforming business education, including the replacement of agency theory with innovation theory ..."
"... since gigantism is the norm, rather than family run farms in a mostly agrarian economy such failures are catastrophic. The linkage between these elephants tends to create systemic risk. Previously, failure was small and isolated. ..."
"... Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons, Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as an entity, many starved, but the mopes there at least still knew how to raise up edible crops and live on "less" and maybe do better collective response to that sharp peak on the entropy curve. Wonder how things might play out exceptionally, here in the Empire? ..."
"... It should be noted that Michael Jensen of HBS, one of the originators of the `maximize shareholder value' of corporate governance, is on some short lists for this year's not-exactly-the-Nobel Prize in Economics. ..."
Oct 06, 2017 | www.nakedcapitalism.com

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

The Idea That Businesses Exist Solely to Enrich Shareholders Is Harmful Nonsense

In a new INET paper featured in the Financial Times , economist William Lazonick lays out a theory about how corporations can work for everyone – not just a few executives and Wall Streeters. He challenges a set of controversial ideas that became gospel in business schools and the mainstream media starting in the 1980s. He sat down with INET's Lynn Parramore to discuss.

Lynn Parramore: Since the 1980s, business schools have touted "agency theory," a controversial set of ideas meant to explain how corporations best operate. Proponents say that you run a business with the goal of channeling money to shareholders instead of, say, creating great products or making any efforts at socially responsible actions such as taking account of climate change. Many now take this view as gospel, even though no less a business titan than Jack Welch, former CEO of GE, called the notion that a company should be run to maximize shareholder value "the dumbest idea in the world." Why did Welch say that?

William Lazonick: Welch made that statement in a 2009 interview , just ahead of the news that GE had lost its S&P Triple-A rating in the midst of the financial crisis. He explained that, "shareholder value is a result, not a strategy" and that a company's "main constituencies are your employees, your customers and your products." During his tenure as GE CEO from 1981 to 2001, Welch had an obsession with increasing the company's stock price and hitting quarterly earnings-per-share targets, but he also understood that revenues come when your company generates innovative products. He knew that the employees' skills and efforts enable the company to develop those products and sell them.

If a publicly-listed corporation succeeds in creating innovative goods or services, then shareholders stand to gain from dividend payments if they hold shares or if they sell at a higher price. But where does the company's value actually come from? It comes from employees who use their collective and cumulative learning to satisfy customers with great products. It follows that these employees are the ones who should be rewarded when the business is a success. We've become blinded to this simple, obvious logic.

LP: What have these academic theorists missed about how companies really operate and perform? How have their views impacted our economy and society?

WL: As I show in my new INET paper " Innovative Enterprise Solves the Agency Problem ," agency theorists don't have a theory of innovative enterprise. That's strange, since they are talking about how companies succeed.

They believe that to be efficient, business corporations should be run to "maximize shareholder value." But as I have argued in another recent INET paper , public shareholders at a company like GE are not investors in the company's productive capabilities.

LP: Wait, as a stockholder I'm not an investor in the company's capabilities?

WL: When you buy shares of a stock, you are not creating value for the company -- you're just a saver who buys shares outstanding on the stock market for the sake of a yield on your financial portfolio. Public shareholders are value extractors , not value creators.

By touting public shareholders as a corporation's value creators, agency theorists lay the groundwork for some very harmful activities. They legitimize "hedge fund activists," for example. These are aggressive corporate predators who buy shares of a company on the stock market and then use the power bestowed upon them by the ill-conceived U.S. proxy voting system, endorsed by the Securities and Exchange Commission (SEC), to demand that the corporation inflate profits by cutting costs. That often means mass layoffs and depressed incomes for anybody who remains. In an industry like pharmaceuticals , the activists also press for extortionate product price increases. The higher profits tend to boost stock prices for the activists and other shareholders if they sell their shares on the market.

LP: So the hedge fund activists are extracting value from a corporation instead of creating it, and yet they are the ones who get enriched.

WL: Right. Agency theory aids and abets this value extraction by advocating, in the name of "maximizing shareholder value," massive distributions to shareholders in the form of dividends for holding shares as well as stock buybacks that you hear about, which give manipulative boosts to stock prices. Activists get rich when they sell the shares. The people who created the value -- the employees -- often get poorer.

###p"downsize-and-distribute" -- something that corporations have been doing since the 1980s, which has resulted in extreme concentration of income among the richest households and the erosion of middle-class employment opportunities.

LP: You've called stock buybacks -- what happens when a company buys back its own shares from the marketplace, often to manipulate the stock price upwards -- the "legalized looting of the U.S. business corporation." What's the problem with this practice?

WL: If you buy shares in Apple, for example, you can get a dividend for holding shares and, possibly, a capital gain when you sell the shares. Since 2012, when Apple made its first dividend payment since 1996, the company has shelled out $57.4 billion as dividends, equivalent to over 22 percent of net income. That's fine. But the company has also spent $157.9 billion on stock buybacks, equal to 62 percent of net income.

Yet the only time in its history that Apple ever raised funds on the public stock market was in 1980, when it collected $97 million in its initial public offering. How can a corporation return capital to parties that never supplied it with capital? It's a very misleading concept.

The vast majority of people who hold Apple's publicly-listed shares have simply bought outstanding shares on the stock market. They have contributed nothing to Apple's value-creating capabilities. That includes veteran corporate raider Carl Icahn, who raked in $2 billion by holding $3.6 billion in Apple shares for about 32 months, while using his influence to encourage Apple to do $80.3 billion in buybacks in 2014-2015, the largest repurchases ever. Over this period, Apple, the most cash-rich company in history, increased its debt by $47.6 billion to do buybacks so that it would not have to repatriate its offshore profits, sheltered from U.S. corporate taxes.

There are many ways in which the company could have returned its profits to employees and taxpayers -- the real value creators -- that are consistent with an innovative business model. Instead, in doing massive buybacks, Apple's board (which includes former Vice President Al Gore) has endorsed legalized looting. The SEC bears a lot of blame. It's supposed to protect investors and make sure financial markets are free of manipulation. But back in 1982, the SEC bought into agency theory under Reagan and came up with a rule that gives corporate executives a "safe harbor" against charges of stock-price manipulation when they do billions of dollars of buybacks for the sole purpose of manipulating their company's stock price.

LP: But don't shareholders deserve some of the profits as part owners of the corporation?

WL: Let's say you buy stock in General Motors. You are just buying a share that is outstanding on the market. You are contributing nothing to the company. And you will only buy the shares because the stock market is highly liquid, enabling you to easily sell some or all of the shares at any moment that you so choose.

In contrast, people who work for General Motors supply skill and effort to generate the company's innovative products. They are making productive contributions with expectations that, if the innovative strategy is successful, they will share in the gains -- a bigger paycheck, employment security, a promotion. In providing their labor services, these employees are the real value creators whose economic futures are at risk.

LP: This is really different from what a lot of us have been taught to believe. An employee gets a paycheck for showing up at work -- there's your reward. When we take a job, we probably don't expect management to see us as risk-takers entitled to share in the profits unless we're pretty high up.

WL: If you work for a company, even if its innovative strategy is a big success, you run a big risk because under the current regime of "maximizing shareholder value" a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile. And they are not the only predators you have to deal with. Incentivized with huge amounts of stock-based pay, senior corporate executives will, and often do, extract value from the company for their own personal gain -- at your expense. As Professor Jang-Sup Shin and I argue in a forthcoming book, senior executives often become value-extracting insiders. And they open the corporate coffers to hedge fund activists, the value-extracting outsiders. Large institutional investors can use their proxy votes to support corporate raids, acting as value-extracting enablers.

You put in your ideas, knowledge, time, and effort to make the company a huge success, and still you may get laid off or find your paycheck shrinking. The losers are not only the mass of corporate employees -- if you're a taxpayer, your money provides the business corporation with physical infrastructure, like roads and bridges, and human knowledge, like scientific discoveries, that it needs to innovate and profit. Senior corporate executives are constantly complaining that they need lower corporate taxes in order to compete, when what they really want is more cash to distribute to shareholders and boost stock prices. In that system, they win but the rest of us lose .

LP: Some academics say that hedge fund activism is great because it makes a company run better and produce higher profits. Others say, "No, Wall Streeters shouldn't have more say than executives who know better how to run the company." You say that both of these camps have got it wrong. How so?

WL: A company has to be run by executive insiders, and in order to produce innovation these executives have got to do three things:

First you need a resource-allocation strategy that, in the face of uncertainty, seeks to generate high-quality, low-cost products. Second, you need to implement that strategy through training, retaining, motivating, and rewarding employees, upon whom the development and utilization of the organization's productive capabilities depend. Third, you have to mobilize and leverage the company's cash flow to support the innovative strategy. But under the sway of the "maximizing shareholder value" idea, many senior corporate executives have been unwilling, and often unable, to perform these value-creating functions. Agency theorists have got it so backwards that they actually celebrate the virtues of " the value extracting CEO ." How strange is that?

Massive stock buybacks is where the incentives of corporate executives who extract value align with the interests of hedge fund activists who also want to suck value from a corporation. When they promote this kind of alliance, agency theorists have in effect served as academic agents of activist aggression. Lacking a theory of the value-creating firm, or what I call a "theory of innovative enterprise," agency theorists cannot imagine what an executive who creates value actually does. They don't see that it's crucial to align executives' interests with the value-creating investment requirements of the organizations over which they exercise strategic control. This intellectual deficit is not unique to agency theorists; it is inherent in their training in neoclassical economics .

LP: So if shareholders and executives are too often just looting companies to enrich themselves – "value extraction," as you put it – and not caring about long-term success, who is in a better position to decide how to run them, where to allocate resources and so on?

WL: We need to redesign corporate-governance institutions to promote the interests of American households as workers and taxpayers. Because of technological, market, or competitive uncertainties, workers take the risk that the application of their skills and the expenditure of their efforts will be in vain. In financing investments in infrastructure and knowledge, taxpayers make productive capabilities available to business enterprises, but with no guaranteed return on those investments.

These stakeholders need to have representation on corporate boards of directors. Predators, including self-serving corporate executives and greed-driven shareholder activists, should certainly not have representation on corporate boards.

LP: Sounds like we've lost sight of what a business needs to do to be successful in the long run, and it's costing everybody except a handful of senior executives, hedge fund managers, and Wall Street bankers. How would your "innovation theory" help companies run better and make for a healthier economy and society?

WL: Major corporations are key to the operation and performance of the economy. So we need a revolution in corporate governance to get us back on track to stable and equitable economic growth. Besides changing board representation, I would change the incentives for top executives so that they are rewarded for allocating corporate resources to value creation. Senior executives should gain along with the rest of the organization when the corporation is successful in generating competitive products while sharing the gains with workers and taxpayers.

Innovation theory calls for changing the mindsets and skill sets of senior executives. That means transforming business education, including the replacement of agency theory with innovation theory. That also means changing the career paths through which corporate personnel can rise to positions of strategic control, so that leaders who create value get rewarded and those who extract it are disfavored. At the institutional level, it would be great to see the SEC, as the regulator of financial markets, take a giant step in supporting value creation by banning stock buybacks whose purpose it is to manipulate stock prices.

To get from here to there, we have to replace nonsense with common sense in our understanding of how business enterprises operate and perform.

Enquiring Mind , October 6, 2017 at 10:44 am

Owners come first!
That was the slogan of our former board chair. He didn't disclose to the employees that his compensation was influenced mightily by how big the net income was. He did tell the employees that they were well down the hierarchy, after Owners (capital O) and then vendors and then customers. His former employees deserted in droves.

RepubAnon , October 6, 2017 at 12:14 pm

I'd say that maximizing long-term shareholder value is a great idea the problem is, as is so often the case these days, short-term thinking.

Driving away a company's best employees makes that quarter's numbers look better, but destroys long-term value. Same thing for so many other short-term, "I'll be gone, you'll be gone" strategies.

One step to fixing things – change the definition of long-term capital gains from the current 1 year to, say, 5 years. This "one simple trick" would fix everything from the carried interest loophole to the abuses inherent in the current Wall Street gambling mentality.

It won't happen, of course, but it'd be nice.

Tim , October 6, 2017 at 2:21 pm

We can talk about what is best in theory, but reality is just that, shareholders come first.

They control the board and the CEO and the CEO institutes the will of the shareholders down into the business entities, determining the level of reinvestment in the business units and the level of employee compensation. That will continue to be the case until the company goes bankrupt at which point shareholders are entitled to nothing.

I agree with others that Jack Welch is saying what he is saying after the fact. Way too easy to do.

a different chris , October 6, 2017 at 10:47 am

>Welch had an obsession with increasing the company's stock price and hitting quarterly earnings-per-share targets, but he also understood

Yeah so he talks a good game but when he had the reins – one of the most powerful men in the world meekly (ok, that's a hilarious adjective when applied to Jack Welsh) followed the herd. Or more accurately, found out where the herd was heading and got out in front of it. The true sign of modern "leadership".

RepubAnon , October 6, 2017 at 12:20 pm

Folks at GE back in the day nicknamed him "Neutron Jack" – if he visited a site, all the employees disappeared, leaving only the buildings standing

digi_owl , October 6, 2017 at 1:06 pm

Or more accurately, found out where the herd was heading and got out in front of it. The true sign of modern "leadership".

Reminds me of something i have read, supposedly a quite from some politician or other, going to the tune of "i need to find out where the mob is going, so i can lead them there".

Left in Wisconsin , October 6, 2017 at 1:06 pm

Welch's primary business strategy at GE was to exit every product market in which GE's market share was not in the top two in the industry (selling them off or closing them down) and reallocate resources to industries where GE was market dominant, often buying up the competition rather than truly investing in innovation. A truly awful human being.

Synoia , October 6, 2017 at 11:18 am

As I personally have always believed, Employees have more invested in their employers than shareholders. Shareholders can sell quickly and have no loyalty. Employees do not enjoy such a liquid "jobs market."

There also seems to be a turning point in companies, where they change the perception of the customers form a group to be treasured, to a group who are to b exploited – change the relationship so the customers become "marks."

I also believe there should be an almost automatic "break -up" provision for companies who reach a certain market share.

Finally there should be one definition of income, and it should include Wages, Dividends, and Capital Gains.

Vatch , October 6, 2017 at 11:27 am

there should be an almost automatic "break -up" provision for companies who reach a certain market share.

Yes, anti-trust enforcement would be nice. Hypothetical President Sanders might actually do that. Real and hypothetical Presidents Bush, Obama, Romney, B. Clinton, H. Clinton, and Trump have other priorities.

readerOfTeaLeaves , October 6, 2017 at 12:15 pm

Sen Bernie Sanders sees right through the neoclassical fetters, blinders, and bullshit. He recognizes how intellectually and economically stagnant and dangerous it is. He has the most powerful conceptual, articulate grasp of economics that I've seen the past 40 years. He also, IIRC, had MMTer Stephanie Kelton as an advisor, and had her advise the Senate Finance Committee. Also notable: Sen Elizabeth Warren.

The other political operators that you mention are still in thrall to neoclassical assumptions. They mistake 'takers' for 'makers' and are economically bamboozled. And it has worked out well for all of them, on a personal basis, so it is not surprising that they don't see the problems.

Anyone actually trying to build an innovative business, OTOH, has to see through the bamboozlement or else you're out of business pronto.

JTMcPhee , October 6, 2017 at 12:05 pm

Chicken and egg question:

The class of humans that by inclination and opportunity become C-Suite and VC looters and "owners:" did they precede the imprimatur of "economists" with their notions of price, value, and crossing of curves, or did the "economists" do a Martin Luther, nail up a bunch of theses, and preach fire and brimstone to turn the greedheads loose?

And was/is any other outcome for the species and the planet even possible?

Left in Wisconsin , October 6, 2017 at 1:14 pm

Neil Fligstein wrote a good book awhile back called The Transformation of Corporate Control that shows how most large manufacturing companies were initially run by engineers, then sales people, then finance people (as corporations came to be seen as bundles of assets as opposed to businesses). I think this transformation paralleled the rise of neoclassical economics. So, not so much "chicken-and-egg" as "class war." In Germany, at least until recently, I believe CEO's of manufacturing firms were still disproportionately engineers.

Carla , October 6, 2017 at 3:05 pm

"most large manufacturing companies were initially run by engineers, then sales people, then finance people"

The Lincoln Electric Company, which became famous for its "Incentive Management" program of compensating employees, was a client of mine. Over three decades I saw it progress through precisely those stages, and gradually lose every characteristic that had made the company unique.

readerOfTeaLeaves , October 6, 2017 at 12:30 pm

This post was a genuine pleasure to read. Especially:

If you work for a company, even if its innovative strategy is a big success, you run a big risk because under the current regime of "maximizing shareholder value" a group of hedge fund activists can suck the value that you've created right out, driving your company down and making you worse off and the company financially fragile .

And we've had a government by and for hedge fund managers for about the same amount of time that we've had economic woes. One problem is that hedge funders like Romney, who actually don't think about consumer product development, actually don't have to test and deploy products, bring their bean-counter assumptions to business and make a hash of things. I mention Romney specifically, because he presents himself to the world as a paragon of economic wisdom.

Romney has a prestigious business school background. Which makes me want to highlight this:

Innovation theory calls for changing the mindsets and skill sets of senior executives. That means transforming business education, including the replacement of agency theory with innovation theory .

JTMcPhee , October 6, 2017 at 12:59 pm

Just a thought: "innovation theory," like MMT, is maybe just a tool set? "Innovation" includes "autonomous combat devices," and CRSP-R, and nuclear weapons, and the F-35, and fracking, and derivatives, and plastics, and charter schools, stuff and ideas that for some of us constitute "value" are corporations as the category has grown to be, any more likely to "innovate" in the areas of social improvements and possibilities, or stewardship of the planet, or close down the toll stations and all the other rent collection scams and extortions they have "innovated" to date? Or release their chokehold on "policy?"

Says the proponent: "Major corporations are key to the operation and performance of the economy. So we need a revolution in corporate governance to get us back on track to stable and equitable economic growth. Besides changing board representation, I would change the incentives for top executives so they are rewarded for allocating corporate resources to value creation. Senior executives should gain along with the rest of the organization when the corporation is successful in generating competitive products while sharing the gains with workers and taxpayers." There seems to be so much wrong and just more Biz-babble about this, one hardly knows where to start unpacking.

"Major corporations are key?" Really? Monsanto? GM? Bechtel? The Big Banks? And "back on track": When has the political economy, writ small or large, ever been "on track to stability and equitable growth," said "growth' itself seemingly one of the pathologies that's killing us? And who's going to write the entries for the corporate senior executives' dance cards that will measure their "success," in those feel-good categories?

But it's a good conversation piece, and maybe an opening into Something Better, however us inherently mostly self-interested, self-pleasing omnivorous predators might define "better "

Disturbed Voter , October 6, 2017 at 12:36 pm

Badly run companies, naturally extinguish themselves. Unfortunately they take down their customers, owners, vendors and employees in the process. But the government can step in and either save a company that otherwise would die, or act as a crony corruption partner on behalf of a well connected company. Same as it always was.

But since gigantism is the norm, rather than family run farms in a mostly agrarian economy such failures are catastrophic. The linkage between these elephants tends to create systemic risk. Previously, failure was small and isolated.

JTMcPhee , October 6, 2017 at 1:06 pm

Welcome to our wonderful new world of infinite mutual vulnerability! Risk On! Nuclear weapons, Equifax, Googleamazon, NSApanopticon, FIRE, hacking, crapification The Soviet Union vanished as an entity, many starved, but the mopes there at least still knew how to raise up edible crops and live on "less" and maybe do better collective response to that sharp peak on the entropy curve. Wonder how things might play out exceptionally, here in the Empire?

allan , October 6, 2017 at 12:48 pm

It should be noted that Michael Jensen of HBS, one of the originators of the `maximize shareholder value' of corporate governance, is on some short lists for this year's not-exactly-the-Nobel Prize in Economics.

[Sep 25, 2017] Free market as a neoliberal myth, the cornerstone of neoliberalism as a secular religion

Highly recommended!
Notable quotes:
"... Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute for policy in the government sphere. Except very telling except when we're talking about funding the security state. ..."
"... The other is that the real power of markets is that in a real free market (not a Potemkin one) decisions are made often at the point where needs, information, incentives, and economic power come together. But where the large scale decisions the governments have to make, markets fail. Policy though doesn't. But Neoliberals hate policy. ..."
"... Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's. ..."
"... Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion. Somewhat similar to "Immaculate Conception" in Catholicism. ..."
"... In reality market almost by definition is controlled by government, who enforces the rules and punish for the transgressions. ..."
"... Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals talk about "free market, not "fair market". ..."
"... After 2008 few are buying this fairy tale about how markets can operate and can solve society problems independently of political power, and state's instruments of violence (the police and the military). This myths is essentially dead. ..."
"... Friedmanism is this sense a flavor of economic Lysenkoism. Note that Lysenko like Friedman was not a complete charlatan. Some of his ideas were pretty sound and withstood the test of time. But that does not make his less evil. ..."
Jan 06, 2017 | economistsview.typepad.com
anne -> Paul Mathis... , December 31, 2016 at 07:09 PM
Krugman's refusal to endorse fiscal stimulus unless the economy is at zero lower bound. That is not only anti-Keynesian, it plays directly into the hands of the debt fear mongers. (Krugman is also worried about the debt.)

[ Only correct to a degree, economic weakness is recognized. ]

Gibbon1 -> anne... , December 31, 2016 at 10:21 PM
Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute for policy in the government sphere. Except very telling except when we're talking about funding the security state.

The other is that the real power of markets is that in a real free market (not a Potemkin one) decisions are made often at the point where needs, information, incentives, and economic power come together. But where the large scale decisions the governments have to make, markets fail. Policy though doesn't. But Neoliberals hate policy.

AngloSaxon -> Gibbon1... , January 01, 2017 at 06:08 PM
Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's.
likbez -> Gibbon1... , -1
Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion. Somewhat similar to "Immaculate Conception" in Catholicism.

In reality market almost by definition is controlled by government, who enforces the rules and punish for the transgressions.

Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals talk about "free market, not "fair market".

After 2008 few are buying this fairy tale about how markets can operate and can solve society problems independently of political power, and state's instruments of violence (the police and the military). This myths is essentially dead.

But like Adventists did not disappear when the Second Coming of Christ did not occurred in predicted timeframe, neoliberals did not did not disappeared after 2008 either. And neither did neoliberalism, it just entered into zombie, more bloodthirsty stage.

The fact that even the term "neoliberalism" is prohibited in the US MSM also helped. It is king of stealth ideology, unlike say, Marxists, neoliberals do not like to identify themselves as such. The behave more like members of some secret society, free market masons.

Friedmanism is this sense a flavor of economic Lysenkoism. Note that Lysenko like Friedman was not a complete charlatan. Some of his ideas were pretty sound and withstood the test of time. But that does not make his less evil.

And for those who try to embellish this person, I would remind his role in 1973 Chilean coup d'état ( https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat ) and bringing Pinochet to power. His "Chicago boys" played a vital role in the events. This man did has blood on his hands.

http://www.bidstrup.com/economics.htm

Of course, bringing a reign of terror to Chile was not why the CIA had sponsored him. The reason he was there was to reverse the gains of the Allende social democracy and return control of the country's economic and political assets to the oligarchy. Pinochet was convinced, through supporters among the academics in the elite Chilean universities, to try a new series of economic policies, called "neoliberal" by their founders, the economists of the University of Chicago, led by an economist by the name of Milton Friedman, who three years later would go on to win a Nobel Prize in Economics for what he was about to unleash upon Chile.

Friedman and his colleagues were referred to by the Chileans as "the Chicago Boys." The term originally meant the economists from the University of Chicago, but as time went on, as their policies began to disliquidate the middle class and poor, it took on a perjorative meaning. That was because as the reforms were implemented, and began to take hold, the results were not what Friedman and company had been predicting. But what were the reforms?

The reforms were what has come to be called "neoliberalism." To understand what "neoliberal" economics is, one must first understand what "liberal" economics are, and so we'll digress briefly from our look at Chile for a quick

[Aug 21, 2017] If you're Canadian, bend over and grab your ankles.

Aug 21, 2017 | www.moonofalabama.org

spudski | Aug 20, 2017 8:25:35 PM | 13

"After years without result, with days to the deadline, Canada's negotiator, Simon Reisman, who Chrystia Freeland recalls in the fond tones Hillary Clinton uses for Henry Kissinger, walked. Why? Because the U.S. wouldn't agree to a "mechanism" that superceded U.S. law. Ottawa was grim. Without a deal, we'd perish. The U.S. negotiator said: Canada needs a "face-saving gesture." President Reagan told his team to get creative.

They did. They didn't replace the U.S.'s unilateral right to impose costs on Canadian stuff with a neutral process to decide what's fair. They created a process to decide only whether the U.S. was accurately enforcing its own rules. That left everything as it was but called it dispute resolution."

http://rabble.ca/columnists/2017/08/minister-freeland-propagates-neoliberal-myth-free-trades-benefits

https://www.thestar.com/news/canada/2017/08/19/us-signals-trumps-buy-american-agenda-non-negotiable-in-nafta-talks.html

John Gilberts | Aug 20, 2017 9:30:54 PM | 15

Re Spudski - 13 and the NAFTA reneg: Good thing Chrystia Freeland and Justin Trudeau have the very best advising them...

Taking Summers' Advice Defies Logic
http://www.torontosun.com/2015/04/08/taking-summers-advice-defies-logic

[Jul 19, 2017] A 21st-Century Form of Indentured Servitude Has Already Penetrated Deep into the American Heartland

Notable quotes:
"... By Thom Hartmann. a talk-show host and author of over 25 books in print.. Originally published at AlterNet . ..."
"... Yes. I thank Hartmann for pointing out the latest power grabs by our corporate masters. Still, his ignoring Clinton, Obama and the rest just puts him in with all the other political tribalists, who by their tribalism distract from the main problems – and their ultimate solutions. It's a class war, Thom, The Only War That Matters. ..."
"... I can disagree with you that this here republic is a democracy. ..."
"... Fair enough. The United States is no longer a representative democracy (and it was only that way occasionally in the past); it's currently an oligarchic plutocracy. But if we hope to regain any semblance of a representative democracy, we need to actively participate. There are many reasons why we've degenerated into a plutocracy, and one of those reasons is that people don't participate enough. ..."
"... "And anything that would make somebody not want to move here or start a company here is going to slow down our progress." ..."
"... The vast majority of the labor market is shifting gears to function as the servant class to the very rich. It is a painful transition as recent gains in labor rights are lost. ..."
"... The last 70 years was an aberration. It will not return, short of a major uprising. Given the state's security apparatus that prospect is extremely unlikely. ..."
"... And I do not agree with Thom's Indentured servitude meme; he gives no real examples, just generalities. I would submit that a neo-feudal system is the fact on the ground. The difference; a serf has land (and yes, he's attached to it), a house, and a modicum of freedom; as long as he takes care of his lord. ..."
"... All information is managed; and this includes the unemployment figures; pure fiction by the way. An indentured servant has work; 20 million(?) or more Usians have no work, and little hope of finding meaningful employment. ..."
"... The importance of this can not be underestimated; human dignity is at stake; we're a society brought up on the importance of being "gainfully" employed. Our society is being intentionally crushed to make us serfs in a neo-feudal society. ..."
"... 20+ years ago in Athens, GA, there was a local chicken place. Good food if you like that kind of thing. Come to find the employees who fried the chicken and worked the service counter were forbidden by the language of their "contracts" to quit for a dollar an hour more at another local restaurant. The first company didn't actually have the means to take its former employees to court, but they had the "right" to do so. Bill Clinton, neoliberal to his rotten core, was happily the president, feeling our pain. ..."
"... These days, even janitors are being required to sign non-compete clauses. When Krishna Regmi started work as a personal care aide for a Pittsburgh home health agency in 2015, he was given a stack of paperwork to sign. "They just told us, 'It's just a formality, sign here, here, here,' " he said. Regmi didn't think much of it. That is, until he quit his job nine months later and announced his decision to move to a rival agency -- and his ex-employer sued him for violating a noncompete clause Regmi says he didn't know he had signed. The agreement barred Regmi from working as a personal care aide at another home health agency for two years. ..."
"... In California, North Dakota and Oklahoma, the law says the agreements are unenforceable; judges will just throw them out. In other states, statutes and case law create a set of tests that the agreements must pass. In Oregon, for instance, they can only be enforced if workers have two weeks to consider them before taking a job, or if the worker gets a "bona fide advancement" in return, such as a raise. ..."
"... The author fails to point out that H1-B is also indentured servitude. ..."
"... The merging of corporate power with the state is called "fascism." This was described by both Benito Mussolini and FDR's vice-president Henry Wallace. But the term "fascism" isn't mentioned in the article. Importantly, fascists are sworn enemies of communism and socialism, and this is how they can be identified. ..."
"... The US is definitely getting more feudal. ..."
"... It's about bullying and intimidation. Like most bullies, the companies are cowards who would back down if challenged, because it would make little economic sense to sue minimum-wage ex-employees. They're relying on the employees being too cowed to call their bluff, so they choose to stay even if unhappy. ..."
"... Non-compete clauses sound like something that will create a hostile work force; that may not be so good for these companies. Articles like this make me think of "Space Merchants", an amusing science fiction satire on capitalism by Pohl and Kornbluth. ..."
"... Perhaps there are other options in responding to the types of abuse detailed in this post, in addition to the political action Thom Hartmann called for. One such action might be characterized as "Passive NonParticipation" with your brains, craftsmanship and know-how to the extent possible, yet still retain your job. ..."
Jul 19, 2017 | www.nakedcapitalism.com
July 19, 2017 by Lambert Strether By Thom Hartmann. a talk-show host and author of over 25 books in print.. Originally published at AlterNet .

Indentured servitude is back in a big way in the United States, and conservative corporatists want to make sure that labor never, ever again has the power to tell big business how to treat them.

Idaho , for example, recently passed a law that recognizes and rigorously enforces non-compete agreements in employment contracts, which means that if you want to move to a different, more highly paid, or better job, you can instead get wiped out financially by lawsuits and legal costs.

In a way, conservative/corporatists are just completing the circle back to the founding of this country.

Indentured servitude began in a big way in the early 1600s, when the British East India Company was establishing a beachhead in the (newly stolen from the Indians) state of Virginia (named after the "virgin queen" Elizabeth I, who signed the charter of the BEIC creating the first modern corporation in 1601). Jamestown (named after King James, who followed Elizabeth I to the crown) wanted free labor, and the African slave trade wouldn't start to crank up for another decade.

So the company made a deal with impoverished Europeans: Come to work for typically 4-7 years (some were lifetime indentures, although those were less common), legally as the property of the person or company holding your indenture, and we'll pay for your transport across the Atlantic.

It was, at least philosophically, the logical extension of the feudal economic and political system that had ruled Europe for over 1,000 years. The rich have all the rights and own all the property; the serfs are purely exploitable free labor who could be disposed of ( indentured servants , like slaves, were commonly whipped, hanged, imprisoned, or killed when they rebelled or were not sufficiently obedient).

This type of labor system has been the dream of conservative/corporatists, particularly since the "Reagan Revolution" kicked off a major federal war on the right of workers to organize for their own protection from corporate abuse.

Unions represented almost a third of American workers when Reagan came into office (and, since union jobs set local labor standards, for every union job there was typically an identically-compensated non-union job, meaning about two-thirds of America had the benefits and pay associated with union jobs pre-Reagan).

Thanks to Reagan's war on labor, today unions represent about 6 percent of the non-government workforce.

But that wasn't enough for the acolytes of Ayn Rand, Ronald Reagan and Milton Friedman. They didn't just want workers to lose their right to collectively bargain; they wanted employers to functionally own their employees.

Prior to the current Reaganomics era, non-compete agreements were pretty much limited to senior executives and scientists/engineers.

If you were a CEO or an engineer for a giant company, knowing all their processes, secrets and future plans, that knowledge had significant and consequential value!company value worth protecting with a contract that said you couldn't just take that stuff to a competitor without either a massive payment to the left-behind company or a flat-out lawsuit.

But should a guy who digs holes with a shovel or works on a drilling rig be forced to sign a non-compete? What about a person who flips burgers or waits tables in a restaurant? Or the few factory workers we have left, since neoliberal trade policies have moved the jobs of tens of thousands of companies overseas?

Turns out corporations are using non-competes to prevent even these types of employees from moving to newer or better jobs.

America today has the lowest minimum wage in nearly 50 years , adjusted for inflation. As a result, people are often looking for better jobs. But according to the New York Times , about 1 in 5 American workers is now locked in with a non-compete clause in an employment contract.

Before Reaganomics, employers didn't keep their employees by threatening them with lawsuits; instead, they offered them benefits like insurance, paid vacations and decent wages. Large swaths of American workers could raise a family and have a decent retirement with a basic job ranging from manufacturing to construction to service industry work.

My dad was one of them; he worked 40 years in a tool-and-die shop, and the machinist's union made sure he could raise and put through school four boys, could take 2-3 weeks of paid vacation every year, and had full health insurance and a solid retirement until the day he died, which continued with my mom until she died years later. Most boomers (particularly white boomers) can tell you the same story.

That America has been largely destroyed by Reaganomics, and Americans know it. It's why when Donald Trump told voters that the big corporations and banksters were screwing them, they voted for him and his party (not realizing that neither Trump nor the GOP had any intention of doing anything to help working people).

And now the conservatives/corporatists are going in for the kill, for their top goal: the final destruction of any remnant of labor rights in America.

Why would they do this? Two reasons: An impoverished citizenry is a politically impotent citizenry, and in the process of destroying the former middle class, the 1 percent make themselves trillions of dollars richer.

The New York Times has done some great reporting on this problem, with an article last May and a more recent piece about how the state of Idaho has made it nearly impossible for many workers to escape their servitude.

Historically, indentured servants had their food, health care, housing, and clothing provided to them by their "employers." Today's new serfs can hardly afford these basics of life, and when you add in modern necessities like transportation, education and child-care, the American labor landscape is looking more and more like old-fashioned servitude.

Nonetheless, conservatives/corporatists in Congress and state-houses across the nation are working hard to hold down minimum wages. Missouri's Republican legislature just made it illegal for St. Louis to raise their minimum wage to $10/hour, throwing workers back down to $7.70. More preemption laws like this are on the books or on their way.

At the same time, these conservatives/corporatists are working to roll back health care protections for Americans, roll back environmental protections that keep us and our children from being poisoned, and even roll back simple workplace, food and toy safety standards.

The only way these predators will be stopped is by massive political action leading to the rollback of Reaganism/neoliberalism.

And the conservatives/corporatists who largely own the Republican Party know it, which is why they're purging voting lists , fighting to keep in place easily hacked voting machines , and throwing billions of dollars into think tanks, right-wing radio, TV, and online media.

If they succeed, America will revert to a very old form of economy and politics: the one described so well in Charles Dickens' books when Britain had " maximum wage laws " and "Poor Laws" to prevent a strong and politically active middle class from emerging.

Conservatives/corporatists know well that this type of neo-feudalism is actually a very stable political and economic system, and one that's hard to challenge. China has put it into place in large part, and other countries from Turkey to the Philippines to Brazil and Venezuela are falling under the thrall of the merger of corporate and state power.

So many of our individual rights have been stripped from us, so much of America's middle-class progress in the last century has been torn from us , while conservatives wage a brutal and oppressive war on dissenters and people of color under the rubrics of "security," "tough on crime," and the "war on drugs."

As a result, America has 5 percent of the world's population and 25 percent of the world's prisoners , more than any other nation on earth, all while opiate epidemics are ravaging our nation. And what to do about it?

Scientists have proven that the likelihood the desires of the bottom 90 percent of Americans get enacted into law are now equal to statistical " random noise ." Functionally, most of us no longer have any real representation in state or federal legislative bodies: they now exist almost exclusively to serve the very wealthy.

The neo-feudal corporate/conservative elite are both politically and financially committed to replacing the last traces of worker power in America with a modern system of indentured servitude.

Only serious and committed political action can reverse this; we're long past the point where complaining or sitting on the sidelines is an option.

As both Bernie Sanders and Barack Obama regularly said (and I've closed my radio show for 14 years with), "Democracy is not a spectator sport."

griffen , July 19, 2017 at 5:43 am

Wait, no mention of the Clinton administration and those Rubin acolytes? I find that hard to believe, those 8 years in the 90s were significant for today's outsized CEO pay and incentives.

WheresOurTeddy , July 19, 2017 at 5:48 am

First-Term Reagan Baby approves this post. New Deal was under attack before FDR's body got cold. Truman instead of Wallace in the VP slot in '44 was a dark day for humanity.

Remember the Four Freedoms.

Arizona Slim , July 19, 2017 at 8:37 am

The New Deal was under attack from day one.

Disturbed Voter , July 19, 2017 at 6:24 am

To keep doing what doesn't work, is insane. So keep voting for your incumbents! Not!

r.turner , July 19, 2017 at 12:57 pm

Massive political action? Not gonna happen.

BoycottAmazon , July 19, 2017 at 6:40 am

Then there is probation board / court bonds slavery. The slave is captured by the police, then chained to debt and papers first by a bond and then later upon "early" release to a probation officer. The slave has restrictions on his freedom by the probation orders, and must make good the money owed the bondsman and the court ordered fines. The slaves work for the benefit of the political and monied class who don't need to pay much if any tax burden for all their government delivered goods thanks to this system of slavery.

DanB , July 19, 2017 at 6:45 am

Hartmann closes with, "As both Bernie Sanders and Barack Obama regularly 'Democracy is not a spectator sport'." Hello Thom: Sanders has twisted himself with pretzel logic regarding neoliberalism and Obama is a full-blown neoliberal (who you seem to forget admired Ronald Reagan).

Colonel Smithers , July 19, 2017 at 7:17 am

Thank you, Dan.

That sentence also caught my attention and reminded me of John Kennedy junior's George magazine, marketing "politics as a lifestyle choice" and featuring Cindy Crawford on the inaugural cover. Allied to the MSM's obsession with identity politics, as a neo-liberal and neo-con driver of news, one is soon distracted from, if not disgusted with, what's going on. Thank God for (the) Naked Capitalism (community).

Livius Drusus , July 19, 2017 at 7:28 am

Yeah like Obama cared about unions and workers' rights. What happened to EFCA? What happened to the comfy shoes Obama said he would wear to walk with public sector workers in Wisconsin? Obama never fought for workers but he fought like hell for the TPP even going on Jimmy Fallon's show and slow jamming for it.

Obama is like the rest of the neoliberal Democrats. They think that unions and workers' rights are anti-meritocratic. Unions are only good for money and foot soldiers during the election. After the election they are basically told to get bent.

lyman alpha blob , July 19, 2017 at 8:11 am

Yes thanks for mentioning the EFCA. I'm so old I remember when the Democrat party campaigned hard on that – "If you give us back the majority in Congress blah blah blah .". And as soon as they won said majority they never mentioned it again.

Dirk77 , July 19, 2017 at 9:38 am

Yes. I thank Hartmann for pointing out the latest power grabs by our corporate masters. Still, his ignoring Clinton, Obama and the rest just puts him in with all the other political tribalists, who by their tribalism distract from the main problems – and their ultimate solutions. It's a class war, Thom, The Only War That Matters.

Vatch , July 19, 2017 at 12:50 pm

One can disagree with Obama or Sanders about various issues, but democracy is definitely not a spectator sport. People need to vote in both primary and general elections, and not just in the big Presidential years. People need to vote in midterm primary and general elections, as well as the elections in odd numbered years, if their states have such elections.

They also need to actively support good candidates, and communicate their opinions to the politicians who hold office. Periodically, people post comments about the futility of voting, or they say that not voting is a way to send a message. Nonsense! Failure to participate is not a form of participation, it's just a way of tacitly approving of the status quo.

Eureka Springs , July 19, 2017 at 2:01 pm

Well I hope I can disagree with you that this here republic is a democracy. There isn't even a party I can think of which operates democratically.

Supporting a good candidate is asking people to participate in spectator sport-like activity. The people, party members, should determine a platform and the candidate/office holder should be obligated to sell/enact/administrate it.

The rich tell their politicians/parties what to do so should the rest of us.

Vatch , July 19, 2017 at 3:56 pm

" I can disagree with you that this here republic is a democracy. "

Fair enough. The United States is no longer a representative democracy (and it was only that way occasionally in the past); it's currently an oligarchic plutocracy. But if we hope to regain any semblance of a representative democracy, we need to actively participate. There are many reasons why we've degenerated into a plutocracy, and one of those reasons is that people don't participate enough.

"Supporting a good candidate is asking people to participate in spectator sport-like activity"

Sure, if people don't participate in the primary process, all they have to choose from in the general election is a couple of tools of the oligarchs. They also need to do many of the things in the quote from Howard Zinn that Alejandro provided.

Alejandro , July 19, 2017 at 3:11 pm

"If democracy were to be given any meaning, if it were to go beyond the limits of capitalism and nationalism, this would not come, if history were any guide, from the top. It would come through citizen's movements, educating, organizing, agitating, striking, boycotting, demonstrating, threatening those in power with disruption of the stability they needed."–Howard Zinn

AND this:

" Democracy is not a spectator sport."– Lotte Scharfman
http://www.capecodtimes.com/article/20081004/opinion/810040340

David, by the lake , July 19, 2017 at 7:04 am

As others have pointed out already, it is important to note that corporatism is not a uniquely Republican characteristic.

Roger Smith , July 19, 2017 at 7:33 am

Great post, although I think it goes a little out of its way to ignore referencing Democrats as an equal part of the problem, as they too are "conservative/corporatists". Party politics is theater for the plebes, nothing more. These "people" have the same values and desires.

Colonel Smithers , July 19, 2017 at 7:40 am

Thank you to Lambert. Indentured labourers were also used by the French colonial ventures, including Mauritius / Ile Maurice, known as Isle de France when under French rule from 1715 – 1810.

Many of the labourers lived alongside slaves and, later, free men and women. They also intermarried, beginning what are now called Creoles in the Indian Ocean, Caribbean and Louisiana. I am one of their descendants.

In 1936, my great grandfather and others, mainly Creoles, founded the Labour Party in Mauritius. A year later, they organised the first strike, a general, which resulted in four sugar factory workers being shot and killed at Union-Flacq sugar estate. From what my grandmother and her aunt and sister, all of whom used to knit banners and prepare food and drink for the 1 May, and my father report, it's amazing and depressing to see the progress of the mid-1930s to 1970s being rolled back . It's also depressing to hear from so many, let's call them the 10%, criticise trade unions and think that progress was achieved by magic. Plutonium Kun wrote about that recently.

19battlehill , July 19, 2017 at 8:12 am

Thom – I agree with your outrage; however, the truth is that economically the US has been broke since the 1970's and it doesn't matter. Nothing will change until our we have an honest monetary system, and until unearned income is tax properly – the rich have gotten richer and corporations have hijacked our government, whining about it does nothing, this will go on until something breaks and then we will see what happens.

cnchal , July 19, 2017 at 8:14 am

What is going on in Idaho? Why would the state politicians do such a thing? From the Idaho link which is the NY Times, reveals the real reason. Believe it or not.

"We're trying to build the tech ecosystem in Boise," said George Mulhern, chief executive of Cradlepoint, a company here that makes routers and other networking equipment. "And anything that would make somebody not want to move here or start a company here is going to slow down our progress."

Alex LaBeau, president of the Idaho Association of Commerce and Industry , a trade group that represents many of the state's biggest employers, countered: "This is about companies protecting their assets in a competitive marketplace ."

Alex doesn't get irony. What price discovery? Where are economists on this? Why are they radio silent? To paraphrase Franklin, a market, if you can keep it.

