Saturday, June 28, 2014

The "Piketty Effect" or the "One-Percent" can be harmful to your health

Collage - David Seaton
"Anybody who reads the newspaper will be aware that, in the United States, the “one per cent” is taking an ever-larger slice of the economic pie. But did you know that the share of the top income percentile is bigger than it was in South Africa in the nineteen-sixties and about the same as it is in Colombia, another deeply divided society, today? In terms of income generated by work, the level of inequality in the United States is “probably higher than in any other society at any time in the past, anywhere in the world." Thomas Piketty - quoted in The New Yorker
I don’t want some rich person’s mansion or bank account. I just don’t want to pay for them with our schools and roads and postal service. Marym in IL- Firedoglake

While mulling over the huge impact of Thomas Piketty's book,"Capital in the Twenty-First Century", I got this nagging feeling that I had been here before, that this was so familiar, but I couldn't put my finger on what it was... 

Then it came to me... This is like when it was statistically proven that smoking causes cancer, and then a shockingly cancer ravaged, near death, much loved, proverbial chain smoker, John Wayne, showed up on that Oscar night in 1979... Only this time, in the case of the side-effects of inequality, the sequence has been reversed: first we are ravished, then near death and then we get the explanatory statistics.

However, I find the similarities striking: an enormous "public-relations" industry, including (massively) Hollywood, devoted over decades to convincing millions of men, women and children that something useless, expensive and totally harmful, was not only not harmful, it was "cool".

Finally the statistical evidence combined with the sight of iconic personalities wasted by the smoking habit has brought about a sea change in public opinion, which has caused millions of people to give up the habit or never start smoking in the first place and forced the passage of stringent legislation, bucking the efforts of big tobacco, one of America's most powerful lobbies.  

Today, far from being seen as cool, smokers are forced to huddle pitifully outdoors in the dead of winter, to get their "fix". 

Statistical evidence combined with raw emotion caused this massive change in public opinion. 

Does this mean that thanks to the ravages of the financial crisis and the findings of professor Piketty we  are going to see pitiful, former billionaires huddling on America's sidewalks anytime soon?

I wouldn't hold my breath waiting for it.

What we are going to see, I think, is an enormous, tectonic conflict between the sea change of Piketty empowered public opinion and the enormous power of the one-percent to corrupt the political process, which will dwarf anything that the tobacco lobby could ever have even dreamt of. DS

Sunday, June 22, 2014

Notes on the new populism

Classic left wing parties are missing the boat today, almost to the point of irrelevance,  because the traditional "working class", which was their power base, has been largely fragmented and is now practically powerless as the enormous "reserve army of labor" that globalization provides means that the worker´s principal weapon, withdrawing their labor, is no longer effective, increasingly even in skilled or jobs requiring higher education: if an American legal assistant is expensive, get an Indian lawyer in India to do the paperwork at a tenth the price per hour. But this has a certain "death spiral" effect.

The"killer contradiction" today is that while workers are no long needed more and more consumers are. Globalization has also brought on overproduction, a glut of consumer goods flood the markets.

How are unemployed or underemployed formerly middle class people, brought up on the idea of their right, even duty to consume, consume? Credit? Been there, done that.

So the real "revolutionary protagonist" today is the
enormous, but increasingly declass√© and naturally resentful middle class that was created before globalization. Some sort of populism,  "us against the one-percent" is the only possible progressive game in town now. 

The challenge is to keep this populism international, progressive and not nationalistic-racist, reactionary etc. 

That is why Thomas Piketty work, "Capital in the Twentyfirst-Century" is a great help, especially among statistic loving Americans, in building objective political consciousness in the middle class for this struggle, which is really just beginning. DS

Friday, June 20, 2014

Groundhog day in Iraq and... you name it

Onward and upward
Sometimes, when you get older you get what Yogi Berra called the "dej√° vu all over again" feeling while observing life and especially world affairs; a little like an usher in an all day movie theater might get... the moviegoers are glued to the screen to see if the hero gets the girl or the bad guy gets his just desserts, while you who have seen this film a dozen times or more before are pulling back curtains, opening doors and spraying air freshener... From Vietnam through Iraq and back to Iraq... from 1964 to 2014: 50 years of my life watching, the drip, drip, drip, of useless bloodshed, death and stupidity...

