Econ-Atrocity Blog

by Emily Kawano, CPE Exec. Dir.

In a remarkable and historic move, the United Steel Workers union (USW) and Mondragon International^[1] announced that they would be working together to establish Mondragon manufacturing cooperatives in the U.S. and Canada.^[2] The Mondragon Cooperative Corporation (MCC) is the world’s largest industrial workers cooperative, located in the Basque region of Spain. It employs almost 100,000 workers in 260 cooperative enterprises that include manufacturing, a university, research and development, social security mutual, and retail shops. In 2008, MCC reached annual sales of more than 16 billion euros and is ranked as the top Basque business group, the seventh largest in Spain.

Inspiration

In the cooperative world, Mondragon, despite criticism of the compromises that it has made in the face of globalization, is still the gold standard of success and has inspired many other cooperative initiatives in other countries. In the U.S., for example, Cleveland’s $5.8 million Evergreen Laundry Cooperative start-up, the first in a network of local worker cooperatives, was inspired by the visit of a Cleveland delegation to Mondragon. The development of this cooperative network is envisioned as a way of creating jobs and revitalizing depressed neighborhoods of Cleveland.

In Chicago, the Austin Polytechnic Academy (APA), a public high school, follows in the footsteps of Mondragon. The first industrial cooperative of MCC was started fifty years ago by five graduates of a technical training school under the guidance of a visionary local priest, Father José Mar&iacutea Arizmendi, who continued to play a central role in the development of Mondragon until his death in 1976. Austin Polytech prepares its students, almost all of whom are from low-to-moderate income families in an African-American neighborhood, for jobs in Chicago’s high skilled industrial sector, and even more importantly, to become worker owners. Towards this end, they have brought in speakers from the Emilia-Romagna region of Italy, another hotbed of successful cooperatives, and a group of APA students are currently on a study tour in Mondragon.

In the Bay Area, the Arizmendi Association of Cooperatives takes its name from Mondragon’s visionary. It is a worker-owned network that provides assistance to new bakeries that are interested in following their successful cooperative business model. There are currently three Arizmendi Bakeries in addition to the original worker-owned Cheeseboard that provided the model and technical assistance for the Arizmendi Association.

New Frontier

It is clear that Mondragon is a source of inspiration for many other initiatives to build economic democracy. The collaboration with the United Steelworkers raises the potential to a whole new sphere of possibilities.

The USW-Mondragon collaboration grew out of a USW ‘green industrial revolution’ project that created a partnership with Gamesa, a Spanish wind turbine firm, to establish production in Pennsylvania by refitting shuttered steel plants. Gamesa is based near Mondragon and it wasn’t long before one thing led to another and the USW-Mondragon connection was made. Discussions and meetings followed over the course of the following year and culminated in this historic agreement to create worker cooperatives in the manufacturing sector, either through worker buy-outs or new start-ups. Other aims include integrating collective bargaining with the cooperative model and exploring co-investing through the USW backed Quebec Solidarity Fund and Mondragon’s Eroski Foundation.

The United Steelworkers (USW) is the largest industrial union in North America, representing 1.2 million members in a diverse range of industries. In a time where labor unions and worker cooperatives have drifted far away from their common roots—when worker cooperatives were seen by some unions as a way to eliminate the class struggle between owner and worker—it is enormously significant for a union of this weight and history to reforge those alliances. It is a signal to the labor union movement as well as the wider public that cooperatives are part of the solution, not some alien phenomenon from a parallel universe. USW spokesman, Rob Witherell said that the collaboration was not a hard sell. Most of their members had been unfamiliar with the concept of worker coops, but once it was explained, they easily ‘got it’ and were very interested. He believes that there is a great potential to expand this project, citing the Blue-Green Alliance, which was launched by the USW and the Sierra Club in 2006 and now numbers 8 million members, as an example of how these initiatives can catch fire.

We continue to see rising unemployment, stagnant wages, cuts in benefits, deteriorating workplace conditions and the hollowing out of our manufacturing sector. This announcement breathes hope of reviving our manufacturing base and rebuilding communities that have been devastated plant closings. Rising oil and transportation prices, combined with the falling dollar are creating the conditions for a manufacturing renaissance in the U.S.^[3] Imagine if this renaissance could be infused with, as USW President Leo Gerard said, “Mondragon’s cooperative model with ‘one worker, one vote’ ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street.”

And when workers own and run the factories they work in, they’re not likely close up shop at the first sign of stress—in over fifty years of operation, Mondragon has only seen three of its cooperative enterprises fail. Imagine.

Notes:

1. Mondragon website: http://www.mondragon-corporation.com/language/en-US/ENG.aspx
2. The full text of the agreement is available at http://assets.usw.org/Releases/agree_usw_mondragon.pdf
3. “Can the U.S. Bring Jobs Back from China?” BusinessWeek, 6/19/08 http://www.businessweek.com/magazine/content/08_26/b4090038429655_page_3.htm

[cross-posted]

James Hamilton, at Econbrowser, notes that he’s surprised by the 0.75% increase in average house prices (as measured by the S&P/Case-Shiller Index of twenty cities). He also says he’s skeptical because of the backlog of unsold homes, likely increases in foreclosures, and high, rising unemployment, especially since Calculated Risk is, too. I agree that there’s reason to be skeptical, especially since this rise in prices is likely to be a surge of people cashing in on the Obama stimulus package’s $8,000 tax credit for first-time home buyers, which expires this fall. If prices continue to rise beyond that critical point, I’d say my skepticism (and CR’s and Hamilton’s) are wrong.

Check out this entry from Calculated Risk if you’d like a shot of cold, hard reality about the value of the happy Stress Test predictions. So far, unemployment is exceeding the “more adverse” stress test scenario and already higher than the peak unemployment rate in the baseline scenario. That rough beast slouching towards Bethlehem not to be born, but to die, is Bank of America.

Calculated Risk: Employment Report: 539K Jobs Lost, 8.9% Unemployment Rate

Congressional Budget Office Director Douglas W. Elmendorf summarizes his testimony to Congress (there’s also a link to the pdf file of the full testimony). Unfortunately, the simplest way to ‘distribute the value of carbon allowances,’ to paraphrase Elmendorf, is not mentioned: dividing it up equally. The technical details (division!) have been dealt with before on this blog by Jonathan.  Why would this obvious alternative be left out? My inner conspiracy theorist whispers that it’s left out to make giving away allowances the most politically viable alternative on the table. After all, why should all those poor folks benefit, when the rest of us have to shell out more at the pump?

Director’s Blog » Blog Archive » Testimony: The Distribution of Revenues from a Cap-and-Trade Program for Carbon Dioxide Emissions

Steve Matthews and Michael McKee at Bloomberg seem to think so. But a simple idea occurs to me: if the Fed is really worried that banks will cause inflation by drawing down reserves, can’t the Fed just raise the required reserve ratio (that’s the percentage of a bank’s deposits [your checking account, for example] that it is required to keep in it’s reserve account at the Fed)? This seems too simple. Am I missing something or are Bloomberg’s reporters?

In “A flawed first draft of history“, FT editor Lionel Barber gets history wrong (again). He claims the origins of the financial crisis were too hard to spot even for financial reporters, because they were to be found “in the credit markets, coverage of which in most news organizations counted as a backwater.” All those derivatives and such were the root of the problem. Actually, as some economists predicted,* the origins of the current crisis were to be found inthe bursting of a huge housing bubble (you may have heard of this). The Financial Times, on the other hand, believed Harvard economists who found that the growing number of households in the US meant that the increase in housing prices was warranted. Third time’s a charm!