Again and again and again, we see narcissist lawyer/politicians doing stuff that is completely demented, from a normal person's point of view. They will be gone in a few years, but the idiotic laws remain.

Arizona Slim , July 19, 2017 at 8:42 am

Note the use of the word "ecosystem." A bullshhhh tell if there ever was one.

jrs , July 19, 2017 at 10:28 am

Tech is neither here nor there in it, I mean they say being able to leave jobs easily was a tech advantage in California where people could leave to start new businesses etc.. So I'm not sure how tech actually lines up on it, and it's almost not the point, even when it does good it's no substitute for an organization that really represents labor. It might be better in California due to tech pressure, but probably mostly because it's a deep blue state, which tends to make places slightly more tolerable places to live. Well as much as we're going to get when what we really need is socialists in the legislature but nonetheless.

Yes these practices are slavery. Indentured servitude is almost too polite, but I get it's more P.C..

Vatch , July 19, 2017 at 4:54 pm

It's not exactly the same as employee non-competition contracts, but remember the scandal about the Silicon Valley companies that privately agreed not to hire each others' employees? Here's one of the many articles about this:

http://www.businessinsider.com/emails-eric-schmidt-sergey-brin-hiring-apple-2014-3

Tom G. , July 19, 2017 at 12:12 pm

I imagine that a few companies will move to Idaho to take advantage of the favorable legal climate, and will leave even more quickly when they can't recruit the talent they need. Speaking as a Software Engineer, the only impact this new law has is to put Idaho at the top of my list of "places I won't consider for relocation."

MG , July 19, 2017 at 12:41 pm

Mulhern is an idiot then because there is a fair amount of evidence that CA's lax enforcement and very skeptical enforcement of non competes is an important factor on why Silicon Valley has thrived. My sense is that this is purely to protect the status quo among large local employers and nothing to do with growing the local ecosystem or smaller firms. Good luck trying to recruit top-flight talent especially engineers/programmers to Boise with most companies have a vigorous year or 2-year non-competes in place.

cnchal , July 19, 2017 at 8:18 pm

> Mulhern is an idiot . . .

Ultimately, Idahoans will shoot themselves in the asses, never mind assets. I know "ecosystem" is a bullshit tell but it's another word for network effects and the network is short circuited by these laws.

Laws preventing an employee from leaving means there is less mixing of talent, making everyone worse off. That's how we learn, getting in there and doing it, whatever it is, and by moving to another employer you transfer and pick up knowledge and experience.

What makes it farcical, is that Big Co Management never envisions itself in their employees shoes.

Mike G , July 19, 2017 at 1:29 pm

"And anything that would make somebody not want to move here or start a company here is going to slow down our progress."

He's right, but in the wrong way. Idaho's new feudal employment laws ensure I will never move there for a tech job.

RenoDino , July 19, 2017 at 8:29 am

The vast majority of the labor market is shifting gears to function as the servant class to the very rich. It is a painful transition as recent gains in labor rights are lost. Becoming a willing supplicant and attaching oneself to a rich and powerful family is the best way to better one's prospects. The last 70 years was an aberration. It will not return, short of a major uprising. Given the state's security apparatus that prospect is extremely unlikely.

Anti Schmoo , July 19, 2017 at 8:54 am

Not a Thom Hartmann fanboy; he deals in glittering generalities and treats serious subject matter in a deeply superficial manner. Having been a Teamster in warehousing and metal trades; they were corrupt and in management's pocket in those places I worked. I'm a huge proponent for labor and the ideal of labor unions (as imagined by the wobblies); not the reality on the ground today.

And I do not agree with Thom's Indentured servitude meme; he gives no real examples, just generalities. I would submit that a neo-feudal system is the fact on the ground. The difference; a serf has land (and yes, he's attached to it), a house, and a modicum of freedom; as long as he takes care of his lord.

Usian's are now, in fact, prisoners of war. Living in a broken system where voting no longer counts; the very back bone of a democratic society. The "two" parties have merged into one entity looking very much like the ouroboros (a snake eating its tail).

All information is managed; and this includes the unemployment figures; pure fiction by the way. An indentured servant has work; 20 million(?) or more Usians have no work, and little hope of finding meaningful employment.

The importance of this can not be underestimated; human dignity is at stake; we're a society brought up on the importance of being "gainfully" employed. Our society is being intentionally crushed to make us serfs in a neo-feudal society.

RickM , July 19, 2017 at 8:56 am

20+ years ago in Athens, GA, there was a local chicken place. Good food if you like that kind of thing. Come to find the employees who fried the chicken and worked the service counter were forbidden by the language of their "contracts" to quit for a dollar an hour more at another local restaurant. The first company didn't actually have the means to take its former employees to court, but they had the "right" to do so. Bill Clinton, neoliberal to his rotten core, was happily the president, feeling our pain. And his own, courtesy of Newt Gingrich et al.

Colonel Smithers , July 19, 2017 at 9:05 am

Thank you, Rick. It was not just our pain that Clinton and Nootie were feeling. Speaking of Mr Bill, his family's role in Haiti, amongst other places reduced to penury, should earn them a place in infamy.

oaf , July 19, 2017 at 9:39 am

"we're long past the point where complaining or sitting on the sidelines is an option."

but marches and *Occupy*s (sp?) FEEL SO GOOD!!! like we are ACTUALLY MAKING A DIFFERENCE!

jrs , July 19, 2017 at 10:41 am

he didn't suggest that, maybe that's what he meant, maybe somewhere else in his communications he says that, but it's not in the article.

Yes a problem is people don't know where or even how to apply any sort of pressure to change things

But one plus of these things being somewhat decided on the state level, is it is more obvious how to go about change there than with the Fed gov where things seem almost hopeless, try to elect people who stand against these policies for instance, easier done some places than others of course, but

jawbon , July 19, 2017 at 11:30 am

Occupy did make a difference, at least in how the public paying attention mostly to broadcast news and the "important" newspapers were concerned. Young people, especially, began to realize what they were up against in this corporatized economy where all the power went to the wealthy.

I'll bet a lot of Occupiers actually began to understand just what Neoliberalism meant!

And the amount of planning and effort the Obama WH spent organizing the Federal agencies and state/local governments to shut down the Occupy encampments indicated to me just how much they feared the effects of Occupy.

different clue , July 19, 2017 at 8:02 pm

Well . . . Occupy was clearly making enough of a difference that the Obama Administration worked with the 18 Democratic Party Mayors of 18 different cities to stamp it out with heavy police stompout presence. The Zucotti clearout in NYC, for example, was just exactly the way Obama liked it done.

Enquiring Mind , July 19, 2017 at 10:03 am

People subject to politicians should begin a coordinated effort to use a common approach to get the truth. Demand transparency, with all campaign contributions, lobbyist contacts, voting records, committee memberships and such all in one place. Use that information to provide a score to show the degree of voter representation. Not sure how that would work, just brainstorming to try some new approach as current ones have failed.

Vatch , July 19, 2017 at 10:05 am

A couple of months ago, this article was published:

https://www.usatoday.com/story/money/2017/05/27/noncompete-clauses-jobs-workplace/348384001/

These days, even janitors are being required to sign non-compete clauses. When Krishna Regmi started work as a personal care aide for a Pittsburgh home health agency in 2015, he was given a stack of paperwork to sign. "They just told us, 'It's just a formality, sign here, here, here,' " he said. Regmi didn't think much of it. That is, until he quit his job nine months later and announced his decision to move to a rival agency -- and his ex-employer sued him for violating a noncompete clause Regmi says he didn't know he had signed. The agreement barred Regmi from working as a personal care aide at another home health agency for two years.

. . . . .

Bills in Maine, Maryland and Massachusetts would restrict noncompete agreements that involve low-wage employees; New York Attorney General Eric Schneiderman, a Democrat, is pushing for the same change in his state. Proposals in Massachusetts and Washington would also restrict the agreements for other types of workers, such as temporary employees and independent contractors.

Such bills face an uphill struggle, however, often because of stiff opposition from business. "Non-compete agreements are essential to the growth and viability of businesses by protecting trade secrets and promoting business development," the Maryland Chamber of Commerce said in written testimony opposing a bill Carr introduced that would have voided agreements signed by workers who earn less than $15 an hour. The bill passed the House in February but died in the Senate.
. . . . . .

Some good news:

In California, North Dakota and Oklahoma, the law says the agreements are unenforceable; judges will just throw them out. In other states, statutes and case law create a set of tests that the agreements must pass. In Oregon, for instance, they can only be enforced if workers have two weeks to consider them before taking a job, or if the worker gets a "bona fide advancement" in return, such as a raise.

States have tightened up enforcement criteria in recent years, propelled by news reports, Starr's research and encouragement from the Obama White House. In addition to Illinois' law banning noncompete agreements for low-wage workers, last year Utah passed a law that voided agreements that restricted workers for more than a year; Rhode Island invalidated them for physicians; and Connecticut limited how long and in what geographic area physicians can be bound.

Yet Starr's survey research suggests that tweaking the criteria may have a limited effect on how often the agreements are signed. In California, where noncompete agreements can't be enforced, 19 percent of workers have signed one, he said. In Florida, where the agreements are easily enforced, the share is the same: 19 percent.

Softie , July 19, 2017 at 10:30 am

The author fails to point out that H1-B is also indentured servitude.

Jacob , July 19, 2017 at 11:00 am

The merging of corporate power with the state is called "fascism." This was described by both Benito Mussolini and FDR's vice-president Henry Wallace. But the term "fascism" isn't mentioned in the article. Importantly, fascists are sworn enemies of communism and socialism, and this is how they can be identified.

gepay , July 19, 2017 at 11:23 am

NC is one of the few blogs where I read the comments.- this was a good article until the wtf comment at the end. Great Britain in an 1833 Act of the Parliament of the United Kingdom abolished slavery throughout the British Empire (with the exceptions "of the Territories in the Possession of the East India Company" (how is that not surprising), Ceylon, now Sri Lanka, and Saint Helena; the exceptions were eliminated in 1843). "Who ya gonna get to do the dirty work when all the slaves are free?" Indentured servants from India – the biggest ethnic group in British Guiana (now Guyana) are from India Indians. The US is definitely getting more feudal.

d , July 19, 2017 at 12:58 pm

while i dont disagree thats it not happening, it just seems extremely short sighted, as without a large growing middle class, corporations are dooming them selves to lower income (profits) in the long term. but then no one can really accuse corporations of having a long term view

different clue , July 19, 2017 at 8:09 pm

But perhaps the rich people hiding behind the corporate veil are motivated by class sadism, not class greed. Perhaps they are ready to lose half what they have in order to destroy both halves of what we have.

Benedict@Large , July 19, 2017 at 1:30 pm

I don't see the problem. You're getting somewhere around minimum wage, and so a lawyer wouldn't take you even if you knew how to find one suitable, which you don't.

So you look at your boss and say, "Sue me." What's the gut to do? Hire a lawyer? Use one on staff? This is a civil case, so what damages is he claiming?

Then how's the judge going to look on this. Any judge I've known would be pissed livid to get stuck with a bullcrap case like this. Imagine when every judge is looking at his docket filled with this nonsense. How long before he starts slapping your boss with contempt?

We're sitting around complaining how bad our bosses are, bet we have another, must worse problem. Employees have turned to wimps over their boss's every utterance. Here's a tip. Probably a half and more of whatever is in you employment "contract" (it probably doesn't even qualify legally as one) is either illegal or unenforceable. Pretend it isn't there.

And above all, STOP rolling over to these jerks. If your biggest problem is a non-compete on a minimum wage contract, your world has already fallen apart. If your bosses problem is that he thinks he needs them, his world is about to.

Mike G , July 19, 2017 at 5:27 pm

It's about bullying and intimidation. Like most bullies, the companies are cowards who would back down if challenged, because it would make little economic sense to sue minimum-wage ex-employees. They're relying on the employees being too cowed to call their bluff, so they choose to stay even if unhappy.

Edward , July 19, 2017 at 2:31 pm

Non-compete clauses sound like something that will create a hostile work force; that may not be so good for these companies. Articles like this make me think of "Space Merchants", an amusing science fiction satire on capitalism by Pohl and Kornbluth.

Swamp Yankee , July 19, 2017 at 2:49 pm

The East India Company did not establish a foothold in Virginia! That was the Virginia Company! This basic factual error mars an article that otherwise makes a very good point.

Swamp Yankee , July 19, 2017 at 2:58 pm

Nor was Virginia a State at the time -- a colony until the Revolution. These are critical distinctions.

This is the kind of thing that drives history teachers crazy.

Chauncey Gardiner , July 19, 2017 at 7:28 pm

Perhaps there are other options in responding to the types of abuse detailed in this post, in addition to the political action Thom Hartmann called for. One such action might be characterized as "Passive NonParticipation" with your brains, craftsmanship and know-how to the extent possible, yet still retain your job.

In the waning years of the Soviet Union, the mantra was "They pretend to pay us, and we pretend to work." I suspect many American workers have already figured out the minimum amount of work necessary to retain their jobs and incomes, hence the recent decline in one of the "elite's" most cherished metrics, "productivity" (besides wealth concentration, of course).

[Jul 01, 2017] The Slogan Globalization Equals Growth Is Wrong by Daniel Gros

Notable quotes:
"... Trade liberalisation has been a significant driver of globalization over the past half century. However, global trade has slowed down in recent years. This column argues that globalization can also be driven by higher commodity prices can also drive, as commodities constitute a large fraction of global trade. This is reflected in trade volumes and commodity prices, which increased until around 2014 but have fallen since. However, commodity price-driven globalization implies lower living standards in advanced countries, as the higher commodity prices diminish the purchasing power of workers. ..."
"... See original post for references ..."
"... "His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing counties from adopting policies and institutions that they themselves have used." ..."
Jun 30, 2017 | www.nakedcapitalism.com
By Daniel Gros, Director of the Centre for European Policy Studies, Brussels. Originally published at VoxEU

Trade liberalisation has been a significant driver of globalization over the past half century. However, global trade has slowed down in recent years. This column argues that globalization can also be driven by higher commodity prices can also drive, as commodities constitute a large fraction of global trade. This is reflected in trade volumes and commodity prices, which increased until around 2014 but have fallen since. However, commodity price-driven globalization implies lower living standards in advanced countries, as the higher commodity prices diminish the purchasing power of workers.

Trade and international financial transactions have grown massively in recent decades. This phenomenon, also called globalization, is often described as a 'mega-trend'. Business and political leaders never tire of repeating that 'globalization' is the future, that it delivers more jobs and higher incomes. However, more recently globalization seems to be in retreat-in 2015 trade actually fell, both in absolute terms and relative to GDP. Does this mean globalization has gone into reverse (OECD 2016, IMF 2015, 2016)?

In this column, I argue that the slogan 'globalization equals growth' is wrong. There is no general economic theorem that links more trade to growth and other economic benefits. Economic theory implies only that, under most circumstances, lower trade barriers will lead to more trade and more jobs. The simplification, that more trade is thus always beneficial, is not warranted. If trade increases for reasons other than the lowering of trade barriers, it is far from clear that this will benefit everybody.

The distinction between globalization driven by lower trade barriers and increases in trade driven by other factors is not just an academic point. It is the key to understanding why globalization has become so unpopular in most advanced countries, and why the recent slowdown in trade is not something to worry about.

What Drove 'Hyper-Globalization'?

The massive increase in trade flows over the last two decades has always been difficult to explain with 'classic' causes, such as trade liberalisation lowering trade costs. Tariffs (and other trade barriers) had of course been reduced radically in several stages in the 1960s, 70s, and 80s. However, by the late 1990s the remaining tariffs were already rather low; and many non-tariff barriers (such as the Multi Fibre Arrangement, which had seriously limited trade in textiles) had also been eliminated. 1

Transport costs of course fell with containerisation, but this improvement had yielded most of its benefits by the late 1990s. Estimates of the overall cost of trade based on the ratio of CIF prices (which incorporate transport costs) and FoB prices (which do not) actually suggest that transport costs slightly increased over the last 20 years; before1995 they had fallen almost continuously (Baldwin and Taglioni 2004). Figure 1 shows that transport costs have fallen again very recently, but that this coincided with a slowdown of trade – the opposite of what one would expect.

Figure 1 Word transport costs

[Imports(CIF)/Exports(FoB]-1

How can one reconcile 'hyper-globalization' (Subramanian and Kessler 2013) with stagnating tariffs and transport costs? Baldwin (2017) provides one answer. He argues that the key driver of globalization today is the falling price of 'transporting' ideas, as opposed to the cost of moving goods.

This contribution provides an additional, maybe complementary, explanation-higher oil (and other commodity) prices increase both trade volumes and transport costs for goods, but not ideas. The impact of oil prices on transport costs is clear-fuel is an important element of overall transport costs. A sharp increase in fuel prices can more than outweigh, at least in the short to medium run, the costs savings due to containerisation. (Cosar and Demir 2017 also argue that most of the cost savings from the latter have been realised.)

But the key point is that higher commodity prices also automatically create more trade, because commodities constitute a large fraction of global trade.

An Illustrative Example

Assume that one tonne of steel and ten barrels of oil are needed to produce one car. In 2002-03, that bundle of raw materials was worth around $800, or about 5% of the value of a car priced at $16,000. This implies that during the early 2000s, industrialised countries had to export five cars for imports of 100 bundles of these raw materials. By 2012–13, the value of the raw materials needed for one car increased to about $2,000, now representing about 10% of the cost of a car (prices of cars had gone up much less). Industrialised countries thus had to export 10 cars, double the previous quantity, for the same amount of raw material imports.

This example shows that the value of trade would double if commodity prices double. There is thus a direct link between the growth of trade and commodity prices. Increasing commodity prices lead to more trade (globalization), whereas falling commodity prices have the opposite effect.

An immediate objection to this example is that it looks at the value of trade, but one also finds that over the last decades the growth of trade in volume has exceeded that of the volume of real growth. However, this excess growth in trade volume also follows in this example-an industrialised country would need to double its exports in volume just to pay for an unchanged volume of raw material imports.

Since food, fuels, and raw materials make up about a quarter of global trade, the huge price movements in raw materials, especially energy, over the last few decades, must have had a big impact on aggregate trade figures. The run up in commodity, and especially crude oil, prices until about 2014 drove hyper-globalization, and the fall in prices since then has now reduced globalization. There is thus little need to look for other explanations for the recent slowdown in trade.

Figure 2 illustrates this phenomenon with three lines, each of which show three variants of the global trade/GDP ratio. The top-most line is just the ratio of total global exports to global GDP. It is the one that shows most globalization-trade accounted for a little over 15% of GDP in 1995, but 25% at the peak in 2007 (an increase of almost 10 percentage points).

The middle line shows global exports of manufacturing goods as a percentage of GDP. The difference to the first line is, of course, trade in raw materials, which increased in value along with their prices, as argued above. Trade in manufacturing goods shows much less globalization, having increased from only 13% to 17.5% of global GDP.

The lowest line takes into account the fact that higher raw material prices also means that industrialised countries have to export more manufacturing goods to pay for their more expensive raw material imports. This last line, which could be called 'manufacturing trade net of payment for raw materials' shows even less globalization, with the ratio relative to GDP going from 10.5% to 13.6% of global GDP (an increase of only 3 percentage points, one third of the headline increase mentioned above).

Figure 2 World trade as a percentage of GDP

Source : Own calculations based on OECD and WTO data.

This decomposition of trade flows suggests that there has indeed been some globalization, but it has been much less strong than the hyper-globalization one sees in the aggregate data. Moreover, the recent fall in commodity prices can fully explain the fall in trade since 2014 with trade in 'net manufacturing' showing no 'de-globalization'.

But back during the heyday of hyper-globalization, no responsible politician dared to explain that globalization driven by higher commodity prices would have different implications (for advanced economies) than globalization driven by trade liberalisation-this new globalization meant lower living standards in advanced countries as higher commodity prices diminished the purchasing power for OECD workers. The widespread popular disenchantment with globalization can thus be easily explained-workers in Europe and the US were told that more trade would make everybody better off. But in reality there was no 'surplus' to be distributed, and workers just noticed a decline in their living standards. 2

But hype and exaggeration are sure ways to bring a valid cause into disrepute. This is what has happened to globalization. The decades of gradual liberalisation of trade and capital flows that followed post-war reconstruction fostered a resumption of global trade that was hugely beneficial. However, at exactly the point when economic analysis would suggest that these gains from trading more freely were largely exhausted, actual trade accelerated. This surge in trade was driven largely by higher commodity prices and could not deliver higher living standards for workers in industrialised countries.

A popular backlash was thus unavoidable and Donald Trump became its standard bearer. The political consequences in Europe are also visible-the Brexit referendum, the difficulties in ratifying the free trade agreement between the EU and Canada (CETA) and the stand-still in the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US are all expressions of this disenchantment with globalization.

What Could Be Done to Avoid Throwing the Baby Out With the Bath Water?

A first step would be to stop the overselling. CETA and TTIP would be useful to have, but the economic benefits can only be of second order importance (and the potential damage feared by some as well). A second step would be to look where there are still trade barriers whose removal could bring significant welfare benefits. They are likely to be found in emerging markets, whose tariffs and non-tariff barriers are still several times higher than those of the EU or the US. European trade policy should thus concentrate on free trade deals with India or China, rather than the US.

See original post for references

0 0 5 1 0 This entry was posted in Commodities , Free markets and their discontents , Globalization , Guest Post , Income disparity , Politics , The destruction of the middle class , The dismal science , TPP on June 30, 2017 by Yves Smith . Subscribe to Post Comments 19 comments justanotherprogressive , June 30, 2017 at 10:38 am

Silly boy! What makes you think that Globalization was ever meant to grow "economies"? It was never more than a means for mega-corporations to improve their bottom lines just another form of arbitrage .

ChrisAtRU , June 30, 2017 at 11:43 am

Globalization and the "free trade" it espoused were – in the words of economist Ha-Joon Chang – tantamount to ladder-kicking :

"His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing counties from adopting policies and institutions that they themselves have used."

sgt_doom , June 30, 2017 at 2:29 pm

What Drove 'Hyper-Globalization'?

What a silly question!

Inflating financial assets - theirs (the super-rich), not ours!

RBHoughton , June 30, 2017 at 9:06 pm

The inclusion of the fatuous 'trade in money' that our agreements contain suggests you are right. Ripping-off by agreement might be the new game.

CD , June 30, 2017 at 11:22 am

Yes, it's surprising how most politicians and economists have missed this. Globalization was always meant to grow corporate revenue in their home saturated markets. Their effects on their home countries' welfare or their home country employees was not important.

Trump voters showed us otherwise.

Also, mergers are not about scale economies or some market benefits. Mergers and acquisitions are about letting top execs ask for higher benefits.

It's amazing that few see thru this persiflage.

JTMcPhee , June 30, 2017 at 1:56 pm

Which corporations have "home countries?" Any more than "our" empire is any respecter of silly old national boundaries. Nations were and are just springboards for "commercial interests " https://www.librarything.com/work/73551 They're the substrates that made and make "legal" the giant falsehoods and frauds that are corporate persons

Massinissa , June 30, 2017 at 3:03 pm

Theres a reason corporations are called 'multinationals'. They don't have actual 'home countries'.

Enquiring Mind , June 30, 2017 at 7:06 pm

Once upon a time, we older people learned about MNCs and their penchant for playing countries off against one another. That seems so quaint in retrospect, given the more brazen behaviors on offer. More recently, families give up citizenship to save some wealth and to hide some wealth. To what kind of world are they running? When loyalty, duty and character become passé, then the replacement characteristics are cause for alarm and disgust.

CD , June 30, 2017 at 5:25 pm

My overall takeway - Decisions by large corporations have huge consequences for the locals, especially if their jobs swim overseas. Locals' feelings at some point, maybe years later, become their votes and political opinions.

So if this is correct, Trump is the payback, greatly delayed. B Clinton's and Obama's politics changed our economy and that in turn became the new politics.

So economics has become politics, and not for the better.

Steven , June 30, 2017 at 11:35 am

The widespread popular disenchantment with globalization can thus be easily explained-workers in Europe and the US were told that more trade would make everybody better off. But in reality there was no 'surplus' to be distributed, and workers just noticed a decline in their living standards.2

There was a surplus alright. But even if promised to "everybody" it didn't go and wasn't intended to go – to "everybody".

Workers without jobs not only can not enjoy the fruits of globalization (AKA lower prices by employing the 'slave labor' of developing nations and raping and pillaging their environment). Western workers can not pay into their (unlocked by resident politicians and oligarchs) 'Social Security lock boxes'.

Left in Wisconsin , June 30, 2017 at 12:13 pm

I don't get a couple of things said in this post:

1. How come the huge run-up in commodities didn't translate to higher (measured) inflation? The author even makes the point that car prices went up much less than steel and oil. (Also, the doubling of oil and/or steel prices seems strange to me, as I thought neither had seen a big run-up in this period.) Granted problems with measured inflation but clearly the bigger problem with working class real wage growth was wage pressure, not inflation pressure.

2. The author seems to presume that trade must balance within countries: exports of cars must double to pay for higher commodities costs. That certainly does not explain car exports from the US (not to mention the lack of balanced trade). And I don't think it explains car exports from Europe or Asia either, unless the argument is that higher commodities costs affected exchange rates, lowering them for car exporters compared to commodities exporters. Nor would it seem to explain Chinese exports, again unless there is some argument as to why China "needs" (in an economic, not political, sense) to run a particular level of massive trade surplus.

3. The author completely ignores China's accession to the WTO in 2000, which some recent studies have suggested was the primary driver for dramatic increases in China exports to US from that point.

PKMKII , June 30, 2017 at 2:15 pm

The lack of car inflation may be explained by the increase in the same period in auto loan debt . If you can make a hefty profit off the loan interest and other service fees, they you don't need to increase the base car price. There may even be a motivation to keep the prices low, as the cheap sticker price gets the customers in the door, and it's not until they've gone through the ringer with the salesman and loan guy that they realized they've been duped into paying way more than advertised.

sgt_doom , June 30, 2017 at 2:32 pm

1. By globalizing wages downwards.

Jeremy Grimm , June 30, 2017 at 4:53 pm

There are a lot of things said in this post that I don't get. [And is this guy really Director of the Centre for European Policy Studies, Brussels? That's scary!]

This author explicitly equates trade with globalization and implicitly equates growth with increases in GDP figures. I believe the term "globalization" covers much more than trade. I believe it also includes the deliberate movement of production out of the U.S. [or out of Europe] to far-away lands with cheaper labor and fewer annoying regulations. I believe it also includes an intent to weaken labor and nation states.

I doubt that figures for GDP provide an adequate measure for growth and similarly doubt that trade measured in terms of a currency provides an adequate measure for trade. Although I suppose this way of measuring trade might support the assertion:

"But the key point is that higher commodity prices also automatically create more trade, because commodities constitute a large fraction of global trade."

I don't know what that assertion really means given my bias against the measures this author uses. In turn, this assertion leads to another odd assertion:

"This example shows that the value of trade would double if commodity prices double. There is thus a direct link between the growth of trade and commodity prices. Increasing commodity prices lead to more trade (globalization), whereas falling commodity prices have the opposite effect."

So using the authors terminology I have trouble with the assertion: "Globalization equals growth" is wrong. If globalization means bigger trade numbers and growth means bigger GDP numbers and if trade is a positive additive component of growth the assertion that globalization equals growth - more clearly - that globalization increases growth seems a tautology. The author's slight of hand correcting for "higher raw material prices" in the trade figures does not convince me of the title assertion - and by this point in the argument the assertion - whether true or false - is devoid of meaning for me.

As Thuto notes in a comment below the author assumes globalization driven by trade liberalization is "somehow better" - I would say the author tacitly assumes globalization driven by trade liberalization does equal growth - contribute to "true" growth. This leads to the author's conclusion that CETA and TTIP might have some marginal benefits and might cause some marginal potential damage neatly avoiding the non-trade issues in those deals - like the ISDS "investor-state dispute settlement" and various intellectual property enhancements contained in the TTP. Given that globalization by trade liberalization does grow GDP and assuming that growing GDP is a good thing for all parties the author can conclude that "European trade policy should thus concentrate on free trade deals with India or China, rather than the US."

We know how globalization's free trade deals with India or China benefited the US. Does this author really desire similar benefits for Europe?

RBHoughton , June 30, 2017 at 9:10 pm

I'm with you Leftie. How inflation hardly appears in our hugely inflated western economies is one of the greatest magic tricks. We all know food and clothing has got more expensive but "inflation?" – not a hint.

I am guessing its like the paper gold market. We have the means to mis-price everything.

nonsense factory , June 30, 2017 at 12:21 pm

Conditions under which trade between nation-states is beneficial to both partners:
(1) Each nation exports goods which it has a competitive advantage in producing. Agricultural products are the classic example.
(2) The profits from sale of such goods remain in the country of origin. Transfer of profits out of the country of origin mean that the country is just a plantation run by absentee landlords.
(3) Trade between the nation-states must be balanced on both sides; i.e. exports and imports are on the same scale.
(4) Both nation-states must have a condition of full employment.
(Ricardo 1817)
Only when conditions 2-4 are met will condition 1, the ideal situation, be realized. Now, globalization of capital flows across nation-state borders (the key element of neoliberalism, or neocolonialism) defeats this. Instead of trade between independent nation-states, what we have is the imperial system – backed up by a $600 billion yearly military budget that is used to attack any entities that refuse to go along with the program, by covert means such as destablization and ultimately by military assault (as long as the target does not possess nuclear weapons, that is).

Furthermore, late 19th-century and 20th century economists have created a set of false assumptions and theorems with no basis in reality to justify this kind of thing. Notions like 'utility', 'externalities', and 'GDP' are just sloppy propaganda games; there are no 'general theorems' in economics that have any solid basis in reality – the entire game of modern academic economic theory is nothing but smoke and mirrors, whose primary function (as with Soviet economic theory and communism) is to promote the ideology of investment capitalism, protecting shareholder interests in the corporate system. If economists want to put their discipline on a sound physical and mathematical basis, they should start by studying a real science like ecology in natural science departments. My own opinion is that anything written by academic economists from the latter half of the 19th century to the present can be discarded with no loss at all.

Instead, read an ecologist like Hutchinson, and think about how those real concepts (in which there are no 'externalities') would apply to a study of human economic activity.

sunny 129 , June 30, 2017 at 1:31 pm

Globalization favored Mega Corporations and Multi-Nationals (+ their corporate share holders, lenders) over the rest of the society including labor b/c global labor wage arbitrage!

Living standards went down for working blue collar ( and some white collar) in the West. There was some 'patchy' RELATIVE increase in living standards of their middle class in some of the Countries, like India!

Sad reality:
The CAPITAL is mobile but the LABOR is NOT!

Thuto , June 30, 2017 at 2:11 pm

The author seems to be arguing that globalization driven by trade liberalization is somehow better and more palatable than globalisation driven by higher commodity prices. Yet history has demonstrated that trade liberalization leads sooner or later to the transfer of manufacturing capacity from high to low income countries, wiping out entire swathes of jobs in said high income countries. So the argument that globalization driven by trade liberalization benefits workers in rich countries is shaky at best and demonstrably false at worst

JTMcPhee , June 30, 2017 at 2:25 pm

So much understanding of "what's wrong" (from the mopes' standpoint, of course) and so little in the way of prescriptions for "what is to be done" about conditions as described Kind of like Tomgram, from the more military- and foreign-adventurism corner of the blogspace

One might guess that we thinking people, with our perceptions and little debates about syntax and the elements of political economy and composition skills, are maybe just tolerated by the Blob, because we don't pose much of a challenge to oligarchy and hegemony And we vent off righteous steam that might get up too much of a head, and also reinforce, via our perceptions of the massiveness of "the problem," the futility of resistance to something so yuuuuge, all interlocking directorates and self-licking incentives Small mice can sometimes avoid being crushed by the elephants' feet, if they are quick and inoffensive.

One wonders where the notion that elephants fear mice, a stock item in comedy, came from

[Jun 28, 2017] How Managerialsm- Generic Management Damaged the American Red Cross naked capitalism

Notable quotes:
"... some one ought to do a study of/ a book on generic management ..."
"... I'm seeing a parallel to the Obama strategy of branding/looting. Corporate and government decay seem to be mirroring each other, and this new obsession among the intelligentsia with messaging over substance is a major component of that. ..."
"... This branding/looting/communications has been building since at least 1977 when undergraduate communication majors multiplied. It accelerated by 1982 when every corporate finance and law professor taught short term quarterly profit was the only responsibility of management. The combination could only lead to the current 'propaganda as responsible management' philosophy. ..."
Jun 28, 2017 | www.nakedcapitalism.com
ng , December 17, 2015 at 5:08 am

some one ought to do a study of/ a book on generic management. it goes back a long way. i first saw it in 1973 where i was working in boomingdale's food department. almost all the managers in the store had worked their way up fom being staff members. in 1973 the board hired a young impressive- looking harvard mba to oversee about a fifth of the departments. he was an energetic man who spent one whole day throwing boxes around in the foof department stockroom to "show the stockmen how to be more productive." after two years his section of the store was the only one to lose money, but by then he had been hired by neiman marcus. in an even higher position.
the managerial class, useless and self-rewarding, is what every corrupt society needs.- endless administrators in the college system, inventing tests for the teachers. red cross, whatever. the destruction of substance and brains and heart. its replacement with ignorance and cluelessness. what a society we're (not) building!

Ulysses , December 17, 2015 at 7:36 am

"The managerial class, useless and self-rewarding, is what every corrupt society needs."

The eloi will continue to become ever more useless, putting insane pressures on the few remaining morlocks they allow to do all the work. Will robots save us? Not very likely, since they will be used to further enrich the parasites above all.

Barry , December 18, 2015 at 11:57 am

You might want to look up Henry Mintzberg, particularly Managers Not MBAs (2004).

Clive , December 17, 2015 at 5:35 am

The BBC is another good example of how managerialism has wrecked a not-for-profit corporation. Until McKinsey infiltrated the place, the BBC didn't really have a "brand" to speak of; if it considered its corporate identity at all, it was only in terms of how its output of programming conveyed what it was supposed to be about as an organisation.

Then, it brought in the brand consultants to develop an image of what it thought it should be. Nothing necessarily wrong with that. What caused the rot to set in was when the brand image started to define the programming output. Was, the brand managers asked the producers and directors, this-or-that programme compliant with the brand guidelines?

If the BBC's brand was not merely delivering communications which are honest and have integrity but also now need to be "simple to understand", "completely neutral at all times" or "a balance of positive as well as negative content" then you end up, as we largely have, with a lot of cosy-consensus mediocrity and an institution which only serves its own internal vested interests.

Lexington , December 17, 2015 at 5:38 am

some one ought to do a study of/ a book on generic management

Managerialism: A Critique of an Ideology

You're welcome ;)

jgordon , December 17, 2015 at 7:55 am

I'm seeing a parallel to the Obama strategy of branding/looting. Corporate and government decay seem to be mirroring each other, and this new obsession among the intelligentsia with messaging over substance is a major component of that.

I'd say that this is also the reason it's impossible to get the government in order. The corporate media is in bed with the corporate state, because patriotism, and most Americans are simply too burned-out or drug-addled to question anything. And if people do sense something is wrong and want a drastic change–well then there's Trump.

Sam Adams , December 17, 2015 at 8:54 am

This branding/looting/communications has been building since at least 1977 when undergraduate communication majors multiplied. It accelerated by 1982 when every corporate finance and law professor taught short term quarterly profit was the only responsibility of management. The combination could only lead to the current 'propaganda as responsible management' philosophy.

Procopius , December 18, 2015 at 9:54 am

I don't know when the turning point was, but it had something to do with neoliberalism becoming the "Washington Consensus" and the dogma that everything had to be "run like a business" became universally accepted. I would guess about the Carter administration.

mad as hell. , December 17, 2015 at 9:05 am

Wow -- It's an amazing story yet I should not be surprised. It's become a common theme throughout American society. We have the usual suspects, greedy, self centered individuals looking out for their interests, using the established modus operandi. Cut, slash and burn as many systems as possible while painting over the truth with colorful, truth distorting logic while enriching your self on the way.

An organization founded by Clara Barton in the 1880″s that has evolved into such a grab bag of I want my share thinking is an American tragedy of epic proportions.

petal , December 17, 2015 at 9:06 am

Funny timing. Just yesterday I was passed on the road in my area of NH by a Red Cross Hummer. It as white all over and the doors emblazoned with the red cross. In tiny print toward the back it said "donated by GM". Made me sick. Got me thinking about all of the mismanagement going back decades.

Melody , December 17, 2015 at 9:24 am

Personally, I'll throw any charitable discretionary money I might have into the gutter before I'd send a cent to the Red Cross. Took three strikes–but I'm done with them.
My father-in-law served in the SeaBees during WWII and initially influenced my dislike for the organization. He reported how Red Cross care packages were "SOLD" rather than distributed to intended service personnel. [Strike one!]

Much later the Twin Towers came down and I felt compelled to donate. When several weeks later I heard officials talk about the amount of contributions received, and asked us to dig deeper–they also revealed that they were setting aside (toward future disasters) at least half of donated dollars. (Whether this was true I don't know–but the fact that it made it into public discussion was not a skillful marketing ploy.) [Strike two!]

I then heard horror stories from local volunteers here on the (unaffected) part of the gulf coast who dropped what they were doing to offer help and support to Hurricane Katrina victims in myriad ways A veterinary friend–after describing the absolute chaos he encountered in the area–reported that late one night, after a gut-wrenching and exhausting day, he walked into the Red Cross tent for a cup of coffee. Not without paying for it–$1/cup–he was told. [Strike three!]

There are local charities still deserving of my small discretionary donations–so I won't truly be throwing money into the gutter; but if my only choice was give to the RC or throw it away: I'd throw it away.

Thanks for the article. I think further investigation would show that others charities–particularly those like the American Diabetes Association (with which I'm familiar)– have adopted that same managerialism model.

flora , December 17, 2015 at 10:53 am

"The Marketers' Best Laid Plans Led to Declining Contributions"

This year, for the first time ever in my adult life, I did not sent a contribution to the Red Cross. All the reasons listed in this excellent post went into my decision not to contribute. I still feel bad about it, but I can't 'enable' continued bad management of the Red Cross.

JEHR , December 17, 2015 at 11:11 am

This article proves yet again that by their words shall they be known. In this day and age when almost everything from politics to education is being subsumed by business lingo, it's interesting to see by the Red Cross example where it will all end up.

The Red Cross which depends on volunteers and donors gets master marketers and business expertise and becomes "branded" as a business; helping others in distress becomes being efficient; preventing and alleviating suffering becomes creating a profitable place where executives get mighty big bonuses; the bottom-up organization becomes a top-down monolith; taking care of emergencies becomes profit-making exercises; all in all, this Red Cross refurbishment reflects the society that we have become–the 1% versus the 99%. When organizations are defined in financial and business terms, there is no room for alleviating or preventing human suffering.

RUKidding , December 17, 2015 at 11:24 am

Crapification of "charities" abounds. I've lived in So CA at least part time since the '90s. San Diegans don't have a lot of love for the San Diego Red Cross:

http://www.utsandiego.com/uniontrib/20061228/news_7m28rcross.html
http://legacy.utsandiego.com/news/fires/weekoffire/20031028-9999_1m28redcross.html

I stopped giving to the Red Cross a long time ago bc of mis-mangement of money and making sure that the Big Wigs at the top get THEIRS first and screw everyone else. It's unfortunate, as this organization probably does some good stuff, but it's priorities are not good.

I donate a certain amount every year, and I look very closely and carefully at the organizations to whom I give my hard-earned dollars. Advise everyone else to do the same. There's a lot of "charities" out there that exist primarily to enrich those at the top, and any good that's done for others – whom the "charity" alleges to serve or support – is strictly incidental.

Good article re American Red Cross. Crapified.

cyclist , December 17, 2015 at 11:27 am

This is a great dissection of the decline at this august organization. Partners In Health is an example of a charity worth supporting.

BTW, I found the Wikipedia bio of the Bonnie McElveen-Hunter very creepy. Looking at the website of her company, Pace Communications, it took me awhile to figure out what they really do, which seems to be something on par with publishing airline magazines. It really isn't clear why this woman should have attained her power and status – e.g. trustee of the RAND Corporation? Really? Seems emblematic of the rot at the top of the US elite.

Jim A , December 17, 2015 at 11:29 am

Well publicized failures in the Hurricane Sandy response and the failure of their attempts at increased revenues through price raises, "branding" and marketing aside, the ARC WAS in increasingly dire straits when she took over. By many accounts centralizing things and closing many local branches WAS a necessity, because cutting overhead was desperately needed in an organization that was loosing large amounts of money every year. This is often that case with these "superstar managers," If everything is working well the organization doesn't bring them on. But when an organization is already floundering, the Boards look for a "superstar" that can "turn it around." It's a perfect situation for these guys: (they're mostly men) If the company goes bankrupt, they say that it was in worse shape than they thought and nobody could have saved it and it it DOES turn around (often for completely exogenous reasons) they can take the credit.

The Washington Metropolitan Area Transit Authority, which runs the subways and buses in Washington DC recently went through a protracted process of hiring a new director because there was a real deep divide on the board between those who wanted a transit executive and those who wanted a "turnaround specialist." They ended up with the latter and there's already talk about a "charm offensive" to try and woo more riders

reslez , December 17, 2015 at 4:37 pm

The Red Cross was bleeding red ink, partly because of less demand for blood products in surgery (they sell the blood that gets donated) and partly because their labeling system was out of date, which reduced demand compared to their competitors' products. This is something the ProPublica article makes clear that isn't really referenced in the HCR post.

So the Red Cross brought in a generic marketer/manager who did what they do best–chopping off employee heads while destroying what made the organization viable. The Red Cross isn't the kind of non-profit that can survive the loss of goodwill in a community. And they still haven't addressed the labeling problem.

Michael G , December 17, 2015 at 12:30 pm

NC readers might be interested in this report, which caused quite a stir in the UK yesterday. Needless to say it has been denounced as worthless by the charities concerned.
I guess the question is whether you mind that when you give a dime, a nickel goes to getting money from the next person
http://www.trueandfairfoundation.com/content/file/feature/review-hornets-nest-report-into-charitable-spending-UK-charities-12-dec-15.pdf

KYrocky , December 17, 2015 at 1:42 pm

Labeling these people generic managers or whatever is far too kind. The goal and driving force of these people was to extract more money from those most in need of charity and assistance. These people are shitty human beings, so call them what they are. The changes that they have wrought within the Red Cross organization has deprived countless suffering peoples of the good will and needed services that would have been provided by this organization BUT FOR THESE ASSHOLES.

Charities are not businesses. Charities, by definition, plan to GIVE things or services to others, not sell them, not to make profit. Putting profit loving Randians, possessed with the goal of using corporate profit taking methods, in charge of a charity is like putting "arsonists for profit" in charge of the fire department. The people that suffer are those that NEED charity, be it in the form of shelter, services, goods, or information, and we, as a society, are diminished.

Sacrificing the Red Cross on the alter of conservative economic ideology is tragic.

digi_owl , December 17, 2015 at 2:59 pm

Sadly the problem is spreading internationally, as US universities is seen as cream of the crop.

bob , December 17, 2015 at 4:28 pm

I have to bring up the post 911 witchhunt by fox news on the red cross too.

That seemed to the the turning point, or near it.

"you mean not all of our donations are going to NYC?"

With Bill Oreilly yelling and throwing spittle at the TV cameras, a change had to be made. I'm sure more than a few of his budddies, who are very Professional Managers, were first in the door.