Perhaps the time has come to put on a saffron robe, take up a begging bowl and retire to a forest hermitage to contemplate my navel or maybe just take a big dose of fruit salts. DS

Sunday, June 15, 2014

Chutzpah, thy name is Tony Blair

Nobody here but us chickens boss
In a defense of his actions in Iraq, Blair attacked as "extraordinary" any notion the country would be stable if Saddam Hussein had stayed in power. (...) Tony Blair has strongly rejected claims that the 2003 US-UK invasion of Iraq was to blame for the current crisis gripping the country, pointing the finger instead firmly at the Maliki government and the war in Syria. In a passionate essay published on his website, the former prime minister said it was a "bizarre" reading of the situation to argue that the US-British invasion of Iraq had allowed the growth of Sunni jihadist groups such as the Islamic State in Iraq and the Levant (Isis), whose fighters have swept through towns and cities north and west of Baghdad over the past week. "We have to liberate ourselves from the notion that 'we' have caused this. We haven't. We can argue as to whether our policies at points have helped or not: and whether action or inaction is the best policy. But the fundamental cause of the crisis lies within the region not outside it Guardian

Leo Rosten in The Joys of Yiddish defines chutzpah as "gall, brazen nerve, effrontery, incredible 'guts,' presumption plus arrogance such as no other word and no other language can do justice to." In this sense, chutzpah expresses both strong disapproval and condemnation. In the same work, Rosten also defined the term as "that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan." Chutzpah amounts to a total denial of personal responsibility, that renders others speechless and incredulous ... one cannot quite believe that another person totally lacks common human traits like remorse, regret, guilt, sympathy and insight. The implication is at least some degree of psychopathy in the subject, as well as the awestruck amazement of the observer at the display. Wikipedia
Today I am speechless: enjoy. DS

Monday, June 09, 2014

Interregnum... after the ball was over

This week William Hague, Britain’s foreign secretary, told the inaugural London Conference hosted by Chatham House that the world was not simply going through a difficult patch, but had entered a period of “systemic disorder”. Financial Times

Nowadays, both advanced economies (like the United States, where unlimited financing of elected officials by financially powerful business interests is simply legalized corruption) and emerging markets (where oligarchs often dominate the economy and the political system) seem to be run for the few. For the many, by contrast, there has been only secular stagnation, with depressed employment and stagnating wages. Nouriel Roubini
The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear. Antonio Gramsci

After the ball was over
Nellie took out her glass eye
Put her false teeth in water
Corked up her bottle of dye
Put her false leg in the corner
Hung up her wig on the door
And all that is left goes to bye byes
After the ball
After The Ball Was Over
What kind of animal are we talking about?
I have to admit that I'm getting bored, but bored as combat soldiers get bored, where fear and boredom mix. Bored with the "systemic disorder" of the "interregnum", the randomness, chaotic entropy of it, which defies rational ordering or analysis: anxiety without any horizon.

At the bottom there is something very simple: when they asked the legendary Willie Sutton why he robbed banks he replied, "because that is where the money is". The money is in tax-havens and it must be taxed and redistributed if humanity is going to have any chance of a "human" future.
It would seem much more useful, in terms of building the capacity to address the environmental crisis, to frame the issue of the environment as linked to a broader struggle that includes the redistribution of income and wealth to more equitably share the costs of environmental restraint; a cultural shift in the balance between individual consumption of goods and collective services; the development of public spaces and desperately needed infrastructural renewal (including mass transit); and the conversion of potentially productive facilities rejected by the market to the production of socially useful and environmentally necessary products and services. Such a framing would also tie the environmental crisis to the obvious need to place democratic planning on the agenda and go so far as to start talking about making private banks into public utilities so that we have access to the financial resources to carry out the above initiatives. Sam Gindin - Jacobin
Alas, who is going to ever bell this cat? DS

Monday, June 02, 2014

Losing it.....