* I predicted it, too, when I first heard that the Fed was raising interest rates again in 2004. Alas, I have no written proof.

By Patrice Woeppel, Ed.D.
Author of Depraved Indifference: the Workers’ Compensation System

March 16, 2009

The Bureau of Labor Statistics (BLS) records 5,488 worker fatalities for 2007, the most recent year for which their data is completed. But the number of worker fatalities recorded by BLS is grossly under-reported.

Worker deaths from toxic exposures, other work illnesses are conservatively estimated by NIOSH and other researchers at 50,00 to 60,000 deaths each year, or ten times the number of fatalities from work injuries.[fn1] [fn2] [fn3] It is a disaster of monumental proportions that goes largely unrecorded. The United States has no comprehensive occupational health data collection system.

As we have lagged behind other nations in our lack of a national comprehensive medical and statistical database on occupational illnesses, occupational injuries; we have lagged behind in the research into the causes and consequences of occupational illnesses that would lead to improved diagnosis, treatment, prognosis, and ultimately prevention, of occupational toxic exposures and resultant diseases.

While the United States has set permissible exposure limits on less than 500 of the hundreds of thousands of chemicals in use in workplaces throughout our country, the EU regulates 30,000 chemicals utilized in their workplaces, and many that we allow here have been banned for years in the EU.[fn4] Even the small number of chemicals, upon which exposure limits have been set in the US, are grossly out of date based on more recent scientific data.

It is a major and costly health issue – costly in lives, and costly in dollars. The economic burden for occupational illness, injury and death in our country is an estimated $170 billion annually. It is an economic burden that falls mainly on families (44%) and on taxpayers (18%); with only 27%, on average, being paid by workers’ compensation.[fn5]

There has been very little general public awareness of this system that maims and kills with impunity. The time is long overdue to re-evaluate a structure that evolved over one hundred years ago; and which clearly doesn’t meet the needs of seriously injured, ill, or toxic chemical-exposed workers, or the families of workers who died from their work – a system that has fostered devastating and lasting damage to families, to communities, to our environment.

Increasingly as a nation, we have been all too willing to push corporate costs onto workers and taxpayers; and all too willing to cut protections for workers, communities.

Occupational illness deaths are now the eighth leading cause of death in the US, more than many of the diseases that receive far more government, public, and media attention.[fn6] We need to right this terrible, continuing American tragedy.

References:

1. Leigh, J. Paul; Markowitz, Steven; Fahs, Marianne; Landrigan, Philip. Costs of Occupational Injuries and Illnesses. University of Michigan Press, 2000.

2 U.S. House of Representatives. Hidden Tragedy: Underreporting of Workplace Injuries and Illnesses. A Majority Staff Report by the Committee on Education and Labor. Honorable George Miller, Chairman, June 2008.

3.Steenland, Kyle; Burnett, Carol; Lalich, Nina; et al.Dying for Work: The Magnitude of US Mortality From Selected Causes of Death Associated With Occupation, American Journal of Industrial Medicine, Vol 43, pp 461-482, 2003.

4. Regulation EC 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), http://eur-lex.europa.eu.

5. op. cit. Leigh, et al, 2000.

6. LaDou, J., M.D. Occupational and Environmental Medicine in the United State: A Proposal to Abolish Workers’ Compensation and Reestablish the Public Health Model, International Journal of Occupational and Environmental Medicine in the United States. 2006; 12 (2) 154-168; and US Department of Health and Human Services, National Center for Health Statistics, Centers for Disease Control and Prevention, National Vital Statistics System, National Vital Statistics Reports, Vol 53, Number 5. Deaths: Final Data for 2002, Table 10 and Worktable I, pp. 1585, 1634, 1662, 1703, 2220-2224, at cdc.gov/hchs/data/dvs/mortfinal2002_workipt2.pdf.

[cross posted]
What gives with this morning’s NPR “Morning Edition” story about banks that are choosing to steer clear of TARP bailout money? Reporter Jim Zarroli mostly profiles the Johnson Financial Group, a bank that at first applied for $100 million, then decided not to take it after all once it learned the details of the the strings that come attached, saying that this bank is just one example of many that represent a “mini rebellion” against the TARP program. As the president of Johnson Financial Group says directly, and as Zarroli reiterates later in the story, Johnson didn’t need the money! Why in the hell would it be news–or be considered “rebellious”–that a healthy bank would not participate in a welfare program for the financial industry? Why is is conceivably news that TARP is designed to include incentives that encourage banks to pay back money they receive through the program quickly? Though undoubtedly flawed six ways to Sunday, the basic idea behind the TARP bailout is that it provides money to large banks that will otherwise go bankrupt or experience major disruptions–and spread those disruptions to other financial institutions, and through them the rest of the economy–and is designed so that the banks will eventually pay back the government (and so, you and me as taxpayers). Zarroli briefly quoted Rep. Barney Frank in defense of TARP and the strings that it attaches to its payouts, but 98% of the story is just bankers whining about either being forced to bank responsibly or whining about not having access to free taxpayer money, free even of the relatively mild strings that are part of TARP. I guess it needs repeating, though I wouldn’t have thought it necessary:

1. TARP money should only be available to banks that actually need it to avoid major business disruptions. That a bank like Johnson, which is in good financial condition, is even allowed to apply for TARP funds is a flaw in TARP. The flaw is not that TARP’s strings cause Johnson to say “no thanks.”
2. Banks that take TARP money not only are required, but by all rights should be required to pay back that money in full, and including interest payments to cover the risk that taxpayers are taking that not all TARP recipients will pay back in full after all is said and done. This is banking after all, right?
3. Banks that take TARP money should pay back the money sooner rather than later. What’s the advantage to taxpayers for having the banks sit on the money longer than they need it?

No-strings-attached banking is what primed the financial bomb that has now exploded in our faces. Responsible banking practices are needed more then ever, and NPR’s promotion of irresponsible banking propaganda does not help.

How’s about $18 million? That’s what John J. Noffo Kahn, of Palm Beach, Florida, paid for a farm in Barnard, Vermont, to be used as a vacation home, and in the process shattering the previous record price for the sale of a residential property in the state (a mere $8 million).

Reports the Valley News (full article not online*):

The buyer […] said in an email that privacy and security were two reasons he purchased the property through [a limited liability company].

“One of the attractions, for me, to the area was that I thought (naively!) that I would be coming to a place where MONEY is not of the foremost importance to the members of the community. I was looking forward to a low-profile existence in which my wealth would not be what defined me to my neighbors,” wrote […] Noffo Kahn, who said he was not interested in having a story written about his new vacation home.

“Thanks for bursting my bubble on Vermont!” he added.

I hate to break it to you, John, but the traditional route to a low-profile existence is to spend less than $18 million for your vacation home.