It's just another part of the planned destruction of any sort of locally based ability or lobby.

just_kate , December 17, 2015 at 5:18 pm

years ago i worked for a marketing firm that did a significant amount of work for the organizer of the avon 3 day breast cancer walks and the amount of money wasted on frivolous items and activities made me sick. really opened my eyes about charities and how greed and fraud can be rampant in the least expected places. don't think i can get any more cynical abt the world at this point :(

Brooklin Bridge , December 17, 2015 at 6:43 pm

There is not enough money in the world to pay McGovern a bonus that would make up for what she has done to the RC. Perhaps a 1000 year stint in a max security prison would be a start though.

BRUCE E. WOYCH , December 17, 2015 at 7:27 pm

Asset Grabbing "Capture" (University of Chicago Economics? Harvard Business ?) and pervasive Control Fraud ( credits to William Black: https://www.ted.com/talks/william_black_how_to_rob_a_bank_from_the_inside_that_is?language=en )
is a revenue seeking parasitic mission creep in the MBA world of executive profiteering and predator capitalism.

In the source article mentioned above ( https://www.propublica.org/article/the-corporate-takeover-of-the-red-cross ) we see century+ old organization established with a charter for public service disaster relief, being marketed as a revenue stream with a potential for mass returns based upon the "brand" quality of saving peoples lives in catastrophic events. The article is part and parcel with how private interests have been dominated by profit driven incentives even in the most sacred trust areas of the public domain of non-profit charities essentially built on the back of American volunteers. How AT&T crony capital took over this organization and adopted it for their own monetary interest is not just a story of lost vision but of totally perverted revision gone off track from its founding purpose.
But make no mistake about it, this is only the tip of the iceberg where private asset stealth is involved in milking and bilking the public trust. the medical Institutions generally across the country have been insidiously going the same perverted path dependent way of revenue streaming as health and wealth as the definition of healthy relief.

[Jun 28, 2017] Health Care Renewal How Managerialsm- Generic Management Damaged the American Red Cross

Notable quotes:
"... "Isn't it great that we have someone that really has had that business expertise in developing and working with a brand and recognizing the power of it ?" ..."
"... Local officials were furious. They say the Red Cross showed up lacking basic supplies such as Band-Aids, portable toilets, and tarps to protect against the rain. Instead the group's volunteers handed out Red Cross-branded bags of items that weren't urgently needed like lip balm and tissues. ..."
"... ' McGovern has fired almost all of the trained and experienced volunteers and staff, ' Maxwell told ProPublica, replacing them 'with people who have absolutely no knowledge of what the Red Cross is or does in a disaster. Not only is she setting these people up to fail but she is compromising the service delivery that is so important to the clients.' ..."
"... The Red Cross Board of Governors , largely composed of well paid business managers (e.g., a former Vice Chairman of Goldman Sachs, a senior vice president of Eli Lilly, the chief financial officer of Home Depot, the executive vice president of Target), decided that a generic manager using a managerialist approach could cure the organization's perceived ills. The new CEO, who lacked any obvious experience or training relevant to the Red Cross mission, hired her former cronies at AT&T and Fidelity as managers. The new team cut costs, laid off employees, centralized management, and focused on marketing. The apparent results were fewer, less experienced, upset staff; fewer volunteers; declining interest in public health training products; and worsening disaster response. ..."
The American Red Cross is a storied non-profit organization. It provides disaster relief, provides a major part of the US blood supply, and has important public health teaching functions, such as teaching cardio-pulmonary resuscitation (look here ). Nonetheless, its operations have become increasingly controversial. ProPublica has been investigating them for years . The latest ProPublica report, entitled "The Corporate Takeover of the Red Cross," showed how this renowned organization has suffered under generic management/ managerialism , providing another case study showing how bad generic management and mangerialism are for health care and public health.

We have frequently posted about what we have called generic management , the manager's coup d'etat , and mission-hostile management. Managerialism wraps these concepts up into a single package. The idea is that all organizations, including health care organizations, ought to be run people with generic management training and background, not necessarily by people with specific backgrounds or training in the organizations' areas of operation. Thus, for example, hospitals ought to be run by MBAs, not doctors, nurses, or public health experts. Furthermore, all organizations ought to be run according to the same basic principles of business management. These principles in turn ought to be based on current neoliberal dogma , with the prime directive that short-term revenue is the primary goal (sometimes in the for-profit sphere called the shareholder value principle, look here .)

The ProPublica article showed how the leadership of the American Red Cross was given over to generic managers; how they ran the organization based on generic business management principles; and how the results were bad for the organization's mission. I will address each point with quotes from the article, and add the commentary that was lacking in a straight investigative journalistic report. The New CEO is a Generic Manager who Specialized in Marketing

Gail McGovern became Red Cross CEO in 2008. Her academic background was in the "quantitative sciences." Her first job was as a computer programmer. Then,

McGovern climbed steadily through the ranks at AT&T. By the mid-1990s, she was head of the company's consumer markets division .

Next,

McGovern left AT&T in 1998, then spent four years at Fidelity Investments, where she was promoted to be the head of the retail mutual fund and brokerage business. Then came six years as a marketing professor at Harvard Business School....

On the other hand, she apparently had no specific experience, training or expertise relating to the mission of the Red Cross, and specifically no experience, training or expertise in public health, health care, blood banking, or disaster relief.

She Believes in the Primacy of Marketing

Her academic writings spell out her theory of corporate leadership. 'In many organizations, marketing exists far from the executive suite and boardroom,' she and her coauthors wrote in the Harvard Business Review. Companies that make this mistake are doomed to 'low growth and declining margins.'
One could argue that perhaps in the long run, a good product that sells itself might be better for a manufacturing firm than a temporarily persuasive marketing campaign. Even so, the mission of the Red Cross is not first to grow and make more money, or even to sell products, but instead it is

The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.

She was Hired by the Red Cross to Promote Generic Management with Emphasis on Marketing.

Ms McGovern was hired at a time when the dogma that business managers ought to run everything was becoming very prominent.

McGovern, selected after a global search by a headhunting firm, was seen as a candidate who would bring private-sector methods to the nonprofit.

"Isn't it great that we have someone that really has had that business expertise in developing and working with a brand and recognizing the power of it ?" [Red Cross Board Chairwoman Bonnie] McElveen-Hunter told the Washington Post at the time.

Note that the Chairwoman of the Board of Governors herself was

a wealthy Republican donor appointed by President George W. Bush in 2004

According to Wikipedia , she is a businesswoman whose undergraduate degree was in business, who worked for Bank of America and then founded Pace Communications, and who also has no discernable experience or expertise in health care, public health, or disaster relief.

The ProPublica article did not suggest that Ms McElveen-Hunter or anyone else really thought through how a generica manager practicing managerialism would actually benefit the mission of the Red Cross.

The CEO Recruited Other Generic Managers

Furthermore,

As part of her effort to run the Red Cross more like a business, McGovern recruited more than 10 former AT&T executives to top positions. The move stirred resentment inside the organization, with some longtime Red Cross hands referring to the charity as the 'AT&T retirement program.'

Again, one would expert a generic manager to feel most comfortable amongst others of her ilk. Again, any consideration of whether running the Red Cross "more like a business" would improve its success as a charity was not evident. The New Generic Managers Relied on Generic Management Dogma

They Established Centralized Control

The work of the Red Cross was traditionally done by local chapters. The new generic managers sought to decrease their independence from "corporate." So,

Each of the Red Cross' more than 700 chapters had its own bank account, tracked its own volunteers, and ran its own computer system. McGovern hoped to realize considerable savings by consolidating these back-office functions, creating what she dubbed 'One Red Cross.'
The notions that different chapters might face different challenges, and hence that flexible local control might do better addressing these challenges than would centralized top-down command were not apparently considered.

They Cut Costs, Particularly Through Cutting Employee Benefits and Laying Them Off

and hence tried to enhance short-term revenue:

She also got to work cutting costs : there was a round of layoffs ; she killed the charity's generous pension program and to employees' retirement accounts.
Also,

When McGovern was hired as CEO, there were over 700 Red Cross chapters across the country. Today, there around 250, though some former chapter offices stayed open even as they were folded into other chapters. The Red Cross declined to say how many offices it closed.

Over the course of McGovern's tenure, the number of paid employees fell from around 36,000 to around 23,000 and the Red Cross today spends several hundred million dollars less a year than it did in 2008. (Most of the staff cuts were from local chapters, not the blood business, though the Red Cross declined to provide a breakdown.)

They Focused on Marketing and Public Relations

Early on,

consolidated, powerful, breathtaking marketing .'

a brand to die for ,' she often said.


In addition,

The Red Cross' chief of fundraising, a former colleague of McGovern's from Fidelity, told the assembled officials that the organization should attract far more than the $520 million in donations it was bringing in annually. ' Strength of brand ,' his PowerPoint said, 'justify results in

range.'

Also, CEO McGovern chose Jack McMaster to run the public health training operation, praising McMaster to Red Cross staff as a master marketer and a trusted former colleague [at AT&T].

As an aside, actually,

After leaving AT&T, he took a job in 1999 as CEO of a Dutch telecom company called KPNQwest. In just a few years, he had run it into what Reuters called a ' spectacular collapse prompting a bankruptcy, a storm of lawsuits, and comparisons to Enron . Just months before the company went under, McMaster publicly boasted that it was poised for dramatic growth.
This suggests that McGovern placed far more priority on hiring "master marketers" than finding trustworthy leaders. Of course, a CEO who is mainly a professional marketer may see marketing as central to whatever organization she is running. The notion that the Red Cross had such a wonderful brand because it used to do wonderful things did not apparently occur to the new generic marketers. Furthermore, the notion that even "master marketing" may not hide the undermining of the organization's mission also did not occur.

They Suppressed Opinions They Did Not Want to Here

As discontent among staff rose (see below), leading to anguish expressed on social media,

critical posts later disappeared from the Facebook page. Moderator Ryan Kaltenbaugh reminded participants that the group was intended to be ' a POSITIVE forum sharing ideas, stories, pictures, links, videos and more across our great country.'

' [P]lease (please) refrain from posting your negative personal views

To a leadership obsessed with marketing, appearance may have seemed to be everything. Yet again, suppressing the bad news does not make what generated it disappear.

They Paid Themselves Very Well

We have often discussed how executive compensation in health care now seems to rise beyond any level that could be justified by the executives' actions and performance. A central problem with managerialism seems to be that now top managers can virtually set their own pay. Thus, they have become value extractors, more focused on their own enrichment than their organizations' ultimate success. The ProPublica article did not explicitly discuss executive compensation except after the failure of the expansion plans by the "master marketer" McMaster,
Amid layoffs in the division last year, bonuses given to McMaster and his team raised eyebrows within the Red Cross, a former headquarters official said.

In a statement, the Red Cross said the bonuses were appropriate because the division hit 'strategic milestones' including establishing 'a national tele-service platform and national sales and service delivery models.'

Regardless, the division failed to reach its real goal, expansion of its business.

Furthermore, there is evidence that during the reign of McGovern, the top managers as a group have been very well paid, especially given that they were running a charity whose good works are largely supported by contribuations and the taxpayers. We noted in a 2011 post that

In 2009, then CEO Gail McGovern received over a million in total compensation, $1,032,022 to be exact. Its President for Biomedical Services got $850,489. Its Executive VP for Biomedical Services got $596,309. Twelve other executives got more than $250,000. Of those, ten got more than $350,000.

Since then, while Ms McGovern's compensation has actually declined, the number of very well paid managers has actually grown. According to the organization's latest available IRS Form 990 filing, for 2013, Ms McGovern had total compensation of over $597,000, and 15 managers had total compensation over $250,000, of these, 10 were over $400,000.

So despite all the problems afflicting the Red Cross (see below, and the larger ProPublica series), the top managers still managed to pay themselves very well.

The Results were Bad

The Marketers' Best Laid Plans Led to Declining Contributions

McMaster laid out how the CPR unit would attract more customers while at the same time hiking prices for classes and training materials in CPR, swimming, and babysitting. He believed the Red Cross brand justified higher prices than were being charged around the country.

'We thought if we raised prices, American Heart [Association] would probably raise prices, and life would be good,' McGovern said at a 2013 employee town hall meeting, referring to the Red Cross' competitor in the CPR class business. 'Didn't happen.'

Also,

'A halfway competent market analysis would have told you that the bulk of our business was in selling to small businesses who viewed us as a business expense,' recalled one former chapter executive director. 'When the massive price increases arrived, it was too much and customers bailed.'
This illustrates that the generic managers did not even achieve their business goal, increasing sales and increasing revenue. What did they care, though, if the bonuses still rolled in?

Centralized Control, Benefit Cuts, Layoffs, and the Marketing Focus Wounded Employee Morale and Discouraged Volunteers. Those who push generic management practices often seem blind to their adverse effects. So, many of those who taught classes - including volunteers who did the work for free - quit after being turned off by headquarters' poor communication .

Also,

But much like the organization's paid staff, many of its volunteers appear deeply disillusioned . An internal survey obtained by ProPublica found volunteers around the country had a satisfaction rate of 32 percent this year - down 20 points from last year.
Furthermore, driving the alienation, longtime employees and volunteers say, is a gulf that has opened up between McGovern's executive suite and the rank and file who have spent decades in the mission-focused nonprofit world.

She has surrounded herself with a tight-knit group of former telecom colleagues, they say. 'They're all people from the period when AT&T imploded,' said one former senior official. ' The priorities seem to be a reflection of what that team is comfortable with: sales and marketing .'

An internal assessment previously reported by ProPublica and NPR said national headquarters' focus on image slowed the delivery of relief aid during Hurricane Isaac and Superstorm Sandy. Officials engaged in ' diverting assets for public relation purposes ,' according to the assessment.

Layoffs and Cutback Reduced Capacity to Respond to Disasters

One example was the response in West Virginia

In West Virginia, where several chapters have been shuttered, emergency management officials said the group's response to recent disasters has been anemic . After a recent water shortage caused by a chemical leak, the charity declined to provide any help to residents, the Register-Herald of Beckley reported . Local officials described that as business as usual for the charity. When a tornado hit in the southern part of the state, the Red Cross' inadequate response left scores of victims without enough food , according to the newspaper.
Another was the response in northern California,
In Northern California last year, the Red Cross shuttered the Napa County chapter and laid off disaster relief staff, according to an

presentation. Then, in September, a drought-fueled fire swept through the area, consuming more than 75,000 acres and 1,200 homes.

Because of the issues with the Red Cross' shelter , nearly all of 1,000 displaced people at the Napa County Fairgrounds - including the elderly, new mothers and children, and anyone with a pet - ended up sleeping outside in tents, cars or RVs . The problems were first reported by the Press Democrat newspaper.

Also,
Local officials were furious. They say the Red Cross showed up lacking basic supplies such as Band-Aids, portable toilets, and tarps to protect against the rain. Instead the group's volunteers handed out Red Cross-branded bags of items that weren't urgently needed like lip balm and tissues.

The Red Cross responders were inexperienced and, according to residents, not enough of them spoke Spanish, the language of many of the fire victims.

In general, as told by former Red Cross volunteer Becky Maxwell, a self-described "die-hard Red Cross person for 25 years," who quit after becoming increasingly frustrated,

' McGovern has fired almost all of the trained and experienced volunteers and staff, ' Maxwell told ProPublica, replacing them 'with people who have absolutely no knowledge of what the Red Cross is or does in a disaster. Not only is she setting these people up to fail but she is compromising the service delivery that is so important to the clients.'

Summary

The Red Cross Board of Governors , largely composed of well paid business managers (e.g., a former Vice Chairman of Goldman Sachs, a senior vice president of Eli Lilly, the chief financial officer of Home Depot, the executive vice president of Target), decided that a generic manager using a managerialist approach could cure the organization's perceived ills. The new CEO, who lacked any obvious experience or training relevant to the Red Cross mission, hired her former cronies at AT&T and Fidelity as managers. The new team cut costs, laid off employees, centralized management, and focused on marketing. The apparent results were fewer, less experienced, upset staff; fewer volunteers; declining interest in public health training products; and worsening disaster response.

Thus, once again, generic managers and managerialism have laid low a formerly proud charity. Unfortunately, this one also happens to have vital public health and disaster relief roles that have now been severely compromised.

Based on previous experience, it should come as no surprise that generic managers who do not know much or care much about public health and health care, and who rely on a one-size fits all management dogma uninformed by the public health or health care context or public health or health care values will end up undermining patients' and the public's health.

The real surprise is that the generic managers have up to now had no problem maintaining the managers' coup d'etat , that is, their iron grip on the leadership of most public health and health care organizations.

To prevent our ongoing downward spiral, we need to reverse the managers' coup d'etat, and return leadership to those who understand health and health care, support their values, and are willing to be accountable for doing so.

ADDENDUM (17 December, 2015) - This post was republished on the Naked Capitalism blog .

Anonymous said... December 17, 2015 at 10:36:00 AM EST

Great post - clarifies why I am seeing the increasingly generic promotion/fund-raising communication "relationships" from many non-profit and advocacy groups lately. -Paul Rowan

afraid said... December 17, 2015 at 5:07:00 PM EST

Is Shkreli a prime example of managerialism?

Roy M. Poses MD said...

Afraid,

I'm afraid Shkreli is not really a typical generic manager, and certainly not typical of the CEO of a big pharma (or other health care) corporation.

Shkreli is a small time player.

Also, he is basically a hedge fund guy, and I don't believe there is any love lost between big corporate CEOs and hedgies. Finally, Shkreli was willing to say out loud what most big corporate managers would not: it's all about the money.

From the AP ( http://bigstory.ap.org/article/763ef9ae0809445e817438a79fcc979b/turing-ceo-martin-shkreli-custody-after-securities-probe )

"'No one wants to say it, no one's proud of it, but this is a capitalist society, a capitalist system and capitalist rules,' he said in an interview at the Forbes Healthcare Summit this month. 'And my investors expect me to maximize profits, not to minimize them or go half or go 70 percent but to go to 100 percent of the profit curve.'"

So I wouldn't be surprised if the big-time managerialists are cheering now that he was arrested. They can use his arrest to pretend that regulation and law enforcement are tough, and that the big-time managers don't have impunity. Furthermore, they can claim that he was just the rare bad apple.

However, a reader of this blog can see the problems are systemic. See in particular:

[Jun 28, 2017] Seriously flawed study will become an urban legend proving that a higher minimum wage is bad for poor people.

Jun 28, 2017 | economistsview.typepad.com

Sandwichman , June 28, 2017 at 01:02 AM

Researchers at the University of Washington have published a study that finds a 9.4% decline in hours of work for low wage workers, earning under $19 an hour. Trouble is the study doesn't appear to take account of wage bracket creep so the hours of workers making just under $19 an hour a year ago just vanish when they get a raise to above $19 an hour.

The EPI, Peter Dorman and Sandwichman have all weighed in with criticisms. But in all likelihood this seriously flawed study will become an urban legend "proving" that a higher minimum wage is bad for poor people.

http://econospeak.blogspot.com/2017/06/seattle-minimum-wage.html

anne -> Sandwichman ... , June 28, 2017 at 05:41 AM
http://www.nber.org/papers/w23532.pdf

June, 2017

Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle
By Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, and Hilary Wething

This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees' earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

im1dc -> anne... , June 28, 2017 at 05:41 AM
Research like that ought not be published, timeline used is too short to be reliable or valid and in all probability they used data skewed from limited sources.
anne -> Sandwichman ... , June 28, 2017 at 05:41 AM
http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-Experiences-2015-16.pdf

June 20, 2017

Seattle's Minimum Wage Experience 2015-16
By Michael Reich, Sylvia Allegretto, and Anna Godoey

Abstract

This brief on Seattle's minimum wage experience represents the first in a series that Center on Wage and Employment Dynamics will be issuing on the effects of the current wave of minimum wage policies-those that range from $12 to $15. Upcoming CWED reports will present similar studies of Chicago, Oakland, San Francisco, San Jose and New York City, among others. The timing of these reports will depend in part upon when quality data become available. We focus here on Seattle because it was one of the early movers.

Seattle implemented the first phase of its minimum wage law on April 1, 2015, raising minimum wages from the statewide $9.47 to $10 or $11, depending upon business size, presence of tipped workers and employer provision of health insurance. The second phase began on January 1, 2016, further raising the minimum to four different levels, ranging from $10.50 to $13, again depending upon employer size, presence of tipped workers and provision of health insurance. The tip credit provision was introduced into a previously no tip credit environment. Any assessment of the impact of Seattle's minimum wage policy is complicated by this complex array of minimum wage rates. This complexity continues in 2017, when the range of the four Seattle minimum wages widened, from $11 to $15, and the state minimum wage increased to $11.

We analyze county and city-level data for 2009 to 2016 on all employees counted in the Quarterly Census of Employment and Wages and use the "synthetic control" method to rigorously identify the causal effects of Seattle's minimum wage policy upon wages and employment. Our study focuses on the Seattle food services industry. This industry is an intense user of minimum wage workers; if wage and employment effects occur, they should be detectable in this industry. We use county level data from other areas in Washington State and the rest of the U.S. to construct a synthetic control group that matches Seattle for a nearly six year period before the minimum wage policy was implemented. Our methods ensure that our synthetic control group meets accepted statistical standards, including not being contaminated by wage spillovers from Seattle. We scale our outcome measures so that they apply to all sectors, not just food services.

Our results show that wages in food services did increase-indicating the policy achieved its goal-and our estimates of the wage increases are in line with the lion's share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13.

Paine -> anne... , June 28, 2017 at 06:20 AM
We need living income compatible
wage rates and hours

The shorter hours program H
of course needs to tie into
the living wage calculation W

H x W

Start with living income flow rate of say 30 k per year
At 1500 hours per year
that requires a wage rate
Of 20 dollars per hour

Equally a 15 dollar wage rate requires 2000 hours per year

So what's your living income for a year ?

Is it 25 k or 20 k or ....


anne -> Sandwichman ... , June 28, 2017 at 05:44 AM
https://www.nytimes.com/2017/06/26/business/economy/seattle-minimum-wage.html

June 26, 2017

How a Rising Minimum Wage Affects Jobs in Seattle
By NOAM SCHEIBER

Three years ago, Seattle became one of the first jurisdictions in the nation to embrace a $15-an-hour minimum wage, to be phased in over several years.

Over the past week, two studies have purported to demonstrate the effects of the first stages of that increase - but with starkly diverging results.

The first study, by a team of researchers at the University of California, Berkeley, supports the conclusion of numerous studies before it, that increasing the minimum wage up to a level that is about half or less of an area's typical wage leads to at most a small reduction in employment.

That roughly describes Seattle, which first increased its minimum wage to $11 an hour from $9.47 for large businesses in April 2015, then to $13 an hour for many of those businesses in January 2016. (Small businesses, and large ones that provide health insurance for workers, had lower increases.)

The Berkeley study focused on the restaurant industry because of the high proportion of restaurant workers who are paid the minimum wage. It found that for every 10 percent that the minimum wage rose, wages in the industry rose nearly 1 percent, and that there was no discernible effect on employment.

By contrast, the second study, which a group of researchers at the University of Washington released on Monday, suggests that the minimum wage has had a far more negative effect on employment than even skeptics of minimum-wage increases typically find. (Neither study has been formally peer-reviewed.)

The University of Washington authors held one significant advantage over other economists studying the issue: detailed data on hours and earnings for workers affected by the increase.

This data allowed the researchers to measure the effects of the minimum wage on workers in all industries rather than relying on restaurants as a stand-in, a common technique. It also allowed them to measure a change in hours worked, a potentially more complete indication of the effect of a minimum-wage increase than the employee head count that many studies use....

Paine -> anne... , June 28, 2017 at 06:26 AM
Yes
Plenty of room to " find "
Pro and con " results "

I like the shift from jobs to hours

Raising he wage rate can be easily off set by lowering hours

Of course that suggests a lift in labor productivity
And Or reduction in service or product either quantity or quality

Paine -> Paine ... , June 28, 2017 at 06:28 AM
Real Labor Productivity increases can be the result of increased work intensity
Shrewd redesign of tasks
Or
Use of additional or better technical systems

[Jun 28, 2017] The single payer system works in Canada, and that is important because Canada is close in values to those of US citizens

Jun 28, 2017 | economistsview.typepad.com

RGC -> pgl... , June 28, 2017 at 08:50 AM

[Taxes may go up but lower costs than private insurance could give many people a net savings.]
............
We will describe the single payer system in Canada, because Canada is physically close and close in values to those of U.S. citizens.

Canada provides free medical services through private entities. The government sets federal standards to assure quality of care. The individual's health remains confidential between a person and his or her physician. In each Canadian province, each doctor submits the insurance claim against the provincial insurer. The person who gets healthcare does not get involved in billing and reclaim.

The Canadian government keeps advertising at a minimum. Costs are paid through funding from income taxes. There are no deductibles on basic health care and co-pays are kept extremely low. Provinces issue a health card to each individual who enrolls and everyone receives the same level of care. There is no variety of plans because all essential basic care is covered, including maternity and infertility problems. Dental and vision care may or may not be covered depending on the Province. Some provinces provide private supplemental plans for patients who desire private rooms if hospitalized.

Cosmetic surgery and some elective surgery are generally not covered. These can be paid out-of-pocket or through private insurers. One's health coverage is not affected by loss or change of jobs, as long as premiums are up to date. There are no lifetime limits or exclusions for pre-existing conditions.

Canadians chose their family physician (called a general practitioner or GP). If the person wants to see a specialist, the GP will make a referral. The median wait time to see a specialist physician is a month. The median wait time for diagnostic services such as MRI and CAT scans is two weeks. The median wait time for surgery is four weeks.

Pharmaceutical medications are covered by public funds for the elderly or indigent, or through employment-based private insurance. The Canadian government negotiates drug prices with suppliers to control costs.

Physician incomes in Canada rose initially after the single payer system was implemented. A reduction in physician salaries followed, many fearing this would be a long-term result of government-run healthcare. However, by the beginning of the 21st century, medical professionals were again among Canada's top earners.

The main thing to notice is that Canada's healthcare cost to its GDP is 11 percent whereas the U.S. cost is 17 percent of the GDP.

http://www.huffingtonpost.com/entry/its-time-for-a-single-payer-healthcare-system_us_58d6470de4b0f633072b37f8

pgl -> RGC... , June 28, 2017 at 09:59 AM
Canada gets a lot of things right that we totally mess up.

[Jun 28, 2017] Whats so Great about Free Trade?

Notable quotes:
"... It is not becoming involuntarily unemployed that is devastating. It is the loss of income security that sucks. I was laid off 6/16/2015, but I was 66 years and 2 months old having earned 37 years of service credit in our defined benefits pension plan and then granted an additional 6 years pension service credit by virtue of taking my severance benefits in the form of enhanced retirement. ..."
"... I had wanted to work six more years so I could take survivor benefit and still have a sufficient retirement income, but the severance package allowed me that freedom instead. ..."
"... There is no such thing as free trade. At best, there are treaties which successively approximate free trade. The problem comes in with who negotiates these agreements, the agreements largely addressing the concerns of those selected to do so, while ignoring the concerns of those not selected to do so. Which is the entire problem. Capital is selected; labor is not. ..."
"... So who ends up liking these things? Capital. Who ends up not liking them? Labor and environment. Duh? Is this really that hard to figure out? ..."
"... "Free trade" (whatever that is) is not necessarily fair trade. Free trade is a slogan special interest use to protect their capture of trade profits. Fair trade would be the attempt to manage trade such that the maximum number of winners is produced. ..."
Apr 01, 2016 | economistsview.typepad.com

David Glasner (I cut quite a bit -- the original is more than twice as long):

What's so Great about Free Trade? : Free trade is about as close to a sacred tenet as can be found in classical and neoclassical economic theory. ... Despite the love and devotion that the doctrine of free trade inspires in economists, the doctrine ... has never been popular among the masses. ...

The key to understanding that disconnect is, I suggest, the way in which economists have been trained to think about individual and social welfare, which, it seems to me, is totally different from how most people think about their well-being. In the standard utility-maximization framework, individual well-being is a monotonically increasing function of individual consumption, leisure being one of the "goods" being consumed, so that reductions in hours worked is, when consumption of everything else is held constant, welfare-increasing. Even at a superficial level, this seems totally wrong. ...

What people do is a far more important determinant of their overall estimation of how well-off they are than what they consume. When you meet someone, you are likely, if you are at all interested in finding out about the person, to ask him or her about what he or she does, not about what he or she consumes. Most of the waking hours of an adult person are spent in work-related activities. ... It seems to me that what matters to most people is the nature of their relationships with their family and friends and the people they work with, and whether they get satisfaction from their jobs or from a sense that they are accomplishing or are on their way to accomplish some important life goals. ...

Moreover, insofar as people depend on being employed in order to finance their routine consumption purchases..., the unplanned loss of their current job would be a personal disaster, which means that being employed is the dominant – the overwhelming – determinant of their well-being. Ordinary people seem to understand how closely their well-being is tied to the stability of their employment, which is why people are so viscerally opposed to policies that, they fear, could increase the likelihood of losing their jobs.

To think that an increased chance of losing one's job in exchange for a slight gain in purchasing power owing to the availability of low-cost imports is an acceptable trade-off for most workers does not seem at all realistic. Questioning the acceptability of this trade-off doesn't mean that ... in principle, the gains from free trade are[n't] large enough to provide monetary compensation to workers who lose their jobs, but I do question whether such compensation is possible in practice or that the compensation would be adequate for the loss of psychic well-being associated with losing one's job, even if money income is maintained. ...

The psychic effects of losing a job (an increase in leisure!) are ignored by the standard calculations of welfare effects in which well-being is identified with, and measured by, consumption. And these losses are compounded and amplified when they are concentrated in specific communities and regions...

The goal of this post is not to make an argument for protectionist policies, let alone for any of the candidates arguing for protectionist policies. The aim is to show how inadequate the standard arguments for free trade are in responding to the concerns of the people who feel that they have been hurt by free-trade policies or feel that the jobs that they have now are vulnerable to continued free trade and ever-increasing globalization. I don't say that responses can't be made, just that they haven't been made.

The larger philosophical or methodological point is that ... economic theory can tell us that an excise tax on sugar tends to cause an increase in the price, and a reduction in output, of sugar. But the idea that we can reliably make welfare comparisons between alternative states of the world when welfare is assumed to be a function of consumption, and that nothing else matters, is simply preposterous. And it's about time that economists enlarged their notions of what constitutes well-being if they want to make useful recommendations about the welfare implications of public policy, especially trade policy.

Barkley Rosser April 01, 2016 at 12:32 AM

The happiness literature on the impact of involuntary unemployment on happiness is quite large, with people like David Blanchflower having played important roles. An offhand summary is that becoming involuntarily unemployed is indeed one of the events that is most devastating to the happiness of most people, with only a few events worse, including having one's spouse die or being thrown in jail.

RC AKA Darryl, Ron -> Barkley Rosser ...

It is not becoming involuntarily unemployed that is devastating. It is the loss of income security that sucks. I was laid off 6/16/2015, but I was 66 years and 2 months old having earned 37 years of service credit in our defined benefits pension plan and then granted an additional 6 years pension service credit by virtue of taking my severance benefits in the form of enhanced retirement.

I had wanted to work six more years so I could take survivor benefit and still have a sufficient retirement income, but the severance package allowed me that freedom instead.

With firms no longer offering defined benefits pension plans then we need to expand social security into a full income pension plan. We need to increase unemployment benefits as well. Once we have paid for that then the plutocrats will find that they are better off paying US workers to make stuff since all their global price arbitrage profits have been clawed back.

DrDick -> RC AKA Darryl, Ron... Reply Friday, April 01, 2016 at 06:58 AM

I think this is an important factor. It is certainly the case that a certain level of consumption increases happiness, but beyond a fairly moderate level, I do not think it actually adds much. Another important factor is having something meaningful to do with your time. For most people, that is work. Boredom is a serious problem among the retired.

PPaine -> DrDick... April 01, 2016 at 07:10 AM

We have more then just skill crushing, job experience crushing. Impacts of domestic production erasing imports. We have the implied competition on wages. Of import threats

Wage stag --

JohnH -> PPaine ... April 01, 2016 at 07:31 AM

Economists largely ignore distribution of benefits, focusing on efficiency and the 'total good.' How that total good is divvied up is largely irrelevant to them, unless the populace gets testy.

In fact, most people would be better off if the economy were slightly smaller but distributed much more evenly. Economists just can't seem to wrap their heads around that concept.

RC AKA Darryl, Ron -> DrDick... April 01, 2016 at 09:58 AM

"I think this is an important factor."

[Not sure which this that you are agreeing with. So, let's say that income security means a roof over are heads and food to eat for the whole family. Then there is this boredom thingy. With a little acreage and a sound mind and body then staying occupied, productive (in some manner of speaking - a rose is a rose is a rose), and happy is a piece of cake. A tenement room with nothing but a TV would be death sentence for me. If not for money then I would never have needed to work for someone else. I see good honest work to do everywhere I look.]

reason April 01, 2016 at 12:45 AM

He came close but he missed the major point. SECURITY.

What do most people see as their life goal? To raise a family. How long does it take? Decades. Flexibility isn't a boon - it is a disaster for most people.

If you only look at a static picture of the world (which is the traditional view of economists) how can you possibility see this?

ilsm -> reason... April 01, 2016 at 04:35 AM

Economics is about "distribution of scarce resources......." if I recall ECON 101.

That phrase is as forgotten and ignored as the thing in the Declaration of Independence about "all men created equal"!

Unless the measure of "good" wrt distribution is the hoard of the richest.

RC AKA Darryl, Ron -> reason... April 01, 2016 at 05:24 AM

"He came close but he missed the major point. SECURITY..."

[Too bad. As I was reading this I was liking it so much that it had already elevated my former opinion of David Glasner, technically elegant, all the way up to topically relevant and possibly even socially astute, but from what you say then I must put a hold on that socially astute. I guess I had better read the entire article before I begin to comment further.]

RC AKA Darryl, Ron -> reason... April 01, 2016 at 06:10 AM

You are correct. Glasner missed the point on security, so he also missed the point that if income is maintained then that would cover the lion's share of well being. Glasner is correct that money is not everything, just as consumption is not everything, but that really does come down to just how much money that we are talking about. I worked a long time contributing into a traditional pension plan. I took great pride in my work, but I have not missed my job or felt inadequate because of the lack of that purpose for a minute since I was laid off on 6/16/2015. That's because between my social security and pension incomes then I can still make my mortgage payments and all my other bills and due to my reduced expenses on payroll taxes, clothes, and gas have more money left over for landscaping and other home projects than I did when I was working. If I was eating cat food or living under a bridge then I would be feeling much worse about having been laid off.

Benedict@Large -> reason... April 01, 2016 at 06:18 AM

There is no such thing as free trade. At best, there are treaties which successively approximate free trade. The problem comes in with who negotiates these agreements, the agreements largely addressing the concerns of those selected to do so, while ignoring the concerns of those not selected to do so. Which is the entire problem. Capital is selected; labor is not. (Neither much is environmental.)

So who ends up liking these things? Capital. Who ends up not liking them? Labor and environment. Duh? Is this really that hard to figure out?

RC AKA Darryl, Ron -> Benedict@Large ... April 01, 2016 at 06:47 AM

"There is no such thing as free trade...."

[Sure there is. Anne complains about this as well. But a large part of maintaining plutocracy within the framework of a democratically electoral republic is the copious use of misleading euphemisms. We all know what they really mean, or at least all of us here reading and commenting at EV know what they mean. My guess is that unemployed workers in the rustbelt know what they mean as well.

Republicans talk about being free all of the time, but what they really are is just cheap. There is nothing free in life. Most people know this intuitively. There are choices and consequences. One consequence of the overuse of "free trade" is the emergence of fair trade. As far as I can tell the rebranding will hardly put a dent in the arbitrage profits. ]

PPaine -> reason... April 01, 2016 at 07:14 AM

Might I submit this word

A decent measure of Control over ones fate

The job markets must always offer everyone ....everyone an opportunity to prosper

Ours is a job based culture as the blog post asserts so clearly

To control ones fate and ones love ones fate
Job opportunities and options
must. always be out there cajoling you to " join us "

jonny bakho April 01, 2016 at 04:09 AM

The United States benefits and historically has benefitted by being one large trading block. Increases in wealth are linked to improvements in transportation even today.

One stumbling block in international trade is the restriction on movement of labor. This is a huge problem for the EU. Another problem is distribution of the profits from trade. How much should be captured by private interests and how much should go to the public good. Should some profits from trade be returned from one country to another? This is often done through severance taxes or export fees.

"Free trade" (whatever that is) is not necessarily fair trade. Free trade is a slogan special interest use to protect their capture of trade profits. Fair trade would be the attempt to manage trade such that the maximum number of winners is produced.

RueTheDay April 01, 2016 at 06:11 AM

It seems to me that a couple of obvious points are being missed.

1) The "gains from free trade" argument is simply that under conditions of trade, more "stuff" will be produced than under conditions of autarky, so theoretically there will be more available for everyone. That says nothing about how those gains are distributed, i.e., there will be individual winners and losers. In practice, those gains never seem to actually get redistributed so it's impossible to say everyone is made better off.

2) What is the root cause of comparative advantage? The textbooks tell us - differences in initial factor endowments, technology, and tastes. What does that mean in a world where a company in a developed company can pick up its capital (and implicitly, technology) and move it to a lesser developed country with cheaper labor, because capital is far more mobile than labor, in order to produce goods to supply its home market (where tastes differ)?

RC AKA Darryl, Ron -> RueTheDay ... April 01, 2016 at 06:22 AM

Glasner did not really miss your point # 1, but he muddled the message a bit over the benefits of redistribution. Almost everyone, but especially those trained in economics, seems to miss your point #2. The most basic premise of comparative advantage has long been broken by technology, but the fiction of that old saw serves the price arbitrage motives of capital so well that it has been preserved in amber like the fossilized bug it is.

Fred C. Dobbs April 01, 2016 at 06:35 AM

The Democrats "Free Trade" Divide
https://shar.es/1Y8WAd
Mark Engler - April 23, 2008

"Free trade" has produced some of the most contentious political debates of our times. In a famous April 2000 article in the New Republic (*), economist Joseph Stiglitz argued, "Economic policy is today perhaps the most important part of America's interaction with the rest of the world. And yet the culture of international economic policy in the world's most powerful democracy is not democratic." During the Bush years, economic policy received far less attention in political discussion than before; the use of military force took center stage. However, the trade and development debate went on, and it continues to affect fundamental questions of global poverty, inequality, and opportunity. Under a new Democratic administration-or under a Republican administration that demotes the neocons in favor of the more traditional, realist foreign policy establishment-it is likely that economic policy will again become the most important part of America's interaction with the world. And it is likely that it will remain profoundly undemocratic.

The injustices of neoliberal trade policy and the hypocrisy of U.S. stances in international negotiations have produced an upheaval in multilateral institutions like the WTO, and this has helped to transform the debate about the global economy. But trade is also an important domestic issue. Today, trade policy plays an important role in the battle for the soul of the Democratic Party.

One of the major accomplishments of the Clinton administration was to move to the fore of the Party a faction led by the centrist, corporate-friendly Democratic Leadership Council. Working with pro-"free trade" Republicans, Clinton and the DLC made passing the North American Free Trade agreement (NAFTA) in 1993 and approving U.S. entry into the World Trade Organization (WTO) in 1994 into bipartisan crusades. The coalition in favor of corporate globalization was always tenuous, however. In recent years, especially as the Bush administration implemented an increasing belligerent foreign policy, the "free trade" coalition has frayed. ...

*- http://www.mindfully.org/WTO/Joseph-Stiglitz-IMF17apr00.htm

anne -> Fred C. Dobbs... April 01, 2016 at 07:12 AM

Really important:

https://www.globalpolicy.org/global-taxes/42760-what-i-learned-at-the-world-economic-crisis.html

April 17, 2010

What I Learned at the World Economic Crisis
By Joseph Stiglitz

Next week's meeting of the International Monetary Fund will bring to Washington, D.C., many of the same demonstrators who trashed the World Trade Organization in Seattle last fall. They'll say the IMF is arrogant. They'll say the IMF doesn't really listen to the developing countries it is supposed to help. They'll say the IMF is secretive and insulated from democratic accountability. They'll say the IMF's economic "remedies" often make things worse--turning slowdowns into recessions and recessions into depressions.

And they'll have a point. I was chief economist at the World Bank from 1996 until last November, during the gravest global economic crisis in a half-century. I saw how the IMF, in tandem with the U.S. Treasury Department, responded. And I was appalled.

The global economic crisis began in Thailand, on July 2, 1997. The countries of East Asia were coming off a miraculous three decades: incomes had soared, health had improved, poverty had fallen dramatically. Not only was literacy now universal, but, on international science and math tests, many of these countries outperformed the United States. Some had not suffered a single year of recession in 30 years.

But the seeds of calamity had already been planted. In the early '90s, East Asian countries had liberalized their financial and capital markets--not because they needed to attract more funds (savings rates were already 30 percent or more) but because of international pressure, including some from the U.S. Treasury Department. These changes provoked a flood of short-term capital--that is, the kind of capital that looks for the highest return in the next day, week, or month, as opposed to long-term investment in things like factories. In Thailand, this short-term capital helped fuel an unsustainable real estate boom. And, as people around the world (including Americans) have painfully learned, every real estate bubble eventually bursts, often with disastrous consequences. Just as suddenly as capital flowed in, it flowed out. And, when everybody tries to pull their money out at the same time, it causes an economic problem. A big economic problem.

The last set of financial crises had occurred in Latin America in the 1980s, when bloated public deficits and loose monetary policies led to runaway inflation. There, the IMF had correctly imposed fiscal austerity (balanced budgets) and tighter monetary policies, demanding that governments pursue those policies as a precondition for receiving aid. So, in 1997 the IMF imposed the same demands on Thailand. Austerity, the fund's leaders said, would restore confidence in the Thai economy. As the crisis spread to other East Asian nations--and even as evidence of the policy's failure mounted--the IMF barely blinked, delivering the same medicine to each ailing nation that showed up on its doorstep.

I thought this was a mistake....

William

Getting fired from your job is one of the most stressful events one can experience in life.

Two psychiatrists once conducted a study to attempt to discover how stressful various events were. They did a massive survey of 5000 people.

Losing your job was calculated to be a 47/100. To compare, having your home foreclosed on was a 30 and the death of a close friend was a 37. The only things more stressful than losing your job were things regarding beginning or ending a marriage, and going to prison.

It's understandable why most people are very, very risk averse when it comes to job loss.

See: Holmes TH, Rahe RH (1967). "The Social Readjustment Rating Scale". J Psychosom Res 11 (2): 213–8.