Please pardon me quoting myself, but...
My clearest reading of 2014's tea leaves is "instability": worldwide instability and in my opinion this instability has its origins at the heart of the most developed economies of the western world. The causes? We are undergoing a technological revolution and process of globalized outsourcing, combined with a reduction of the welfare state that is severely degrading the middle class in developed countries and converting them slowly, but surely into working-poor. Anyone who has read a bit of history could tell you how dangerous that is. Newslinks - 2014 and Welcome To It
On top of that, like whipped cream, I would put the following from today's Financial Times
Economic forecasters have yet to internalize the fact that the US economy has fundamentally altered. The purchasing power of the majority of Americans has not only stagnated since the recovery began five years ago – it has actually declined. Edward Luce - Financial Times
 And on top of that, like a maraschino cherry, this from no other than His Holiness the Pope:
Populism in Europe, trust and mistrust, some theories about the Euro ... I don’t know much about this kind of thing. But unemployment is serious: we have a global economic system that is centered on money, not on the human being. In order to keep going, this system discards things. It discards children: birth rates are not high, in Italy the average couple has less than two children and in Spain even less. It discards the elderly, even through euthanasia in disguise, medicine is only administered up until a certain point. And young people are discarded too.  I think unemployment among Italy’s young is 40%, in Spain it’s 50%, in Andalusia, 60%. There is an entire generation of people that is not studying or working. This culture of waste is very serious. Europe is not the only place where it exists, but it is strongly felt in Europe. It is an inhumane economic system. Pope Francis
Spain, where I live, is not anywhere near collapsing, but the conditions that the Pope mentions are leading to some of the most coherent, practical, active, alternative politics that I have ever seen:
Until recently, it appeared that the Spanish indignados movement had fizzled out. But on Sunday evening, a fledgling party born from its ashes proved otherwise, winning five seats and 1.2 million votes in Spain's European elections. - The Guardian
The name of the new party is "Podemos", which most translate as the first person plural of the verb "poder", "We Can", but Spanish speakers notice that podemos is also the subjunctive, first person plural of the verb "podar" (to prune) or "Let's Prune". 

The elections were on Sunday the 25th of May

I suppose it's just a coincidence, but the King of Spain has abdicated exactly one week later.

How has technology caused so much pain and confusion?

At the bottom of it is the enormous increase in productivity brought on by information technologies. We simply produce much more than we can possibly consume: we need lots of consumers and much fewer workers.  How are underemployed people supposed to buy anything? On credit. Something has to give, has given.

With lower costs and more technology, profits rise and much of this gain is reinvested in more productivity-raising technology, which makes more skills and the people who have them redundant. This means, perversely, that more profits usually lead to less jobs or much poorer jobs. This paradigm, which until recently only held true for the poorly educated, is now reaching the ranks of university graduates. Now, with digital technology, even high intellectual output tasks can be outsourced to where people with postgraduate degrees can be hired for the same cost per hour as high school graduates in a developed country.

Result: As more money is invested in raising productivity, fewer and fewer people can produce more and more for a market glutted with products that fewer and fewer people can afford to buy without going into debt.

Salaries don't rise because most workers are not really needed that badly and are easy to replace if they go on strike, complain or even report in sick.. and thus they have no bargaining power. Any shortages such as one resulting from low birthrate in developed countries can be solved by outsourcing the jobs to poorer countries with high birthrates.

All people are really required to do is to buy many things that they don't really need, which they can do, even with a McJob, by using a credit card... hereby kicking the can into the future: a future with poorer paying jobs, less horizon, more need of credit to participate, with less chance of ever paying back the debts incurred.

To make underpaid workers buy things that objectively they don't need, an entire industry (marketing) exists to make them dissatisfied with what they already have. Perversely, unhappiness becomes a social good in such an economic arrangement. A thrifty person, content with his lot, who for thousands of years was seen, in all traditions, as a wise and sensible man; in this contemporary situation is seen as a public enemy to be "stimulated". 

As to what the contributions technology and advanced communications might make to improving America's economy, awhile back I read Fareed Zakaria's, "The Post American World", where Zakaria writes about advances in nanotechnology:
At some point in the future, or so I'm told, households will construct products out of raw materials, and businesses will simply create the formulas that turn atoms into goods.
The idea is that you put some powder you order on the Internet into a washtub, add water and out walks a TV set, thus putting millions of Chinese people out of work.

Whether this ever happens or not, the fact that somebody might think it was a good idea and that a lot of money was being invested in making it happen would have to put you on your guard a bit: it's the thought that counts.

In a sense our entire "civilization" is sort of a universal "Ponzi scheme". If the wheel stops even for a moment it all comes tumbling down.

It's amazing that a structure this artificial, that fills so few truly human needs, has taken so long to nearly collapse.

What will collapse, if it ever comes, look like?

The best metaphor, the most poetic illustration of political collapse that I have ever seen is the video below this piece: Rumanian dictator Nicolae Ceausescu's last speech, a man of absolute power for decades, only a matter of hours before being shot. In itself, like a perfect work of art it shows in less than ten minutes a process that in a country as marvelously structured as the USA might take more than twenty years, if it happened at all.

I think that America's system is so well carpentered that if it ever collapses it will appear till the last moment like a termite-ridden piece of furniture: absolutely normal looking till someone or something puts too much weight on it. DS