There are a few things worth noting. First, in support of the friendly rivalry we Vermonters have going with our Granite State neighbors, Noffo Kahn’s complaint about his bubble being burst regarding his conception of Vermont, the Valley News is located in Lebanon, New Hampshire, so there’s some chance that his bubble might still be intact. Noffo Kahn’s new neighbors in Barnard probably will treat him with neighborly respect, though they have good reason to distrust multi-millionaire vacationers. That’s because the sellers of the farm, whose main domicile is in Texas, sued 14 fellow Barnard residents who were opposing the fact that they (the Texan owners) had closed off a trail through the property that had long been open to the community. Now, that wasn’t Noffo Kahn, and maybe he’s the kind of swell guy who doesn’t let his wealth define him, and instead defines himself as a good neighbor who respects something more in his fellow men and women than their own lack of wealth.

As for Noffo Kahn’s preference that the Valley News not write a story on the property sale:

After a reporter e-mailed back, making clear that the record-setting sale was a news-worthy event and asking for a chance to discuss the matter, Noffo Kahn, who had already expressed his “already dismal appraisal of today’s media,” wrote back.

“So typical!” he wrote. “You haven’t even the sensitivity to realize that writing a story about an $18 million property–when so many are suffering this Christmas–is a salt on their wounds!”

Let’s debate the question of news-worthiness for a moment. Con: Noffo Kahn is a person who buys things, just like everyone buys things, so why should he be made into a celebrity of sorts against his will when none of the rest of us have newspaper articles written about our purchases? I mean, would I want the whole world to know that I recently purchased not one but three copies of the amazingly cool book The Human-Powered Home, so that I can give the extras away as gifts to as-yet-unidentified friends? Oh the embarrassment! When will that darned media stop noticing that extreme economic inequality is damaging to the individual well-being of the vast majority of people, community and social cohesion, democratic governance, and the future habitability of the biosphere? (Ditto.) (Or more like, when will the media actually start noticing it and taking it seriously on a more than one-off basis?)

Pro: The habit of really, really rich people to pay extraordinary sums for the things they buy has a real effect on the lives of others, and just like it is news worthy to report on a leaking manure lagoon that threatens the health of downstream neighbors, it is news worthy to report on events that impact the economic lives of of “downstream” neighbors as well. Given the timing of the sale, this particular transaction probably won’t have the same effect on property values of neighbors as it would have if it had taken place a couple of years ago, but the principle remains the same. When you throw money around, it matters; there are unintended consequences, and while the Valley News story doesn’t attempt to perform a systems analysis on what all those consequences might be, at least they have alerted readers to the fact that something with reasonable potential to have broader consequences has happened.

And as for that “salt on their wounds” that Noffo Kahn is so worried about, perhaps at this Christmas time a better use of Noffo Kahn’s time would be turn that sensitivity question around and first remove the plank from his own eye.

[* Come on, Valley News, get with the program!]

UPDATE, below

The part of the new bailout bill that’s supposed to bring along the most formerly reluctant House members is to raise the coverage limit for Federal Deposit Insurance Corporation (FDIC) insured personal deposits (which includes savings and checking accounts, cds and money market accounts) from the current level of $100,000 to $250,000. Obama, McCain and the FDIC all approve. See this story, for instance. But who does this really affect? Using data from the 2004 Survey of Consumer Finances (the 2007 numbers aren’t yet available) and adding all covered accounts within households (note that this overstates coverage, since the insurance covers accounts not households) produces this table:

That’s right, this plan will help to insure that 3.5% of households with deposits over $100,000, but not the 1.5% with deposits over $250,000. I guess they’re on their own. Actually, most people in both of these categories already keep multiple accounts, to stay under the insured limit, so it will help not that much. However, it does make it look like a “compromise was reached on an improved bill,” allowing representatives to say that they held out for their constituents while they’re campaigning over the next month.

You don’t suppose that’s the point, do you?

UPDATE:

meanwhile, FDIC is doing a fine job slowing down lending.

I don’t often agree with Greg Mankiw, but in this case I do agree with two of his points, if not with his reasoning.

[First posted to Chelseagreen.com. Go to that version for links.]

Proponents of the “free market” have a tendency to ignore one inconvenient fact: there is no such thing as a free market in reality. Never has been one. Never will be one. The “free market” is a myth, a fairy tale told over and over by newspaper columnists and TV pundits and quite a few professional economists. I’ve come across a few declarations of this myth lately that irked me (for example this infuriatingly ignorant and ignorizing dreck), and so I’d like to rant for a moment.

This is not to say that markets, as a system for organizing economic activity, are no good. There are some good things about markets, flawed as they always are. There are also bad things about them. Sometimes, the flaws are their saving grace! That’s because some “flaws” in what might otherwise be a fully “free” market (theoretically, that is, but only in theory since it simply cannot exist in reality) make the results of the market activity more socially beneficial. The opposite is also true: some flaws lead to worse social results, relative to what might happen if the markets were to be fully “free.” But again, that’s all pie-in-the-sky philosophizing, because markets are never, ever fully free.

Here’s photographic proof!

One result of a free market, proven beyond any doubt in multitudes of Econ 101 courses for the past century, is the so-called “law of one price.” As Wikipedia states,

The law of one price is an economic law stated as: “In an efficient market all identical goods must have only one price.”

(Where “efficient” is econo-speak for what laymen call “free.”)

Now even in the Econ 101 courses, the professors will mention some nuances to this blanket statement, for example to account for the difference in shipping costs to deliver an otherwise identical product from different locations. Similarly, as Wikipedia notes

The law also need not apply if buyers have less than perfect information about where to find the lowest price.

Yet here we are in the brave new 21st century, equipped with the world’s greatest information tools in history, and even still, prices for identical products differ by enormous magnitudes. An example: this Samsung 32-inch flat-panel TV, as shown through Google shopping.

Check it out… the lowest price shown is $382 and the highest price shown is 149% higher at $950. The screenshot doesn’t capture all the offers that the Google search unearthed, but obviously prices vary widely within those two outliers.

How can this be? How can there be so much difference in prices for an identical product? Well, economists and business analysts can probably offer quite a few explanations, but they all boil down to this: the market is not free. It is not efficient.

So keep that in mind next time someone says that all we need to do to solve some problem is to “set the market free,” “get rid of government interference,” or “blah blah blah.” As I implied above, sometimes it will make sense to reduce the government’s influence on a particular aspect of some particular market, but too many people have adopted a blindered ideology that the “free/efficient/unfettered” market represents an ideal that we should be always and everywhere be pursuing. Not only is that doubtful that the ideal is actually ideal, but it simply cannot be achieved, nunca. And as the “theory of the second best” teaches us, that means there is no good reason whatsoever to think that the best alternative is to move as close as possible to this unachievable so-called ideal.

Class dismissed!

As discouraging as votes on things like FISA and telecom immunity have been, there are still some enormous differences between the two (?) major party candidates. For example, there’s the distributional impacts of their tax policy proposals, as well-illustrated in the figure below from the Tax Policy Center’s newly updated analysis (click on image to embiggen).

(Tip of the Econ-Atrocity chapeau to Paul Krugman)

Just when you thought there would never be any good news about the economy, oil, or anything along comes this. McClatchey reports that a new report commissioned by Ted (”the internet is a series of tubes“) Stevens (R, Alaska) finds that drilling the Arctic National Wildlife Refuge in Alaska would, in ten years, bring the price of a barrel of oil down by $0.75. Wow. At today’s prices ($135 per barrel and $4 per gallon) that gives us a 2-cent reduction in prices at the pump. In ten years. Seems well worth it to me (in opposite-world; for fans of Superman, that’s Bizarro World [thanks Bob!]).