[Jun 28, 2017] Shibboleth of contemporary economics, free trade is just one of the mechanisms by which empires extract rents

Notable quotes:
"... Pick up an introductory textbook of economics and your chances of finding an objective assessment of a system of this kind are very low indeed. Instead, what you'll find between the covers is a ringing endorsement of free trade, usually in the most propagandistic sort of language. Most likely it will rehash the arguments originally made by British economist David Ricardo, in the early 19th century, to prove that free trade inevitably encourages every nation to develop whatever industries are best suited to its circumstances, and so produces more prosperity for everybody. Those arguments will usually be spiced up with whatever more recent additions appeal to the theoretical tastes of the textbook's author or authors, and will plop the whole discussion into a historical narrative that insists that once upon a time, there were silly people who didn't like free trade, but now we all know better. ..."
"... There's a rich irony here, because not much more than a century ago, a healthy skepticism toward the claims of free trade ideology used to be standard in the United States. At that time, Britain filled the role in the world system that the United States fills today, complete with the global empire, the gargantuan military with annual budget to match, and the endless drumbeat of brushfire wars across what would one day be called the Third World, and British economists were accordingly the world's loudest proponents of free trade, while the United States filled the role of rising industrial power that China fills today, complete with sky-high trade barriers that protected its growing industries, not to mention a distinctly cavalier attitude toward intellectual property laws. ..."
"... Free trade is simply one of the mechanisms of empire in the age of industrialism, one part of the wealth pump that concentrated the wealth of the globe in Britain during the years of its imperial dominion and does the same thing for the benefit of the United States today. Choose any other mechanism of empire, from the web of military treaties that lock allies and subject nations into a condition of dependence on the imperial center, through the immense benefits that accrue to whatever nation issues the currency in which international trade is carried out, to the way that the charitable organizations of the imperial center-missionary churches in Victoria's time, for example, or humanitarian NGOs in ours-further the agenda of empire with such weary predictability: in every case, you'll find a haze of doubletalk surrounding a straightforward exercise of imperial domination. It requires a keen eye to look past the rhetoric and pay attention to the direction the benefits flow. ..."
"... Follow the flow of wealth and you understand empire. That's true in a general and a more specific sense, and both of these have their uses. In the general sense, paying attention to shifts in wealth between the imperial core and the nations subject to it is an essential antidote to the popular sort of nonsense-popular among tame intellectuals such as Thomas Friedman ..."
"... Free trade is only fair if all nations in the agreement start from the same point. If you choose not to invest in development, that's your own lookout, but don't complain if you end up under the de facto control of the one who did. ..."
Mar 24, 2017 | marknesop.wordpress.com

robert , February 26, 2014 at 11:44 am

Regarding Kirill's post about that shibboleth of contemporary economics, free trade.

Pick up an introductory textbook of economics and your chances of finding an objective assessment of a system of this kind are very low indeed. Instead, what you'll find between the covers is a ringing endorsement of free trade, usually in the most propagandistic sort of language. Most likely it will rehash the arguments originally made by British economist David Ricardo, in the early 19th century, to prove that free trade inevitably encourages every nation to develop whatever industries are best suited to its circumstances, and so produces more prosperity for everybody. Those arguments will usually be spiced up with whatever more recent additions appeal to the theoretical tastes of the textbook's author or authors, and will plop the whole discussion into a historical narrative that insists that once upon a time, there were silly people who didn't like free trade, but now we all know better.

What inevitably gets omitted from the textbook is any discussion, based in actual historical examples, of the way that free trade works out in practice That would be awkward, because in the real world, throughout history, free trade pretty consistently hasn't done what Ricardo's rhetoric and today's economics textbooks claim it will do. Instead, it amplifies the advantages of wealthy nations and the disadvantages of poorer ones, concentrating capital and income in the hands of those who already have plenty of both while squeezing out potential rivals and forcing down wages across the board. This is why every nation in history that's ever developed a significant industrial sector to its economy has done so by rejecting the ideology of free trade, and building its industries behind a protective wall of tariffs, trade barriers, and capital controls, while those nations that have listened to the advice of the tame economists of the British and American empires have one and all remained mired in poverty and dependence as long as they did so.

There's a rich irony here, because not much more than a century ago, a healthy skepticism toward the claims of free trade ideology used to be standard in the United States. At that time, Britain filled the role in the world system that the United States fills today, complete with the global empire, the gargantuan military with annual budget to match, and the endless drumbeat of brushfire wars across what would one day be called the Third World, and British economists were accordingly the world's loudest proponents of free trade, while the United States filled the role of rising industrial power that China fills today, complete with sky-high trade barriers that protected its growing industries, not to mention a distinctly cavalier attitude toward intellectual property laws.

One result of that latter detail is that pirate editions of the Encyclopedia Britannica were produced and sold by a number of American firms all through the 19th century. Most of these editions differed from their British originals in an interesting way, though. The entry for "Free Trade" in the original editions repeated standard British free-trade economic theory, repeating Ricardo's arguments and dismissing criticisms of free trade out of hand; the American editors by and large took the trouble to replace these with entries critiquing free trade ideology in much the same terms I've used in this post. The replacement of pro- with anti-free trade arguments in these pirate editions, interestingly enough, attracted far more denunciation in the British press than the piracy itself got, which shows that the real issues were tolerably well understood at the time.

When it comes to free trade and its alternatives, that level of understanding is nowhere near so common these days, at least in Britain -I've long suspected that businessmen and officials in Beijing have a very precise understanding of what free trade actually means, though it would hardly be to their advantage just now to talk about that with any degree of candor. In the West even those who speak most enthusiastically about relocalization and the end of corporate globalism apparently haven't noticed how effectively tariffs, trade barriers, and capital controls foster domestic industries and rebuild national economies-or perhaps it's just that too many of them aren't willing to consider paying the kind of prices for their iPods and Xboxes that would follow the enactment of a reasonable tariff, much less the prices that would be required if we had the kind of trade barriers that built the American economy and could build it again, and bluecollar First World workers were paid First World wages to make them.

Free trade is simply one of the mechanisms of empire in the age of industrialism, one part of the wealth pump that concentrated the wealth of the globe in Britain during the years of its imperial dominion and does the same thing for the benefit of the United States today. Choose any other mechanism of empire, from the web of military treaties that lock allies and subject nations into a condition of dependence on the imperial center, through the immense benefits that accrue to whatever nation issues the currency in which international trade is carried out, to the way that the charitable organizations of the imperial center-missionary churches in Victoria's time, for example, or humanitarian NGOs in ours-further the agenda of empire with such weary predictability: in every case, you'll find a haze of doubletalk surrounding a straightforward exercise of imperial domination. It requires a keen eye to look past the rhetoric and pay attention to the direction the benefits flow.

Follow the flow of wealth and you understand empire. That's true in a general and a more specific sense, and both of these have their uses. In the general sense, paying attention to shifts in wealth between the imperial core and the nations subject to it is an essential antidote to the popular sort of nonsense-popular among tame intellectuals such as Thomas Friedman, at least, and their audiences in the imperial core-that imagines empire as a sort of social welfare program for conquered nations. Whether it's some old pukka sahib talking about how the British Empire brought railroads and good government to India, or his neoconservative equivalent talking about how the United States ought to export the blessings of democracy and the free market to the Middle East or the former Soviet Union it's codswallop, and the easiest way to see that it's codswallop is to notice that the price paid for whatever exports are under discussion normally amounts to the systematic impoverishment of the subject nation.

marknesop , February 26, 2014 at 5:44 pm

Free trade is only fair if all nations in the agreement start from the same point. If you choose not to invest in development, that's your own lookout, but don't complain if you end up under the de facto control of the one who did. But when a highly-developed nation espouses a free trade agreement with a nation that is just starting, it should be fairly easy to forecast who will come out ahead on the deal.

Did you uhhh write that yourself? Because it's pretty awesome.

astabada , February 27, 2014 at 12:46 am

I agree with Mark, your comment is great. Especially when you mention that these matters were much more clear to the general public a century ago, than they are now.

This is what List wrote (National System):

It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors in the British Government administrations. Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.

[Jun 28, 2017] The Scourge of Managerialism – Generic Management, the Managers Coup DEtat, Mission-Hostile Management Rolled Up, as Described by Some Men from Down Under

Notable quotes:
"... The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market. Both ideas have far-reaching implications. The claim that every organisation - whether it is a mining company, a hospital, a school, a professional association or a charity - must be structured according to a single model, conforming to a single set of legislative requirements, not so long ago would have seemed bizarre, but is now largely taken for granted. The principle of the market has become the solitary, or dominant, criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment to critical reflection, have become displaced and devalued. Indeed, the latter are viewed as quaint anachronisms with less importance and meaning than formal procedures or standards that can be readily linked to key performance indicators, budget end points, efficiency markers and externally imposed targets. ..."
"... Originally conceived as a strategy to manage large and increasingly complex organisations, in the contemporary world, no aspect of social life is now considered to be exempt from managerialist principles and practices. Policies and practices have become highly standardised, emphasising market-style incentives, devolved budgets and outsourcing, replacement of centralised budgeting with departmentalised user-pays systems, casualisation of labour, and an increasingly hierarchical approach to every aspect of institutional and social organisation. ..."
"... The managerial class is the universal class Hegel wrote about. It is the enemy of the productive classes, the agricultural and the industrial. Perhaps managers are like the eunuchs in former empires, grabbing power without production, always zealous that no idea will threaten their standing. ..."
"... Pick any empire on the verge of collapse in history and you'll find terrifying parallels to America today. I think all failing empires/societies must follow roughly similar trajectories on their way to oblivion. ..."
"... The creation of "professional managers" was not simply shaped by market fundamentalism but also by the progressive movement itself. Robert H. Wiebe's book "The Search for Order: 1877-1920, does a remarkable job of detailing this process. ..."
"... The trajectory runs from local autonomy once being the heart of American democracy, to the incremental erosion of the autonomy of community, to the supposedly necessary regulatory, managerial needs of urban-industrial life. and finally to the creation of flexible administrative devices that tended to encourage the creation of professional managers(in both the public and private sectors) and the increasing centralization of authority. ..."
Jun 28, 2017 | www.nakedcapitalism.com
Posted on October 29, 2015 by Lambert Strether Lambert here: As we dig deeper into the health care system, concepts like those expressed in this article will become increasingly useful. The patterns identified by Poses here remind me of the university, which is also being eaten alive by a bloated and parasitical administrative layer.

By Roy Poses , MD, Clinical Associate Professor of Medicine at Brown University, and the President of FIRM – the Foundation for Integrity and Responsibility in Medicine. Cross posted from the Health Care Renewal website

I just found an important article that in the June, 2015 issue of the Medical Journal of Australia(1) that sums up many of ways the leadership of medical (and most other organizations) have gone wrong. It provides a clear, organized summary of "managerialism" in health care, which roughly rolls up what we have called generic management , the manager's coup d'etat , and aspects of mission-hostile management into a very troubling but coherent package. I will summarize the main points, giving relevant quotes.

Recent Developments in Business Management Dogma Have Gravely Affected Health Care

Many health practitioners will consider the theory of business management to be of obscure relevance to clinical practice. They might therefore be surprised to learn that the changes that have occurred in this discipline over recent years have driven a fundamental revolution that has already transformed their daily lives, arguably in perverse and harmful ways.

These Changes Have Been Largely Anechoic

these changes have by and large been introduced insidiously, with little public debate, under the guise of unquestioned 'best practice'.

See our previous discussions of the anechoic effect , how discussion of facts and ideas that threaten what we can now call the managerialist power structure of health care are not considered appropriate for polite conversation, or public discussion.

Businesses are Now Run by Professional Managers, Not Owners

The traditional control by business owners in Europe and North America gave way during the 19th century to corporate control of companies. This led to the emergence of a new group of professionals whose job it was to perform the administrative tasks of production. Consequently, management became identified as both a skill and a profession in its own right, requiring specific training and based on numerous emergent theories of practice.

These Changes Were Enabled by Neoliberalism (or Market Fundamentalism , or Economism )

Among these many vicissitudes, a decisive new departure occurred with the advent of what became known as neoliberalism in the 1980s (sometimes called Thatcherism because of its enthusiastic adoption by the Conservative government of Margaret Thatcher in the United Kingdom). A reaction against Keynesian economic policy and the welfare state, this harshly reinstated the regulatory role of the market in all aspects of economic activity and led directly to the generalisation of the standards and practices of management from the private to the public sectors. The radical cost cutting and privatisation of social services that followed the adoption of neoliberal principles became a public policy strategy rigorously embraced by governments around the world, including successive Liberal and Labor governments in Australia.

Note that this is a global problem, at least of English speaking developed countries. The article focuses on Australia, but we have certainly seen parallels in the US and the UK. Further, note that we have discussed this concept, also termed market fundamentalism or economism.

Managerialism Provides a One-Size Fits All Approach to the Management of All Organizations, in Which Money Becomes the Central Consideration

The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market. Both ideas have far-reaching implications. The claim that every organisation - whether it is a mining company, a hospital, a school, a professional association or a charity - must be structured according to a single model, conforming to a single set of legislative requirements, not so long ago would have seemed bizarre, but is now largely taken for granted. The principle of the market has become the solitary, or dominant, criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment to critical reflection, have become displaced and devalued. Indeed, the latter are viewed as quaint anachronisms with less importance and meaning than formal procedures or standards that can be readily linked to key performance indicators, budget end points, efficiency markers and externally imposed targets.

Originally conceived as a strategy to manage large and increasingly complex organisations, in the contemporary world, no aspect of social life is now considered to be exempt from managerialist principles and practices. Policies and practices have become highly standardised, emphasising market-style incentives, devolved budgets and outsourcing, replacement of centralised budgeting with departmentalised user-pays systems, casualisation of labour, and an increasingly hierarchical approach to every aspect of institutional and social organisation.

We have frequently discussed how professional generic managers have taken over health care (sometimes referred to as the manager's coup d'etat .) We have noted that generic managers often seem ill-informed about if not overtly hostile to the values of health care professionals and the missions of health care organizations.

Very Adverse Effects Result in Health Care and Academics

In the workplace, the authority of management is intensified, and behaviour that previously might have been regarded as bullying becomes accepted good practice. The autonomous discretion of the professional is undermined, and cuts in staff and increases in caseload occur without democratic consultation of staff. Loyal long-term staff are dismissed and often humiliated, and rigorous monitoring of the performance of the remaining employees focuses on narrowly defined criteria relating to attainment of financial targets, efficiency and effectiveness.

The principles of managerialist theory have been applied equally to the public and the private sectors. In the health sector, it has precipitated a shift in power from clinicians to managers and a change in emphasis from a commitment to patient care to a primary concern with budgetary efficiency. Increasingly, public hospital funding is tied to reductions in bed stays and other formal criteria, and all decision making is subject to review relating to time and money. Older and chronically ill people become seen not as subjects of compassion, care and respect but as potential financial burdens. This does not mean that the system is not still staffed by skilled clinicians committed to caring for the sick and needy; it is rather that it has become increasingly harder for these professionals to do their jobs as they would like.

In the university sector, the story is much the same; all activities are assessed in relation to the prosperity of the institution as a business enterprise rather than as a social one. Education is seen as a commodity like any other, with priority given to vocational skills rather than intellectual values. Teaching and research become subordinated to administration, top-down management and obsessively applied management procedures. Researchers are required to generate external funding to support their salaries, to focus on short-term problems, with the principal purpose being to enhance the university's research ranking. The focus shifts from knowledge to grant income, from ideas to publications, from speculation to conformity, from collegiality to property, and from academic freedom to control. Rigid hierarchies are created from heads of school to deans of faculties and so on. Academic staff - once encouraged to engage in public life - are forbidden to speak publicly without permission from their managers.

Again, we have discussed these changes largely in the US context. We have noted how modern health care leadership has threatened primary care . We have noted how vulnerable patients become moreso in the current system, e.g., see our discussions of for-profit hospices . We have discussed attacks on academic freedom and free speech , the plight of whistle-blowers , education that really is deceptive marketing, academic institutions mired in individual and institutional conflicts of interest , and the suppression and manipulation of clinical research . We have noted how health care leaders have become increasingly richly rewarded , apparently despite, or perhaps because of the degradation of the health care mission over which they have presided.

The Case Study

The article provided a case study of the apparent demise of the Royal Australasian College of Physicians as a physician led organization, leading to alleged emphasis on "extreme secrecy and 'commercial in confidence," growth of conflicts of interest, risk aversion on controversial issues. When members of the organization called for a vote to increase transparency and accountability, the hired management apparently sued their own members.

Authors' Summary

Whether the damage done to the larger institutions - the public hospitals and the universities - can be reversed, or even stemmed, is a bigger question still. The most that can be said is that even if the present, damaging phase of managerial theory and practice eventually passes, its destructive effects will linger on for many years to come.

My Summary

I now believe that the most important cause of US health care dysfunction, and likely of global health care dysfunction, are the problems in leadership and governance we have often summarized (leadership that is ill-informed, ignorant or hostile to the health care mission and professional values, incompetent, self-interested, conflicted or outright criminal or corrupt , and governance that lacks accountability, transparency, honesty, and ethics.) In turn, it appears that these problems have been generated by the twin plagues of managerialism ( generic management , the manager's coup d'etat ) and neoliberalism (market fundamentalism, economism) as applied to health care. It may be the many of the larger problems in US and global society also can be traced back to these sources.

We now see our problems in health care as part of a much larger whole, which partly explains why efforts to address specific health care problems country by country have been near futile. We are up against something much larger than what we thought when we started Health Care Renewal in 2005. But at least we should now be able join our efforts to those in other countries and in other sectors.

Reference

1. Komesaroff PA, Kerridge IH, Isaacs D, Brooks PM. The scourge of managerialism and the Royal Australasian College of Physicians. Med J Aust 2015; 202: 519- 521. Link here .

We have to leaven this dismal post with the 1980 live version of "Down Under" by Men at Work

https://www.youtube.com/embed/IbsfupH8W1o

JLCG , October 29, 2015 at 3:18 am

The managerial class is the universal class Hegel wrote about. It is the enemy of the productive classes, the agricultural and the industrial. Perhaps managers are like the eunuchs in former empires, grabbing power without production, always zealous that no idea will threaten their standing.

Eleanor , October 29, 2015 at 9:21 am

It is unfair to eunuchs to compare them to managers. The man who led the great Ming dynasty naval journeys to SE Asia and Africa was a eunuch. The man credited with the invention of paper was a eunuch attached to the Han Dynasty court.

Narses, one of the emperor Justinian's great generals, was a eunuch.

He began his military career at the age of sixty and continued until he was murdered by the then-emperor at the age of ninety-five.

(This post is the result of very quick checking and memories of Robert Graves' wonderful book Count Belisarius. But I am mostly right.)

Ed , October 29, 2015 at 10:05 am

This comment completely misses the point of JLGC's excellent comment, and I refer you to the opening chapters of the Romance of the Three Kingdoms for remedial reading. Its become striking, at least to me, how much the developed western world is imitating the declines of the Chinese dynasties.

jgordon , October 29, 2015 at 10:21 am

Pick any empire on the verge of collapse in history and you'll find terrifying parallels to America today. I think all failing empires/societies must follow roughly similar trajectories on their way to oblivion.

Lexington , October 30, 2015 at 12:22 am

One of those parallels is surely that authentic historical memory has been lost and replaced by the authority of works of fiction

S M Tenneshaw , October 29, 2015 at 4:45 am

Back in 1975 at my local technical college, I was fortunate enough to snag a part-time COBOL programming job at the school. My colleagues and I noticed that several managers above the department level had little to do but sit around in their offices. Periodically they would emerge to engage some unlucky soul in dumb conversation. One of my co-workers summed it up admirably: "The more they make, the less they do."

A couple years later while reading the Sunday paper job ads, I ran across this job title: Manager of Management Development. A sign of very bad things to come.

PIGL , October 29, 2015 at 4:48 am

Let me say this about that:

"Voltaire's Bastards"

John Raulston Saul

dk , October 29, 2015 at 6:03 am

I have to wonder if it's a coincidence that both healthcare and education are given as especially notable victims of inappropriate/ineffective management

Because both healthcare and education are things that can best and primarily be done by and for oneself. And there is overlap here: organic chemistry is a special case of molecular physics. Regardless of how well instructors present it, there is a wealth of well understood information on molecular physics (with a lot of special examination of organic chemistry), and so far the bulk of that information remains easily available (although it's starting to disappear at an increasing and alarming rate). I know that many will say, "there's a lot more to it than that!", but this only indicates that they themselves have made no sustained effort to understand these matters. It's not rocket science (which is, indeed, quite demanding).

I think the authors may somewhat overlook collateral (and undoubtedly mutually synergistic with managerial phenomena) issues in the quality of teachers and doctors, which has also degraded in a similar way, possibly for similar reasons. Rote learning increasingly replaces comprehension in both fields. Inundated with unproven, and often unsound, commercial and theoretical dogma, rudimentary performance is still possible, but results are mediocre. Excellence in these fields requires patience, precision and and familiarity with underlying principles; "caring", bonhomie and rote knowledge are admirable, but not viable substitutes.

Does it even make sense to pay to undertake courses in order to get a certificate of achievement? From a commercial career perspective, certainly. But such a certificate is no sure guarantee of skill. "Qualified" personnel are not necessarily capable. In a time of ever increasingly complex systems and disciplines, capability is more needed than ever. The management sector is not the only area where performance, and fulfillment of actual (in contrast to nominal) responsibility, degrades.

For that matter, does it even make sense to have somebody undertake to diagnose your own health, without detailed information about your diet, your regular environment, your physical history, and any exceptions to these; information for which you yourself should be the best source? The consulting physician enters at an immediate disadvantage, facing a significant information deficit; it behooves individuals to become more proactive, especially when rudimentary diagnostic equipment (sphygmomanometers, simple blood test kits, etc) and reference information (anatomical references, drug chemistries and interactions, etc) are readily available. True, there are some thing's you can't do yourself, surgery is surely a valuable skill and worthy of respect, but it has significant limits as well (replacing a bad heart in an unhealthy body won't cure the body, etc).

Managerialism is a scourge, a calamity, a great threat; no argument from me. But it's not the only problem we face, as a culture, and as an economy, of human beings, in these fields and others. And the authors acknowledge this tangentially, but perhaps somewhat over-emphasize the impact if managerialism on the ongoing degradation of these and other fields, at least by omission of other evident and significant factors.

norm de plume , October 29, 2015 at 6:35 am

'Does it even make sense to pay to undertake courses in order to get a certificate of achievement? From a commercial career perspective, certainly. But such a certificate is no sure guarantee of skill. "Qualified" personnel are not necessarily capable'

I think in time there will be a move away from official credentialing toward companies and organisations testing candidates – 'qualified' or not – themselves, with a professional or a dept (depending on the size of the concern) whose job it is to sort the wheat from the chaff. They would be in constant liaison with the various sections (and not just the heads) to keep abreast of what skills and knowledge are required in appointees, and test candidates accordingly. The net enables enterprising people too poor to afford expensive laurels to become as skilled and knowledgeable and probably more flexible than those born with 'advantages'. The twin drivers of this change will be, for the employers, the degradation of quality in 'qualified' applicants that you refer to, and, for the employees, the debt peonage involved in becoming 'qualified'

'For that matter, does it even make sense to have somebody undertake to diagnose your own health, without detailed information about your diet, your regular environment, your physical history, and any exceptions to these; information for which you yourself should be the best source?'

Not to mention your genetic heritage yes, human variation is the big blind spot not just in medicine but health generally. Almost nothing can be generalised, yet whole industries in health and wellbeing rely on generalisation.

norm de plume , October 29, 2015 at 6:09 am

This

'The claim that every organisation - whether it is a mining company, a hospital, a school, a professional association or a charity - must be structured according to a single model, conforming to a single set of legislative requirements, not so long ago would have seemed bizarre, but is now largely taken for granted. The principle of the market has become the solitary, or dominant, criterion for decision making, and other criteria, such as loyalty, trust, care and a commitment to critical reflection, have become displaced and devalued'

Put me in mind of this :

'And, so, finally the floodgates were open. Nowadays, every expected income stream is a fair candidate for capitalization. And since income streams are generated by social entities, processes, organizations and institutions, we end up with the 'capitalization of every thing'. Capitalists routinely discount human life, including its genetic code and social habits; they discount organized institutions from education and entertainment to religion and the law; they discount voluntary social networks; they discount urban violence, civil war and international conflict; they even discount the environmental future of humanity. Nothing seems to escape the piercing eye of capitalization: if it generates earning expectations it must have a price, and the algorithm that gives future earnings a price is capitalization'

Ed Walker , October 29, 2015 at 6:11 am

The number of healthcare administrators has soared. Here's a nice chart. The huge increase occurred in the early 90s.
http://www.google.fr/imgres?imgurl=http%3A%2F%2Fimage.slidesharecdn.com%2Fpnhplongsetweisbartversion-121221105916-phpapp01%2F95%2Fpnhp-long-setweisbartversion-52-638.jpg%253Fcb%253D1356087906&imgrefurl=http%3A%2F%2Fwww.slideshare.net%2FPNHP%2Fpnhp-long-setweisbartversion&h=479&w=638&tbnid=jrT8UrwLVoOZbM%3A&docid=udNUOrYIofj7GM&ei=NfAxVpKnNYLjUc_foeAP&tbm=isch&iact=rc&uact=3&dur=1757&page=1&start=0&ndsp=15&ved=0CCoQrQMwBGoVChMI0pXI_LfnyAIVgnEUCh3Pbwj8

guest , October 29, 2015 at 1:50 pm

Does anybody have an idea of what changed in 1990 to lead to such a sudden jump in the management overhead of health organizations? It must have been something crucial in the legal or economic environment of the sector.

redleg , October 30, 2015 at 8:14 pm

Start here:
https://kenhoma.wordpress.com/2014/04/30/how-many-mba-degrees-are-awarded-each-year/
It takes time to achieve a critical mass of MBA-wielding managers in order for group-think to establish itself.
I'm not going to exhaust myself fact-checking this data, so if anyone finds better please correct me and post it. Based on my own experience in a STEM field, this looks about right.

abynormal , October 29, 2015 at 6:24 am

Sadistic Managerial 'teams' have existed too long in too many areas. my mother recently received a notice on the door of her apartment, she's occupied for 5yrs. this letter was short and to the point 'if you do not pay .23 (cents) before the end of the business day, you will vacate your apartment'. mom, 81yro, called me in hysterics. i got to her apt. and immediately had to attend to her racing heart and hyperventilating. i read the letter slowly and see where mom missed the "you will voluntarily vacate your apartment".
after a few deep breaths, i hiked down to the den of smiling sadist offering coffee and cake. they introduced themselves as the 'new management', when i asked how many of the group of 5 it took to pull the 3yro .23 Cent delinquency i was assured by the head honcho, she was involved with the entire process. i explained my CPA sister and myself, Corporate Analyst (stretch), were off a few zero's and hadn't even bothered to account for the home office reconciliations.

back to 'healthcare/hospitals': "-owned hospitals. How many are there? Two hundred and thirty-eight of them in the whole country (out of more than five thousand)–somewhere between four and five percent of the total in the U.S. (numbers courtesy TA Henry from this excellent piece).

What are the issues?

Obamacare effectively bans doctors from owning hospitals in the U.S.
Those already in existence are grandfathered in under the law.
We know that doctor-owned hospitals have higher average costs–hence the rationale for banning them under a law with the intent of "bending the cost curve."

In the most recent Medicare data (December 2012 report on "value-based purchasing"), doctor-owned hospitals did well in terms of achieving quality milestones.

How well?

Really well. Physician-owned hospitals took nine out of the top ten spots in the country. And in spite of their low relative number, forty-eight out of the top one hundred.

What's the secret sauce? Here's a little tidbit on the #1 ranked hospital from another excellent piece on this issue:

The top one is Treasure Valley Hospital in Boise, Idaho, a 10-bed hospital that boasts a low patient-to-nurse ratio and extra attention, right down to thank-you notes sent to each discharged patient.

A 10-bed hospital? Thank you notes for each discharged patient? Sign me up to go there next time I need hospital services.

Who cares? Well, we all should. Why?

It boils down to incentives.

When doctors own the hospitals, they stand to directly share in profits. If you're a doctor-owner, and the hospital you both run and own is functioning at a high level, you think, "This is what America is all about. Free enterprise. Why shouldn't I make more money if my hospital runs well?"

As a taxpayer, do I want government incentives going to hospitals that are privately owned and known for cherry-picking insured patients?

Moreover, what does it say about public hospitals, or academic centers, that often see the sickest, poorest, most vulnerable patients? Yes, their quality is measurably lower, according to this data. But now, in spite of staying true to their core missions (serving the public) they're being further penalized.

Is this just another case of the rich simply getting richer?

Maybe Obamacare's got it wrong. Maybe we should build upon the model of doctor-ownership and turn over public hospitals to their workers. All of them. Let the nurses buy in. And the food handlers. And the "environmental services" folks (i.e. custodial crews). Let's really let the workers own the means of production. Then we can see where incentives get us." http://www.kevinmd.com/blog/2013/05/doctor-owned-hospitals-rich-richer.html

Sister Act: Gov. Perry's Little-Known Sister is a Lobbyist for Lucrative Doctor-Owned Hospitals; Milla Perry Jones is vice president of government relations at United Surgical Partners International, an Addison, Texas company that runs hospitals and surgery centers co-owned by doctors. Sister Jones works with trade groups to rebut claims that doctor-owned medical facilities inflate American medical bills. Both Governor Perry and his sister have championed doctor-owned facilities in Texas and Washington.
2006 federal report found that Medicare costs are 20 percent higher at doctor-owned orthopedic surgical hospitals than at competing community hospitals. These studies typically do not determine if the extra procedures are beneficial. The doctor-owned industry says it delivers superior care and points to contradictory research that does not associate doctor ownership with higher costs.
doctor-owned facilities are money machines. A 2009 study found that Texas' doctor-owned hospitals pumped $2.3 billion into the economy each year. The industry has had to use some of this money to fend off political meddling. Heavily favoring Republicans, Perry Jones' United Surgical PAC spent almost $250,000 on federal politicians from 2005 to 2010, according to the Center for Responsive Politics. The New York Times reported that Doctors Hospital at Renaissance donors gave congressional Democrats $1.3 million in that period, with then-House Speaker Nancy Pelosi visiting that hospital in 2007. Surpassing the powerful Texas Medical Association, the Doctors Hospital's Border Health PAC spent close to $4 million on Texas state elections from 2005 through 2010, becoming Texas' 13th largest PAC. Houston's doctor-owned North Cypress Medical Center pumped another $500,000 into Texas state races, ranking as Governor Perry's No. 5 donor in 2010.

In one of his last presidential ads, Rick Perry skewered Washington as a twisted place where, "You can't say that Congressmen becoming lobbyists is a form of political corruption." United Surgical, North Cypress and Doctors Hospital at Renaissance have paid federal lobbyists-including ex-Congressman Tom Loeffler-almost $3 million since 2005. Joined by two Perry Jones-affiliated trade groups, these same doctor-owned interests paid 24 Texas lobbyists-including U.S. Senator John Cornyn's daughter-up to $3.4 million in that period. These lobbyists do not include Milla Perry Jones, whose advocacy activities may not trigger Texas' registration requirements. (A Texas lobbyist generally must register if she receives more than $1,000 a quarter for direct communications with public officials). http://www.texasobserver.org/obamacare-jags-rick-perrys-lobbyist-sister/

can you imagine the independent sadist managing these hospitals?

Wade Riddick , October 29, 2015 at 9:32 am

It's about confiscating public budgets – and, as such, it fits into the broader pattern of privatized jail and war. When you have for-profit war, you never get any peace; there's no money in it. For profit medicine is about sickcare and not healthcare. There's no profit in cure or prevention, only treatment.

Sickness creates natural captive markets for rent-seeking monopolies and cartels to exploit. Once you've got a disease there are only so many chemical options to treat it. Corporate America is often actively blocking cheap treatments to steer patients toward patented medicine. See my earlier comment about Pharmacy Benefit Managers. The recent epidemics of drug shortages aren't a coincidence; they are engineered. It's only happening with cheap, effective, often public domain chemicals (e.g., methotrexate, 2ml vials of MgSO4). This is by design. Rent-seekers confiscate public goods like public domain chemicals and provide inferior, expensive, patented substitutes.

Some of these are baffling if you don't understand the recent breakthroughs in biochemistry. When you take gel helminths (worms like whipworms) out of the body you get autoimmune diseases like m.s. and crohn's. This has been clear for about ten years but have you heard about that research from drug company-funded "patient" groups? When you feed people antibiotics that kill their gut flora and sell people food stripped of necessary fiber to nourish said bacteria, you get inflammation and insulin resistance – contributing to, sometimes outright causing, Alzheimer's, diabetes, autism, atherosclerosis, cancer and polycystic ovaries, among many diseases. What news company wants to tell the public the food companies in creating an addictive sugar-laden product by removing fiber is also creating disease? Big Tobacco wasn't an anomaly. It's a pattern of regular conduct across industries.

Patients are being tortured to death in this system.

washunate , October 29, 2015 at 9:50 am

Love the read. The quaint notion that the top employees in healthcare aren't in it for the money still lingers in some corners of our society.

One quibble with using this quote

A reaction against Keynesian economic policy and the welfare state, this harshly reinstated the regulatory role of the market in all aspects of economic activity and led directly to the generalisation of the standards and practices of management from the private to the public sectors.

It does not apply very well to the American context. Healthcare in the US context is all about the welfare state. US taxpayers give more money to both medical and non-medical managers/administrators/specialists/etc. than any other taxpayers in any other country on the planet. Markets play no role in the monstrosities that have become our hospital franchises, drug dealers, and equipment peddlers. These corporations (many of them 'nonprofit') are the anti-thesis of price takers in a competitive marketplace.

tyaz , October 29, 2015 at 11:19 am

Health care in the US is a mess in more than one dimension. Many aspects of managerialism are certainly a major problem contributing to increased costs and reduced quality. But there is an aspect of "overconsumption" of health services as well. I put it in quotes because the framing of "overconsumption" puts the blame on patients (as if they are "consumers"), rather than where I think the blame truly belongs - health care providers and management.

The existing system is largely setup to pay by the number of procedures (easy to measure with electronic health records) rather than the actual quality of care (not as easy to measure). Specialized doctors and managers have an incentive to push for unnecessary procedures and clinical visits, because it means they get paid more.

Perhaps the strongest evidence for doctors responding to these perverse incentives is the specializations that doctors choose. Primary care specializations like family medicine, general practice, and pediatrics are being decimated because these specializations are largely focused with preventative or long-term care. As a result, the pay is substantially lower than other specializations that perform many procedures. The evidence is that there is a critical shortage of doctors in these primary care fields, especially in rural areas of the country. Doctors flock to specializations that offer many procedures and consequently higher pay.

JTMcPhee , October 30, 2015 at 8:47 am

Smaal example of "wallet biopsy" structuring of "health care:" You have a lab test or MRI or tissue biopsy done, under the "provider's" order. To be "given the results," even if normal or benign, you have to " be seen in clinic." A nurse or paraprofessional may actually "give you your results," but that will be billed as an office visit with the doctor. Don't want to pay f9r the wallet biopsy? Fine, the doc doesn't "give you yor results." And if you find a more compassionate, maybe even more skilled, provider? If there's a balance due on your account with the first, S/he effectively has a "chart lien," like a lawyer's "file lien," on your very own personal medical records.

And maybe that's "against the law," some places, but as always, where there's ño effective remedy (sue the doctor or the corporation? No effective remedy), there's no right

My wife went through this with a "Chr8stoan" DO primary-care dude who discovered Mammon was a more compelling god than YHWH, corporations and privatized his practice and got into peddling "procedures" like in-office ablation of throat tissue to "cure apnea and snoring," and Trusting Patient enrollment in drug trials for Bad Meds

Anyone who thinks clinicianscare all Albert Schweitzers needs to read "The House if God," learn the real rules of practice, understand what a "GOMER" is, and hope you won't get the "buff and turf" treatment. It's a hilarious book, but a check on the irrational exuberance that endows practitioners of the calling art business of medicine with universal expectations of virtue https://en.m.wikipedia.org/wiki/The_House_of_God

And Lambert, don't credit me with invention of that "wallet biopßy" phrase– it's a commonplace in the business of medicine.

Lambert Strether Post author , October 30, 2015 at 12:10 pm

We need more such commonplaces! The language will be very revealing. Readers?

JTMcPhee , October 30, 2015 at 8:59 am

"Wallet biopsy:". http://csn.cancer.org/node/253191
Another less cynical take: http://www.urbandictionary.com/define.php?term=wallet%20biopsy
And closer to the real meaning: http://insureblog.blogspot.com/2009/01/wallet-biopsy.html?m=1
And more: http://www.healingwell.com/community/default.aspx?f=35&m=3346181

Why the vast majority of us humans will" never have nice things," like comity and empathy and simple decency, 'cuz more than enough of us are "all too human."

TedWa , October 29, 2015 at 11:31 am

Good read. Self-sustainability in all aspects of our lives is being usurped by un-free markets created by rent seekers or their lackeys. There is no longer a desire for America to be the best nation in the world because that would mean it's self-sustaining. And I'm not talking budgets. I'm talking people running things instead of corporations. No longer does Buy American mean anything – actually, it's been outlawed by our trade agreements. There is no drive among our leaders anymore for America to be self-sustaining, which includes taking care of the least of us because we're all in this together. Capitalism as practiced by corporations is dead, it just refuses to be buried. Supported by the Fed handouts it's busy handing out crutches for the entities it's crippled – which it then intends to kick the crutches out from under. Hilarious ehh? Universities, hospitals, pharma, the post office you name it used to all be self-sustaining entities that people could afford or that provided needed services at low prices and actually cared about people. Self-sustaining to me means America having the best food, the best health care, the best education, the happiest people and on and on – the shining city on the hill so to speak. Instead we get crapification of everything we need and it's all for sale to the highest bidder who then crapifies everything even more. It's a race to the bottom and the ultimate goal is a floor full of crutches and no one left standing.

TedWa , October 29, 2015 at 3:04 pm

I meant : "It's a race to the bottom and the ultimate goal is a floor full of broken crutches and no one left standing."

Masonboro , October 29, 2015 at 5:23 pm

+ 10

The medical association I use actually has a C-level job called "Chief Efficiency Officer". Her latest was raising the bar for hospital referrals thus reducing insurance company costs and increasing consumer (I have stopped saying patient) risk. The incentive is the insurance companies are kicking back part of the extra profit. Another case of privatize profit – socialize cost since the added cost to consumers is impossible to measure. If I can find the letter from the association announcing (and attempting to rationalize) the change, I will email a copy to Lambert.

Jim

Adam Eran , October 29, 2015 at 2:23 pm

Worth a look: Matthew Stewart's The Management Myth . It discloses that the very foundations of "scientific management" originating with Frederick Winslow Taylor were flawed. Taylor cooked the results of his "scientific" experiments in getting more productivity from the workforce to fit his theories. The first MBA - Penn's Wharton School - was founded on this con. Similar cons were at the inception of the Harvard MBA.

The "MBA Mentality" - embodied by W, among others - says everything can be measured, and measurement is what makes it real. Hence testing our students until their eyeballs bleed is now an endorsed strategy to improve educational outcomes. No actual science supports this conclusion, but that hasn't stopped the people who want to leave No Child Behind(tm).

Turns out, management is a liberal art! Who knew?!

Mickey Marzick , October 29, 2015 at 2:29 pm

"The particular system of beliefs and practices defining the roles and powers of managers in our present context is what is referred to as managerialism. This is defined by two basic tenets: (i) that all social organisations must conform to a single structure; and (ii) that the sole regulatory principle is the market. Both ideas have far-reaching implications. The claim that every organisation - whether it is a mining company, a hospital, a school, a professional association or a charity - must be structured according to a single model, conforming to a single set of legislative requirements, Originally conceived as a strategy to manage large and increasingly complex organisations, in the contemporary world, no aspect of social life is now considered to be exempt from managerialist principles and practices."

This is an apt description of MARKET TOTALITARIANISM.

MBAs and project managers armed with their metric-driven spreadsheets in pursuit of "best practice" – market lebensraum – speak the same language and spearhead this offensive against the welfare state. A managerial elite devoted to the belief that the the market will set you free functions much like the Waffen SS did in another regime with explicit totalitarian aspirations. The need for concentration camps is not needed in this version of totalitarianism because "no aspect of social life is exempt from managerialist principles and practices." The institutions of civil society have been captured by this "weltanshuung/zeitgeist" and dissent is lost in the "nacht und nebel" of the eternal present.

Herbert Marcuse [One Dimensional Man], Eric Fromm, [Escape From Freedom] and the Frankfurt School broached the idea of what has evolved into "market totalitarianism" shortly after the Second World War. Dismissed largely as a Marxist rant it did not garner much traction inside or outside of academia, especially in this country. I suspect many of you are too young to be familiar with this body of work – no fault of yours. Nevertheless, LIBERALISM 2.0 [aka neoliberalism] did not capture the hearts and minds of the political classes until the 1970s signified by Ronald Reagan's election in 1980. From then on it gathered steam and by the 1990s it was apparent that "market totalitarianism" was on the rise, if not yet ascendant.

Orwellian concepts like "doublethink/doublespeak" resonated as the language employed in political discourse became little more than smoke and mirrors. "Reform" signified a revamping of welfare and criminal justice. It also has come to mean little more than slash-and-burn CUTS to programs associated with the welfare state or their outright privatization under the rubric of "choice" . Natural gas and electric rate "choice" programs exemplify this approach. Indeed, the two biggest prizes – Social Security and Medicare – are subject to calls for "entitlement reform" by Republicans and Democrats alike. That both programs have been internalized in the minds of many as "entitlements" destined for "reform" testifies to this. The federal deficit matters now and the hysteria surrounding it will likely be a primary talking point in the 2016 elections. The question of how will we pay for the expansion of any program barring tax increases will become the retort by those opposed to both, MMT notwithstanding.

The Great Recession has been portrayed as an anomaly or as a normal part of the business cycle and precipitated some rethinking. But make no mistake about it, the market totalitarian impetus in this country continues unabated. If anything, the monotheism of the market has accelerated in some respects as "businesspersons" – Donald Trump and Carly Fiorina – from the private sector now vie for the presidential nomination of the Republican Party. The very idea that business acumen/experience is now of paramount importance in running this country – as a business – testifies to the pervasiveness of market totalitarianism. It is now deep rooted in civil society.

Even here in Akron, there are plans to rename the University of Akron: the Ohio Polytechnic University! Fans of Firesign Theater back in the day will recall the rivalry between "more science high" and "commie-martyrs' high school! It would be funny in most circumstances. but who's laughing now? Many a former rubber rat plan to vote for Trump!

I have come to the conclusion that "market totalitarianism" now has to run its course in this country. The Achilles' heel of market totalitarianism may be how and where it stifles/smothers innovation, subjugating research and development to market criteria in which the short term trumps the long term. To the extent that dissent/conflict is fundamental to innovation and cannot be confined to the laboratory, then resistance is NOT futile. It remains to be seen whether that dissent can be co-opted or reappropriated indefinitely by market totalitarianism in this country or not, yet alone outside of its borders.

Jesper , October 29, 2015 at 5:13 pm

Ban collective bargaining and the collective will suffer. If a government was allowed to negotiate for the collective against the suppliers then maybe the outcome would be different. But as we all know, letting the government co-ordinate and negotiate for the collective will make it worse for some individuals so ..
The needs of the many do not(?) outweigh the needs of the few. Be it for healthcare, education or?

Jim , October 29, 2015 at 5:47 pm

"The Scourge of Managerialism" raised some profoundly important issues.

But its fundamental assumption " the traditional control by business owners in Europe and North American gave way during the 19th century to corporate control of companies. This lead to the emergence of a new group of professional whose job it was to perform the administrative tasks of production"–is only half correct.

The creation of "professional managers" was not simply shaped by market fundamentalism but also by the progressive movement itself. Robert H. Wiebe's book "The Search for Order: 1877-1920, does a remarkable job of detailing this process.

The trajectory runs from local autonomy once being the heart of American democracy, to the incremental erosion of the autonomy of community, to the supposedly necessary regulatory, managerial needs of urban-industrial life. and finally to the creation of flexible administrative devices that tended to encourage the creation of professional managers(in both the public and private sectors) and the increasing centralization of authority.

Can any renewal of democracy begin without a dismantling of professional managerial authority in both the market and the state?

Is a breakdown of centralized bureaucratic power (both public and private) a precondition for democratic renewal?