If you have ever asked yourself…

What’s the Economy For, Anyway?
What should a well-functioning economy do?
What’s behind lower wages and longer working hours?
Should we, ordinary folk have any say in running our own economy?
How do we build a more just and sustainable economy?

…then this course is for you!

What’s The Economy For, Anyway? The Case for a Solidarity Economy and Social Wealth
An Online Course offered by the Center for Popular Economics
Summer Session I (June 2 - July 10, 2008)
Course Fee: $900 for THREE Univ. of Massachusetts Credits or $400 for non-credit students.
40-60 Professional Development Points (in MA) or 3.6 Continuing Education Credits (outside MA) available.
Limited scholarships available for non-credit students.

The Center for Popular Economics, in collaboration with the Forum on Social Wealth and the Political Economy Research Institute at Univ. of Massachusetts, Amherst is offering a special topics 3-credit online course (Econ 197) this Summer. The course runs from Monday, June 2nd till Thursday July 10th. No background in Economics is required. The course is suited for students as well as activists and community members who want to learn more about the economy. Please see attached flyer and course outline or visit http://www.populareconomics.org/WTEF_Online_Course.html. An overview of the course is presented below. For more details contact Amit Basole at abasole@gmail.com or Emily Kawano at emily@populareconomics.org.

Overview: “The Economy” is often portrayed in the media and by politicians as a force of nature that we must adapt to or perish. But we, the ordinary people make our economy tick. Shouldn’t we have a say in how it is run and to what purpose? This online course raises the questions: what purpose do we want our economy to fulfill? Is it fulfilling this purpose today? If not, what can we do about it? What resources do we have available in order to effect our changes?

The course is comprised of three main parts. Part One takes a look at the performance of the current economic model, known to economists as “Neoliberalism.” Although our economic model has allowed unprecedented accumulation of wealth by a few, for the majority of us it has meant falling or stagnant wages, longer work hours, rising healthcare costs, and deterioration of our natural and social environment. We start with a look at the historical roots of neoliberalism and then try to understand the economics behind it.

In Part Two, we start talking about how some of the things that we saw going wrong in Part One can be set right. In the midst of growing inequality and corporate power, many grassroots economic alternatives have been springing up throughout the U.S. as well as the rest of the world. This is the new “Solidarity Economy.” Grounded in principles of economic democracy, social solidarity, cooperation, egalitarianism, and sustainability, this is an alternative to the Neoliberal vision of the economy. In this part of the course we will look at some examples of such alternatives as well as understand the economics behind them.

Building alternatives requires resources. But part of the neoliberal agenda is the diverting of economic resources into fewer and fewer hands. Where will the resources for alternatives come from? In Part Three we talk about a vast store of assets that communities everywhere possess and on which they can draw for constructing alternatives. This store, which we call “social wealth” consists of our cultural and ecological commons and our capacity to work for those we care about. We will also look at how the economics of the care economy or the cultural commons differs from the economics of corporations.

J.S. at Environmental Economics seems to think so. Maybe. According to a NY Times piece the bill

would revoke $17 billion in tax breaks extended to big oil companies like Exxon Mobil Corp and slap a 25 percent windfall profits tax on firms that don’t invest in new energy sources.

My question is: will the Democrats grow a spine in time to pass such a bill, even in the face of some opposition?

The unions in South Africa seem to have successfully turned back Chinese weapons headed for the Zimbabwe powder keg, and now U.S. longshoremen are taking what may well be the strongest protest action against the Iraq war since it was started five long years ago. Thanks to the always well-informed Juan Cole for the tip. I dare say this is cause for celebration–to be followed by nose-to-the-grindstone protests until the war is over… and then to be followed by more nose-to-the-grindstone efforts to achieve universal, single-payer healthcare coverage, simultaneous with nose-to-the-grindstone action to ratchet down global warming pollution for real. Don’t worry, there’ll be plenty to agitate about once those are dealt with.

[Originally posted here.]

In my post a moment ago I mentioned how I’d once heard that, for the money the US spent on the war in Vietnam, we could have paid for the installation of an in-ground swimming pool for each and every Vietnamese family instead. What a great way to win the hearts and minds of our enemies, eh? So I decided to try out the math for this stupid, awful, and infuriating Iraq war. What if we had tried to bribe the Iraqi people to overthrow Saddam Hussein and install a working democracy instead of imposing these things (rather: trying futilely to do so) by force?

Cost of war to US taxpayers as of March 28, 2008: a bit over $506,359,000,000. Source.

Population of Iraq in July 2008, according to the CIA World Factbook: 27,499,638.

I threw in 2,000,000 extra people to account for the dead and refugees, so the numbers below are based on an estimated population 29.5 million people.

Cost per Iraqi (each man, woman, and child) paid so far by US taxpayers on the war: $17,767.21.

First of all, what if we’d just offered Saddam Hussein and his top leadership only, say, half the total that we’ve spent–roughly $253 billion–to leave Iraq and go live in the Bahamas? Well, if he’d refused but the so-called free market loving leadership in the US had pursued this market line of thinking, we could have had Hussein overthrown–without the loss of a single American life–by offering each man, woman, and child in Iraq any of the following.

• a 16′ x 24′ x 42′ in ground swimming pool ($10,403 each, therefore leaving $7,364 in leftover cash for each Iraqi)
• a 2009 Toyota Matrix ($16,190 each, leaving $1,577 in leftover cash for each Iraqi)
• considering all the hot sunlight they get in Iraq, how about 15 grid-tie photovoltaic solar panels rated at 208 watts each for a total of 3,120 watts of peak output! ($17,685 for the set of panels, leaving $82 in leftover cash for each Iraqi)
• or considering reports of those windy sandstorms, how about 2 Skystream grid-tie wind turbines with a 33 foot monopole wind tower for each ($15,998 for the set, leaving $1,769 in leftover cash for each Iraqi)
• or, in the interest of spreading American culture around to every nook and cranny of this planet, how about 250 traditional and all-American apple pies (each serves eight) plus 846 pints of Ben & Jerry’s organic ice cream! ($17,745 for the package, leaving $22 in leftover cash for each Iraqi to spend on insulin and other diabetes care)

There you have it. The Iraqi people could have had a Saddam Hussein-free Iraq and eaten their apple pie, too. But that’s not the way we did it, because, as usual, the American government tried to do it on the cheap. Haven’t any of these people heard “penny wise, pound foolish” before? And now Bush/Cheney and McCain have got their sights set on going double-or-nothing broke in Iran as well. Will you buy that?

Too bad all unions aren’t this bad-ass. But when a union is bad-ass it can make a real difference, and, as DHinMI at DailyKos says, this is “An Example of Why Authoritarians Fear Labor Unions.”

Because they stand up to power:

A Chinese ship carrying arms destined for Zimbabwe was last night forced to turn back after South African unions refused to unload it, claiming that to do so would be “grossly irresponsible”, South African media reported…

…

I was trolling through Flickr looking for photos of John McCain (for a t-shirt design I’ve got in mind) and came across this graphic by pseudoplacebo. It shows how much Clinton, Obama, McCain, and Ron Paul had spent per delegate they’d won, as of February 25, 2008. It’s something that’s been on my mind lately. Even though I’ve come to be an Obama supporter, it is seriously grossing me out how much money this election is costing–more than that, it’s unnerving to me that Obama’s lead (and probably victory) in the Democratic primary has depended so heavily on such obscene amounts of money. Yes, yes, I know, more than almost any politician in recent years, Obama’s money is coming largely from small donors. Even still, it gives pause for thought.

Anyhow, thanks to pseudoplacebo for giving this graphic a Creative Commons license!

I know I’m behind the times, but last night I was reading some (seriously) backlogged email and in it was a link forwarded by my mom to David Mamet’s recent essay in the Village Voice, “Why I Am No Longer a ‘Brain-Dead Liberal’.” It’s a strange essay that’s simultaneously difficult to follow and clearly intended as an embodiment of Churchill’s (perhaps apocryphal) dictum that “If you’re not Liberal when you’re 25, you have no heart. If you’re not Conservative when you’re 35, you have no brain.” It took Mamet more than 25 years to harden his heart, but by golly he’s done it! As for the question of whether he successfully traded it in for a new and improved brain… well, that’s not quite so certain.

It seems his first mistake is in assuming that his playwriting is an accurate reflection of reality, and then using an interpretation of his own play as a way to see back through to reality. His example of the clash between “conservative” and “liberal” is from his recent play, November.

But my play, it turned out, was actually about politics, which is to say, about the polemic between persons of two opposing views. The argument in my play is between a president who is self-interested, corrupt, suborned, and realistic, and his leftish, lesbian, utopian-socialist speechwriter.

Notice that his “conservative” is actually just a jerk: “self-interested, corrupt, suborned” — I won’t grant him “realistic” since this is Mamet’s subjective interpretation of his own character after the fact of Mamet’s conversion to a more conservative philosophy about life. Nothing about being self-interested or corrupt or suborned has anything to do with political outlook. People across every inch of the political spectrum are sometimes self-interested (and sometimes not) and sometimes corrupt (and sometimes not). True, the stereotype of a conservative in our culture is of a self-interested “old white man,” and leading conservatives in recent years, from Dick Cheney to Tom DeLay and so on, have done a bang-up job of encouraging the belief that conservatives are also likely to be corrupt; but those things don’t really have anything to do with conservatism per se, only with the nonpartisan tendency of power to corrupt and absolute power to corrupt absolutely.

On the other side is Mamet’s stand-in for a “liberal.” The key term for her is that she’s “utopian” (though her being a lesbian is surely frosting on the cake for Mamet). And again, though utopianism fits the stereotype of the left, it’s an intellectual flaw that knows no boundaries. Hitler, among other things, was certainly a utopian (and certainly not a liberal).

So Mamet has allowed himself to be confused by the surface ephemera of cultural stereotypes, has embodied them in his play’s characters, and has then analyzed them in his effort to deduce essential truths. It’s no surprise that he’s missed the mark.

Mamet’s conversion is based on his revelation that people, alas, are not generally good at heart. Instead, he says, “people are swine and will take any opportunity to subvert any agreement in order to pursue what they consider to be their proper interests.” He goes on to say that recognition of this truth of human nature is at the heart of the U.S. Constitution.

The Constitution, written by men with some experience of actual government, assumes that the chief executive will work to be king, the Parliament will scheme to sell off the silverware, and the judiciary will consider itself Olympian and do everything it can to much improve (destroy) the work of the other two branches. So the Constitution pits them against each other, in the attempt not to achieve stasis, but rather to allow for the constant corrections necessary to prevent one branch from getting too much power for too long.

Rather brilliant.

I’m in no position to disagree, but this points us towards Mamet’s next essential error. While Mamet is a fan of the separation and more-or-less balancing of powers between the branches of government, his conversion to conservatism (which, though hard to tell for sure from his essay, sounds pretty much like libertarianism) leads him to imply that the “free-market” should be left to itself and the power of government eliminated, or at least mostly so.

What about the role of government? Well, in the abstract, coming from my time and background, I thought it was a rather good thing, but tallying up the ledger in those things which affect me and in those things I observe, I am hard-pressed to see an instance where the intervention of the government led to much beyond sorrow.

But if the government is not to intervene, how will we, mere human beings, work it all out?

I wondered and read, and it occurred to me that I knew the answer, and here it is: We just seem to. How do I know? From experience. I referred to my own—take away the director from the staged play and what do you get? Usually a diminution of strife, a shorter rehearsal period, and a better production.

Let’s ignore the fact that, once again, Mamet is mixing up the metaphors of his reality. When you take away a director, you aren’t just taking away generic “government,” you’re taking away authoritarian government. It might be true that taking away any and all forms of government leads to beautiful theatrical productions, but that’s not a conclusion Mamet can legitimately claim from his example.

Anyhow, Mamet’s bigger confusion is one of scale and it leads him to fall for a bait and switch. Sure, a group of people the size of a bunch of actors and production crew can probably figure out how to behave with one another reasonably well most of the time. “Live and let live” works, mostly, maybe, at the level of neighborhood or community. (Don’t forget, however, that it has often been transformed into “live and let lynch.”) So conservatism/libertarianism might be perfectly reasonable at small scale; to paraphrase Churchill again, this might be the worst political philosophy there is for the small scale of society, except for all the others.

But our world is not as claustrophobic as Mamet’s theatrical in-crowd. We don’t live in one giant small town. And if the separation and balancing of powers makes sense for government, where is Mamet’s desire, post-conversion to “conservatism,” for a balancing of the power of corporations, of the market economy? This is Mamet’s most interesting mistake, in my opinion, because in pointing out the inconsistency of his thinking I’ve realized that the traditional “liberal” response doesn’t hold up well enough for me. Mamet’s bashing of government as leading to not “much beyond sorrow” is the knee-jerk conservative response to failures that are real; and while I think that government is necessary to serve as a balancing power against the whims of the market economy, the frustrations that both conservatives and liberals continuously feel at the state of our society leads me to a further conclusion: this balancing act isn’t working because it’s a two-legged stool. The Constitution balances the powers by splitting them up between three branches. If one branch gets out of hand, the other two–even if only for entirely selfish reasons–will be inclined to join forces to bring the first branch back within proper limits. But it takes three branches to enable such a dynamic.

In our contemporary society, there doesn’t seem to be a third branch of structural power available, not one that I can think of at least. Perhaps once the labor movement served that role. The civil rights movement and other mass social movements might be understood to have functioned as third branches of social power in their times. Nowadays, I don’t see anything filling the role of a third branch. The result, from my “liberal” perspective, is a government largely overrun by the power of the economic sphere. (Of course, it’s not just the “economy” generically speaking that can organize and direct power; it’s the people in elite positions of the economy who can do so.) And when the government has been “suborned” (my thanks to Mamet for that–I was annoyed at first that I had to look up his fancy word, but it’s a good one) by the economy, is it any wonder that so many of the government’s actions appear to lead to sorrow?

So what’s out there to rise up as a new third leg of power, capable of enabling a balancing with government and economy? A revived labor movement might do it, but I’m not holding my breath. Some new social movement, maybe, like that of immigrants or environmentalists. But I think I might be better off buying Bear Stearns stock than putting my hopes in one of those possibilities. Even if such a social movement does arise, what chance does it have to institutionalize itself to remain relevant for more than a few years, a decade or two at the most? What makes it even more unlikely is the fact that institutionalization of social movements seems mostly associated with the demise of their social power, their appropriation into the realms of government and economy, not the maintenance of an independent power structure. How about “the church”? That’s the most likely candidate, but frankly, I’d rather stick with the second-rate status quo than risk going the route of The Handmaid’s Tale.