[Jun 28, 2017] The Skills Gap: Blaming Workers Rather than Policy

Notable quotes:
"... We don't see this sort of bidding war for workers taking place in any major sector of the economy. While there may be a few occupations in a few areas where employers really are bidding up wages rapidly, this is not happening in most sectors of the labor market. ..."
"... The other reason we know the skills shortage story does not fit is that there is no noticeable increase in the length of the average workweek for any major group of workers. The story we would expect to see if companies could not hire more workers is that they would instead work their existing workforce more hours, paying them overtime if necessary. We don't see this happening on any large scale either. The length of the average workweek is actually slightly shorter now than it was two years ago. Here also, there is no major area of the economy in which are seeing lengthening workweeks in a manner that would be consistent with the skills shortage story.... ..."
Jun 28, 2017 | economistsview.typepad.com

anne , June 27, 2017 at 03:39 PM

http://cepr.net/publications/op-eds-columns/the-skills-gap-blaming-workers-rather-than-policy

June 25, 2017

The Skills Gap: Blaming Workers Rather than Policy
By Dean Baker

Last week Donald Trump visited a technical college in Wisconsin. He was accompanied by Wisconsin Governor Scott Walker, several members of Congress, and top officials in his administration. The theme was promoting apprenticeship programs that give workers job specific skills. Trump, along with the rest of his contingent, bemoaned the fact that employers cannot find workers with the skills they need. This theme was picked up by many in the media, including many who are not Republicans, who argued that workers in the U.S. are not getting ahead because they lack the necessary skills.

The striking feature about this argument is how widely it gets repeated, even when the evidence continually shows that it is not true. Just to be clear, it is good that U.S. workers get better training. Other countries, most notably Germany and the Nordic countries, do a much better job of training workers who do not get college degrees than the United States.

It is also true that any individual worker will almost certainly be better off in the labor market if they could acquire more skills. Certainly the best advice to a young person completing high school would be to try to go to college or alternatively to get the training needed to be a physical therapist, dental hygienist, or some other moderately well-paying professional. Insofar as the government can facilitate this education and training it will be good for both the workers and the economy as a whole.

But that is very different from claiming that the main reason that millions of workers are unemployed or out of the labor force is that they don't have the right skills. This claim is endlessly put forward, in both the United States and elsewhere, even in contexts where it is obviously not true.

The unemployment rate in the United States fell to 4.3 percent in May, so the claim that companies may be having trouble finding qualified workers is more plausible now than earlier in the recovery. But even now that the labor market is hugely stronger than at its low points in the Great Recession there is still reason to question the skills shortage view.

First and foremost we are not seeing the sort of rapid wage growth that would be expected if there were widespread skills shortage. This is a story where companies would like to expand their business but are prevented from doing so because they can't find any workers with the skills they need.

However there are always some workers somewhere who have the needed skills. Companies could offer higher wages to lure workers away from competitors. Or, they can make a point of recruiting in more distant areas and offering to pay travel and location expenses for workers.

We don't see this sort of bidding war for workers taking place in any major sector of the economy. While there may be a few occupations in a few areas where employers really are bidding up wages rapidly, this is not happening in most sectors of the labor market.

The other reason we know the skills shortage story does not fit is that there is no noticeable increase in the length of the average workweek for any major group of workers. The story we would expect to see if companies could not hire more workers is that they would instead work their existing workforce more hours, paying them overtime if necessary. We don't see this happening on any large scale either. The length of the average workweek is actually slightly shorter now than it was two years ago. Here also, there is no major area of the economy in which are seeing lengthening workweeks in a manner that would be consistent with the skills shortage story....

[Jun 26, 2017] US Pursues Selective Protectionism Not Free Trade

Notable quotes:
"... As a result of this protectionism, average pay for doctors is over $250,000 a year and more than $200,000 a year for dentists, putting the vast majority of both groups in the top 2.0 percent of wage earners. Their pay is roughly twice the average received by their counterparts in other wealthy countries, adding close to $100 billion a year ($700 per family per year) to our medical bill. ..."
"... We also have actively been pushing for longer and stronger patent and copyright protections. While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees at odds with free trade. And, they are very costly. Patent protection in prescription drugs will lead to us pay more than $440 billion this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion comes to almost $3,000 a year for every family in the country. ..."
"... It is also worth noting patent protection results in exactly the sort of corruption that would be expected from a huge government imposed tariff. (When patents raise the price of a drug by a factor of 100 or more, as is often the case , it is equivalent to a tariff of 10,000 percent.) The result is that pharmaceutical companies often make payoffs to doctors to promote their drugs or conceal evidence that their drugs are less effective than claimed or even harmful. ..."
"... Stop using the term "free trade" at all...when wall street bankers and hedge fund managers and the corporate media use the term "free trade", what they are really talking about is labor arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety and environmental standards. It usually means a nation without a democracy, run by either oligarchs or despots. ..."
"... Bbbbut patents are essential to allow top executives to extract half the annual expenditures of unprofitable corporations in compensation while still leaving a few pennies for "research". ..."
"... Fake news...about a reliable as a Democrat's promise that he's for the working folks. ..."
"... The "law" of supply and demand just does not apply in this field. That "law" also does not work in certain other areas where important conclusions are drawn from it - applying it is not a substitute for empirical evidence. ..."
Apr 12, 2017 | cepr.net

The Washington Post and other major news outlets are strong supporters of the trade policy pursued by administrations of both political parties. They routinely allow their position on this issue to spill over into their news reporting, touting the policy as "free trade." We got yet another example of this in the Washington Post today.

Of course the policy is very far from free trade. We have largely left in place the protectionist barriers that keep doctors and dentists from other countries from competing with our own doctors. (Doctors have to complete a U.S. residency program before they can practice in the United States and dentists must graduate from a U.S. dental school. The lone exception is for Canadian doctors and dentists, although even here we have left unnecessary barriers in place.)

As a result of this protectionism, average pay for doctors is over $250,000 a year and more than $200,000 a year for dentists, putting the vast majority of both groups in the top 2.0 percent of wage earners. Their pay is roughly twice the average received by their counterparts in other wealthy countries, adding close to $100 billion a year ($700 per family per year) to our medical bill.

While trade negotiators may feel this protectionism is justified, since these professionals lack the skills to compete in the global economy, it is nonetheless protectionism, not free trade.

We also have actively been pushing for longer and stronger patent and copyright protections. While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees at odds with free trade. And, they are very costly. Patent protection in prescription drugs will lead to us pay more than $440 billion this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion comes to almost $3,000 a year for every family in the country.

It is also worth noting patent protection results in exactly the sort of corruption that would be expected from a huge government imposed tariff. (When patents raise the price of a drug by a factor of 100 or more, as is often the case , it is equivalent to a tariff of 10,000 percent.) The result is that pharmaceutical companies often make payoffs to doctors to promote their drugs or conceal evidence that their drugs are less effective than claimed or even harmful.

Raye 2 days ago

I was pleased to see that PBS looked into the matter of physician supply a few years ago.. They noted: "There are fewer physicians per person than in most other OECD countries. In 2010, for instance, the US had 2.4 practicing physicians per 1000 people--well below the OECD average of 3.1." They also noted that "US physicians get higher incomes than in other countries." They didn't go so far as to note a cause-and-effect relationship here, a deliberate restriction of supply going on, for purposes of raising MD incomes. But at least they were presenting the facts.

They even mentioned the $750 billion wasted each year by our health care system.. I expect it's up to at least $3000 per person by now. And they suggested some good uses that so much money could be put to (VA health care, state college education for all the 17- and 18-year-olds in the country). I would like to add another use. If we were wasting less on overpriced health, more people might be able to afford a little more leisure and recreation time. And this (especially the recreation time) might lead to a lowering of our very high rates of obesity, diabetes and prediabetes.

Harlan Raye , 2 days ago

Physician density (as reported by CIA dot gov with dates) shows Canada with smaller ratio than the U.S. but they still retain lower costs, and U.K. though higher by 10 or 15% has considerably lower costs, and the U.S. has more specialists but they get higher incomes, and states with more doctors have higher incomes.

We may need more doctors, especially general practitioners, and more medical schools since 8% of U.S. citizens are forced to train abroad already, but increased supply won't lower costs. It is the medical system and not the supply of doctors that determines fees being charged, which only amount to 10% of total costs. Cut their fees 30% and you still have a $1 trillion 1/3 cost higher than other developed nations. Doctors are not the main cause of the dysfunctional system. Look at what other countries do.

Harlan , 3 days ago

This bolsters my case, there is a high skills job shortage. Take 100,000 proposed increase in doctors and give the jobs exclusively to foreign graduates, and you've robbed Americans of needed jobs. College graduates only have a 2.5 percent unemployment rate because they take jobs away from those without college. So lack of enough high skills jobs really hurts the working class lower income groups with less formal education.

New argument, pay attention. No one would deny that a gap of 1 million jobs, or nearly 1% of increased unemployment (really only .8% since there are 120 jobs), is enough to suppress wages, induce slack in the economy, suppress growth, and possibly even create contraction or self sustaining stagnation. Well a 100,000 new doctor jobs is only 1/10 of that amount. How important is that? I would argue it's very important. 10 percent cause of any such serious effect as a 1 percent rise in unemployment is nutty to dismiss. That's why we cheer when the unemployment drops even .1 percent. You don't get the benefits of full employment until reach full employment, whether 1 percent away or .1 percent away. Really.

EPI

Even the Most Educated Workers Have Declining Wages
Feb 2015

Harlan ->Harlan , 3 days ago

Was trying to highlight this report, but buried the lead:

EPI
Even the Most Educated Workers Have Declining Wages
Feb 2015

Also in my comment where I wrote "since there are 120 jobs," obviously meant "120 million jobs".

And finally, left out a "you" in closing:

You don't get the benefits of full employment until you reach full employment, whether 1 percent away or .1 percent away.

David Havelka , 3 days ago

Isn't 10 years and 1 million dollars too much for the average family practice physican to pay to become a doctor. Reducing the cost of educating a doctor would be a better solution. Increasing the use of midwives and nurse practicioners is another unexplored solution.

Stop using the term "free trade" at all...when wall street bankers and hedge fund managers and the corporate media use the term "free trade", what they are really talking about is labor arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety and environmental standards. It usually means a nation without a democracy, run by either oligarchs or despots.

As best I can see, neither NAFTA or any other "free trade" agreement mentions anything about wages, or for that matter worker health and safety, or environmental standards. The only purpose of NAFTA and TPP was to force trade partners to accept US patent and copyright protections as the price of access to the lucrative US market.

Dean's argumen that just because we import cheap foreign labor to displace American workers in the contruction and lawn-mowing and housekeeping labor markets, it's fair and justified to import highly educated professionals seems wrong-headed to me. Are you talking about extending H1B Visa categories to include doctors.

In my opinion the people behind the high cost of highly educated professions is the AMA, and the universities and education trade associations---who set the standards for doctors and lawyers, and are the ones demanding foreigners complete American educational standards to be permitted to work in the USA

Harlan-> David Havelka , 3 days ago

The truth is the exact opposite of what you report. The medical educational establishment favors increased admissions. The AMA is another story, perhaps. In any event you need more medical schools for more doctors, not lower standards or importing more than the already high 12% foreign medical school graduates we recruit each year.

Our high standards are fine. But already 8% of US citizens train abroad for lack of medical schools. Even if you don't favor more doctors, that in itself screams for more U.S. medical schools.

From the Association of American Medical Colleges
Tuesday, March 14, 2017
New Research Reaffirms Physician Shortage
Shortages Likely to Have Significant Impact on Patient Care

More corrections: H1B can already include doctors, though 60 percent are in tech. Trade agreements were not about patents and copyright, they were about making it easier to do what they were already doing. No surprise is you lower barriers to trade, your domestic industry suffers in competition with cheaper goods. Unions opposed them to protect their jobs. Do you think the union officials were geniuses and the economists were stupid? Or was it common sense exactly what would happen and that it was just too convenient for economists not to favor trade, deregulation of banks, lower taxes, derivative markets, hedge funds.

David Havelka -> Harlan , 2 days ago

Sound like "fake news"---the educational establishment supports increasing admissions but if the price of admission is 10 years and 1 million dollars, well....so the cost of entry they charge is usually a barrier to entry.. Aside from that, there is the standards for admission are set by the educational establishment...so between the two, what have you got? A contrived limit on doctors. Oh, but apologists for the educational establishment like you keep repeating the PR/BS line that universities and trade unions want to increase admissions to medical schools.

Next another one of your "facts" that sounds seriously contradictory...that trade agreements make things "easier" to do what they were doing. HUH? What does that mean? Look none of the trade agreements have anything to do with anything except patent and copyright protection. If a trading partner accepts patent and copyright protection for their economy, they get access to the Us market without trade barriers. Except for productts that receive public subsidies, like franken-food and growth hormone treated meat. So a trading partner is forced to remove the barriers to entry on things like the growth hormone raised beef to Japan, and genetically modified and subsidized crazycorn to Mexico. Is that what you mean by "making things easier"....Sure it makes things "easier"---but is that the point? Or do citizens from Japan have the right to prohibit meat raised with growth hormones? Or do Mexican citizens have the right to prohibit genetically raised corn?

Look, "free trade" is a utopian fantasy, invented by a bunch of liars to sell something to the US consumer that isn't good for him.

Harlan -> David Havelka , 2 days ago

Why don't you try reading what people wrote before posting under their comment? I'm against trade agreements and increased trade that undercuts American workers.

Maybe you should read even the most elementary news report on the effect of NAFTA and China's entry into the WTO. Patent and copyright protections were neither the main motivation nor an important effect. China pays little heed to any IP law anyway and their state efforts to coerce and steal American technology are barely concealed.

Japan doesn't buy American due to cultural norms, American incompetence, and laziness, and Japanese protectionist laws and regulations.

Most free traders have been Republicans, and most objections to free trade have come from the Democrats and the left. Except for Trump Clinton reversal, Liberals (and unions) can claim the high ground over conservatives when it comes to trade issues. This blog and Dean Baker consistently decries the effects of international trade and trade agreements effects on the working class.

There is a shortage of medical schools, there is no shortage of qualified students, admissions standards do not prevent medical student enrollment from increasing. Your comment is virtually fact free.
You obviously hate education and unions and real news.

AlanInAZ , 3 days ago

Expanding doctor supply without major changes to the insurance system is as likely to increase overall healthcare costs as reduce them. In the world of healthcare, demand increases to meet supply.

The country with the insurance and healthcare system closest to the US is probably Switzerland with the exception that costs are controlled with a national fee for service scale (TARMED).

The Swiss estimate that each new private medical practice adds $536,000 per doctor to the nation's overall healthcare spending. This is one of the main reasons the Swiss limit the number of new medical practices and control doctor immigration to balance demand. The Swiss are concerned about rising costs and the government is now proposing to reduce the allowable charges by specialists.

Those that are attracted to Baker's immigration proposal should ask what is the long term consequence of relying on immigration to fill the doctor shortfall and/or control cost. In the short run there may be some average income reduction for physicians with little or no change in total healthcare costs (remember total cost equals average income times the larger number of doctors). Longer term, it restricts domestic investment in expansion of healthcare training and that is a restriction of opportunity for all Americans.

Mitch Beales , 3 days ago

Bbbbut patents are essential to allow top executives to extract half the annual expenditures of unprofitable corporations in compensation while still leaving a few pennies for "research".

pieceofcake , 3 days ago

'U.S. Pursues Selective Protectionism: Not Free Trade'

Oh absolutely - and I'm also really worried about these doctors... and the meat - the meat - as if we can't export all of our meat to China - we for sure will need more doctors to operate on all these oversized boobs which will grow if we have to eat all of our hormone meat by ourselves - and you know how painful it is to carry these big boobs around?

And I happen to know this Plastic Surgeon who told me we need lots and lot more Plastic Surgeons -(as Americans get older and older) - and perhaps - if your plan finally comes through - also facelifts will get cheaper - as who wants to have her or his face done in a undeveloped country -(even if it comes with a nice and long vacation)

So more power to y'a and you finally have completely convinced me and let's do it together!

Get them doctors!!

Harlan , 3 days ago

There is no protectionism when it comes to doctors as they are well represented by immigrants who make up 12% of doctors, including new doctors, comparing favorably to the near record 13.5% U.S. immigrant population.

U.S. doctors don't make twice the salary of other developed countries, with their incomes running about 40% to 60% for GPs and specialists respectively.

More doctors should be supplied by relieving the shortage of medical schools, even an extra 100,000 would help the working class stop getting bumped into unemployment by an overskilled work force. Too many college graduates and not enough jobs, so they bump off those without. They get 2.5% unemployment, those without north of 5 or 7%.

This paper cited below clearly shows we do not pay our doctors twice the salary of other developed countries. The figure is actually around 40% for those in general practice, 60% for specialists, and largely because U.S. salaries overall are higher (in every occupation). When you look at the comparative advantage a doctors salary in any country enjoys over the average salary in that country, even that advantage largely disappears. See figure 2 on page 16 for general practitioners and and figure 6 on page 21 for specialists.
"THE REMUNERATION OF GENERAL PRACTITIONERS AND SPECIALISTS IN 14 OECD COUNTRIES: WHAT ARE THE FACTORS INFLUENCING VARIATIONS ACROSS COUNTRIES?"

Unlike Dean Baker's anti-labor, anti-working class stance that we should end any protection against importing cheaper foreign labor to undercut wages, we should of course afford the same protections to all occupations.

David Havelka ->Harlan , 3 days ago

It is the Democrat Party politics that is behind the high cost of doctors and lawyers. Why because the Educational establishment---the trade associattions and the universities themselves are the ones limiting the admissions, and the ones demanding that all medical professioanls get their education and qualifications through themselves...And we all know that is the universities, the education trade unions and their lobbiest that are one of the most powerful constituencies for the Democrat Party.

Mitch Beales ->David Havelka , 2 days ago

It is the republic party that is behind the high cost of everything as well as the pollution of the internet with ridiculous comments like yours.

Harlan ->David Havelka , 3 days ago

The truth is the exact opposite of what you report. The medical educational establishment favors increased admissions.

From the Association of American Medical Colleges
Tuesday, March 14, 2017
New Research Reaffirms Physician Shortage
Shortages Likely to Have Significant Impact on Patient Care

David Havelka ->Harlan , 2 days ago

Sound like a "fake newa"...so the educational establishment's official public relations read BULL-TOSS position is to support increased admissions to medical school. Yet the same establishment imposed the "barrier to entry" cost of obtaining a doctor ticket, 10 years and 1 million dollars. And who the heck sets the admission standards for their precious schools that results in the high rejection rate of applicants.

Fake news...about a reliable as a Democrat's promise that he's for the working folks.

skeptonomist ->Harlan , 3 days ago

The OECD article should be read by anyone interested in this. Figure 11 shows that the number of physicians in the US is close to the OECD average - in fact the number of specialists is actually less, but the US level of pay is higher. Of course there is also no correlation of pay with the fraction of foreign doctors.

And despite the supposed shortage of GP's in the US their pay is still much less. The "law" of supply and demand just does not apply in this field. That "law" also does not work in certain other areas where important conclusions are drawn from it - applying it is not a substitute for empirical evidence.

The comparison of physician pay would be better if done with the overall median rather than average. Greater inequality in the US means that the average pay is greater than in the other countries.

[Jun 26, 2017] The entire spectrum of political thought from the neoliberal center to the reactionary right is really about setting up punitive systems of coercion and control.

Notable quotes:
"... The entire spectrum of political thought from the neoliberal center to the reactionary right is really about setting up punitive systems of coercion and control. They hate the "losers" and want them punished. They really believe that the beatings should continue until morale improves, that if you make things unbearable people will pull themselves up by their bootstraps, and if they don't then they deserve all the cruelty that can be heaped upon them. ..."
"... The poor are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class. ..."
"... This is how totalitarian regimes operate and how they view the "brainiacs" of this World. Brainiacs are merely military assets to be deployed brutally against the enemy. Or, if the Brainiacs are perceived to be "Assets of the Enemy", they are targeted for destruction- First, Foremost and on the double! ..."
May 05, 2017 | www.nakedcapitalism.com
James Levy , May 4, 2017 at 1:14 pm

I used to think that much of modern conservatism was simply a misguided, wrong-headed alternative attempt to formulate policies for the general welfare. Then I read Corey Robin's book The Reactionary Mind and started reevaluating that presumption.

The entire spectrum of political thought from the neoliberal center to the reactionary right is really about setting up punitive systems of coercion and control. They hate the "losers" and want them punished. They really believe that the beatings should continue until morale improves, that if you make things unbearable people will pull themselves up by their bootstraps, and if they don't then they deserve all the cruelty that can be heaped upon them.

The poor are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class.

clarky90 , May 4, 2017 at 5:51 pm

IMO, Parise (an economist) is following a well-worn "playbook".

https://en.wikipedia.org/wiki/Democide

It is happening, as I speak, in the beautiful little town that I grew up in, on the banks of the Ohio River, in Southern Ohio. (drugs and hopelessness)

Seventy-five years ago, it happened to my Jewish forebears in Belarus. Three hundred years ago my Minqua (Iroquois) forbears were destroyed by this murderous rationalization.

This sort of article is not an exchange of ideas, but rather a crafted assault on a vulnerable group of humanity (in this case, the Poor)

Thank you Yves for bringing this to our attention!

clarky90 , May 4, 2017 at 7:37 pm

This last century, Scientists, Intellectuals, Academics, and Religious Leaders have been viewed as Powerful Military Assets, or Military Threats by totalitarian regimes. They have been used to progress the goals of regimes. (The Nazi Doctors of Auschwitz)

Or, if they question the regime, they are the first to be rounded up, jailed or murdered.

The Khmer Rouge immediately murdered anybody who wore glasses or had soft hands.(Intellectuals).

When the Soviet Union invaded Latvia, Lithuania and Estonia in 1940, the first thing the NKVD did was round up local Scientists, Intellectuals, Academics, Religious Leaders and Cultural Leaders and deport them to the Gulags or, more likely, kill them.

The Nazis behaved in exactly the same way with the Cultural leadership of Poland, Czechoslovakia, Yugoslavia ..

This is how totalitarian regimes operate and how they view the "brainiacs" of this World. Brainiacs are merely military assets to be deployed brutally against the enemy. Or, if the Brainiacs are perceived to be "Assets of the Enemy", they are targeted for destruction- First, Foremost and on the double!

I believe that we have a naive view of "experts"; imagining benign, tweed coated/skirted, helpful, good-hearted, "Good Will Hunting" types. Thanks Hollywood!

Adam Eran , May 4, 2017 at 6:08 pm

MSM! Why this fairly screams David Brooks' name!

[Jun 26, 2017] Why hurting the poor will hurt the economy

Crocodile tears of WaPO staff... Who fully supported implementation of Washington consensus that robbed the nations in favor of international companies... this was a new mass scale economic rape of the Western countries and it was especially brutal in xUSSR area.
Mar 11, 2017 | economistsview.typepad.com

djb : March 11, 2017 at 06:42 AM

Why hurting the poor will hurt the economy - The Washington Post

that this topic even needs a special article about it is proof of the sad state of affairs of economics today

Why trying to help poor countries might actually hurt them - The Washington Post

Nobel-winning economist Angus Deaton argues against giving aid to poor countries

It sounds kind of crazy to say that foreign aid often hurts, rather than helps, poor people in poor countries. Yet that is what Angus Deaton, the newest winner of the Nobel Prize in economics , has argued.

Deaton, an economist at Princeton University who studied poverty in India and South Africa and spent decades working at the World Bank, won his prize for studying how the poor decide to save or spend money. But his ideas about foreign aid are particularly provocative. Deaton argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations' governments and slowing their growth. According to Deaton, and the economists who agree with him, much of the $135 billion that the world's most developed countries spent on official aid in 2014 may not have ended up helping the poor.

Angus Deaton (LARRY LEVANTI/AFP/Getty Images)

The idea of wealthier countries giving away aid blossomed in the late 1960s, as the first humanitarian crises reached mass audiences on television. Americans watched through their TV sets as children starved to death in Biafra, an oil-rich area that had seceded from Nigeria and was now being blockaded by the Nigerian government, as Philip Gourevitch recalled in a 2010 story in the New Yorker. Protesters called on the Nixon administration for action so loudly that they ended up galvanizing the largest nonmilitary airlift the world had ever seen. Only a quarter-century after Auschwitz, humanitarian aid seemed to offer the world a new hope for fighting evil without fighting a war.

There was a strong economic and political argument for helping poor countries, too. In the mid-20th century, economists widely believed that the key to triggering growth -- whether in an already well-off country or one hoping to get richer -- was pumping money into a country's factories, roads and other infrastructure. So in the hopes of spreading the Western model of democracy and market-based economies, the United States and Western European powers encouraged foreign aid to smaller and poorer countries that could fall under the influence of the Soviet Union and China.

The level of foreign aid distributed around the world soared from the 1960s , peaking at the end of the Cold War, then dipping before rising again. Live Aid music concerts raised public awareness about challenges like starvation in Africa, while the United States launched major, multibillion-dollar aid initiatives . And the World Bank and advocates of aid aggressively seized on research that claimed that foreign aid led to economic development.

Deaton wasn't the first economist to challenge these assumptions, but over the past two decades his arguments began to receive a great deal of attention. And he made them with perhaps a better understanding of the data than anyone had before. Deaton's skepticism about the benefits of foreign aid grew out of his research, which involved looking in detail at households in the developing world, where he could see the effects of foreign aid intervention.

"I think his understanding of how the world worked at the micro level made him extremely suspicious of these get-rich-quick schemes that some people peddled at the development level," says Daron Acemoglu, an economist at MIT.

The data suggested that the claims of the aid community were sometimes not borne out. Even as the level of foreign aid into Africa soared through the 1980s and 1990s, African economies were doing worse than ever, as the chart below, from a paper by economist Bill Easterly of New York University, shows.


William Easterly, "Can Foreign Aid Buy Growth?"

The effect wasn't limited to Africa. Many economists were noticing that an influx of foreign aid did not seem to produce economic growth in countries around the world. Rather, lots of foreign aid flowing into a country tended to be correlated with lower economic growth, as this chart from a paper by Arvind Subramanian and Raghuram Rajan shows.

The countries that receive less aid, those on the left-hand side of the chart, tend to have higher growth -- while those that receive more aid, on the right-hand side, have lower growth.


Raghuram G. Rajan and Arvind Subramanian, "Aid and Growth: What Does the Cross-Country Evidence Really Show?"

Why was this happening? The answer wasn't immediately clear, but Deaton and other economists argued that it had to do with how foreign money changed the relationship between a government and its people.

Think of it this way: In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders don't deliver the basic services they promise, the people have the power to cut them off.

Deaton argued that foreign aid can weaken this relationship, leaving a government less accountable to its people, the congress or parliament, and the courts.

"My critique of aid has been more to do with countries where they get an enormous amount of aid relative to everything else that goes on in that country," Deaton said in an interview with Wonkblog. "For instance, most governments depend on their people for taxes in order to run themselves and provide services to their people. Governments that get all their money from aid don't have that at all, and I think of that as very corrosive."

It might seem odd that having more money would not help a poor country. Yet economists have long observed that countries that have an abundance of wealth from natural resources, like oil or diamonds, tend to be more unequal, less developed and more impoverished, as the chart below shows. Countries at the left-hand side of the chart have fewer fuels, ores and metals and higher growth, while those at the right-hand side have more natural resource wealth, yet slower growth. Economists postulate that this "natural resource curse" happens for a variety of reasons, but one is that such wealth can strengthen and corrupt a government.

curse

Like revenue from oil or diamonds, wealth from foreign aid can be a corrupting influence on weak governments, "turning what should be beneficial political institutions into toxic ones," Deaton writes in his book "The Great Escape: Health, Wealth, and the Origins of Inequality." This wealth can make governments more despotic, and it can also increase the risk of civil war, since there is less power sharing, as well as a lucrative prize worth fighting for.

Deaton and his supporters offer dozens of examples of humanitarian aid being used to support despotic regimes and compounding misery, including in Zaire, Rwanda, Ethiopia, Somalia, Biafra, and the Khmer Rouge on the border of Cambodia and Thailand. Citing Africa researcher Alex de Waal, Deaton writes that "aid can only reach the victims of war by paying off the warlords, and sometimes extending the war."

He also gives plenty of examples in which the United States gives aid "for 'us,' not for 'them'" – to support our strategic allies, our commercial interests or our moral or political beliefs, rather than the interests of the local people.

The United States gave aid to Ethiopia for decades under then-President Meles Zenawi Asres, because he opposed Islamic fundamentalism and Ethiopia was so poor. Never mind that Asres was "one of the most repressive and autocratic dictators in Africa," Deaton writes. According to Deaton, "the award for sheer creativity" goes to Maaouya Ould Sid'Ahmed Taya, president of Mauritania from 1984 to 2005. Western countries stopped giving aid to Taya after his government became too politically repressive, but he managed to get the taps turned on again by becoming one of the few Arab nations to recognize Israel.

Some might argue for bypassing corrupt governments altogether and distributing food or funding directly among the people. Deaton acknowledges that, in some cases, this might be worth it to save lives. But one problem with this approach is that it's difficult: To get to the powerless, you often have to go through the powerful. Another issue, is that it undermines what people in developing countries need most -- "an effective government that works with them for today and tomorrow," he writes .

The old calculus of foreign aid was that poor countries were merely suffering from a lack of money. But these days, many economists question this assumption, arguing that development has more to do with the strength of a country's institutions – political and social systems that are developed through the interplay of a government and its people.

There are lot of places around the world that lack good roads, clean water and good hospitals, says MIT's Acemoglu: "Why do these places exist? If you look at it, you quickly disabuse yourself of the notion that they exist because it's impossible for the state to provide services there." What these countries need even more than money is effective governance, something that foreign aid can undermine, the thinking goes.

Some people believe that Deaton's critique of foreign aid goes too far. There are better and worse ways to distribute foreign aid, they say. Some project-based approaches -- such as financing a local business, building a well, or providing uniforms so that girls can go to school -- have been very successful in helping local communities. In the last decade, researchers have tried to integrate these lessons from economists and argue for more effective aid practices.

Many people believe that the aid community needs more scrutiny to determine which practices have been effective and which have not. Economists such as Abhijit Banerjee and Esther Duflo, for example, argue for creating randomized control trials that allow researchers to carefully examine the development effects of different types of projects -- for example, following microcredit as it is extended to people in poor countries.

These methods have again led to a swell in optimism in professional circles about foreign aid efforts. And again, Deaton is playing the skeptic.

While Deaton agrees that many development projects are successful, he's critical of claims that these projects can be replicated elsewhere or on a larger scale. "The trouble is that 'what works' is a highly contingent concept," he said in an interview. "If it works in the highlands of Kenya, there's no reason to believe it will work in India, or that it will work in Princeton, New Jersey."

The success of a local project, like microfinancing, also depends on numerous other local factors, which are harder for researchers to isolate. Saying that these randomized control trials prove that certain projects cause growth or development is like saying that flour causes cake, Deaton writes in his book. "Flour 'causes' cakes, in the sense that cakes made without flour do worse than cakes made with flour – and we can do any number of experiments to demonstrate it – but flour will not work without a rising agent, eggs, and butter – the helping factors that are needed for the flour to 'cause' the cake."

Deaton's critiques of foreign aid stem from his natural skepticism of how people use -- and abuse -- economic data to advance their arguments. The science of measuring economic effects is much more important, much harder and more controversial than we usually think, he told The Post.

Acemoglu said of Deaton: "He's challenging, and he's sharp, and he's extremely critical of things he thinks are shoddy and things that are over-claiming. And I think the foreign aid area, that policy arena, really riled him up because it was so lacking in rigor but also so grandiose in its claims."

Deaton doesn't argue against all types of foreign aid. In particular, he believes that certain types of health aid – offering vaccinations, or developing cheap and effective drugs to treat malaria, for example -- have been hugely beneficial to developing countries.

But mostly, he said, the rich world needs to think about "what can we do that would make lives better for millions of poor people around the world without getting into their economies in the way that we're doing by giving huge sums of money to their governments." Overall, he argues that we should focus on doing less harm in the developing world, like selling fewer weapons to despots, or ensuring that developing countries get a fair deal in trade agreements, and aren't harmed by U.S. foreign policy decisions.

Deaton also believes that our attitude toward foreign aid – that developed countries ought to swoop in and save everyone else – is condescending and suspiciously similar to the ideas of colonialism. The rhetoric of colonialism, too, "was all about helping people, albeit about bringing civilization and enlightenment to people whose humanity was far from fully recognized," he has written.

Instead, many of the positive things that are happening in Africa – the huge adoption in cell phones over the past decade, for example – are totally homegrown. He points out that, while the world has made huge strides in reducing poverty in recent decades, almost none of this has been due to aid. Most has been due to development in countries like China, which have received very little aid as a proportion of gross domestic product and have "had to work it out for themselves."

Ultimately, Deaton argues that we should stand aside and let poorer countries develop in their own ways. "Who put us in charge?" he asks.

Inequality

[Jun 26, 2017] I hate the the use of word THE POOR by neoliberal politicians It is an insult like deplorable

Notable quotes:
"... "Struggling " is a far better term if we need a category for distressed citizens. Jobless of course leaves out The huge Category of low wage short hours households. Liberals want to help, want to be charitable, but the real social blight is lack of opportunity to make a decent living thru wage work ..."
"... Safety nets are not necessary if opportunity provides alternatives. More jobs more hours ..."
"... And instead we curb the jobs and hours expansion rate because we refuse to socialize even in part the pricing mechanism ..."
"... That was war time and we "tolerated" rations and price boards for the war effort ..."
"... A similar sense of urgency however can be instilled if leading circles embrace the effort ..."
"... We moved from the landed aristocracy to the landed gentry. Democracy still remains to be seen in full light of day, even relatively representative. ..."
"... Distribution system of US/EU capitalism has failed. [It is a ] systemic plunder* it passed ..."
"... Well yeah, but that is the best that we can get with largely unanswerable elites in charge of everything. Patronizing triangulation is the natural modus operandi for republican politics under a system of dollar democracy and arcane rules of compartmentalized representation. Sure, pure democracy is too cumbersome, but would a rough approximate of representativeness be too much to ask? ..."
Mar 11, 2017 | economistsview.typepad.com
Paine : March 11, 2017 at 05:49 AM
I hate the the use of word "THE POOR " by liberal politicians It's like deplorable It's an insult

"Struggling " is a far better term if we need a category for distressed citizens. Jobless of course leaves out The huge Category of low wage short hours households. Liberals want to help, want to be charitable, but the real social blight is lack of opportunity to make a decent living thru wage work
Wage rates and hours

Households cope with this blight. They struggle tinline and hold on to some happiness in the Jeffersonian use of the word happiness

Paine -> Paine... , March 11, 2017 at 05:58 AM
Safety nets are not necessary if opportunity provides alternatives. More jobs more hours

And instead we curb the jobs and hours expansion rate because we refuse to socialize even in part the pricing mechanism

We know what potential for mobilizing idle hours exits thru correct and adequate micro nautics We did this in 1940 - 44

That was war time and we "tolerated" rations and price boards for the war effort

A similar sense of urgency however can be instilled if leading circles embrace the effort

A war on browning

But first the Threat of global browning. Has to become real in the minds of The citizenry

RC AKA Darryl, Ron -> kthomas... , March 11, 2017 at 08:10 AM
Most people are complicated and Thomas Jefferson was no exception. The better part of him was associated with James Maddison and largely came from Thomas Paine.

But TJ had far too many personal problems to be held up like a saint. To be fair his time was well before even a faint glimmer of effective democracy during the dawn of the modern quasi-electorally appointed republic, an institution designed to emphasize property rights economic and political efficacy over inherited bloodlines.

We moved from the landed aristocracy to the landed gentry. Democracy still remains to be seen in full light of day, even relatively representative.

ilsm -> Paine... , March 11, 2017 at 07:32 AM
Distribution system of US/EU capitalism has failed. [It is a ] systemic plunder* it passed

l'audace, l'audace toujour l'audace

RC AKA Darryl, Ron -> Paine... , March 11, 2017 at 08:17 AM
Well yeah, but that is the best that we can get with largely unanswerable elites in charge of everything. Patronizing triangulation is the natural modus operandi for republican politics under a system of dollar democracy and arcane rules of compartmentalized representation. Sure, pure democracy is too cumbersome, but would a rough approximate of representativeness be too much to ask?

[May 27, 2017] Macro policy is sort of trade policy. So instead of neoliberal ideal of a free market in international trade without trade policy or government interference, we really need governments to manage trade, or at least manage their macro policy with trade policy in mind

Notable quotes:
"... "The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits." ..."
"... Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries). ..."
"... Moreover, team Trump is consistently misguided with their unilateral approach to this problem of trade imbalances. As long as foreign capital continues to flow freely into the US from surplus countries, absorbing less from Germany simply implies absorbing more excess savings from somewhere else. ..."
"... Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries). ..."
"... At this point, the growing group of economists who recognize the importance of these international imbalances are pointing towards the capital flows themselves as the force behind persistent trade deficits. ..."
"... "King suggests that the best solution is for deficit countries to get together with surplus countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth." That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust, repeat") that's been so repeatedly damaging to countries across the globe." ..."
May 27, 2017 | economistsview.typepad.com
Christopher H., May 27, 2017 at 09:17 AM
http://jaredbernsteinblog.com/trump_trade_germany/

Trump, trade, and Germany
by Jared Bernstein

May 26th, 2017 at 1:58 pm

So, at a meeting in Brussels yesterday, President Trump appears to have told leaders of the European Union that "the Germans are bad, very bad." I'll let those with foreign diplomatic chops figure out how to clean that up-and good luck: When I plug the Spiegel Online headline-"Die Deutschen sind böse, sehr böse"-into Google translator, it spits back: "The Germans are evil, very evil."

I'll handle the economics, which actually are interesting. When Trump talks about trade, he sometimes gets a piece of it right, and it's often a piece about which establishment politicians and the economists that support them are in denial: Germany's trade surplus of over 8 percent of GDP really is a problem for the other countries with whom they trade.

That's not just my view. Both Ben Bernanke and more recently, Lord Mervyn King, former governor of the Central Bank of England, have expressed serious concerns about the impact of Germany's large trade surplus on other countries.

But here are two things that I'm sure Trump misunderstands. First, Germany is not manipulating its currency to build its surplus. Instead, it's the single currency of the Eurozone that's the culprit. Germany is the economic powerhouse of the region, with stronger growth and production practices than its Eurozone partners. Thus, if it's currency could float, it would surely appreciate, but it can't, so its goods are underpriced in export markets relative to those countries' exports.

Second, as I'll get to in a moment, it's not clear what Germany should do about it.

In many posts, I've explained that, contrary to conventional wisdom, including the pushback I've already heard from German EU ministers, trade imbalances are not always benign, nor do they represent efficient markets at work. King stresses the damage of currency misalignments, as well as the fundamental arithmetic of global trade. Since trade must balance on a global scale, one country's trade surplus must show up as other countries' deficits. When a country like Germany produces so much more than it consumes (runs a trade surplus), other countries must consume more than they produce (run trade deficits). And when the magnitudes get this large as a share of GDP-Germany's surplus hit a record 8.6 percent of GDP last year-the damage to other nations can be severe.

Bernanke in 2015:

"The fact that Germany is selling so much more than it is buying redirects demand from its neighbors (as well as from other countries around the world), reducing output and employment outside Germany at a time at which monetary policy in many countries is reaching its limits."

Bernanke's last point is key. When economies are percolating along at full employment, trade deficits can, in fact, be benign. But unemployment in the Eurozone is still 9.5 percent, which combines Germany's 3.9 percent with Spain's 18.2 percent, Greece's 23.5 percent, Italy's 11.7 percent, and so on. Germany's massive surplus has cribbed labor demand from those high unemployment countries, but neither the fiscal nor monetary authorities in these nations have undertaken adequate counter-cyclical policies ("why not?" is a good question having to do with constraints of the monetary union and austerity economics).

To be clear, even at full employment, large, persistent trade deficits-which again, are the flipside of large, persistent surpluses-can be problematic. Here in the US, they've hurt our manufacturers and their communities, a fact that Trump exploited in the election. And one can, of course, see similar political dynamics in the weaker parts of European economies.

Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries).

At this point, the growing group of economists who recognize the importance of these international imbalances are pointing towards the capital flows themselves as the force behind persistent trade deficits. This is an important insight because it belies the simple solution we tend to hear from the mainstream: if only you'd save more, your trade deficit would shrink. But if other countries persist in exporting their savings to us, short of capital controls to block those flows, our trade deficit will also persist.

What could/should Germany do to be more of team player, spreading demand to others instead of hoarding it? The usual recommendation, made by Bernanke, is to take their excess savings and invest them at home, say through more public infrastructure or some other sort of fiscal stimulus. But King makes the good point that since Germany is already pretty much at full employment-recall their 3.9 percent unemployment rate–they may be disinclined to take this advice.

King suggests that they should instead do something to raise the value of their exchange rate (appreciate their currency), but here again, it's not obvious how, as a member of the currency union, they're supposed to go about that.

Surely, the solution Trump intimated-a big tariff on German exports into the US-wouldn't work. For one, such actions invite retaliation, and not only do many of us want to tap the consumer benefits of our robust global supply chains, but Germany has factories here that employ a lot of people making cars and other equipment. That's welcome investment.

Moreover, team Trump is consistently misguided with their unilateral approach to this problem of trade imbalances. As long as foreign capital continues to flow freely into the US from surplus countries, absorbing less from Germany simply implies absorbing more excess savings from somewhere else.

King suggests that the best solution is for deficit countries to get together with surplus countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth." That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust, repeat") that's been so repeatedly damaging to countries across the globe. Perhaps that would be a motivator for our trading-partner countries, though the longer Trump's out there on the road, the harder it's getting to imagine such forward-looking international coordination.

I too have suggested that President Trump should convene such a commission, but sadly, I'm not the Jared he listens to. In the meantime, he should check out Google Translator before he mouths off.

Christopher H. said... May 27, 2017 at 09:25 AM

Krugman:

"This has only minor spillovers to the United States - maybe Germany's unhelpful role has contributed a bit to our trade deficit, but this is basically an intra-Europe issue."

Bernstein:

"To be clear, even at full employment, large, persistent trade deficits-which again, are the flipside of large, persistent surpluses-can be problematic. Here in the US, they've hurt our manufacturers and their communities, a fact that Trump exploited in the election. And one can, of course, see similar political dynamics in the weaker parts of European economies.

Trade deficits have also contributed to asset bubbles. They must be financed with borrowed capital, and such flows from surplus countries were clearly associated with our housing bubble in the 2000s, as well as the longer-term "secular stagnation" economist Larry Summers talks about (weak demand, even in mature recoveries).

At this point, the growing group of economists who recognize the importance of these international imbalances are pointing towards the capital flows themselves as the force behind persistent trade deficits.

This is an important insight because it belies the simple solution we tend to hear from the mainstream: if only you'd save more, your trade deficit would shrink. But if other countries persist in exporting their savings to us, short of capital controls to block those flows, our trade deficit will also persist."

Paine -> Christopher H.... May 27, 2017 at 02:10 PM

Nonsense. We can force Germany to build more cars here. In fact we can tell the German MNCs to build all their north American cars here. Including parts and accessories. German MNCs have no patriotic urge we couldn't subvert with market threats. Or Japanese MNCs for that matter. Push back ?

Sorry we are the global market of choice we shut you out and you decline to secondary status. Violate the code of MNCs liberty to jump borders at will ?