The only suggestion I’ve heard that might do the trick–and I don’t know that it would–is that of Peter Barnes from his book a year or so ago, Capitalism 3.0 (available in full as a free PDF). In the book, Barnes argues in favor of the establishment of a legally empowered and widespread system of “commons”; that is, resources and organizations held as common property by some relevant group of people, from the level of neighborhood to nation to world. This commons sector wouldn’t replace the market economy and its associated private property (though some resources currently utilized as private property would be converted to common property) and it wouldn’t replace government and its associated public property (though some resources currently utilized as public property would be converted to common property). What makes a commons sector viable, perhaps, as a third leg in balancing the social powers is that it would (as envisioned by Barnes) be institutionalized in a manner that maintains its separate power base from the private property economy and the government. Unlike Mamet, Barnes has no interest in dazzling readers into a state of confusion and irritation, so his writing is clear and pleasant to read. Could the commons be enough to do the trick? Would it truly be robust and resilient over time? I don’t know, but the book is short and sweet, so check it out and see what you think.

Now I want to get back to something I touched on above. One of the ironies of Mamet’s essay is that, partly (though surely not entirely) due to his obnoxious tone of condescension towards all those “brain-dead liberals” he’s left behind in his conversion, the comments in response to the article are filled with back and forth vitriol between offended liberals and conservatives offended at the offended liberals. I tried reading the comments but quickly sickened of the dismissive attitudes that predominated. So here’s the irony: Mamet thinks that people work things out when left to their own devices, just like his utopian theater group that puts on such great plays when liberated from under the thumb of the governing director; and yet his article elicits evidence of exactly the opposite. As I suggested, the theory that people just work things out A-OK might be a good theory to apply to small groups (but then, why so many runaway teenagers? why so many battered wives? why so many suicides?) but, repeating myself, the world is much bigger than that. Our modern world is filled to overflowing with connections, some seen, some hidden, between people near and far, people who not only don’t know one another but don’t even know that the others exist. Farmers in Kansas converting their fields from wheat to corn, in order to cash in on the ethanol boom, are part of a system that results in skyrocketing bread prices in Egypt (and yes, I realize that this example is one in which government plays a leading role in screwing things up, though — does it really need saying? — the US government’s ethanol policy wouldn’t be nearly the disaster that it is if the government weren’t so susceptible to the lobbying efforts of Archer Daniels Midland, Cargill, and the other agribusiness corporations).

More banal, but experienced by almost anyone reading this missive of mine, is the fact that the anonymity and distance of modern modes of communication, perfectly presented in comments on blogs and other online pages, triggers so very many people to adopt an “act like an asshole first and apologize later, if I feel like it” attitude. It’s neither liberal nor conservative to be bothered by the decay in cultural decency; but Mamet’s self-described conservative preference for just letting it all fix itself leaves a lot to be desired. Sure, sometimes government action exacerbates a problem; sometimes there’s no good solution and leaving things alone is the best available from a set of bad options. But in a world of “people [who] are swine and will take any opportunity to subvert any agreement in order to pursue what they consider to be their proper interests,” does it really make good sense to always and everywhere ask the swine to work their own problems out, regardless of the fact that some but not all of the swine are armed to the teeth, that some but most definitely not all are richer than God, that some revel in their swineness while others care at least to try for a little courtesy and decency and honesty? The answer to a swinish human nature in the realm of government was the balancing of powers. It also seems to me the best answer I’ve encountered for the overall realm of society at large. Balance those powers. Put a leash on the government, absolutely for sure, but also for sure put a leash on the economic powers cuz those pigs will steal the shirt off your back and then smile as they offer to sell it back to you at a special discount, “just for you ;).” For now, at least, that’s the liberalism this zombie is sticking with.

BusinessWeek has a recent article about the new law requiring improvement in automobile and small truck fuel efficiency (”The Road to a Stronger CAFE Standard“). Among other things, the article describes how the law changes the way that the CAFE (Corporate Average Fuel Economy) measurement is calculated. Under the old CAFE calculation, fuel economy is measured separately for each auto manufacturer. Under the new calculation, all manufacturers will be measured together, and a trading scheme is established so that companies beneath the industry-wide average must buy credits from companies that are above the average. Since American auto manufacturers produce a disproportionate share of minivans, pickup trucks, and SUVs (all lumped together as “light trucks”), the American companies are more likely to be on the buyer side of the credit buying while companies like Toyota and Honda will be more likely to be on the seller side of the scheme. Says one guy from the American company perspective,

it’s SUV and pickup buyers who will be stuck with the tab, suggests Chrysler Vice-Chairman Tom LaSorda. “It’s likely to be another big hidden tax on the consumer, as well as small businesses and building trades.”

What BusinessWeek’s writer fails to mention is the other side of the equation: this system also results in a hidden subsidy for buyers of efficient cars. If Honda is selling lots of relatively efficient cars, and therefore is able to sell credits to Ford (which is selling more in the way of trucks), then Honda can hold down the price of the cars while still making the same overall profit. The pressure on Ford that pushes up the price of trucks will be an “equal and opposite” pressure on Honda to hold down the price of their small cars. All in all, it could be a completely neutral system in terms of the overall effect on consumers. Of course, lots of details and corporate decisions might end up making it either more or less than perfectly neutral in the end, but BW’s article is misleading when it only highlights the one side of the equation. On this general concept, see more about “feebate” proposals.

Oh, and by the way, all of Detroit’s (and Toyota’s, the Prius notwithstanding) hemming and hawing about how hard it is to make more fuel efficient is pretty obviously a load of bunk, even if the people doing the hemming and hawing believe their own bunk.

[Crossposted at my work blog.]

BusinessWeek’s GreenBiz blog tipped me off to a recent BW article on carbon labeling. Carbon labeling means to label consumer products with an indicator of how much greenhouse gas was emitted in the production and distribution of each product to the point of having it on the shelf in front of the customer. The idea has been around for a while, but only recently have manufacturers (like Timberland shoes) and retailers (like Tesco, a British chain of mega-grocery stores) started to implement carbon labeling programs. As it turns out, according to BW’s article, carbon labeling is tricky for a few reasons. First, it can be tremendously difficult to squeeze all the aspects of modern, globalized manufacturing into a single numerical measurement of greenhouse emissions. Second, for such programs to work, there needs to be a fair bit of consumer education so that people will have any idea of what these carbon labels actually mean. (If a label says, “50 grams of carbon,” is that good or bad or what?)

Here are some thoughts suggestions that probably have been thought of by other people as well, but what the hey:

1) The ideal carbon label will be structured similarly to the energy guide labels on refrigerators and other appliances we see in the US. That is, on a line that shows the minimum-to-maximum amount of greenhouse emissions caused by similar products to the one in your hand (like all canned vegetables or all pasta products or all color televisions) as well as an indication of where on this line the individual product falls. If canned vegetables incur anywhere between 10 and 100 grams of carbon-equivalent greenhouse emissions (using made up numbers for sake of the example), and the can in your hand incurred 30 grams, then you’d see something like “10—–30————–100″. That’s the first part of the labeling scheme, and would be called the “Manufacturing & Distribution” count. For some products, like canned vegetables, that would be enough. For products like TVs that require the ongoing consumption of energy in use, there would be another line (like the existing energy guide labels on refrigerators and such) that indicates the relative use of energy going forward, based on the average greenhouse emissions of the electric grid across the country. This would be the “Usage” count. Finally, for products that have both counts on their label would be a third measurement line called “Expected Lifetime” which would be a combination of the “Manufacturing & Distribution” count and an estimate of the probable cummulative lifetime “Usage” count, for example the combination of M&D plus 10 years worth of normal usage of a TV. Some products might have high M&D counts but be more efficient in use, and therefore their lifetime impact would be lower than an alternative product that had a lower M&D count but was inefficient in usage.