Now that is a horse of a darker shading

Christopher H. said... May 27, 2017 at 09:22 AM

Krugman:

"Yet Germany's huge trade surpluses are a problem * - which has nothing to do with trade policy."

Macro policy is sort of trade policy as Bernstein points out above. Instead of this neoliberal ideal of a free market in international trade without trade policy or government interference, we really need governments to manage trade, or at least manage their macro with trade policy in mind.

As Bernstein suggest:

"King suggests that the best solution is for deficit countries to get together with surplus countries and, a la Bretton Woods, figure out a "mutually advantageous path to restore growth." That sounds a bit pie-in-the-sky until you consider the economic shampoo cycle ("bubble, bust, repeat") that's been so repeatedly damaging to countries across the globe."

In the 1980s, the dollar was getting too strong until governments managed trade and currency policy via the Plaza Accords which brought the dollar down. It was trade policy.

It wasn't policy to change savings rates or something that the mainstream economists focus on.

Christopher H. -> to pgl... May 27, 2017 at 10:41 AM

"The exchange rate value of the dollar versus the yen declined by 51% from 1985 to 1987. Most of this devaluation was due to the $10 billion spent by the participating central banks.[citation needed] Currency speculation caused the dollar to continue its fall after the end of coordinated interventions. Unlike some similar financial crises, such as the Mexican and the Argentine financial crises of 1994 and 2001 respectively, this devaluation was planned, done in an orderly, pre-announced manner and did not lead to financial panic in the world markets. The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan."

Since the coordinated actions of central banks led to the devaluation of the dollar and reduction of the trade deficit, I'd say it was currency and trade policy as well.

"The justification for the dollar's devaluation was twofold: to reduce the U.S. current account deficit, which had reached 3.5% of the GDP, and to help the U.S. economy to emerge from a serious recession that began in the early 1980s."

[May 27, 2017] "Markets Today Are Radically Different Than What We Believe - We Have the Façade of Competition -

May 27, 2017 | promarket.org

Valletti, who is also a Professor of Economics at the Imperial College Business School and the University of Rome Tor Vergata, discussed the EC's investigation into the Facebook-WhatsApp merger during the panel. Facebook, he said, had "lied" to European regulators about its ability to absorb WhatsApp's user data, but the larger issue was market definition.

"Would the decision on the merger have changed had the Commission known that information at the time?" asked Valletti, who joined theEC in 2016. "At the time, the Commission defined the relevant market as non-search advertising. This is a huge market. In that ocean, even Facebook doesn't have a lot of market power. If instead the market definition had been, for instance, advertising on social networks, [it's]likely theywould have concluded that Facebook would have been dominant in that particular market, and that integrating that useful information from [WhatsApp] could have enhanced its market power." Valletti also stressedthe importance of having individual-level data when discussing issues like competition at the advertising market, and not just looking at market shares.

Pasquale and Taplin, meanwhile, criticized U.S. antitrust authorities, with Taplin saying that digital platforms have "done very well because they have a certain regulatory capture" and Pasquale remarkingthat "U.S. antitrust policy is rapidly becoming a pro-trust policy."

As an example of this "pro-trust" policy, Pasquale cited the FTC's lawsuit against online contact lens retailer 1-800 Contacts . 1-800 Contacts was sued by the FTC last yearfor having reached agreements with 14 other online contact lens sellers that they would not advertise to customers who had searched for 1-800 Contacts online."You would imagine that given the power of these [companies], and given the activity in Europe and many other nations, our enforcers would be extremely concerned about these platforms. They are-they're concerned about little companies hurting the platforms," he said.

The FTC, added Pasquale, had pursued the 1-800 Contacts case aggressively. "I'm not here to comment on the merits of this case, but I think that the choice of this enforcement target speaks volumes. What does it say? It says that if small firms arebeing exploited or hurt by a big digital behemoth, or think [they]are, don't try in any way to coordinate or maintain your independence. What you should do is all combine and merge and become a giant, say, contacts firm. In the media, they should all combine and merge and maybe all be bought by Comcast, so that then they can negotiate with Google in a way that they are relatively of the same size and power. That's the pro-trust message we're getting under current non-enforcement U.S. antitrust policy."

[May 26, 2017] Fair Trade instead of Free Trade

May 26, 2017 | economistsview.typepad.com
im1dc , May 26, 2017 at 05:06 AM
"Blinder: Why, After 200 Years, Can't Economists Sell Free Trade?" From yesterday.

B/C so-called 'Free Trade' favor one group over another. Fair Trade should be the basis for 'Free Trade.'

American Economists are not smart enough to comprehend the "basis" and instead focus on numbers which are clearly skewed to favor trade and which ignore the effects on those that DO NOT gain in such deals.

im1dc - , May 26, 2017 at 05:12 AM
Maybe it would help if Economists thought in metaphors.

Try thinking about music. There are all sorts of genres. Within each some are great and some are horrible, i.e., a vast variety of degrees of what is great and what is not.

RC AKA Darryl, Ron - , May 26, 2017 at 06:57 AM
"Maybe it would help if Economists thought in metaphors..."

[Essentially that is what economists already do, although the term most often used is a different form of abstraction than a metaphor or colloquial meme. Economists think in terms of stylized facts.]

https://en.wikipedia.org/wiki/Stylized_fact

In social sciences, especially economics, a stylized fact is a simplified presentation of an empirical finding.[1] A stylized fact is often a broad generalization that summarizes some complicated statistical calculations, which although essentially true may have inaccuracies in the detail...

*

[When it comes to sorting out the beneficiaries from the losers, then the common measurement of all things economic is money. Money aggregates is what economists look at in all those stylized facts. So, the people with the most money naturally matter more in economics.

However, the devil is in the details. Just like Bluefin tuna do not benefit from a higher price for Bluefin tuna in the short run (nor long run either unless caused by a drastic fall in quota and catch rather than stock depletion) and fisherman of Bluefin tuna do not benefit from a higher price of Bluefin tuna in the long run (as they still won't make enough to save and invest adequately to protect against fishery collapse) and sushi bars don't benefit and sushi eaters do not benefit then maybe lose-lose is more likely than win-win in economics. But if you were an economists and said that then you would be out of a job.

Environmental economics makes a lot more sense than monetized economics if we are worried about the future and quality of life for everyone, but economist do not worry about the future because "In the end we are all dead" before it becomes time to pay the environmental piper. Besides environmental economics places much more focus on distribution than wealth and GDP, whereas monetized economics is just the opposite. So, financialize and securitize to your heart's content because we are on the path to global destruction.]

RC AKA Darryl, Ron , May 26, 2017 at 05:35 AM
RE: Growth, import dependence, and war in the context of international trade

Roberto Bonfatti, Kevin O'Rourke 26 May 2017

Classical models suggest that shifts in the balance of power can lead to conflict, where the established power has the incentive to trigger war to deter the threat to its dominance. This column argues that this changes if international trade is taken into account. Industrialisation requires the import of natural resources, potentially leading a smaller nation to trigger war either against a resource-rich country or the incumbent nation. The model can help explain the US-Japanese conflict of 1941 and Hitler's invasion of Poland, and has implications for US-Chinese relations today...

http://voxeu.org/article/growth-import-dependence-and-war

[I am not buying into ANY of THESE narratives regarding the risks of geopolitical instability attributable to increased levels of global economic integration, but I do really like how the authors pose these narratives which all fly in the face of the old saw about global economic integration ushering in a sustained period of world peace.

Indeed globalization has never stopped warring before. It did not prevent WW-I. Yes, there was lots of world trade before container ships and the free movement of capital. Container ships and the free movement of capital just lowered the cost of extended supply chains such that international wage arbitrage made greater global integration profitable for owners of capital well after most other comparative advantages of international competition had become moot.

Global economic integration via the international settlement of accounts regime under the gold standard was a principle cause of the Great Depression which in turn greatly exacerbated "The Economic Consequences of the Peace." The Versailles Treaty was a "Carthaginian peace" Keynes convincingly argued and it did indeed lead to WW-II with Germany in the grips of the Great Depression fitfully reasserting its self determination.

I do not even believe that war poses the greatest risk to geopolitical instability in the current century. The H-bomb has done a lot to limit the severity of international hostility even if it has done nothing to reduce the frequency since the end of the Cold War.

The role of the greatest risks to geopolitical instability in the current century I expect to be filled by various supply side and demand side shocks delivered by the unnatural events of Nature under its present climate change regime. Floods, draughts, typhoons, and even earthquakes (yep - both rising ocean and melting glaciers are unsteadying the steady pressure of Earthly masses on its tectonic plates - recipe for earthquakes second only to asteroids) all continue to be both more frequent and more severe. In an integrated global economy any catastrophe of economic significance in one country (or more) is not only propagated in its economic effects to all of its trading partners around the world, but those effects become magnified as the integration between those trading partners reverberate the effects. This is globalization's economic shock multiplier effect. Falling tides wreck all boats. This century is still young, but fortunately enough for me that I am not.]

RC AKA Darryl, Ron - , May 26, 2017 at 07:32 AM
It is drying up outside now after two days of rain and no one has slapped me with the other side of this story yet. So, I will have to slap myself while I am still conveniently at hand to answer the challenge.

If not for globalization then worldwide poverty would likely be the greatest risk to geopolitical instability in the current century instead of climate change, which would also make climate change even more deadly and difficult to deal with. However, globalization in its present degree and form was the chosen rather than only possible means of turning the tide against global poverty. First off, the major emerging economies were each capable of doing quite a lot on their own and a lot more with just a little help in the form of capital and technology. It was the choice of the west to engage in private trade rather than foreign aid to achieve these ends. That choice came about because corporations have a greater control of western governments than western governments have control of corporations. Corporations seeded that choice both through their own generosity to the campaigns of politicians and via a public relations campaign against giving foreign aid to those people. Corporations preferred to just give those people our jobs and skip the middle man, the taxpayer.

[May 26, 2017] Blinder Why, After 200 Years, Cant Economists Sell Free Trade (Video)

Notable quotes:
"... Neoliberal economics denies that for real economic agents networks are of primary important. ..."
"... I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication. ..."
May 26, 2017 | economistsview.typepad.com
I.B , May 25, 2017 at 02:02 PM
Free trade works with he assumption that the winners share their profits with the losers, creating a win-win or at least win-no lose scenario. However, the same people who preach free trade tend to suggest to "reform" the welfare state, a.k.a. annihilating it, eliminating the very assumption that makes free trade supposedly a pareto improvement.

Plus economists only argue with money and commodities. Free trade moves jobs abroad, destroying lifes and communities. This non-monetary cost is not included in the models that prove the advantages of free trade.

New Deal democrat - , May 25, 2017 at 02:07 PM
Yes.

In terms Blinder might understand: "Alan, if you let me murder you, I will give each of your children and grandchildren $10,000. That's money they wouldn't otherwise receive. You're cool with that, right?"

Gibbon1 - , May 25, 2017 at 05:39 PM
[destroying lifes and communities]

Neoliberal economics denies that for real economic agents networks are of primary important.

mulp - , May 26, 2017 at 12:15 AM
"Free trade works with he assumption that the winners share their profits with the losers, creating a win-win or at least win-no lose scenario"

Nonsense. Free trade, local or international, is about trading labor for labor. There are no winners or losers. Economies must be zero sum. A free trade means neither you nor I do AAA nothing for the other that puts us at a disadvantage. Since Reagan made free lunch economics cool, most economists reject labor as the core of the economy.

Free lunch economics seeks to eliminate labor from the economy as a purely burdensome cost. Instead, free lunch economics worships money with no connection to labor. But money is, at its core, simply a proxy for labor. But with free lunch economists constantly rejecting labor as a burden to be cut and eliminated, trade increasingly becomes about monopoly power and rents, but that requires eliminating free trade.

The problems with trade in the US is free lunch economists have justified and given authority to trade US property, land, assets away in exchange for labor by Asians who needed assets to develop. Assets like fossil fuels, iron ore, etc.

Milton Friedman argued that we Americans become wealthier getting labor produced consumption goods in exchange for giving them our property in a frequently cite 1978 lecture. Ie, he advanced the idea that labor is not what trade is about.

Yet, you will never find an economist describing the advantage of free trade by saying nation one's capitalists make its workers unemployed in order to have nation two's workers do all the work.

That's the wonder of free lunch economics. Describe free trade in terms of trading labor. Then immediately argue that it's better to trade, not labor, but assets for labor, making workers in both nations better off....

The rhetoric is clever, and liberals grew lazy and failed to think about the flaws in free lunch economics of Friedman, et al, since.

JohnH , May 25, 2017 at 03:12 PM
After 200 years it has finally gotten to the point where free trade promoters are having trouble selling their snake oil. The biggest problem is that 'free' trade isn't free at all. It is a series of deals heavily negotiated on behalf of the industries that benefit from them...labor, indigenous groups, and environmentalists are nowhere to be found at the negotiating table...only multinational corporations hoping to get a free lunch...or as close to it as possible...in return for the gobs of money they invested in Democrats and Republicans.

Sad that it has taken 200 years to figure this out.

mulp , May 26, 2017 at 12:29 AM
Workers love to screw themselves because they believe they will keep getting high wages even if they pay every other worker low wages. Do you complain that food prices are too low resulting in food workers being paid too little?

If you are not calling for higher food prices, then you better believe food workers want your wages slashed so the price of what you produce for them can be afforded by someone making $15,000 a year.

No one forces any American worker to buy Chinese made goods, or any import. Instead, US workers kill their own jobs paying prices that are too low to be produced by US workers.

But not even Bernie calls for higher prices paid by all workers so US workers can produce everything at good 60s era union wage levels. Food was more expensive then. Clothing more expensive. Vacations like those many take today were very expensive, so vacations then were spartan: visiting relatives, or camping in government parks or staying at a cabin with an outhouse and no electricity.

dwb , May 25, 2017 at 04:11 PM
Maybe economists could sell free trade if they were not standing if front of what looks like a concrete prison wall fidgeting with their microphone.

I find it mildly amusing that economists who believe in rational expectations and rational consumers cannot understand why people are too stupid to get free trade. Experience cognitive dissonance much?

Only an economist who does not understand business would say that it does not pay to advertise a book before it's out.

Gibbon1 - , May 25, 2017 at 05:57 PM
I have an idea what's wrong with ration expectations theory that falls out of work I've done on self organizing radio networks.

One of the biggest problems when trying to reason about these networks if that the actual nodes have very limited information about the layout of the network. It's vital to take that into account when developing strategies for maintaining the network without having a central controller.

I find that people have a really really hard time letting go over an over-all mental model of what is happening and way. Turns out none of the information that the nodes have is totally unambiguous. It's always ambiguous and limited and poorly sampled.

That's the central problem with the rational expectations model right there. In real life the actors do not have anything close to sufficient, well sampled, unambiguous information to work off of. Even if they did, cognitive load is an issue.

Real life actors tend to punt and work on developing trusted economic associations with other economic actors. My experience is this takes years to develop. Yet neoliberals don't place any value on those trusted networks and work to destroy them because they see them as inefficient.

reason - , May 26, 2017 at 02:51 AM
It is worse than that. Economists don't have a model that works, but they assume that each and every actor in the market does. That is a crazy assumption.
kaleberg , May 25, 2017 at 05:25 PM
Places are created by import substitution. Free trade makes import substitution harder. That means places like cities, states and even nations, have found it increasingly difficult to be somewhere as opposed to some trading post or colony. People like to live somewhere as opposed to nowhere.
Shouldn't ignore 170 years of Western protectionism which led to wealth, followed by 30 years of total destruction under free trade , May 25, 2017 at 07:55 PM
Economists need to study history. They needed to be told about East Asia and should travel around the destroyed cities of the US. Economists should let the people of Detroit how wonderful things have gone since the US abandoned protectionism in the early 1970s.
Jerry Brown - , May 25, 2017 at 09:48 PM
There is a whole lot of truth in your comment. Economists (and policy makers) should look at East Asian countries and really take into account how export focused economies HAVE managed to improve the standard of living of their citizens so greatly. And they have managed that- and it is a very good thing overall. But it has had costs for many here in the US who were not in a position to bear those costs and there has not been any nearly adequate attempt to help them bear those costs.
Economists should sell free trade in Youngstown, Camden, Cleveland, East St. Louis - tell them the world was terrible in the 1950s when the US had high tariffs , May 25, 2017 at 08:18 PM
Economists should host the next AEA meeting in Youngstown. 

Toast yourselves! Celebrate your brilliant successes - what a marvel America has become sin ce it abandoned Lincoln's protectionism!

So modern! So rich! A true land of opportunity, unlike the bad old days under 19th century GOP protectionism!

Jesse , May 25, 2017 at 09:20 PM
Free trade, like free markets, are both tools of the neoliberal agenda moreso than sound principles applicable to the real world.

Markets with few or no rules and enforcement to prevent the strong and well connected from victimizing others resides the fundamental assumption that people are naturally rational and with the character of angels.

Anyone who has ever driven on a freeway knows that this assumption representative a fatal error.

libezkova - , May 26, 2017 at 08:36 AM
Jesse,

"Free trade, like free markets, are both tools of the neoliberal agenda moreso than sound principles applicable to the real world."

Exactly -- The key word here is "tools". They are used as a tools of achieving specific, pretty nefarious goals.

What is interesting is that neoliberals redefined the meaning of "free" as "unregulated" and pushed to use it in this "double" meaning, instead of the proper word "fair".

Neoliberals never use the term "fair trade". That's Anathema to them.

That redefinition is actually pretty subtle and pretty devious. Really Orwellian semantic trick.

Compare with "The Ministry of Truth, which concerned itself with news, entertainment, education, and the fine arts. The Ministry of Peace, which concerned itself with war. The Ministry of Love, which maintained..."

libezkova , May 25, 2017 at 10:15 PM
As Reason once commented in this blog: "I'm beginning to hate the word free".

There is no free trade - only negotiated and regulated trade and dominant nations always get better terms.

Foreign nations are very suspicious if, for example, the USA reps talk about "free trade" ;-)

Historically GB was the promoter. In this case, free trade was simply one of the mechanisms of empire in the age of industrialism, one part of the wealth pump that allows to concentrate the wealth of the globe in Britain during the years of its imperial dominion. Manufactured good carried huge premium in price. For example, they completely destroyed textile industry in India to eliminate competition. Opium wars is another good example here.

It's role is pretty similar for the United States today. In a very interesting way it is combined with "debt slavery" for the most of that nations on the globe.

Kind unique combination, typical for neoliberalism.

It also exists within the web of military treaties that lock allies and vassal nations into a condition of dependence on the imperial center, as well as enforce the dominant currency in which international trade is carried out.

It requires a keen eye to look at the history and pay attention to the direction in which the benefits of "free trade" flow.

But in reality the USA has very little to do with "free trade". The USA practices "selective protectionism" hypocritically disguised as "free trade".

http://cepr.net/blogs/beat-the-press/u-s-pursues-selective-protectionism-not-free-trade?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+beat_the_press+(Beat+the+Press)

"... We also have actively been pushing for longer and stronger patent and copyright protections. While these protections, like all forms of protectionism, serve a purpose, they are 180 degrees at odds with free trade. And, they are very costly.

Patent protection in prescription drugs will lead to us pay more than $440 billion this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion comes to almost $3,000 a year for every family in the country. ..."

"... Stop using the term "free trade" at all...when wall street bankers and hedge fund managers and the corporate media use the term "free trade", what they are really talking about is labor arbitrage. Shifting factories to nations with the lowest worker living standards, health, safety and environmental standards. It usually means a nation without a democracy, run by either oligarchs or despots. ..."

reason, May 26, 2017 at 06:28 AM
I never said that - the word I hated was "freedom", because it has been badly abused (and it is often not clear what it is). Freedom is only ever relative (i.e. you can't increase one aspect of freedom without impingement of another in some way). That is not the same as the adjective "free" - which not an concept relating to a universal state - I know what free entry to a museum is.
libezkova -> reason ... , May 26, 2017 at 08:24 AM
Never say never ;-)

reason : Reply Thursday, March 23, 2017 at 02:20 AM , March 23, 2017 at 02:20 AM

Is the question "Are there Benefits from Free Trade" - different from the question "Are there Benefits from Trade"? What work is word "free" doing here - and what does it even mean?

I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication.

http://economistsview.typepad.com/economistsview/2017/03/links-for-03-23-06.html#comment-6a00d83451b33869e201bb098696b7970d

[May 19, 2017] We need to attack and defeat the neoliberal belief that markets are information processors that can know more than any person could ever know and solve problems no computer could ever solve

May 18, 2017 | www.nakedcapitalism.com
Jeremy Grimm , May 17, 2017 at 5:59 pm

Phillip Mirowski challenged the left to directly attack and defeat the neoliberal belief that markets are information processors that can know more than any person could ever know and solve problems no computer could ever solve. [Prof. Philip Mirowski keynote for 'Life and Debt' conference https://www.youtube.com/watch?v=I7ewn29w-9I ]

Sorry for the long quote - I am loathe to attempt to paraphrase Hayek

"This is particularly true of our theories accounting for the determination of the systems of relative prices and wages that will form themselves on a wellfunctioning market. Into the determination of these prices and wages there will enter the effects of particular information possessed by every one of the participants in the market process – a sum of facts which in their totality cannot be known to the scientific observer, or to any other single brain. It is indeed the source of the superiority of the market order, and the reason why, when it is not suppressed by the powers of government, it regularly displaces other types of order, that in the resulting allocation of resources more of the knowledge of particular facts will be utilized which exists only dispersed among uncounted persons, than any one person can possess. But because we, the observing scientists, can thus never know all the determinants of such an order, and in consequence also cannot know at which particular structure of prices and wages demand would everywhere equal supply, we also cannot measure the deviations from that order; nor can we statistically test our theory that it is the deviations from that "equilibrium" system of prices and wages which make it impossible to sell some of the products and services at the prices at which they are offered."
[Extract from Hayek's Nobel Lecture]

This just hints at Hayek's market supercomputer idea - I still haven't found a particular writing which exposits the idea - so this will have to do.

Sorry - another quote from the Hayek Nobel Lecture [I have no idea how to paraphrase stuff like this!]:

"There may be few instances in which the superstition that only measurable magnitudes can be important has done positive harm in the economic field: but the present inflation and employment problems are a very serious one. Its effect has been that what is probably the true cause of extensive unemployment has been disregarded by the scientistically minded majority of economists, because its operation could not be confirmed by directly observable relations between measurable magnitudes, and that an almost exclusive concentration on quantitatively measurable surface phenomena has produced a policy which has made matters worse."

I can't follow Hayek and I can't follow Jason Smith. The first quote above sounds like a "faith based" theory of economics as difficult to characterize as it is to refute. The second quote throws out Jason Smith's argument with a combination of faith based economics and a rejection of the basis for Smith's argument - as "scientistically minded."

I prefer the much simplier answer implicit in Veblen and plain in "Industrial Prices and their Relative Inflexibility." US Senate Document no. 13, 74th Congress, 1st Session, Government Printing Office, Washington DC. Means, G. C. 1935 - Market? What Market? Can you point to one? [refer to William Waller: Thorstein Veblen, Business Enterprise, and the Financial Crisis (July 06, 2012)
[https://archive.org/details/WilliamWallerThorsteinVeblenBusinessEnterpriseAndTheFinancialCrisis]

It might be interesting if Jason Smith's information theory approach to the market creature could prove how the assumed properties of that mythical creature could be used to derive a proof that the mythical Market creature cannot act as an information processor as Mirowski asserts that Hayek asserts. So far as I can tell from my very little exposure to Hayek's market creature it is far too fantastical to characterize with axioms or properties amenable to making reasoned arguments or proofs as Jason Smith attempts. Worse - though I admit being totally confused by his arguments - Smith's arguments seem to slice at a strawman creature that bears little likeness to Hayek's market creature.

The conclusion of this post adds a scary thought: "The understanding of prices and supply and demand provided by information theory and machine learning algorithms is better equipped to explain markets than arguments reducing complex distributions of possibilities to a single dimension, and hence, necessarily, requiring assumptions like rational agents and perfect foresight." It almost sounds as if Jason Smith intends to build a better Market as information processor - maybe tweak the axioms a little and bring in Shannon. Jason Smith is not our St. George.

But making the observation that there are no markets as defined makes little dint on a faith-based theory like neoliberalism, especially a theory whose Church encompasses most university economics departments, most "working" economists, numerous well-funded think tanks, and owns much/most of our political elite and so effectively promotes the short-term interests of our Power Elite.

[May 08, 2017] The Thousand Day Reich The Double Movement

Notable quotes:
"... The Great Transformation ..."
"... Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. ..."
"... More broadly, fascism, like socialism, was rooted in a market society that refused to function' (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom. ..."
"... Mark Blyth's book, Great Transformations ..."
"... they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven't been gutted, but they have been greatly weakened. ..."
"... As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich. ..."
"... Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them. ..."
"... Review of International Political Economy ..."
"... The problem, they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable. ..."
"... Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise. ..."
"... If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and neglected book on money, Frozen Desire ..."
"... Lots of mentions of "society" there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby the economy has ceased to be a national economy but "society" has largely remained within borders. ..."
"... Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors. ..."
"... Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades). ..."
"... I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the "supine response" of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs). ..."
"... Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment. ..."
"... A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy. ..."
"... A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion. ..."
"... The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable - really that uncertainty ..."
"... I crossed this bridge myself in 2008. Trump's supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. ..."
May 06, 2017 | crookedtimber.org

by Henry on May 1, 2017 This is the second in a series of projected posts that try to look at the Trump administration and right wing populism through the lens of different books (the first – on civil society – is here ). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European exile intellectual – Karl Polanyi.

Karl Polanyi's key book, The Great Transformation has enjoyed a big revival in the last decade. This Dissent article by Patrick Iber and Mike Konczal provides a great summary. Their article – from last year – was intended primarily to frame a discussion of differences between Hillary Clinton and Bernie Sanders. However, as Iber and Konczal suggest in passing, Polanyi would not have been surprised by Trump. Why not? In part, because Polanyi offers a macro-level account of the changing relationship between society and economy, and how efforts to free the economy from the embrace of social relations become self-undermining.

In Polanyi's argument, the economy is 'socially embedded.' This means that economic transactions and relationships aren't separate from society – they are part of it. Efforts to free the market from society and make it self-regulating are not only utopian, but are likely to have disastrous consequences. For Polanyi, the liberal market societies that sprung up in countries such as Britain in the eighteenth and nineteenth centuries, and spread across the world, are not rooted in some natural propensity to 'truck, barter and exchange one thing for another.' Instead, they are an unnatural extrusion – the result of a doomed effort to separate out the market from the society that constitutes it, turning nature and social relations like labour into artificial commodities to be bought, sold and exchanged.

This is rooted in Polanyi's understanding of economic history, which discusses other ways in which the economy has worked (an aside: a substantial portion of the work of the Nobel prize winning economist Doug North can be read as an extended effort to prove Polanyi wrong ). It also leads to his famous (among social scientists) argument about the 'double movement.' Polanyi argues that efforts to disembed markets from their social supports leads to a backlash from 'Society,' which looks to re-embed market relations within a social context.

This effort to re-embed social relations can take both benign and malign forms. Polanyi was a social democrat. He wanted to roughly map out a set of social protections that could restrain the harmful effects of markets, effectively re-embedding them within a set of social protections. Yet his book was first published in 1944, and he was equally concerned with the malign ways in which Society might re-embed markets. He saw the economic crises of the 1930s as a product of disembedded markets and the gold standard. This led to direct political confrontations between workers – immiserated by lower wages and capitalists who had "built industry into a fortress from which to lord the country" (p.235). Economic and political paralysis provided ideal conditions for fascism to succeed: "Fear would grip the people, and leadership be thrust upon those who offered an easy way out at whatever ultimate price" (p. 236).

Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement. At least as important as an actual fascist movement "were the spread of irrationalist philosophies, racialist esthetics, anticapitalist demagogy, heterodox currency views, criticism of the party system, widespread disparagement of the 'regime' or whatever was the name given to the existing democratic set-up" (p.238). More broadly, fascism, like socialism, was rooted in a market society that refused to function' (p.239). The more market crisis, the better fascism prospered, since it purportedly offered a way to re-embed markets within social structures, albeit at the cost of human freedom.

Thus, for Polanyi, the key challenge was to re-embed markets in society in a healthy rather than pernicious fashion. This would involve social protections and the restoration of the primacy of society over the economic system, so that "the market system would no longer be self-regulating" (p. 251). Governments would cooperate more, while retaining the freedom to organize their national life as they wanted, rather than being strangled by the need to maintain an artificial currency standard. The valuable aspects of liberal society – specifically, the civil liberties, private enterprise and wage system which sprung up from nineteenth century liberalism – would have to be maintained through persistent efforts to ensure that every move to strengthen society be accompanied by a move to strengthen individual freedom.

Polanyi's arguments provided many post World War II social democrats with a set of intellectual tools to understand and justify the world that was being created. They suggested that European social democracy, rather than being a way station on the path to true revolution, was an end-state, and arguably a more attractive end-state than exemplars of post-revolutionary society such as the USSR and China. In domestic politics, national governments instituted the welfare state and other social protections. In international politics, scholars such as John Ruggie argued in the 1980s that the post World War II economic order provided a kind of 'embedded liberalism' of the kind recommended by Polanyi.

They also provide, potentially a diagnosis of what has gone wrong since the 1980s. Embedded liberalism is dead, and neo-liberalism has triumphed in its place. Mark Blyth's book, Great Transformations , is an explicit updating of Polanyi. It documents how intellectuals and business leaders brought through an intellectual, social and economic transformation, deliberately intended to undermine embedding institutions, and reinstitute market freedoms in their place. The world of the last twenty years has seen an extraordinary transformation. International markets do not any more have an equivalent of the gold standard (although the euro served quite well in its place in the European Union), yet they create their own disciplining apparatuses that subordinate national economies to international markets. Traditional social protections haven't been gutted, but they have been greatly weakened.

As Piketty and others have documented, the benefits of globalization have flowed, to a vastly disproportionate extent, to those who were already rich.

Unions have been crippled, often quite deliberately. Traditional labor markets have been hollowed out, leaving working class people exposed to uncertain and often miserable futures. Just like the nineteenth and early twentieth century paupers and workers that Polanyi discusses, modern workers and members of the lower middle class find themselves exposed to an unrestrained market, that seems intent on ripping out the social bulwarks that used to protect them.

Hence, a straightforward Polanyian account of Trump and right wing populism would explain it as a backlash to the renewed efforts of market liberals (or neoliberals in market parlance) to free the economy from the social restraints that make it bearable for human beings. It would argue that we are again seeing a 'double movement,' as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections.

Fred Block and Peggy Somers provided such an account a couple of years ago, where they foresaw the threat of resurgent right wing populism. Their analysis is worth quoting in extenso

Polanyi argued that the devastating effects on society's most vulnerable brought on by market crises (such as the Great Depression in the 1930s) tends to generate counter movements as people struggle to defend their livelihoods, their neighborhoods, and their cultures from the destructive forces of marketization. The play of these opposing dynamics is the double movement, and it always involves the effort to remobilize political power to tame the apparent over-extension of market forces. The great danger Polanyi alerts us to, however, is that mobilizing politics to protect against markets run wild is just as likely to be reactionary and conservative, as it is to be progressive and democratic. Whereas the American New Deal was Polanyi's example of a democratic counter movement, fascism was the classic instance of a reactionary counter-movement; it provided protection to some while utterly destroying democratic institutions.

This helps us to understand the tea party as a response to the uncertainties and disruptions that free market globalization has brought to many white Americans, particularly in the South and Midwest. When people demonstrate against Obamacare with signs saying "Keep Your Government Hands off My Medicare," they are trying to protect their own health care benefits from changes that they see as threatening what they have. When they express deep hostility to immigrants and immigration reform, they are responding to a perceived threat to their own resources-now considerably diminished from outsourcing and deindustrialization. Polanyi teaches us that in the face of market failures and instabilities we must be relentlessly vigilant to the threats to democracy that are often not immediately apparent in the political mobilizations of the double movement.

We just saw in the European elections that right-wing, seemingly fringe parties, came in first in France and the U.K. This is a response to the continuing austerity policies of the European Community that have kept unemployment rates high and blocked national efforts to stimulate stronger growth. It might still be largely a protest vote-a signal to the major parties that they need to abandon austerity, create jobs, and reverse the cuts in public spending. But unless there are some serious initiatives at the European Community and the global level to chart a new course, we can expect that the threat from the nationalist and xenophobic right will only grow stronger.

The best evidence for this perspective comes from the rhetoric of Trump and other right wing populists. Trump's rhetoric differs from traditional Republicanism in that it isn't as viscerally hostile to social protections (at least social protections that Trump supporters don't associate with African Americans and immigrants). He welds together a detestation for foreigners with anger towards a perceived cosmopolitan elite, and a promise to protect ordinary Americans from both. Irrationalist philosophies . Racialist esthetics . Anticapitalist demagogy . Heterodox currency views . Criticism of the party system . Widespread disparagement of the 'regime.' Und so weiter .

Orban and Kaczynski, pari passu, offer much the same blend. So, for that matter, does Theresa Mayin a watered down form. They may or may not deliver on their rhetoric (Trump's anti-Wall Street fervor, for example, has miraculously disappeared after his election), but each bases their appeal on it.

There are different flavors of Polanyian thought. Iber and Konczal represent a left-leaning social democratic flavor, that is in line with the Sanders wing of the Democratic party, and look to build bridges with those further to the left. Other Polanyians like Sheri Berman are more attracted to a moderate version, which builds more directly on the European example, and are skeptical of anti-system versions of leftism. Polanyian arguments involve compromise between a left critique of markets and a more centrist defense of liberalism. Different writers strike the compromise in different places.

This also has implications for how one analyses Trump and other populists. For example, Berman argues that the dangers of right wing populism depends to a very great extent on the strength of existing liberal institutions and practices, and the willingness of others to oppose Trump (just as traditional fascism depended for its success on the willingness of 'establishment' conservatives to strike a deal).

Polanyi's arguments about great transformations differ from civil society oriented approaches like Gellner's in some important ways. Gellner is, in the end, on the side of the cosmopolitans – he prefers a detached and ironic liberalism to more traditionalist versions of identity, and believes that it is crucially linked to the thought system that has given rise to science and the partial mastery of nature (even if he prefers to maintain a quasi-ironic stance towards that thought system too). Civic nationalism, for Gellner, is the homage that virtue pays towards vice – an identity politics homeopathically diluted so as to make it stronger in some ways (people remain oriented to the general interest of a larger collective), but weaker in others (they are also capable of maintaining and moving between other forms of identification). Polanyi, in contrast, values community attachment and accompanying 'thick' notions of society as good things in their own right. While he also sees great virtue in some aspects of liberalism, he seeks always to prevent it from overwhelming society, both because of the devastation that it wreaks itself, and the corresponding devastation that may be wreaked by Society taking its revenge.

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

The weakness of traditional Polanyian thought is twofold. First, modern conditions are not the same as those identified by Polanyi in the 1930s. There isn't a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won). Second, the mechanisms that Polanyi identifies are notably vague. To argue that 'Society' strikes back against the 'Market' is to identify an already indistinct relationship between two indistinctly defined abstracts. There is arguably something very important in there, somewhere. However, without further specificity, it is hard to make concrete arguments about what is going to happen when, let alone to build on these arguments towards successful action.

One possible way forward is offered in a new paper ( non-paywalled until the end of May at Review of International Political Economy ) by Blyth and Matthias Matthijs. As noted before, Blyth's first book riffed explicitly on Polanyi, while drawing out a separate set of arguments about the relationship between ideas and institutions, and how this explained the senescence of embedded liberalism as well as its birth. This paper, in contrast, is not a development of Polanyi's arguments so much as an effort to do what Polanyi did in the 1940s. Blyth and Matthijs use current events to come to a systemic understanding of changes in the world economy, changes in domestic economies, and how they are related to each other.

They argue, more or less, that the international economic order tends at any one moment in time to have a specific 'regime' – a set of 'policy targets' or expected goals that actors within the system, look to achieve, and the institutions within which these targets are embedded. The problem, they argue, building on Kalecki's thought and generalizing it, is that each regime contains the seeds of its own destruction. More precisely, each regime encourages actors within it to behave in ways that gradually make the regime politically unworkable.

Thus, after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, however, as Kalecki argued, meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to 'discipline' labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called 'stagflation' of the 1970s. Kalecki predicted, rightly, that this would lead business and capitalists to start pushing actively for a more 'orthodox' set of policies which would move away from trying to maintain full employment, and towards cutting deficits instead.

Blyth and Matthijs argue that this is indeed what happened, giving rise to neoliberalism. The neoliberal regime identified the key problem of the previous regime, inflation, as its major policy target. And indeed, advanced industrialized democracies have had relatively low inflation over the last thirty years. However, pursuit of this policy goal has its own problems. Neoliberalism too contains the seeds of its own demise, even if they are different seeds, and it is a different demise.

If the previous era was a debtor's paradise, where inflation made it cheaper to pay back debts, Blyth and Matthijs identify the current order as a creditor's paradise where the real value of debt is maintained (on the struggle between creditors and debtors, see also James Buchan's wonderful and neglected book on money, Frozen Desire ). Thus, the current regime is pursuing a "policy of price stability in an environment of wage stagnation and rising debt levels driven by the [regime] itself" (p. 22). Stagnant wages and low job security led people to borrow money to retain their ability to consume, helping lead to the financial crisis. The policy responses to this crisis – which have boosted returns to asset holders, while imposing austerity on others – have not eased the systemic problems of the new regime, but rather worsened them.

This (combined with the supine response of the center left to these problems) is what is leading to the new populism that is threatening to overwhelm the existing system – the "anti-creditor pro-debtor political coalitions that have been systematically eating away at mainstream center-left and center-right party vote shares since the crisis." The political success of Trump, and politicians like him, is the consequence of endogenous breakdown within the regime.

Blyth and Matthijs's account differs from Polanyi's in some very important ways. The key dynamic is not 'Society' striking back at the 'Market.' Instead, it is a more specific set of actors, whose interests are largely determined by the situation that they find themselves in, and how that situation changes as the dynamics of a given regime become self-undermining (in the sense that they erode the underlying foundations of the regime) at the same time as they are self-reinforcing (in the sense that the core actors try to keep the system going through increasingly desperate measures. It also is, as they note, exploratory rather than dispositive. What it does is to usefully show how Polanyi's basic intuitions – that the neo-liberal project of market creation is inherently self-undermining – can be applied to a far more specific set of actors, and specific set of mechanisms entraining those actors, than described in Polanyi's own work.

(Updated to include many small fixes and a couple of clarifications. Updated again to include Block and Somers quote which really should have been there in the first place).

Brad DeLong 05.01.17 at 4:16 pm ( 1 )

Looks like you are going to write my paper about how Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys to understanding the 21st century before I do

May I recommend "Highway to Hitler"? http://www.nber.org/papers/w20150

Yours,

Brad DeLong

Ronan(rf) 05.01.17 at 4:58 pm ( 2 )
Afaict a lot of the research would say that what we're seeing is primarily a reaction to cultural change, and although that can't be completely divorced from market driven socio economic changes (for example occupational/class shifts) a lot is just simply demographics (a reaction to immigration, decline in status for once dominant ethnic groups etc)

What could polanyi say about that, if the changes people were reacting to were mainly demographic rather than socio economic ?

bruce wilder 05.01.17 at 5:16 pm ( 4 )
Very interesting essay. I will offer only a reaction to a couple of small points.

after World War II, the regime of Western countries was oriented towards the policy target of achieving full employment. This, . . . meant that the median wage kept on rising, advantaging skilled workers, and disadvantaging business, which found it hard to 'discipline' labour, or maintain productivity. In turn then, private investment fell, and unemployment rose at the same time as inflation rose too – the so-called 'stagflation' of the 1970s.

A couple of things are questionable in this narrative account and that may be telling to larger arguments. What is "advantaging skilled workers" doing in this narrative? Really, it was "skilled" workers who were advantaged? What skills? "Skills" are one of those things people introduce to economic arguments willy nilly when they want to invoke moral factors but avoid mentioning political power. It's hand-waving of the worst sort.

The auto and steel workers scored because they were organized and because the economic rents enjoyed by their oligopolistic employers were vulnerable. "Discipline" was a real enough problem - quality in car production was notorious. But, the "unskilled" nature of production labor was also conspicuous - the jobs were extremely boring. And, management wasn't sure whose side they were on; that management employees would get the same union benefits that they conceded to hourly labor was surely a factor in the generous terms of the 1969 labor agreements.

"private investment fell" Not actually true. Returns on investment fell, even as rates of investment continued to rise - that was the problem of the late 1960s and 1970s. There's a paradox here, in the relationship of invested capital to wages and it has to do with diminishing returns. That was then, and today, we are experiencing the mirror image problem: rates of return are now very high, but rates of investment are quite low - in fact, a large part of the apparent increase in the share of national income going to "capital" over the last generation is attributable to net disinvestment, cashing out of accumulated capital stock, tangible and intangible, and diversion of flows from social reproduction of that capital stock. In the 1960s, the U.S. was building the interstate highway system and great state university systems; now infrastructure is conspicuously shabby and college is a trapdoor into debt peonage.

I am thinking it might be worthwhile to throw in a bit of Frank Capra and It's a Wonderful Life to show what Polanyi is pointing at. What are the economics of that movie fantasy? And, the alternative of Potterville? Savings and loans on the one hand, and casinos on the other, among other things. And, now we have as President, someone who profited pushing casino gambling as a key to economic development.

bob mcmanus 05.01.17 at 5:25 pm ( 5 )
Gellner, Polanyi, Keynes, and Tocqueville are the master social-theory keys

Really?

I'm reading Henry's pieces, largely without comment, looking to see which way the winds are blowing. Okay, maybe the Marxians lost and are over, and the Continental Theorists aren't welcome, but the Social Constructionists? Michael Mann, Giddens, Baumann, Randall Collins, Bellah, Sassen not political theory enough maybe. And then the cyberkids, post-90s thinkers:Fuchs, Castells, Hayles, Kittler, Manovich, Couldry, Bakardjieva, Kosseleck media studies, cultural studies nothing to do with political economy. Nor the feminists, critical race theorists, or post-colonialists or queer theorists. (Not that I have read them all, but I want to, I should)

Gellner, Polanyi, Keynes, and Tocqueville. Right.

Chris Bertram 05.01.17 at 6:49 pm ( 6 )
Lots of mentions of "society" there, and none of the nation-state, which is interesting, since one of the forms that disembedding has taken since the 1970s is "globalization", a process whereby the economy has ceased to be a national economy but "society" has largely remained within borders.
engels 05.01.17 at 7:09 pm
we are again seeing a 'double movement,' as right wing populist politicians take advantage of popular anger to restore a social and moral order which may look appalling to liberal eyes, but which reinstitutes (or, at least, claims to reinstitute) much desired social protections

This sounds a bit like: 'we are about to see the end of human mortality because Sergey Brin is going to live forever (or at least claims he will)'.

Stephen 05.01.17 at 7:42 pm ( 8 )
Henry: "Polanyi believed that fascism had little to do with the outcomes of World War I".

Life is short, I have many other things to do, I confess I've not read Polanyi. But could you enlighten me: does he explain why Fascism did well in states badly defeated in WWI (Germany, Austria, Hungary) or disappointed (Italy, Romania), but not in states more or less victorious (France, Belgium, UK, USA, Canada, Australia) or happily neutral (Sweden, Norway, Denmark, Netherlands, Switzerland)?

Also: "Blyth and Matthjis identify the current order as a creditor's paradise where the real value of debt is maintained". As far as I can see, negative real interest rates are becoming more and more common. Some mistake here?

JimV 05.01.17 at 8:24 pm ( 9 )
There were skilled workers outside of the automobile assembly lines.

Ships, turbines, generators and other complex machinery were not built using assembly lines. Skilled workers in those fields included welders, grinders, machinists, crane operators, riveters, pattern-makers, foundry workers, electricians and drafters. GE had an Apprentice Program to teach high-school graduates these skilled trades, in the 1950's, 60's, and 70's.

At a design meeting in the 1970's, Dr. W, the Manager of Aerodynamic Development Engineering at GE Large Steam Turbine once told us, "The key to aerodynamic efficiency in a turbine blade is continuity of the second-derivative." To which the Rotor Design Engineering Technical leader replied, "Someday let me introduce you to the large Polish guy who grinds the second derivative." (Who probably made as much as Dr. W, with overtime to get things shipped in December instead of January to meet year-end billing.)

Not so much anymore, of course.

nastywoman 05.01.17 at 8:49 pm ( 10 )
– and I always thought that contemporary 'Populists' just pick -(without a lot of 'thought') – whatever (currently) is popular to get elected?
– and that's why so much 'Social-Democratic-Policy' is in the programs of Europeans Populists – but so little in the thoughts of a Von Clownstick.
And that the only 'things' Populists in the US and in Europe share – is 'braindead nationalism' – very 'narrow minds' – and pretending to be -(courtesy – Oxford Dictionary) –
'A member or adherent of a political party seeking to represent the interests of ordinary people'?

And I never thought there is any thought behind the willy-nilly-ways Von Clownstick picked his friends – from US Republicans to Crazy Right-Wingers – Russians – if helpful – or even the Blond from Wikileaks – und so weiter

And there is this old German Fairy Tale -I think from Wilhelm Hauff – where a 'citizen' who hates the establishment in the town he lives – dresses up an Ape in very fancy clothes and presents him as 'a gentlemen' – and how 'visionary' was that – and did you guys ever enter a Trump Hotel? I mean – the way the dude picks his Interior Design – that's so 'Nouveau Rich Russian' – that we should ask for his birth certificate?

bob mcmanus 05.01.17 at 9:41 pm ( 11 )
I expected to like the Mark Blyth and very much did, thanks for the link. Blyth seems to be good, much better than I, at communicating the useful ideas to the audience that needs to hear them.

Bertram: whereby the economy has ceased to be a national economy but "society" has largely remained within borders.

Blyth and co-writer at the end talk about a return to "neo-nationalism" without being clear how it differs from nationalism. My early impressions of the current reaction is that globalization, cosmopolitanism and uhh diversity have progressed much further than say 1900-1925 (how much is left of agricultural and rural sectors, or even mass manufacturing) and are embedded more deeply and broadly in national populations, up to 20 to 30 percent. Not yet enough to be hegemonic in adverse conditions.

So reactionary nationalism will mostly fail, as we are seeing, in strong economic changes. We will remain neoliberal. It will I think fail on social or cultural changes, except in areas where the state makes a difference. it will roll back state programs, including immigration, minority protections, cultural support etc. But culture will continue to globalize and diversify as a media and social project.

PS: Blyth does the now std periodization, 1945-75 as the Keynesian Fordist era, 1975-2008 as the neoliberal retrenchment (?). But stuff like the National Endowment for the Arts, Food Stamps, Great Society and Civil Rights Programs endured and prospered throughout the latter period. Could we possibly reassess those as more neoliberal than Fordist, and therewith expand our understanding of neoliberalism?

engels 05.01.17 at 10:11 pm ( 12 )
I think JimV and Bruce are both right. Skilled worker can be a meaningful concept hut nowadays it seems to be commonly used as a kind of virtus dormitiva explanation for the higher wages paid to people higher up the corporate food chain and a fig-leaf for various kinds of rent, connections, cultural capital, etc
Russell Arben Fox 05.02.17 at 12:03 am ( 13 )
A wonderful review-essay, Henry; I'll be thinking about some of the things you say here for a while. My only comment is that when you say

This makes Polanyi attractive to two, somewhat different, strains of modern argument on the left. The first – closer to the center – is a strand of communitarianism, which similarly looks to reconcile the values of liberalism and community order. The second is a more strongly left leaning social democratism, which is indirectly influenced by Marx and friendly to Marxian thought, but which looks to find a different set of intellectual ancestors than those of the Marxist tradition.

I think you might be making a slight category error, in that you're looking at different elements of the left that ground themselves in slightly differing disciplinary perspectives, but which are very much a part of the same whole. The theorists who call themselves "communitarians" and those who call themselves "social democrats" do not necessarily overlap, but that's because they're looking at different sets of conceptual questions: at the collective nature of humankind's social epistemology and moral evaluation, in the former, and at the collective nature of political legitimacy and public goods, in the latter. The Marxist tradition has things to contribute to both, I think.

John Quiggin 05.02.17 at 12:41 am

Pro-debtor politics is always in competition with social democracy. In the US, for example, there is a strong negative correlation at the state level between redistributive taxation and debtor-friendly bankruptcy laws. Trump, a repeated bankrupt and tax dodger, embodies this perfectly.

alfredlordbleep 05.02.17 at 2:05 am ( 15 )
Thus, Polanyi believed that fascism had little to do with the outcomes of World War I, and depended for success more on the sympathies of the powerful than on any true mass movement.

Orwell specifically offered this [emphasis added] which admittedly doesn't go as far as the Polanyi attribution:

Mein Kampf by Adolf Hitler
reviewed by George Orwell

. . . It is a sign of the speed at which events are moving that Hurst and Blackett's unexpurgated edition of Mein Kampf, published only a year ago, is edited from a pro-Hitler angle. The obvious intention of the translator's preface and notes is to tone down the book's ferocity and present Hitler in as kindly a light as possible. For at that date (early 1939) Hitler was still respectable. He had crushed the German labour movement, and for that the property-owning classes were willing to forgive him almost anything.

john c. halasz 05.02.17 at 2:38 am ( 16 )
I'm a bit puzzled by JQ @12. "Financial assets" are at bottom debt, i.e. claims held by creditors against underlying production incomes, wages and profits. One might argue that there are all sorts pf property and equity claims count as much (though that's increasingly untrue with stock buy-backs, PE buy-outs, etc.), but "wealth" is held primarily in the form of "financial assets" and those assets are increasingly inflated in "value" by debt leveraging, officially supported by CBs among other agencies; while drawing off production incomes from the rest of the economy, they are based on speculation, M-M' without any intermediating C, IOW fictitious capital. Public debt, while stigmatized by neo-liberal austerity advocates, nonetheless supplies key collateral for the financial system and its leveraging strategies and instruments, while substituting for taxation. So just how would progressive income taxation be the opposite of bankruptcy, i.e. debt reduction and restructuring, when increasing potions of basic earned income are consumed in debt servicing, while large shares of income are siphoned off by inflated financial "assets"? Doesn't that just indicate the weakness of traditional social democratic thinking and the economic models that supported it, which largely missed the debt dynamics that culminated in the current continuing crisis? Now if you wanted to talk of taxation of financial "wealth" and the blocking off of financial flows to tax havens and the substitution of public investment for private extractions, in the face of public deficit fear-mongering, then you might get at the required debt-restructuring and head toward a real program of income redistribution and economic revival oriented toward alternative ends. But it's hard to see how one could do that while maintaining a "cosmopolitan" outlook that ignores states and their citizen publics.
Brett 05.02.17 at 6:15 am ( 19 )
I don't quite understand the "discipline" argument. Productivity growth rates were higher in the Postwar Period than in the decades before, despite far stronger and more militant unions. Why would such be easier to discipline than before?

It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).

phenomenal cat 05.02.17 at 7:10 am ( 20 )
halasz, it would be helpful, for me anyway, if you could further unpack your reasoning starting with "so just how would progressive taxation " and especially the bit about the weakness of "social democratic thinking" that follows.

I think I'm following based on the last couple of sentences, but something more explicit would be nice. Insofar that I am, this may be the cul de sac in which the political economy of globalization/neoliberalism will founder with its inability/unwillingness to reverse direction.

If there can be no limits or boundaries to the flows of "cosmopolitan" capital and wealth (or its concentration) within and across various configurations of the state (or other kinds of communities) the outcome will be increasing constrictions on the power and sovereignty of states and communities. This much is already clear. What is less clear, though outlines are taking shape, is the full extent of social reaction to this state of affairs. The de riguer right wing and/or "populist" reactionary reaction among some publics is plainly visible but will go no further than exacerbating existent problems or further devolving states' atrophied capacity to act on behalf of the public. The political wildcard is on the leftward spectrum of reaction where actors are finally waking up en masse to the realities of a sociocultural compromise with liberalism and to the plain fact that neoliberal governance as financialized corporate globalism is willing to compromise on exactly nothing. The problem, as you seem to be indicating, is the left spectrum remains enthralled to models that appear to have been checkmated. As of yet the left has yet to produce any novel solutions that confront actually existing concentrations of power and not those of 75 – 100 years ago.

Given current state of affairs, mass or public reaction may well push toward more or less complete withdrawal of "participation," general refusal, and legitimacy collapse across political and economic institutions. Bartelby the Scrivener as world history.

Faustusnotes 05.02.17 at 9:16 am ( 21 )
Interesting to characterize these movements as a debtors revolt given that trump allegedly owes a lot of money to some dubious creditors.
MFB 05.02.17 at 12:57 pm

Interesting point, faustusnotes, but perhaps you are making the mistake of a) thinking that Trump believes what he says and b) thinking that Trump voters know what they're doing.

In reality, there is obviously an enormous amount of debt generated by the need to promote easy credit in order to keep consumption high while keeping wages low. This was bound to piss people off sooner or later. There is also an enormous amount of underemployment and unemployment driven by a reluctance to invest in anything which doesn't offer an enormous return on investment.

It seems likely that what is happening at the moment is simply a revulsion against the circumstances in which people find themselves, combined with absolute ignorance (and massive misinformation) about the source and cause of those circumstances. Hence, all over the world, people are making extremely unwise choices of leaders and then getting immensely pissed off when those leaders don't do what they imagine the leaders have promised to do, and going off and voting for even less wise choices in consequence.

The long-term effects of this are not promising.

Z 05.02.17 at 1:36 pm ( 23 )
Commenting on such a deep yet wide-ranging post almost feels like cheapening. Here goes nevertheless

there isn't a stalemate between the workers and the capitalists (the capitalists seemed mostly to have won)

and

This (combined with the supine response of the center left to these problems) is what is leading to the new populism

attracted my attention.

In addition to the reaction of the business community described in Blyth & Matthjis, a designed economical response if I understood correctly their thesis, isn't it also the case that the educative trajectories of the various groups in advanced societies started to diverge (and more properly sociological change)? Whereas all groups made great educative gains in the 1900/1970 period (with first universal primary and secondary education, then the massification of undergraduate education), only the top 15% to 25% went on to pass this threshold (at least for several decades).

I think members of this latter group, who typically do not own significant amounts of capital yet are hardly accurately described as workers, can legitimately be counted on the side of the winners, even when not capitalists themselves. And indeed, the normal constituent voter of left-of-center mainstream parties in advanced democracies (as well as the normal candidate, in fact) has been a non-capitalists member of this group, making the "supine response" of these parties to the inherent problems of the neoliberal regime almost natural: elected representatives of these parties and their core voters profited, and still profit, from this regime (in the increasingly present context of climate disruption, it is not unconceivable that this group-aka as us-would experience a net reduction of its level of economic prosperity in the event of an egalitarian redistribution more attuned to ecological needs).

Hence also the preference for irrationalism and intellectual heterodoxy amongst the political adversaries of this group.

Ronan(rf) 05.02.17 at 7:05 pm ( 24

Further to (2) above

https://www.adamtooze.com/2017/03/01/explaining-brexit-trump-search-method/

"Inglehart, is a die hard modernization theorist. So he would insist on long-term connections between economic development, affluence and liberal postmaterial values. But this is a very different kind of socio-economic determinism than the one usually invoked to explain the current surge of radical right politics. And it would seem to me that the Polanyians should concede some major modifications to their crisis model. How exactly one might modify the Polanyian model, I will need to write a separate post.

The trigger of immigration, after all, can easily be squared with a basic Polanyian position. It is the model of cultural development, or lack of it, that is the problem. Why do some people react to globalization protectively and not others and does this reduce to sectional economic interests and exposures to competitive pressure?
" the aforementioned 'other post'

https://www.adamtooze.com/2017/03/02/notes-global-condition-mapping-debate-around-left-behind-white-working-class/

bruce wilder 05.02.17 at 7:24 pm ( 26 )
engels @ 12: I think JimV and Bruce are both right.

Indeed. JimV experienced and is describing aspects and manifestations of what I abstractly labeled, "disinvestment" - the dismantling and burning off of accumulated often intangible social capital to fund upward income redistribution.

Brett @ 19: I don't quite understand the "discipline" argument. . . . It feels more like declining productivity was caused by something else, and that plus inflation increasingly cratered returns on investment (especially since this was back when the stock market was still boring in the US).

Blyth and Matthijs are arguing a "regime" as explanator, which is to say that it isn't any one thing, but the common alignment of many things, that matters. And, they are explicitly insisting on - or at least emphasizing - a top-down, macro dictates micro, everything-becomes-endogenous approach in constructing the identification of how the regime both explains and orders dynamic development.

The conventional Chicago School mainstream neoclassical economics that underpins the neoliberal explanation of the neoliberal regime (1980-2008+) says that we live in a market economy, a decentralized system of markets loosely coordinated by more-or-less competitive market prices, drawn toward manifest stability most of the time by the strange attractor of a near-by general equilibrium cum Solow growth path, to which to the U.S. economy (it is always the U.S. economy which is the implicit model for macroeconomic speculation) always returns after exogenous shocks have knocked it down temporarily. This market economy stabilized by general equilibrium in price is imagined to be rather like the one Hayek imagined for his essay on the Use of Knowledge in Society, a better-than-socialist-planning emergent utopian economy, which is less-than-perfect only because wages and prices are too "sticky". Wages are sticky downward, you see, and that is particularly unfortunate in blocking the path of necessary adjustments toward a utopia of ever cheaper labor - workers are inexplicably stupid about not-accepting lower wages when that would be to their advantage in restoring equilibrium full-employment. (Do I have to mention that I am being sarcastic?)

Neoliberalism's explanation of the neoliberal regime helped to create the neoliberal regime. And, Blyth and Matthijs are self-consciously aware that they must find a way out of that explanatory structure, which is why, for example, they feature a recasting of the Lucas Critique, which was an important foundation stone in erecting the intellectual superstructure of the neoliberal regime way back when. The previous regime's "Keynesian" (or New Deal or ordo-liberal) intellectual superstructure was subverted pretty completely over a long period of time, its main threads thoroughly marginalized, so it is hard to get a clear view without calling the whole of mainstream economics a giant cabal of fools and liars.

Blyth and Matthijs do need for reasons of self-preservation to shy away from calling neoliberalism one Big Lie, though it does take away a bit from the clarity of their exposition that they must refrain from doing so, for the moment.

A regime as explanator implicitly rejects the core idea of the neoliberal regime - a general market equilibrium, complete with a not quite invisible hand of monetary policy, as the stabilizing mechanism for the growth path of the economy.

A regime, as a common alignment of many things, many trends if you will, is compatible with a vision of an economy which is fundamentally driven by disequilibrium dynamics, an economy which for fundamental reasons of uncertainty, accumulation and depletion, in which the distribution of risk reflexively drives the distribution of income and economic behavior. A regime explanation says that periods of apparent stability are the result of a kind of gyroscopic stability imparted by forward motion that aligns and coordinates, in much the way that pedaling a bicycle makes the bicycle smoothly stable as long as it is in forward motion.

So, a regime explanation says that the post-war period of economic growth and expansion was the consequence of getting a lot of things aligned and then launching the bicycle on its course down a smooth slope. Not one thing alone, but many things, repeating and repeating in pattern like the spinning of a bicycle's wheels: trivial things many of them, like the auto industry's annual introduction of new models or negotiating new labor contracts. And, not by the emergent magic of the market alone, but by deliberate institution building and management.

So, if you were to go back and seek an explanation for the steady increase of productivity and wages over the nearly thirty years from 1946 to 1973, using a regime to organize your thinking would allow an identification of many underlying factors - increasing use of petroleum, increasing use of process manufacturing techniques and increasing scale of production under those techniques, increasing scope and reach of the money economy, increasing scale of global trade and exchange. What allows for the appearance of stability in what is a highly dynamic period is getting all of that moving forward in a way that lets people coordinate their expectations and behavior: the overarching regime that imparts stability to dynamic change. Risks are low despite epic rates of change and people act confidently, increasingly assured that the recent past is a good guide to a reliable and therefore beneficent future.

The implied essence of the regime as explanator is that capitalism is inherently dynamic and unstable - really that uncertainty (that we don't know a lot more than we do know or can expect to learn and we never know exactly what we do not know) dominates economic organization; rational expectations is b.s. in a world driven to founder on disappointed expectations). All the factors that might explain some apparently linear trend, like say productivity growth, over some seemingly stable period are in fact arcing thru a cycle, self-subverting if you like but also not unlike an arrow shot up into the sky that must come down somewhere.

Labor discipline is no different from any other factor trend: it was arcing across the 1940s to the 1970s just like the expansion of petroleum and electricity, or the expansion of world trade within the framework of Bretton Woods. The bicycle of the world economy centered on the U.S. hit a wall and the rider fell off in the 1970s stagflation. Talk about over-determined! Bretton Woods broke; the vestigial gold exchange standard broke, the petroleum economy hit a ceiling and broke, the Fordist manufacturing economy broke, the U.S. agricultural economy built on subsidized control of production broke.

Or, if you prefer, not-broke so much as simply passed an inflection point on an inevitable arc, and a new institutional regime was required to organize and structure the economy, to put the bicycle back up and into forward motion to restore the sense of stable movement. Blyth and Matthijs are proposing that the neoliberal regime put into place around 1980 can be understood as organized around a monetary policy of disinflation leading to deflation: that was the essential stabilizing element around which everything else aligned. I think they might be being too clever by half, self-consciously trying to lead a neoliberal establishment away from its self-regarding orthodoxy by playing on its narcissism and its self-love for the Great Moderation.

A remarkable thing about the 1930s is how reluctant liberals were to take the opportunity presented by the New Economy of electricity and gasoline and mass production. The means to greatly expand production and increase human welfare were ready to hand and people were stumbling over reactionary resistance and their own certainty that there was magic in the hair-shirt of austerity and the gold standard. (The non-liberal left in the 1930s was fomenting revolution in a way that seemed mostly to add to the palsy of liberalism. Then there was Stalin, who certainly transformed Russia in an ugly hurry.)

We liberals and leftists, today, do not have such great opportunities, but we seem to want to imagine that we do. Elon Musk is our hero. Post-scarcity is our leftish vision for an overpopulated world on the eve of what is almost certain to be a toboggan ride toward a collapse of ecologies and probably civilization itself.

Z 05.02.17 at 7:56 pm ( 27 )
Sorry for the double post, I'm slowly grappling with the ideas.

I think in the end what I meant to say is that Polanyi's Great Transformation can be conceptualized as a struggle between Society and Markets in the context of a convergence of social groups within a given society (convergence driven by rising educative level, the correlative universal participation in the political sphere and perhaps the massive destruction of capital in the two world wars and the Great Depression) while the current Great Transformation of the neoliberal and post-neoliberal regime can be likewise conceptualized as a struggle between Society and Markets but this time in the context of a divergence of social groups (driven by diverging educative achievements, the correlative diverging modes of participation in the political sphere and perhaps the lack of massive destruction of capital by cataclysmic events).

An interesting aside, also touched upon by Chris, is that even though Polanyi's Great Transformation happened in a converging context within the national system, it was remarkable in its diversity internationally (New Deal in the US, Front Populaire in France, Nazism in Germany ). It is unclear to me to whether the current Transformation is happening in a diverging or converging context internationally. On the one hand, comparable nation-states are currently clearly engaged in diverging socio-economic trajectories (if only in terms of demographic evolution) and supposedly homologous political forces actually do diverge quite a bit (there is not so much in common politically between the US under Trump, the UK under May and Germany under Merkel for instance, even though they supposedly all represent the mainstream rightwing party of their respective national systems). On the other hand, the governing élite is very cosmopolitan and socially homogeneous and actual political reactions to the current economic system tend to be quite similar, perhaps.

JRLRC 05.02.17 at 9:50 pm ( 28
So, disembedded markets are or tend to be bad for (the) people, who eventually realize that in a very imperfect fashion. Fascism has required the costs of disembedded markets. Deregulated markets are disembedded markets. Neoliberalism leads or contributes to fascism. And those who co-built and opened the door for the fascists can close it behind them both

In the trumpian case, I do see both fascism and neoliberalism (continuity of; Obamacare excepted). There is a fascist perspective within the administration, with its nationalist-populist components, not just authoritarian, but it coexists with neoliberal bullshit and policy, such as the usual tax breaks for the usual suspects. Neoliberal fascism?
Is there room (and time) for neoliberal fascism as a national regime properly understood?
Very useful text, Henry.

kidneystones 05.03.17 at 1:03 am ( 30 )
There's a great deal to admire and enjoy in this essay. So much so that I won't bother to comment on the many useful and informative elements. The piece is well-grounded, well-argued, and clearly the product of Henry's solid scholarship. The problems appear, predictably I'm afraid, in Henry's characterization of the tea party and of Trump supporters.

Few, in any, social scientists of Henry's political disposition appear to have spent much time digesting tea party arguments first hand, or those of Trump. Immigration can be a magnet and code argument for xenophobes and racists. I'd suggest, however, that many tea party people see/saw themselves as pro-immigration. Every call for the wall by Trump was followed a call for legal immigration through a great, beautiful gate. At the local level, immigration presents both opportunities for new experiences and revitalizing old fears. The industry and optimism of immigrants (generally) is a slap in the face to those who've learned their very existence is regarded by the powers that be (including elites on both coasts) as an impediment to progress and efficiency. The 'left' certainly displays no interest, or sympathy, for coal miners in West Virginia, for example, despite efforts by Obama and HRC to draw attention to their plight, a plight clearly of concern to Henry and many here.

Yet, submission on cultural issues such as abortion and trans-gender rights seems to be the price demanded by rank-and-file 'liberals' as a condition of re-humanizing this group of fellow citizens. That rank ignorance and bigotry are rife in some of these same communities should not and cannot be a factor in forming economic alliances with these folks, not least because right-leaning populists are far more motivated and committed to change than those on the left. (Henry's earlier critique on the motivations of the new Labour members is worth recalling)

I crossed this bridge myself in 2008. Trump's supporters are principally concerned with creating opportunities for their kids, not improving their own immediate circumstances, which are just fine for the most part. This vision of the world is not one in which most of the people in the picture are a different color, creed, or culture. Most people would like to think (I believe) that their own kids can raise families of their own in circumstances somewhat better than their own – without being forced to learn a new language, or adapt customs foreign to their own way of life.

I'll close by restating that culture is at least as important as cash – that's the conclusion of Arlie Hochschild. Liberals need to set aside their own prejudices and disdain for those who vote for Trump and Brexit if liberals have any hope of winning their trust. Both this essay and others like it suggest that task may be easier said than done.

Maynard Handley 05.04.17 at 2:45 am ( 31 )
Let me suggest that the real problem here is the wrong level of analysis. What the essay presents is a series of models for how the world works - the Polanyi model was relevant then but broke down, the Blyth and Matthijs model now describes today. Instead let me suggest that the problem is meta: Modernism (growing since the Enlightenment) is an insistence that the messiness of reality can be captured by models. This is not just an insistence on rationality, it is an insistence that the axioms that feed into that rationality are fairly few and can be fairly easily grasped.

And what I see over "recent" history is occasional angry rebellions against the feeling of living in a society that is created by these rigid rules - an unhappiness stemming from both constant (always apparently, frequently actually) stupid constraints AND also a constant need to have to make and deal with choices even when you don't care about the choices. (Not just choices of "what peanut butter to buy" but choices of the "I don't know how to be a man anymore" or "how come what we used to say thirty years ago is suddenly so taboo?" form.)

So we have, for example, Nazism (and Japan) as a reaction to this. (I'm not about the more backward parts of Europe, and I think Russia, like China was something different.) Then we have 1968 and The Greening of America. Then we have the Iranian Revolution. Then we the Tea Party in America and Al Qaeda in the Arabic world.

I'm not denying that political entrepreneurs hijack the zeitgeist to suit their ends; nor am I claiming that every spasm of recent world history was a reaction to the world created by Modernism; but I am saying that the events I listed had this reaction as their ultimate cause. Which means, IMHO, that you can't satisfy the unhappiness simply with a political program because the unhappiness is not of political origin, even though that's a particularly graphic manifestation.

In other words, the sorts of texts that *I* think are relevant to understanding are things like Bendict Anderson, _Seeing like a State_, the point being not a trivial libertarian "states are stupid and they suck" but rather "Modernist models of the world try to impose legibility on situations that are fundamentally complex, and this enforced legibility will frequently lead to backlash and disaster, whether it's ignorantly designed "scientific forestry in Germany, or attempts to redesign agriculture in the USSR, or the assumption that risk can be so well modeled and distributed that it can be nullified as we saw in 2007".

Or Iain McGilchrist, _The Master and his Emissary_, talking about two alternative ways in which the brain works (holistic vs analytic, filled with fascinating anecdotes about the consequences of various types of brain traumas), and how the West (and I'd say much of Asia) appears to be in thrall to the analytic, to the extent that it can no longer see or even understand that the map is not the territory.

[May 08, 2017] Thoughts on Mirowski and Neoliberalism from a Polanyian Perspective by Kari Polanyi Levitt and Mario Seccareccia

May 05, 2017 | www.ineteconomics.org

May 2016 | Economic History | History of Economic Thought | Institutions, Policy & Politics

Commentary By

Download paper


Karl Polanyi demonstrated that Classical Liberalism and current Neoliberalism were organized political movements, but their successes sparked political backlashes against laissez-faire economics - a dialectic that continues to shape politics to this day. Laissez faire was planned, explained Karl Polanyi in The Great Transformation: The origins of the market system go back to the intentional project of institutional transformation initiated in England in the 19th century, establishing a free labor market, free trade and the gold standard. Institutions such as the unions, the industrial cartels and the Welfare State instead emerged subsequently as spontaneous counter-reactions to laissez faire. Kari Polanyi Levitt and Mario Seccareccia show, with a new periodization, how this dialectic interaction, or 'double movement' can still guide the understanding of today's Neoliberalism.

This is a response to "The Political Movement that Dared not Speak its own Name: The Neoliberal Thought Collective Under Erasure" by Philip E. Mirowski

[May 08, 2017] Karl Polanyi for President by Patrick Iber and Mike Konczal

Recommended !
May 04, 2017 | www.dissentmagazine.org

Peter K: May 04, 2017 at 01:29 PM

https://www.dissentmagazine.org/online_articles/karl-polanyi-explainer-great-transformation-bernie-sanders

Karl Polanyi for President

Patrick Iber and Mike Konczal ▪ May 23, 2016

...

Is Bernie Sanders the only "Polanyian" Democrat?

Not at all. Democrats have taken up Polanyian arguments in response to many of the market-fundamentalist notions that the Tea Party has helped to circulate in recent years. The most notable example might be President Obama and Elizabeth Warren's "you didn't build that" faux-controversy from 2011 and 2012. Warren, who first made the argument, was speaking out against the idea that calling for higher taxes on the rich constitutes class warfare, saying:

There is nobody in this country who got rich on his own-nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did.

This is a fundamentally Polanyian point about the embeddedness of markets in society, and the always unnatural nature of income distribution. Polanyian arguments arise pretty naturally as rebuttals to certain libertarian notions of how economies should work, which may be one reason that certain Democrats sometimes sound like Polanyi.

But Polanyi also helps explains some of the tensions within the Democratic Party. One of the divides within the Democratic primary between Bernie Sanders and Hillary Clinton has been between a social-democratic and a "progressive" but market-friendly vision of addressing social problems. Take, for example, health care. Sanders proposes a single-payer system in which the government pays and health care directly, and he frames it explicitly in the language of rights: "healthcare is a human right and should be guaranteed to all Americans regardless of wealth or income."

Clinton, meanwhile, describes affordable health care as a right. Clinton also wants higher education to remain a market commodity, because she says that if the government paid, it would needlessly be giving a free ride to the children of the wealthy and the upper-middle class. Clinton's reasoning appeals to ideas of market efficiency, while Sanders, in stating that "Education should be a right, not a privilege," appeals to ideas of community beyond markets.

Sanders here offers a straightforward defense of decommodification -- the idea that some things do not belong in the marketplace-that is at odds with the kind of politics that the leadership of the Democratic Party has offered more or less since Carter and the narrow policy "wonk" focus that tends to dominate coverage.

Whether or not Sanders has read Polanyi-similar language about economic and social rights was also present in FDR's New Deal, which Sanders argues is the basis of his brand of socialism-Polanyi's particular definition of socialism sounds like one Sanders would share:

Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society. It is the solution natural to industrial workers who see no reason why production should not be regulated directly and why markets should be more than a useful but subordinate trait in a free society. From the point of view of the community as a whole, socialism is merely the continuation of that endeavor to make society a distinctively human relationship of persons.

Sanders's particular notion of a political revolution-in which people use democracy to change the rules governing our national political economy-is very Polanyian. Polanyi's socialism has a certain modern appeal when the more traditionally Marxist idea of having the state seize the means of production has been abandoned even by most who identify as socialists. Instead, Polanyi's relevance for today lies in his arguments that markets need to be subjected to democratic control, that human beings resist being transformed fully into commodities, and a fully realized market society is both impossible, undesirable, and at odds with genuine liberty and freedom.

Sanders's campaign has shown that a political platform favoring decommodification and a retreat from the extremes of society's subordination to markets has deep appeal. The future of the party does not belong to Bernie Sanders himself, but the Karl Polanyi Democrats are here to stay.

Peter K. -> Peter K.... Thursday, May 04, 2017 at 01:30 PM

I thought it was odd that DeLong linked to this:

http://crookedtimber.org/2017/05/01/the-thousand-day-reich-the-double-movement/

The Thousand Day Reich: The Double Movement

by HENRY on MAY 1, 2017

This is the second in a series of projected posts that try to look at the Trump administration and right wing populism through the lens of different books (the first – on civil society – is here). The last post was mostly riffing on Ernest Gellner. Today, it's another middle-European exile intellectual – Karl Polanyi.

...

[May 08, 2017] Silicon Valley is the story of overthrowing entrenched interests through innovation. Children dream of becoming inventors, and scientists come to Silicon Valley from all over the world. But something is wrong when Juicero and Theranos are in the headlines, and bad behavior from Uber executives overshadows actual innovation by Matt Stoller

Apr. 19, 2017, | www.businessinsider.com

Matt Stoller is a fellow at the Open Markets Program at New America.

Silicon Valley is the story of overthrowing entrenched interests through innovation. Children dream of becoming inventors, and scientists come to Silicon Valley from all over the world. But something is wrong when Juicero and Theranos are in the headlines, and bad behavior from Uber executives overshadows actual innovation.

$120 million in venture funding from Google Ventures and Kleiner Perkins, for a juicer? And the founder, Doug Evans, calling himself himself Steve Jobs "in his pursuit of juicing perfection?" And how is Theranos's Elizabeth Holmes walking around freely?

Eventually, the rhetoric of innovation turns into .... a Google-backed punchline.

These stories are embarrassing, yes. But there's something deeper going on here. Silicon Valley, an international treasure that birthed the technology of our age, is being destroyed.

Monopolies are now so powerful that they dictate the roll-out of new technology, and the only things left to invest in are the scraps that fall off the table.

Sometimes those scraps are Snapchat, which managed to keep alive, despite what Ben Thompson calls ' theft ' by Facebook.

Sometimes it's Diapers.com , which was destroyed and bought out by Amazon through predatory pricing. And sometimes it's Juicero and Theranos.

It's not that Juicero and Theranos that are the problem. Mistakes - even really big, stupid ones - happen.

[May 05, 2017] The key ideas of neoliberalism are from late 30th

May 05, 2017 | economistsview.typepad.com
libezkova -> paine... , May 04, 2017 at 06:27 PM
""Market friendly " is an absurd notion

It is symbol of faith. Actually there is a slight difference in worshiping markets in neo-classical economy vs. neoliberalism.

While both are faith communities ( https://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/ ), Gods they worship are slightly different.

== quote ==
The lexicon of The Wall Street Journal and the business sections of Time and Newsweek turned out to bear a striking resemblance to Genesis, the Epistle to the Romans, and Saint Augustine's City of God. Behind descriptions of market reforms, monetary policy, and the convolutions of the Dow, I gradually made out the pieces of a grand narrative about the inner meaning of human history, why things had gone wrong, and how to put them right. Theologians call these myths of origin, legends of the fall, and doctrines of sin and redemption. But here they were again, and in only thin disguise: chronicles about the creation of wealth, the seductive temptations of statism, captivity to faceless economic cycles, and, ultimately, salvation through the advent of free markets, with a small dose of ascetic belt tightening along the way

== end of quote ==

In neo-classical economy market is the most efficient distribution mechanism of goods and allocation of capital.

In neoliberalism it is more like giant artificial intelligence machine which automatically comes to optimal decision, that no single individual or, God forbid, government is capable to archive.

paine -> libezkova... , May 04, 2017 at 07:12 PM
Neo liberalism: a faithless set of mystifications for the business community

A corporate sponsored cult best when operated by knowing scoundrels

Aim liberate the oligop outfits

paine -> paine... , May 04, 2017 at 07:19 PM
The liberal professional class simply hasnt a clue about economics. they saw the soviet gosplan system fail. So...... Markets must be necessary
libezkova -> paine... , May 04, 2017 at 09:27 PM
"The liberal professional class
simply hasnt a clue about economics
they saw the soviet gosplan system fail"

The key ideas of neoliberalism are from late 30th

Symptomatic Redness -Philip Mirowski
https://www.youtube.com/watch?v=cf2YQ-1wvrc

[May 04, 2017] The entire spectrum of political thought from the neoliberal center to the reactionary right is really about setting up punitive systems of coercion and control. by their bootstraps, and if they dont then they deserve all the cruelty that can be heaped upon them.

Notable quotes:
"... The poor [under neoliberalism] are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class. ..."
May 04, 2017 | www.nakedcapitalism.com

The poor [under neoliberalism] are errant children who need to be molded. Conservatives may whine about the "nanny state" but what they really want to see is either the negligent mommy state or the abusive daddy state. They want to "help" the poor the way a drill instructor wants to help you learn to obey and kill. And remember: it's for your own good. Perhaps I am being unfair, but beneath the platitudes this seems to be the motivating ideology of too much of the contemporary governing class.

[May 04, 2017] Free Market is a symbol of faith, but its interpretation is lightly different between neoclassic economy and neoliberalism

May 04, 2017 | economistsview.typepad.com
paine -> Peter K.... May 04, 2017 at 06:08 PM
"Market friendly " is an absurd notion

The better label is "corporate friendly "

Its amazing the Dem elite are still at this perpetual courtship of the big foot profiteers

paine -> paine... , May 04, 2017 at 06:11 PM

Dont push donor necessities practical realism etc

bernie proved thats an alibi

Throw out wall street

libezkova -> paine... , May 04, 2017 at 06:27 PM
""Market friendly " is an absurd notion "

It is symbol of faith. Actually there is a slight difference in worshiping markets in neo-classical economy vs. neoliberalism.

While both are faith communities ( https://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/ ), Gods they worship are slightly different.

== quote ==
The lexicon of The Wall Street Journal and the business sections of Time and Newsweek turned out to bear a striking resemblance to Genesis, the Epistle to the Romans, and Saint Augustine's City of God. Behind descriptions of market reforms, monetary policy, and the convolutions of the Dow, I gradually made out the pieces of a grand narrative about the inner meaning of human history, why things had gone wrong, and how to put them right.

Theologians call these myths of origin, legends of the fall, and doctrines of sin and redemption. But here they were again, and in only thin disguise: chronicles about the creation of wealth, the seductive temptations of statism, captivity to faceless economic cycles, and, ultimately, salvation through the advent of free markets, with a small dose of ascetic belt tightening along the way

== end of quote ==

In neo-classical economy market is the most efficient distribution mechanism of goods and allocation of capital.

In neoliberalism it is more like giant artificial intelligence machine which automatically comes to optimal decision, that no single individual or, God forbid, government is capable to archive.

[Apr 28, 2017] Will some honest economist, if there are any left, finally step up and analyze the distributional effects of free trade between capital and labor?

Apr 28, 2017 | economistsview.typepad.com
JohnH said in reply to pgl...

, April 28, 2017 at 06:49 AM
"Krugman thought that this was because economists, enamored by the "jewel in the crown of economics", theory of comparative advantage, tend to look at average effects, not at the heterogeneity of effects. He thought that this was changing now. "

Interesting that economists still seem to avoid a discussion of those supposedly 'diffuse' winners. Sure, consumers saw lower prices. But what about investors, at whose behest these 'fair' trade deals got negotiated in the first place?

Will some honest economist, if there are any left, finally step up and analyze the distributional effects of 'free' trade between capital and labor?

I expect that the most concentrated effects 'free' trade will be found not only among displaced workers but also in the profits...and earnings going to the 1%.

[Apr 28, 2017] Concentrated oligopolies know how to best leverage this situation to their advantage, shifting production and employment among various operations

Apr 28, 2017 | economistsview.typepad.com
JohnH said in reply to RC AKA Darryl, Ron... , April 28, 2017 at 07:51 AM
True enough.

Neil Irwin had an interesting piece in the NY Times a couple days ago. Basically, he was meditating on the future direction of the economic stagnation. He speculates that the rise in inflation was a non-recurring event, driven largely by rising oil prices. Those clamoring for more inflation are likely to be disappointed.

Irwin notes that underlying drivers of growth and inflation are absent: globally there is over capacity in manufacturing, ample supplies of commodities, and a glut of labor.

Concentrated oligopolies know how to best leverage this situation to their advantage, shifting production and employment among various operations.

I have long argued that this new reality will put a damper on US wage growth, because employers have escape valves in the global market. IMO Promoters of low interest rates ignore this new reality, claiming that pressurizing the economy will inevitably lead to higher wages.

We will see who is right. Ten years and counting...and wages have yet to rise.

RC AKA Darryl, Ron -> JohnH... , April 28, 2017 at 08:07 AM
Yep. However, there is always room for complexity in economics. The right and wrong of inflation will depend upon the basket of goods AND services. CPI includes the following.

• Food and beverages

• Housing

• Apparel

• Transportation

• Medical care

• Recreation

• Education and communication

• Other goods and services

There is more than ample room for cost push inflation that is not linked to wages in every bullet. That is not something to celebrate though.

RC AKA Darryl, Ron -> RC AKA Darryl, Ron... , April 28, 2017 at 08:08 AM
What we want to see is demand pull inflation though, which is always a result of higher wages.
JohnH -> RC AKA Darryl, Ron... , April 28, 2017 at 08:41 AM
I agree that we want to see inflation resulting from higher wages...but economists rarely talk about wages in the same breath as inflation...which leads me to suspect that they are interested mostly in more inflation, which I believe has few benefits, rather than higher wages, which has a lot of benefits.

Most here strenuously disagree, believing that we must take it on faith that liberal economists are really promoting higher wages via accommodative monetary policy, even though wages almost never factor into any discussion of monetary policy or its benefits.

[Apr 09, 2017] Under neoliberalism government intervention is prohibited as it undermines the fundamental myth about self-regulating free market . Which is the symbol of faith for neoliberals. That means that the helicopter drops is the only tool that is left in recessions

Apr 09, 2017 | economistsview.typepad.com
Peter K.

, April 08, 2017 at 11:05 AM
Mainstream center-left Democrats like Justin Wolfers or Jason Furman - even Krugman and Summers - don't to say that government spending always works or is always the answer so they say it's only in this special situation when we're at or near the ZLB and the Fed has to rely on unconventional policy.

And then zombie supposed-leftwingers like RGC say monetary policy only works when rates rise and credit is rationed. Sorry, that's incredibly stupid.

Fiscal policy always works as does monetary policy, just depends on how well it is executed and how much is done.

The people who say monetary policy doesn't work are just providing excuses to the Fed which didn't really try and gave us the worst recovery on record.

But when asked, the Fed says they gave us the recovery they wanted. Massive fukin cognitive dissonance.

libezkova -> Peter K.... , April 08, 2017 at 04:19 PM
Under neoliberalism government intervention is prohibited as it undermines the fundamental myth about self-regulating "free market". Which is the symbol of faith for neoliberals.

That means that the helicopter drops is the only tool that is left in recessions.

[Mar 24, 2017] "Economics Upside Down" or Why "Free Markets" Don't Exist

Mar 24, 2017 | www.nakedcapitalism.com

"Economics Upside Down" or Why "Free Markets" Don't Exist

This is an instructive interview with Ha-Joon Chang, author of the new book "23 Things They Don't Tell You About Capitalism." He debunks some widely accepted beliefs, such at the existence of "free markets" or the necessity of "free trade" for the development of capitalism.

Enjoy!


Topics: China, Corporate governance, Credit markets, Free markets and their discontents, Globalization, The dismal science

Email This Post Posted by Yves Smith at 12:09 am

11 Comments " Links to this post


11 Comments:
Charles Frith says:
June 15, 2011 at 2:25 am
Bravo.

Reply
Septeus7 says:
June 15, 2011 at 5:57 am
Ha-Joon Chang is one of the best real world economists out there and I find it sad that Asians now have to teach Americans about traditional American system development and industrial policies but we should take any help we can get at this point.

When will we stop with these idiotic so-called "free market" economics and start understanding that if we run away from our responsibility to look out for our own economic interest politically then we will have our lunch taken by those "free market" types pouring billions into political influence because they obviously don't believe a word of their own faux-economic ideology?

Reply
Another Gordon says:
June 15, 2011 at 6:22 am
An excellent book, nicely structured and easy to read.

However, he does leave out a couple of things, for example that competition does not always lead to lower prices and/or better outcomes as the neoliberal fantasy has it.

Competition only works when it costs less than its benefits. Yet it is often horribly expensive and the benefits often modest at best.

Reply
Iolaus says:
June 15, 2011 at 11:02 am
Ha-Joon says "You can't have slaves." But we do have slavery, right here.

Reply
Anonymous Jones says:
June 15, 2011 at 12:42 pm
What is truly amazing is that something this obvious (that all markets are regulated by some means, and that whether you prefer those means versus others is almost entirely based on outcomes rather than procedures) is such a fringe idea.

I was watching the Bobby Fischer documentary on HBO, and it struck me how easy it must be slip into madness living in this completely insane world. There are so many obvious fallacies you must accept to "fit into" normal society (the existence not just of a god, but the particular consensus "God" of your community; the belief that your community (oh, let's say America) always has good intentions and could never (gasp) be using its might to enrich the people running the place; the weird idea that "honor" for samurai or other military types is selflessly serving the elite who are exploiting the rest of society). To be thought sane, one's insanity must match others' insanity.

To investigate the world, to examine the BS that you have been told over and over, has the potential to completely untether the psyche. Look at all the rampant conspiracy theorists on this site. Are they really different (in kind, not in specifics) from the "Protocols" crazies or the bilderberg lunatics or the "end of the world" preachers? Another thing that is so amazing is that you read history and watch documentaries and you realize these crazies are doing almost *exactly* the same thing as someone else in another generation 50 years ago, 100 years ago, 150 years ago, 1000 years ago. Fischer himself was once in the thrall of an "end of the world" preacher who was doing almost exactly what Harold Camping just did and then Fischer moved onto this insane "Protocols" fixation.