2) I realize that this notion of an ideal carbon label still ignores the difficulties in actually figuring out accurate counts for greenhouse emissions; but if you can get decent estimates of the emissions, then I think that’d be a good way to do the labeling in a way that consumers could interpret and make meaningful choices between products. You have to have the relative position of each product on a scale for the number to mean anything.

3) If you want to educate the populace on how to use these things, teach 10 year olds about it. They will quickly and insistently instruct the rest of us, treating us like absurd fools until such time as we master the system as well as they have.

4) The trickiness of figuring out accurate and consistent greenhouse emission labeling is an argument in favor of using carbon taxes/cap-and-trade systems. Sorta. On the one hand, the financial tool of carbon tax/cap-and-trade — implemented on upstream sources of carbon (and other greenhouse gases) — easily introduce an effective alternative to the carbon label into the economy. Product prices will rise relative to the amount of extra cost their manufacturers & distributors face as a result of the greenhouse gas emissions incurred during manufacturing and distribution. The can of corn that involved more greenhouse emissions will incur a greater carbon-cost increase than the alternative can of corn that involved less emissions. However, this isn’t totally satisfactory, because so much else is involved in pricing: the “price signal” is terribly noisy and prone to distortion and/or misinterpretation. In addition, there are some — how many? — people willing, even eager, to pay more for products that they are confident involve less greenhouse emissions. Working the greenhouse effect of a product into the product’s price is a good thing, but that doesn’t obviate the usefulness of a more fully informed consumer as a second level for reducing carbon footprints. One further thought on this, though: it’s possible that if a carbon tax is implemented, the tax itself could be used as a tool for measuring the greenhouse emissions on a product and therefore be the basis of the carbon label. Businesses already keep track of the taxes they pay, and so the added burden of accounting should be less than trying to account for a new system of purely physical carbon emission counting. Right? Because the carbon tax itself is predicated (or should be) on a carbon-equivalent scale, it would be an easy translation to take the cumulative taxes paid on a product through its manufacturing and distribution lifetime and restate that as an amount of carbon emitted during the process. The increasing use of rfid chips in distribution chains only makes this easier to implement, as you have better tracking going on and the ability to link movement of materials and goods to the taxes those materials and goods incur for the businesses making and moving them. (Having said this, I still favor a Peter Barnes’ style cap-auction-trade-dividend approach over the carbon tax approach.)

5) I gotta get back to work!

Here is a quick quiz question and reality redefinition brought to you by President Bush’s Council of Economic Advisers. Fill in the blank:

“[A]s people’s real incomes grow, they become subject to higher tax rates.”

This phenomenon is known as _______________________.

A Modest Proposal: Ten Steps to a Democratic Economy

by John J. Fitzgerald

I propose Ten Steps to a Democratic Economy. Starting with this column, I would like to explain and defend my proposals. I invite commentary and analysis.

1. The Right to a Job – Every person should be guaranteed a job. If the private sector cannot help them, then a public sector job should be available. This could include working on a mass transit system to replace the interstate highway system. Maintenance of public parks, fully staffing public schools and public hospitals could be other areas of employment. We should also publicly fund an alternative energy policy to end our dependence on foreign oil. The model to follow here would be Sweden.
- - - - -
Every person who is not significantly handicapped should be able to work for a living. I define a decent job as one that pays at least $10.00 per hour, for a 7 hour day, 5 days a week, with decent working conditions, health care and Social Security coverage. If the current market can not supply those jobs, then the government should. This program would be similar to what Franklin Roosevelt’s New Deal meant in the 1930’s, except it would not wait for an economic depression to get it started. I would like to see this expand and contract as the situation required. For example, maintenance of public parks and recreation areas would be an ongoing effort. Maintenance of public buildings, schools and hospitals which are historically neglected because of budget concerns would be fully funded, thereby creating a supply job market that will always be present to match demand. Creating a mass transit system would require a huge workforce just as the interstate highway system of the 1950’s and 1960’s did. Converting from an automobile based transportation system would ease global warming and end our dependence on oil from the Middle East. Converting from petroleum and natural gas to wind power, solar and increased hydro would also require new construction and manufacturing jobs.
Shortening the work week to 35 hours will also create more jobs. It would increase leisure time and thus would promote jobs in that sector. We would also have to make over-time illegal. One should be able to survive and flourish on the income generated by one job. The goal is to create more jobs. The whole idea is to get away from a profit making system to an economy that puts people first. Another name for this is democratic socialism.
To attain this goal we need to start discussing it as a goal. Some people are already close to doing this. This past month, [December, 2006] AFL-CIO President John Sweeney outlined his federation’s vision for stopping what he called, “the senseless slaughter” of good American jobs.
In a speech to the National Press Club, Sweeney described how America’s workers have struggled over the past 25 years as “a perfect storm of outsourcing, off shoring, tax evasion, layoffs, work speedups, wage cuts, health care cuts, pension cuts, shifting risks, bashing unions and short-changing communities”
has swept across the economic landscape.
Sweeney talked about some of the immediate actions Congress and President George W. Bush can take to stop the erosion of good jobs in
America, including:
• Guaranteeing America’s workers the freedom to form unions and
bargain for a better life.
• Giving workers the same protections as corporate interests in
our trade policy.
• Making it illegal for companies to buy or sell products made
in sweatshop conditions.
• Repealing tax laws that encourage companies to send jobs
overseas.
• Passing universal health care coverage.
• Telling corporate America to rejoin our national community by
investing more in workers and less in their executives.
• Doubling the money we spend on education and job training.
• Raising the minimum wage.

Sweeney is making proposals within the context of a corporate-capitalist-labor union system. I think we need to move beyond this approach and for that we will need to get involved with political parties and political campaigns. A good start might be found in a progressive movement within the Democratic Party.

Paul Krugman’s latest column asserts that Senator Clinton should be the clear favorite for those in favor of universal health care.

The principal policy division between Hillary Clinton and Barack Obama involves health care. It’s a division that can seem technical and obscure — and I’ve read many assertions that only the most wonkish care about the fine print of their proposals.

But as I’ve tried to explain in previous columns, there really is a big difference between the candidates’ approaches. And new research, just released, confirms what I’ve been saying: the difference between the plans could well be the difference between achieving universal health coverage — a key progressive goal — and falling far short.

Specifically, new estimates say that a plan resembling Mrs. Clinton’s would cover almost twice as many of those now uninsured as a plan resembling Mr. Obama’s — at only slightly higher cost.