I guess people are just incapable of reflecting on themselves enough to see this. Or I guess it would make them as crazy as Fischer if they ever did.

Reply
Just Tired says:
June 15, 2011 at 3:13 pm
Read Eric Fromm's, The Sane Society. In the 1950's, Fromm recognized that a whole society could be mentally ill and those who were thought to be out of the mainstream were really the sane ones. He also raised the question to the mental health profession as to who were the proper ones to treat given that reality. It is almost as if the mental health takes a kind of democratic approach to the definition of mental illness, i.e. the majority of the population was defined as sane by definition. Fromm argued that the approach should be more objective.

Reply
Foppe says:
June 15, 2011 at 5:25 pm
subjectivity and objectivity are meaningless notions once you start 'diagnosing' entire societies as mentally ill or diseased. What is perceived as either is done so through consensus formation; this cannot meaningfully happen if you exclude the majority of the population from weighing in on the basis of an argument that they are mentally ill. (I do not find Fromm's vocabulary very helpful in this case)

Reply
LifelongLib says:
June 15, 2011 at 5:00 pm
Conspiracy theories are often twisted versions of things that are really happening. Mark of the Beast, without which you can't buy or sell? Try getting a plane ticket or renting a hotel room without a major credit card. World ruled by alien reptiles? Some kid joins the army to get money for college, and ends up getting blown apart 10,000 miles from home. Sure sounds like something alien reptiles would set up. Actual human beings wouldn't do those things to each other, right?

Reply
Fed Up :-) says:
June 16, 2011 at 5:05 am
How have individuals been affected by the tech­nological advances of recent years?

Here is the answer to this question given by a philosopher-psychiatrist, Dr. Erich Fromm:

Our contemporary Western society, in spite of its material, intellectual and political progress, is in­creasingly less conducive to mental health, and tends to undermine the inner security, happiness, reason and the capacity for love in the individual; it tends to turn him into an automaton who pays for his human failure with increasing mental sickness, and with despair hidden under a frantic drive for work and so-called pleasure.

Our "increasing mental sickness" may find expres­sion in neurotic symptoms. These symptoms are con­spicuous and extremely distressing. But "let us beware," says Dr. Fromm, "of defining mental hygiene as the prevention of symptoms. Symptoms as such are not our enemy, but our friend; where there are symp­toms there is conflict, and conflict always indicates that the forces of life which strive for integration and happiness are still fighting." The really hopeless victims of mental illness are to be found among those who appear to be most normal. "Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been si­lenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does." They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their per­fect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted, still cherish "the illusion of indi­viduality," but in fact they have been to a great extent deindividualized. Their conformity is developing into something like uniformity. But "uniformity and free­dom are incompatible. Uniformity and mental health are incompatible too. . . . Man is not made to be an automaton, and if he becomes one, the basis for mental health is destroyed."

http://www.huxley.net/bnw-revisited/index.html#overorg

Reply
Andrew P says:
June 15, 2011 at 9:07 pm
My main problem with Chang's book is that even though he destroys all these market conceits, he doesn't properly incorporate Marxian, and other structural critiques of capitalism. He just accepts that capitalism and market systems are the best distributive means available, which is absurd. He ignores the fundamentally irrational nature of capitalism, how it's at conflict with itself and that as marx noted, "it sows the seeds of its own destruction."

For a great structural critique of modern capital everyone here at NC should read up on John Bellamy Foster's Monopoly and finance capital. He builds on Sweezy and Baran's earlier work on Monopoly capital, showing how production in the "real" economy is less and less profitable, necessitating the explosion in financial speculation and debt in order to keep resuscitating the moribund monopoly production sector. It has aspects of Keen's Credit Accelerator argument but goes a bit further.

This article is the first in a series. You can find the rest at the site.

http://monthlyreview.org/2006/12/01/monopoly-finance-capital

Reply
MichaelPgh says:
June 16, 2011 at 4:02 am
Great post! See also Freud, "Civilization and its Discontents". The stories we tell ourselves about how the world works versus our discoveries of how the world actually works are a continuous source of "cognitive dissonance" (in modern psychology), "alienation" (in Marxism), or "madness" (in Foucault). Trying to reconcile the story with our own experience is perilous business indeed.

[Mar 23, 2017] Im beginning to hate the word free . There is no free trade - only negotiated and regulated trade.

Notable quotes:
"... Is the question: "Are there Benefits from Free Trade" - different from the question "Are there Benefits from Trade"? What work is word "free" doing here - and what does it even mean? ..."
"... I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication. ..."
"... There is no "free" trade - only negotiated and regulated trade. And we seem to do a really lousy job of negotiating, unless you are in the small percentage who rigged the game. ..."
"... Silly boy, only large corporations and capital matter. Workers are a hindrance to rent extractions and can be sacrificed. ..."
Mar 23, 2017 | economistsview.typepad.com
reason : March 23, 2017 at 02:20 AM
Is the question: "Are there Benefits from Free Trade" - different from the question "Are there Benefits from Trade"? What work is word "free" doing here - and what does it even mean?

I'm beginning to hate the word "free". It is so vague and so often misused that I'm beginning to think it should just be banned. It is a hindrance to communication.

Tom aka Rusty said in reply to reason ... , March 23, 2017 at 04:45 AM
There is no "free" trade - only negotiated and regulated trade. And we seem to do a really lousy job of negotiating, unless you are in the small percentage who rigged the game.
reason -> Tom aka Rusty... , March 23, 2017 at 06:31 AM
Who are "we"? Most people in the rest of the world thinks the game was rigged by the U.S. (whose main interest seems to be in protecting its patent holders and agriculture).
Tom aka Rusty said in reply to reason ... , March 23, 2017 at 06:34 AM
I care more about US workers than workers in other countries. As should our politicians. And I think when the US is strong the rest of the world is better for it.
Smart $$$$ Long said in reply to Tom aka Rusty... , March 23, 2017 at 06:53 AM
Do you know where your citizens are?

As more expatriots travel and do business overseas, more foreign born sisters, brothers, and cousins come here for our slice of the global supply chain production. As the line blurs between our home girls and home boys vs others, the lines between many ethnicities also blurs as intermarriage moves forward.

Forget political favoritism and affirmative favoritism! Let the good times roll and thrill your soul! Got soul?

Get
it --

Tom aka Rusty said in reply to Smart $$$$ Long... , March 23, 2017 at 08:27 AM
I don;t care where they come from, once they are legal US workers they are my home boys and girls.
DrDick -> Tom aka Rusty... , -1
Silly boy, only large corporations and capital matter. Workers are a hindrance to rent extractions and can be sacrificed.

[Mar 12, 2017] Like communist ideology free market fundamentalism is sticky and self-sustaining. Probably more then Bolshevism ever was.

Mar 12, 2017 | economistsview.typepad.com
libezkova -> Fred C. Dobbs... March 11, 2017 at 09:37 PM , 2017 at 09:37 PM
But in reality most of US media fits the definition "They are among the most dishonest human beings on earth."

Unfortunately. Good articles still happen, but they are rare jewels in the massive dung of propaganda.

They really are now quite on par with the USSR propagandists from Pravda and Izvestia.

I for one switched to British media which is slightly better (especially comments) while also quite neoliberal (especially Guardian)

Comments to a typical article in WaPo suggest that with the current level of brainwashing of the population (as demonstrated by WaPo commenters, even adjusting for specific social base of WaPo) the US got into an "ideological trap" from which it might never be able to escape.

And it is not unplausible that because of this trap it will remain disconnected with reality it might eventually collapse and disintegrate like the USSR. That's the danger of neoliberal brainwashing.

The USSR was unable to compete with the West. The USA faces China and South Asia "tigers" problem.

BTW Japan might not be willing to remain the USA protectorate forever.

Like communist ideology free market fundamentalism is sticky and self-sustaining. Probably more then Bolshevism ever was.

Witness amazing resilience it demonstrated after financial collapse of 2008 which essentially buried neoliberalism (aka free market fundamentalism) as ideology.

And self-regulating markets are the same kind of Utopia as Communism (in its Bolshevism interpretation). Extremes meet.

In this particular sense, the US society now resembles the USSR society: a para-theocratic state with neoliberalism as a state religion

Actually "In God we trust" should probably be replaced "In free market we trust" on dollar bills.

If I remember correctly Christ did not like money changers so putting this on dollar bills and coins was a travesty from the very beginning (The cleansing of the Temple story "And making a whip of cords, he drove them all out of the temple, with the sheep and oxen. And he poured out the coins of the money-changers and overturned their tables. And he told those who sold the pigeons, "Take these things away; do not make my Father's house a house of trade."[Jn 2:13–16]")

And nobody in sound mind can't deny this fact of mass brainwashing and the conversion of the US into a para-theocratic state quite similar to the USSR.

How those honchos in congress can speak about wonders of deregulation after 2008 without being drunk or on drugs I do not fully understand.

[Feb 21, 2017] Are you willing To kill the Goose That Laid the Golden Eggs .

Notable quotes:
"... Free trade always and everywhere leads to poverty. The US must return to Lincoln's protectionist tariff regime if it wants to recovery the prosperity Krugman and co. helped destroy in the free trade "globalization" period from 1973 to January 20, 2017. ..."
"... It is easier said then done. Many US companies now depends on foreign manufacturing and foreign markets. The train has left the station. ..."
"... Careful actions might help to change the situation for better, but any abrupt or reckless action will definitely make the current situation worse, as employment in the USA now depends on employment in Mexico like one auto part manufacturer recently explained to Trump: you institute tariffs -- we lay off the US workers, because we have no other option. ..."
Feb 21, 2017 | economistsview.typepad.com
Arrogance of free traders... February 20, 2017 at 08:06 PM , 2017 at 08:06 PM
Arrogant economists? Yes - the US may not have much, but it is overflowing with arrogant economists.

A trillion dollar goods trade deficit that persists year after year? A wealthy country stripped of its manufacturing and turned into a debtor nation thanks to economists refusing to bother with economic history that could not be more clear.

Free trade always and everywhere leads to poverty. The US must return to Lincoln's protectionist tariff regime if it wants to recovery the prosperity Krugman and co. helped destroy in the free trade "globalization" period from 1973 to January 20, 2017.

Trump should revive Lincoln protectionism - then he will rightfully take his place among the greats.

libezkova : , February 20, 2017 at 08:44 PM

"Trump should revive Lincoln protectionism - then he will rightfully take his place among the greats."

It is easier said then done. Many US companies now depends on foreign manufacturing and foreign markets. The train has left the station.

Careful actions might help to change the situation for better, but any abrupt or reckless action will definitely make the current situation worse, as employment in the USA now depends on employment in Mexico like one auto part manufacturer recently explained to Trump: you institute tariffs -- we lay off the US workers, because we have no other option.

Are you willing "To kill the Goose That Laid the Golden Eggs". Paradoxically this idiom means an unprofitable action motivated by greed

[Feb 20, 2017] Why did Krugman insist free trade would be wonderful?

Notable quotes:
"... Because that's what pays and what brought him where he is now. Krugman is not a scientist ready to be burned for his convictions. He is a despicable presstitute. Such people have no morals. ..."
"... Plato oil might throw a monkey wrench into such projections. Globalization is based on cheap oil and consume obscene amount of it for transportation of food and goods from one continent to another. ..."
"... Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do we need more battleships, fighter planes and attack helicopters? ..."
"... Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil extraction technologies. ..."
Feb 20, 2017 | economistsview.typepad.com
why did Krugman insist free trade would be wonderful?... : , February 20, 2017 at 04:08 PM
Did he really know nothing of economic history? Did he not think that the US would follow 19th century free trade colonies and semi-colonies into dustbin and economic hell of deindustrialization? Had Krugman never honestly heard of the city of Camden? Did he never wonder at the consequences of 0% tariffs in a mercantilist world?

Time for free trade economists to sit down, be quiet and admit their mistakes.

libezkova -> why did Krugman insist free trade would be wonderful? ... , February 20, 2017 at 04:54 PM
"Why did Krugman insist free trade would be wonderful?"

Because that's what pays and what brought him where he is now. Krugman is not a scientist ready to be burned for his convictions. He is a despicable presstitute. Such people have no morals.

im1dc : , February 20, 2017 at 04:20 PM
Absolutely the best description and explanation of Trump and his presidency that I read

" Trump administration is basing its budget projections on the assumption that the U.S. economy will grow very rapidly over the next decade - in fact, almost twice as fast as independent institutions like the Congressional Budget Office and the Federal Reserve expect. There is, as far as we can tell, no serious analysis behind this optimism; instead, the number was plugged in to make the fiscal outlook appear better.

I guess this was only to be expected from a man who keeps insisting that crime, which is actually near record lows, is at a record high, that millions of illegal ballots were responsible for his popular vote loss, and so on: In Trumpworld, numbers are what you want them to be, and anything else is fake news. ..."

I'm going to keep this metric in mind whenever Trump or his Administration declares something to be right and everyone else wrong, i.e., fake news

libezkova -> im1dc... , February 20, 2017 at 04:51 PM
Plato oil might throw a monkey wrench into such projections. Globalization is based on cheap oil and consume obscene amount of it for transportation of food and goods from one continent to another.

Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do we need more battleships, fighter planes and attack helicopters?

Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil extraction technologies.

The political stability of neoliberal society much like stability of Bolshevism depends on whether the promises of higher standard of living for everybody are delivered.

If not, and for the bottom 80% they were not, the society enters the period of political instability.

Which in the USA probably has started with the election of Trump.

MSM dogs who are now barking at Trump are barking to the wrong tree.

[Feb 20, 2017] Free-trade globalization is so ridiculous on so many levels one can only conclude that economic theologians who support it are either utterly incompetent or corrupt.

Feb 20, 2017 | economistsview.typepad.com
Ron Waller : February 20, 2017 at 01:24 PM , 2017 at 01:24 PM
Free-trade globalization is so ridiculous on so many levels one can only conclude that economic theologians who support it are either utterly incompetent or corrupt.

First take skyrocketing inequality and government debt. Both are related to free-trade outsourcing schemes. When production is moved out of country to cut wage costs and cut corners on regulations the only people who profit from it are corporate executives and shareholders. In the US, the top 20% own 80% of all investments. If the top 20% are the only ones benefiting – while workers are getting slaughtered – then clearly this is a major source of rising inequality.

In a functioning economy – and yes America once had a functioning economy during the Keynesian New Deal era that began with FDR and was ended with Reagan – all segments of society benefit from GDP growth – not just self-aggrandizing robber barons.

Next factor in twin deficits. When a country is importing more goods than it is exporting it has a trade deficit. The US has had a whopping structural trade deficit for about 40 years spanning the entire Friedmanian neoliberal era that began with Reagan. How does a nation purchase imports it is not earning with exports? By borrowing: i.e., running government deficits.

A simple analysis of international trade over the Friedmanian neoclassical era shows that economists must be mental midgets or they are on the take. During the Ricardian era, economists railed against mercantilist monarchs on the basis it was illogical: i.e., as Krugman puts it, if all countries want to run trade surpluses they have to trade with another planet because if some countries are running structural trade surpluses then others must run structural trade deficits.

But what happened during the Friedmanian era? Economists looked the other way on the most mercantilist period in economic history. The oligarchs of undeveloped countries ran massive net trade surpluses. Most developing countries ran whopping net trade deficits. This is the very opposite of Ricardian free-trade ideology predicated on countries having a net balance of trade.

Next factor in lost GDP. It's definition: all final goods and services produced in a country in a year. Not all final goods outsourced from a country. Which is to say, outsourcing kills GDP dollar for dollar. So it's really no wonder that GDP growth collapsed after decades of outsourcing schemes – along with the entire Western economy. (Of course this was not the only kind of economic corruption that caused economic collapse.)

But it's really funny to think that looting oligarchs in developed countries are willing to destroy the economy for a percentage. Because they only make a profit cutting labor costs. That's a one time deal. The outsourced GDP is GDP that is lost every year – from which they would've otherwise profited. (This is not to suggest that all GDP must be fiercely protected. Simply that there must be some balance that can only be accomplished with some form of managed trade.)

Next factor in the destruction of demand. Take a $30 an hour auto job in the US or Canada. Ship it off to Mexico where workers are paid $3 an hour. It's an economic miracle! How many people making $3 an hour can afford to buy a new car? Oh that's right! If the central bank prints money by buying up toxic assets created by barbarian bankers tearing up the global financial system – this will make up for all the loss in demand. It's call "economic science."

Now for some salt in the wounds: for all the wealth that flows out of the country from these outsourcing schemes an equal amount must flow back and in the form of foreign debt. Right now Chinese oligarchs are producing a massive housing bubble in Canada snatching up real estate. Of course the bubble won't burst overnight like in the US whose housing bubble was predicated on predatory mortgage-lending fraud. It will deflate like Japan in something like a 15-year bear market which caused their economy to fall apart. (Note that Japan's 22-year "lost decade" is actually a decades-long Great Depression. 2015 GDP is the lower than 1993 – and falling. Now that's an economic miracle: akin to the 7 plagues of Egypt.)

Long story short: looting barbarian plutocrats are even dumber than their lapdog economists. First they started burning the furniture to heat the house. Now they are tearing up the rafters. Like the frog and scorpion story they don't want to think about the consequences of their actions – i.e., the inevitable collapse of the Western economy into fascist revolutions and world war.

The establishment is hysterical now that Trump has come along – on behest of the American people – and put this nonsense to a stop – which Obama in Hillary Clinton had planned to accelerate with the TPP and whatever other "open border" schemes across the Americas. ("Need more rafters!")

Like Keynes and FDR, Trump is at least taking some kind of action to save capitalism and capitalists from themselves. Americans had tasked their first African-American president with this job. Now it's Plan B time.

It's amazing how many people think Trump is dumb when they are so much dumber. Trump is smart enough to realize that free-trade globalization is the problem (one of many; : but at least he's smart enough to realize part of the problem.)

I don't believe in Trump. Never have. But I believe in him a lot more than this tumorous growth of fake technocrats, fake-news journalists, fake public servants and fake meritocrats eroding the foundations of this primitive barbarian proto-civilization by liquidating the public trust and committing crimes against humanity.

RGC -> Ron Waller ... , February 20, 2017 at 01:51 PM
People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich.

-John Kenneth Galbraith
The Age of Uncertainty (1977)
Chapter 1, p. 22

cm -> RGC... , February 20, 2017 at 03:58 PM
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

I would say this is rational. Surrendering advantages will generally weaken your position and thus increase the risk of complete destruction or being stripped of further advantages. Also quite often members of the elite, individually or as a group, have likely acted in ways that enraged their opponents to the point that they will likely not stop at just stripping advantages until a "reasonable" point, but indeed seek complete destruction. History is full of things like guillotines and hunting down and murder or lifelong imprisonment of all family members (who have not been plausibly disavowed or disassociated while the old regime was still comfortably in power).

cm -> cm... , February 20, 2017 at 04:00 PM
Of course in the past, rulers and elites were often dethroned by other elites, with popular uprisings only used as a temporary tool. In any case, once it gets close to that point, it's an all or nothing fight for either side.
cm -> cm... , February 20, 2017 at 04:06 PM
There have been examples where elites have ceded advantages in a peaceful transition. But that usually happen in a context where there had already been gradual transitions to shared/broader power in the past (generally not peaceful in the initial stages). The UK and its royals/nobility are an obvious example, probably also Scandinavia which are mostly still nominally kingdoms (?), or the royal family and former or still existing nobility has influence but officially only a figurehead role. The transition to democracy happened largely peacefully in the past 1-2 centuries, prior to that not so much.
RC AKA Darryl, Ron -> Ron Waller ... , February 20, 2017 at 02:02 PM
THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU!

It makes sense of course that your name is Ron.

ken melvin -> Ron Waller ... , February 20, 2017 at 02:26 PM
Things can not change and stay the same.
Jesse : , February 20, 2017 at 01:43 PM

Until the Democrats reform their leadership and recommit to working people again, they will have no future as a party.

Brad and Larry and Paul are a big part of the status quo for the liberal establishment, and the incredible failure of leadership they have achieved.

Continuing to argue about it here, with the quick resort to personal attacks and name-calling, is irrelevant, because the Democratic party is dead. Seriously, how big of a loss can they take before the leadership gets tossed? It was not just the presidency. They have lost almost everything.

http://jessescrossroadscafe.blogspot.com/2017/02/jimmy-dore-and-thomas-frank-on-what.html

RC AKA Darryl, Ron -> Jesse... , February 20, 2017 at 02:10 PM
Don't count the Democratic Party out yet. Politicians need to make a living. After the Civil War the Democratic Party had to scrape together what it could find that Republicans had tossed out with the garbage. So, the Democratic Party took to supporting immigrants and unions. Times have changed and the Democratic Party lost the unions to corporatism, but tried to make it up with racial politics. That worked some, but the problem with identity politics is that eventually people get their rights and freedoms and next thing you know they want jobs and college educations for their children. The Democratic Party made a big mistake abandoning the interests of ordinary working people, but that is what their corporate donors demanded. So, it is time for a makeover and if the next one does not take then they will be back at it again because politicians have to make a living.
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 04:33 PM
The Democratic party, much less so than the Republican party, is not homogenous. All the things you ascribe to them past or present don't apply to most of their current members or operatives.

It is one of the pernicious aspects of an effectively two-party system that all progressives have a strong motivation or even necessity to associate themselves with the "least bad" party. By way of official narrative the Democrats definitely fit the bill, even though they contain a lot of "co-opted" (if not corrupted) establishment baggage. That just happens with any major party - elites and interest groups that nominally stay out of politics but factually participate and not just a little are never resting.

In Germany, the 80's (perhaps late 70s?) saw an ascendancy of the Green party which was strongly associated with environmentalism, and by implication resistance to then prevalent politics, social mores, etc. They were successful as environmentalism and (I would say secondarily but that can be debated) civil/individual liberties and gender/ethnic equality which they also featured big time were themes that found wide appeal, and the time was ripe for them (e.g. environmental degradation had become undeniable, and gender/ethnic discrimination had become recognized as a factor hindering progress, aside from just fairness concerns).

A few decades later (and starting even a few years after the success) there was a noticeable bifurcation in the Greens - it turned out they were not all on the same page regarding all social issues. A number of Greens "defected" from the party and associated themselves with Red (Social Democrats, equivalent of US Democrats) or Black (Christian Democrats, equivalent of US Republicans) - showing that environmental or general (dimensions of) equal opportunity concerns are perhaps orthogonal to stands on other more or less specific social issues (or if one wants to be more cynical, that some people are careerist and not so much about principles - that exists but I would prefer (with little proof) to think it doesn't explain the larger pattern).

[Feb 08, 2017] A Utilitarian Welfare Analysis of Trade Liberalization

econpapers.repec.org

The currently established welfare criterion used in international trade theory results in conclusions that are not only intellectually dishonest and deceptively misleading but are not as value free as is commonly believed. Although academic economists have devoted much effort to understanding the distributional effects of trade, the current welfare conclusions of trade basically ignore entirely the distributional effects. This paper argues that trade policy needs to be framed within a legitimate moral framework that moves distribution to the forefront. The welfare effects of trade should be judged by what actually happens, not by what could potentially happen in an idealized world with costless transfers.

In the first section the inadequacy of current international welfare economics is discussed. Second, the justification for using a utilitarian framework is developed along with a brief history of the doctrine and its role in Cambridge welfare economics. Next the properties of a utility function that would be realistic as well as having desirable mathematical properties are discussed. Welfare considerations would not be especially important if trade did not create significant redistributions; therefore the size of the redistributions relative to the efficiency gains from trade liberalization is examined. Finally, the welfare effects of trade liberalization using various trade models and simulations are discussed.

The current approach to the welfare analysis of trade is to follow the recommendation of Hicks and Kaldor and equate national welfare with real national income and ignore entirely how income is distributed. Although admitting that considering distribution involves an unscientific value judgment, numerous economists (such as I.M.D. Little, Frank Knight, Edward Chamberlin) have concluded that distribution is too important to ignore and it is better to consider it even if that makes the analysis less than scientific. As Blaug has stated (1978,p. 626), "the true function of welfare economics is to invade the discipline of applied ethics rather than to avoid it."

The basic objective of trade policy under modern welfare analysis therefore is to maximize national income. This outcome is considered optimal because of the Hicks-Kaldor compensation principle whereby everyone could potentially be made better off than in any other alternative with the appropriate lump sum transfers. For some, the possibility that these transfers could be made is sufficient, regardless of whether any transfers are actually made. For others, there is a naive belief that after all the income maximizing policies are implemented, that the government (or society) then consistently redistributes income in a manner consistent with its specific social welfare function. However, Rodrik (1997, p.30) is correct when he states that in regard to trade policy changes, "compensation rarely takes place in practice and never in full."

Even if society wanted to redistribute income, however, it can not be done in a zero costs lump sum fashion.

[Feb 01, 2017] There has not been free trade or free market for a long long time if ever.

Feb 01, 2017 | economistsview.typepad.com
Tom aka Rusty : January 30, 2017 at 12:02 PM , 2017 at 12:02 PM
There has not been "free trade" for a long long time if ever.

There is "negotiated trade" with rules set by governments.

Yuuuuge difference.

Peter K. -> Tom aka Rusty... , January 30, 2017 at 12:29 PM
Exactly. And the rules have been set by U.S. multinational corporate negotiators. Just look at TPP.

There is also dollar policy which is again set by corporate interests.

Paul Samuelson also praised Australia's Tariffs & US became ultra rich under Lincoln's protectionism : , -1
In case anyone cared, Samuelson also argued cogently for Australia's high tariff regime in a famous 1981 article.

In case economists want to bother learning history (why would they?) - you can also consider the funny example of Abraham Lincoln who "took away property rights" and raised tariffs sky high.

Did the US become a poor third world country because it took away plantation owners' property rights and jacked up tariffs? Hmm. Reason to pause and reflect economists?

[Jan 26, 2017] Dean Baker has some interesting Free Market proposals that will make elitist libertarians sputter

Jan 26, 2017 | economistsview.typepad.com
jonny bakho : , January 26, 2017 at 05:15 AM
Dean Baker has some interesting "Free Market" proposals that will make elitist libertarians sputter.
He suggests a vacant property tax, which I see is a good idea, especially in dense urban areas. It takes our city years to get abandoned houses condemned or landlord compliance through the legal system.
I would take it one step further and drastically raise taxes on parking lots. I would not allow religious organizations to exempt their parking lots from this tax. Other buildings, ok, but churches should not be allowed to destroy the tax base and neighborhoods by replacing buildings with parking lots.
jonny bakho -> jonny bakho... , January 26, 2017 at 05:18 AM
I would say that Dean Bakers proposals fit with DeLong's call for better economic policy:

From his comments

"I would note that the "trade deals" did not create international trade. If you want to say that we should have no international trade, be my guest--but Donald Trump will not agree with you. The problem is that he is saying that getting rid of NAFTA and getting tough with China will bring all those good manufacturing jobs back. And that is completely false.

As I say, technology has carried us down from 30% to 12%--and we do not want to hinder that--lousy macro policies have gotten us down from 12% to 9%, and "trade deals" have maybe gotten us down from 9% to 8.6%. If you don't want to hear that, I can't make you..."

I would note that the "trade deals" did not create international trade. If you want to say that we should have no international trade, be my guest--but Donald Trump will not agree with you. The problem is that he is saying that getting rid of NAFTA and getting tough with China will bring all those good manufacturing jobs back. And that is completely false.

http://www.bradford-delong.com/2017/01/nafta-and-other-trade-deals-have-not-gutted-american-manufacturingperiod-live-at-voxcom.html#comments

DrDick -> jonny bakho... , January 26, 2017 at 07:17 AM
Meh. I generally really like Baker, but these are pretty weak tea. I do agree with him that the AMA monopoly needs to be broken.
RC AKA Darryl, Ron -> DrDick... , January 26, 2017 at 07:40 AM
Dean Baker writing about market based reforms for publication by AEI is not the pro-labor Dean Baker that we have come to love and honor. It gets him exposure that he would otherwise not have though.
-->

[Jan 02, 2017] Neoliberals hate government policies, unless they increase thier ability to make profits

Free market is a neoliberal myth, the cornerstone of neoliberal secular region.
Notable quotes:
"... Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's. ..."
economistsview.typepad.com
Gibbon1 -> anne... , December 31, 2016 at 10:21 PM
Two of my criticisms about Krugman/Friedman, etc is that is 'free markets' are supposed to substitute for policy in the government sphere. Except very telling except when we're talking about funding the security state.

The other is that the real power of markets is that in a real free market (not a Potemkin one) decisions are made often at the point where needs, information, incentives, and economic power come together. But the large scale decisions the governments have to make, markets fail. Policy though doesn't.

But Neoliberals hate policy.

AngloSaxon -> Gibbon1...
Well, duh. "Policy" and "Capitalism" don't go together and never have. When you enact policy, you destroy the ability to make profit and you get the 1970's.
likbez -> Gibbon1... January 01, 2017 at 10:15 PM
Free market is a neoliberal myth, the cornerstone of neoliberalism as a secular religion. Somewhat similar to "Immaculate Conception" in Catholicism.

In reality market almost by definition is controlled by government, who enforces the rules and punish for the transgressions.

Also note interesting Orwellian "corruption of the language" trick neoliberals use: neoliberals talk about "free market, not "fair market".

After 2008 few are buying this fairy tale about how markets can operate and can solve society problems independently of political power, and state's instruments of violence (the police and the military). This myths is essentially dead.

But like Adventists did not disappear when the second coming of Christ did not occurred in predicted timeframe, neoliberals did not did not disappeared after 2008 either. And neither did neoliberalism, it just entered into zombie, more bloodthirsty stage. the fact that even the term "neoliberalism" is prohibited in the US MSM also helped. It is kind of stealth ideology, unlike say, Marxists, neoliberals do not like to identify themselves as such. The behave more like members of some secret society, free market masons.

Friedmanism is a flavor of economic Lysenkoism. Note that Lysenko like Friedman was not a complete charlatan. Some of his ideas were pretty sound and withstood the test of time. But that does not make his less evil.

And for those who try to embellish this person, I would remind his role in 1973 Chilean coup d'état ( https://en.wikipedia.org/wiki/1973_Chilean_coup_d%27%C3%A9tat ) and bringing Pinochet to power. His "Chicago boys" played a vital role in the events. This man did has blood on his hands.

http://www.bidstrup.com/economics.htm

=== quote ===
Of course, bringing a reign of terror to Chile was not why the CIA had sponsored him. The reason he was there was to reverse the gains of the Allende social democracy and return control of the country's economic and political assets to the oligarchy. Pinochet was convinced, through supporters among the academics in the elite Chilean universities, to try a new series of economic policies, called "neoliberal" by their founders, the economists of the University of Chicago, led by an economist by the name of Milton Friedman, who three years later would go on to win a Nobel Prize in Economics for what he was about to unleash upon Chile.

Friedman and his colleagues were referred to by the Chileans as "the Chicago Boys." The term originally meant the economists from the University of Chicago, but as time went on, as their policies began to disliquidate the middle class and poor, it took on a perjorative meaning. That was because as the reforms were implemented, and began to take hold, the results were not what Friedman and company had been predicting. But what were the reforms?

The reforms were what has come to be called "neoliberalism." To understand what "neoliberal" economics is, one must first understand what "liberal" economics are, and so we'll digress briefly from our look at Chile for a quick...
=== end of quote ===

[Dec 28, 2016] Free trade is a delicate instrument, much like tennis racket.

Dec 28, 2016 | economistsview.typepad.com
Economists believe crazy things: December 28, 2016 at 06:05 PM

[As if] protectionist Japan is now backward and poverty stricken; free trade Africa is soaring on the wings of giant trade deficits :

Economists lead the way in silly beliefs that defy empirical reality and common sense. The most glaring example of this is the view that free trade is beneficial. All evidence points in the opposite direction, but no matter - our fake economists are happy to say/believe whatever so long as their foreign government paymasters and banks write the ten thousand dollar checks for "consulting" and "academic reports".

likbez -> Economists believe crazy things.. December 28, 2016 at 07:31 PM

You are probably wrong. Free trade is a delicate instrument, much like tennis racket. If you hold it too tightly you can't play well. If you hold it too loose you can't play well either.

Neoliberals promote "free trade" (note "free" not "fair") as the universal cure for all nations problems in all circumstances. This is a typical neoliberal Three-card Monte.

The real effect in many cases is opening market for transnationals who dictate nations the rules of the game and loot the country.

But isolationism has its own perils. So some middle ground should be fought against excessive demands of neoliberal institutions like IMF and World Bank. For example, any country that take loans from them (usually on pretty harsh conditions; with string attached), has a great danger that money will be looted via local fifth column. And will return in no time back into Western Banks leaving the country in the role of the debt slave.

The latter is the preferred role neoliberals want to see each and every third world country (and not only third world countries -- see Greece and Cyprus). Essentially in their "secret" book this is the role those counties should be driven into.

Recent looting of Ukraine is the textbook example of this process. The majority of population now will live on less then $2 a day for many, many years.

At the same time, balancing free trade and isolationism is tricky process also. Because at some point, the subversion starts and three letter agencies come into the play. You risk getting color revolution as a free present for your refusal to play the game.

Neoliberals usually do not take NO for the answer.

That's when the word "neoliberal" becomes yet another dirty word.

[Dec 24, 2016] Guest Contribution Five Key Factors for 2017 Econbrowser

Dec 24, 2016 | econbrowser.com
Joseph December 21, 2016 at 3:11 pm

"He stated, the culture in Silicon Valley is about social liberalism and environmentalism, yet, the tech firms are full of the most ruthless free market capitalists he's ever seen."

Ha, Silicon Valley is full of the most anti-free market capitalists anywhere. They spend all their time trying to figure out ways to eliminate competition through mergers and buyouts and market domination.

The spend all their time suing each other to maintain their government enforced anti-competitive patent monopolies. Silicon Valley hates free market competition. They spend inordinate amounts of time and money to reduce free market competition.

Roots of Reaganolatry

The New York Times
Jim Hansen
is a trusted commenter California 4 hours ago

Given their intense desire to destroy and smash Iran through bombing or any other means possible, I'm surprised that the Republicans still like Reagan, who illegally sold high-tech missiles to Iran without Congressional approval.

Ron Cohen
is a trusted commenter Waltham, MA 6 hours ago

Reagan has been lionized by the right because he personified an ideal, that of free markets and small government. What he actually did in office, whether successful or not in pursuing a conservative agenda, have no bearing on his popularity.

Economists may enjoy debating the merits of his economic record. But they should recognize that not all judgments are economic. Reagan gave the country a morale boost when it was most needed. As to his actual record, the faithful don't give a damn.

Glenn4723
Ohio 7 hours ago

But there is little connection between the broad measures of any president's success/failure re economic policies and "how the economy works".

On one hand, in Reagan's case, interest rates brought under control, unemployment greatly reduced; wages increased; energy prices greatly reduced - is Reagan directly responsible? - matters little most people and without doubt the Republican/conservative population will look no further - nor will this change with expert economic analysis 'proving' otherwise; which of course will be disputed by other experts.

The roots of Reagan's success as seen by the many non-expert, but more importantly voting, population is that on balance broad measures of the U.S. economy were much better when he left than when he started.

Dryly 41

8 hours ago

I have always thought that if Abraham Lincoln was the greatest Republican president and Franklin D. Roosevelt the greatest Democratic president then Ronald Reagan was one of the strangest, if not the strangest president in American history. He was born February 6, 1911 such that he voted for FDR over Herbert Hoover in 1932. His father was one of the 25% unemployed and got a job with the Federal Emergency Relief Agency, and, when that was converted to a works program with the Works Project Administration. Reagan defended those programs as constructing real improvements in the waterfront in Dixon, Ill. where he was a lifeguard. Reagan saw, as an adult "one third of a nation ill-housed, ill-clad, and ill-nourished", soup lines and breadlines, and Hoovervilles. He voted for FDR in 1936, 1940 and 1944. He voted for Truman in 1948 and supported Helen Gahagan Douglas in 1950.
But his marriage to Jane Wyman dissolved and his grade B movie acting career ended. He took a job hawking for General Electric where he came under the spell of Lemuel Rickets Boulware and became a right winger. He led the GOP to radicalism. He ended the GOP as the party of Lincoln on race. He adopted "supply side" tax cuts for the wealthy funded by massive budget deficits unseen in American history. He led the movement back to Laissez Faire and repeal of the "strict supervision" of finance that gave us the longest period of financial stability in American history. Radicalism not at all conservative.

James Jordan
Falls Church, VA 8 hours ago

Dr. K,

I observed the Reagan Administration at close hand and you write the truth.

I think the GOP might have had something to break the ideological mold in "Carly" Fiorina. She was "head and shoulders" above the Governors and the sitting Senators.

There is a new demographic and the old rich white guys who were setting the agenda for both parties are losing power. They are fighting like hell to hold on but I don't think they can make it to the White House.

Of course they have strength at the local and district level where money really counts so the challenge is to form a government to deal with the real problems by taking back the House and the Senate and the State Houses. As you have recognized, it was all over for President Obama in 2010.

We need to correct this imbalance if we are to have a chance of stopping the drift to oligarchy and monopoly. The whole economy is being hurt and it is kind of stupid. America can do more than sell weapons all over the World. Why not invest in electric Maglev transport for freight and passengers and reduce the cost of goods delivered & fare cost for travel.

Space solar anyone? 2 cents per kwh would make synthetic gasoline, diesel, and jet fuel feasible.

Cheap electric transport and cheap electricity are principal milestones of the project plan for achieving a paradise by the end of the Century. The return on investment can be used to pay the tuition, books, fees, room and board of pre-k through 16. It can be done.

Jonathan Payne
London via Silicon Valley 8 hours ago

All thinking and intellectually honest people know the truth about the Reagan administration. It's almost boring to discuss it anymore.

Carter had OPEC and the resulting inflation to deal with twice, and geologists telling him that end of oil was near. Reagan cut taxes DRAMATICALLY, borrowed $2.5T over the course of his administration (back when $1T meant something) and Iran/Iraq had a 10 year war that they financed by flooding the oil markets, providing 10 years of nearly free energy.

Reagan partied without any eye to the future. And here we are in his future. Thanks, Reagan.

Dave G
Palo Alto, CA 8 hours ago

It is not just that the economy under Reagan was not that great. Reagan himself was not a very bright or thoughtful person. In many ways he set the country on the wrong path. Someday soon historians will document well the many different ways he ruined the country for its citizens.

Blue State
here 8 hours ago

The Great Communicator was really handy with the tribal buzzwords of a tribe beginning to see the end of its dominance. That's why that tribe doesn't want to let go of St. Reagan. There will be a tipping point - soon? - where that tribe will collapse in on itself, and the new era begins.

CindyG
Moorestown, NJ 8 hours ago

Reagan is right on Dubya's shirt=tail as the worst President ever!

Republicans have historical amnesia about everything Reagan did including funding terrorists. Yes, the same group that attacked the World Trade Center, the Pentagon and brought down the plane in Pennsylvania. In the 1980's while preparing for a possible war with the Soviet Union, Ronald Reagan spent billions of taxpayer dollars funding the Islamist mujahidin Freedom Fighters in Afghanistan. He supplied the Taliban and Osama Bin Laden with weapons and training and they gave it back to the United States over a decade later....911.

Margaret Thatcher about Ron Reagan: "Poor Dear, there's nothing between his ears."

Ruppert
Germany 8 hours ago

When Reagan slashed Carter's budget for solar energy by two third, it was a great day for Germany. We had lost our radio/tv industry to Japan, losing many well-paid jobs. It took a while, but the solar industry eventually became a great success for Germany and China. Thank you so much, Ronald Reagan.

Thanny
NJ 8 hours ago

Regarding that "white male" comment, I suggest you don't go down the road of identity politics. It's a logic- and reason-free zone of oppression olympics that's no less fact-denying that the worst of conservatism.

Stick to liberalism, which holds no truck with bad ideas no matter how broadly similar the motives of those holding them are.

Jim in MI
Michigan 8 hours ago

The job creation success of the Democrats seems to be repeatable. From Carter, to Clinton, to Obama. My guess is that if job creation is what you want to do, with the power of America and its government, it's not that hard. The Reagan success can't be replicated. Basically because there's nothing there.

voreason
Ann Arbor, MI 8 hours ago

Another part of the Reagan myth is that his push for massive expansion of military spending - including the deployment of weapons intended to provide first strike capability such as the MIRV'd MX missile, the creation of the "Star Wars" program, deployment of nuclear armed Pershing II missiles in Europe, and the gigantic naval expansion - brought the Soviet Union to its knees and won the cold war. The fact is that the USSR was teetering on brink of economic and political collapse for years, something famously predicted by Soveit dissident Andre Amalrik in his 1970 book "Will the Soviet Union Survive until 1984?"

The foreign policy failures and aberrations of the Reagan administration (bombing of the Marine Barracks in Lebanon, invasion of Granada, Iran-Contra scandal) are legendary.

Reagan's presidency has been overrated in so many ways.

Chris
Sydney, Australia 8 hours ago

The republicans have white washed the whole Iran Contra mess from their history. Imagine Obama selling weapons to Iran to fund planned parenthood.

howard567
Chicago, IL 8 hours ago

Brief summary of Reagan's "low tax" and "small government":
1. Average tax revenue (%GDP) under Reagan: 18.2%. US Average (40 years) :18.1%.
2. Federal spending (%GDP) under Reagan: 22.4%. US Average (40 years): 20.7%
3. Reagan cut top income tax rate on the richest from 70% to 28%.
4. Reagan upped social security tax.

http://money.cnn.com/2010/09/08/news/economy/reagan_years_taxes/

Rick Starr
Knoxville 8 hours ago

The amazing thing to me is how the Right has hero-worshipped Reagan into the role of the great de-regulator. It was Carter (with a Democratic congress) who deregulated airlines. Railroads. Trucking. Telecommunications. There was banking reform and the sudden ability to provide branch banking across political boundaries.

Some were for better, a few for worse, but the Reagan mythology continues, even though I can't think of anything he did that was comparable. (While the AT&T breakup happened during the Reagan years, the process began during the Carter time)

Marc Donner
New York 8 hours ago

Well, the Internet was coming to be by 1980, though it was more than fifteen years after that before the general public really got to use it. But I am definitely splitting hairs here :-)

Tammy
Pennsylvania 8 hours ago

I think the problem is we are not use to looking at the stats through the global lens. Thus, I can understand how the economy (macro economy) "vanishes"--according to the stats in your last post.

We live in a security [surveillance] state. Therefore the transparency, we so much desire, would probably hurt future growth potential projections or G.D.P.
Or, we can see this as being an aid to the real transparency we seek.

I do laugh thinking about the philosopher Alain de Botton's work and why he and the philosophy of Roger Scruton play off each other. Then again, the philosopher Terry Eagleton, seems to be on board with de Botton (if I understand Eagleton correctly. It's all about ___________. But, really, what do you think society will look like in 50-100 years?

If you could live in any time period in our past would you? I don't think you would.

cesium62
redwood city, ca 8 hours ago

"It's quite remarkable that the right can't find any more contemporary role models."
But, but... Isn't the whole point to the Right about taking us back to where we were? In fact, I find it remarkable they can fixate on someone so contemporary.

"2036, when Democrats will have nominated their first android"
I dunno, man. 2036 seems a tad on the near side. Can we agree on 2044?

Mitch Buchannon
beach 8 hours ago

Funny how this doesnt apply to Clinton. Economic boom during the 90s didnt have anything to do with Bill Clinton. If you dont believe me try this guy: http://newsbusters.org/blogs/noel-sheppard/2011/01/23/krugman-shocker-19...