[cont’d]

On the other hand, and mucking up the analysis of what’ll happen if Clinton is elected versus Obama (assuming one of them is indeed elected over the Republican candidate), is the idea I’ve seen advocated that Obama on the November ballot will better help in the election of lots more Democrats to the US House and Senate. The idea being that Clinton is more divisive, so even if she wins, there will be fewer middle-ground and moderate-Republican voters who will feel enthusiastic about the Dems in general, and so less likely to vote for other Dems on the ticket. But Obama is seemingly more unifying and uplifting of a character, and so good vibes for him will rub off on other Dems on the ticket. And if that’s true, then ironically Obama would have a Congress to work with that would be more amenable to a strong health care initiative, whereas Clinton would have a harder fight on her hand because the Congress she faced wouldn’t be as friendly to progressive causes. (Examples of this sort of analysis from The Nation and DailyKos.)

And is Krugman right that those opposed to universal health care will actually and successfully be able to kill an attempt by Obama to expand his policy vision by turning his primary campaign words against him? It seems plausible that he could change his vision and that, if this occurs during a honeymoon first 100 days following a landslide victory, brush aside those sorts of attacks without too much trouble. Maybe I’m being too optimistic. It’s just that I find myself reasonably convinced by the “Obama brings with him a stronger Congress than Clinton” arguments and so have been finding myself moving towards supporting him for that reason. (I’m in Vermont and our primary isn’t until March 6.)

Onward!

[Update] It’s all pretty frustrating, this not being able to predict the future. I say that because I agree with something else that Krugman has said (though I can’t recall where to link to it at the moment) that establishing a viable universal health care system is enormously important, both for the wellbeing of the country in general, and for a left/progressive movement as well. It’d be like a new New Deal–it would provide a kind of shared benefit that tens-, hundreds of millions of people would feel and appreciate. They’d not only be better off, they’d know that it was the left that got them better off. Large numbers of people who felt that there was no useful difference between the Republicans and the Democrats would learn that in fact there is. (And even if you think there isn’t currently, the establishment of universal health care would in itself be the fact of difference.) Large numbers of people who think government is just a big joke would learn that government can indeed do some things–some very, very important things–right, do them better than the alternatives. A decent universal health care system, alongside a carbon cap-and-dividend system, would breathe vibrant new life into a progressive political movement. We’d gain a generation or more of new loyalty and energy.

And we need that loyalty and energy. There’s lots to be done, from avoiding the worst of global warming to eliminating poverty, from ending the Iraq war to rebuilding crumbling schools and other infrastructure. These things are big jobs and expensive. To do them right means having the backing of the majority of the people. To get that backing, the people have to feel–to know–that “we’re all in it together” is more than empty rhetoric. Universal health care is the achievable reality that makes that rhetoric tangible. It’s a policy of solidarity that makes each next step a little easier to achieve. It’s why I’ve been quipping (mostly to myself) for a while now that “universal health care is an environmental issue.” If we can provide universal health care that makes it one heck of a lot easier to convince people that we all have to face restrictions on energy consumption (and so consumption in general). We have to face both the restrictions and the benefits (of health care, of a healthy environment, etc.) together.

And so if in fact that’s all true, then boy oh boy will it be disappointing if Obama (or Clinton) is elected president–especially if he (or she) is backed by a newly enlarged Democratic majority in Congress–and yet fails to seize the opportunity. Boy oh boy, very disappointing.

I was curious about overall popular vote numbers for the primaries this year. I’ve seen a number of pieces, particularly at DailyKos (like this one) pointing out that Democrats are going to the polls in much larger numbers than Republicans. But a little bit of searching came up with nothing as far as overall popular vote tallies. They’re out there, I’m sure, but I couldn’t find them easily. So I put some together and they’re over on my workplace blog, in case you’re curious.

[The following is a guest post emailed in to the Center for Popular Economics by a reader of CPE’s newsletter]

by Ben Leet

I am a retired school teacher who has done research on the U.S. economy partly for personal reasons and also because I had been teaching at a school in a poverty neighborhood in Oakland. There were many murders, crimes and depressing events in the neighborhood where I taught. Children brought in bullets that had passed through their walls, or one described a murder that happened in his back yard. Those were the worst examples, but violence was not uncommon. Bad economics, I concluded, contributed to poor student performance, poor behavior, and stunted emotional development. Here are the salient facts I’ve uncovered that point to a society mired in inequality.

Here are the problems we face:

Jared Bernstein (among many many many many many others, including Jonathan, who beat me to the punch below) dissects todays job numbers at EPI’s Job Picture. Particularly telling is this graph:

It shows that year-on-year job growth (a better indicator than the more volatile weekly or monthly job numbers that are widely reported) has been falling dramatically for almost a year now.

UPDATE:

Here’s an even bigger picture from Calculated Risk’s entry on the jobs numbers. In addition to the detail on the slump in job growth over the last year, it’s also easy to spot the jobless recovery under Bush’s watch. During no other recovery period has job growth been so consistently low, than under GWB. And that’s with huge deficit spending and two wars! I used to think that no one could match Warren G. Harding. But, I really must say it: Worst. President. Ever!

I admit to feeling some of that “lack of consumer confidence” myself. No pink slips at my workplace, not that I’ve heard rumor about at least, but news like this doesn’t help.

Employers cut 17,000 jobs from their payrolls in January, Labor Department figures showed. Economists had been expecting a rise of 80,000.

…

The job losses were across all sectors of the economy including manufacturing and professional services.

“The economy is in recession mode,” said Peter Morici, an economist at the University of Maryland.

On the topic of recessions and workers (employed or otherwise) and what we can expect, Working Life blogger Jonathan Tasini reports on analysis from the Center for Economic and Policy Research.

Why listen to what CEPR says? Well, for one, if the world had listened to CEPR, and, in particular Dean Baker, rather than the morons on Wall Street and on the flickering screen, we would have realized a housing bubble was a serious threat long time ago.

So, CEPR says: [click through to see for yourself]

Here’s an interesting take (read the whole thing, it’s short!) on the Laffer Curve (the theoretical source of the arguments made by people like Rudy Giuliani, that cutting taxes increases government revenues). One reason is that the higher tax rates are, the more people will try to avoid them.  Taking the logic, to it’s absurd conclusion:

If you’re the sort of person who is willing to use these tax avoidance schemes - and I would hazard to guess that not that many people in that situation are not - how low do tax rates have to be in order that you do not engage in those schemes? The answer: half a percent. Guess how low tax rates would have to be for someone making $200 million a year not to use the same schemes.

The implication, of course, is that we want to close the loopholes that allow corporations and the wealthy to dodge paying their share, unless you find 0.5% tax rate on Paris Hilton’s income (I do love to pick on her, but fill in the blank with whoever you want that makes more in a year than whole towns will make in their lifetime) to be a reasonable amount. Do you? I don’t.

I am supporting Barack Obama in the Massachusetts Democratic Primary on 5 February 2008. I am going to vote for Barack Obama for the following reasons:

My previous candidates have dropped out after low levels of popular support. I thought Kucinich had an excellent platform. I thought that Richardson had the maturity and skills to be President.

It is now looking to be a two-person race in Massachusetts.

I think that Barack Obama and Hillary Clinton have really no discernible differences in their voting records or their platforms. Clinton did vote for the Iraq War and Obama opposed it, but there is not much difference between them.

I think Barack Obama is a break with the dead centered politics of the past. He represents a younger generation and is bringing young people into the Democratic Party. His speeches inspire and bring people together.

Barack Obama is not married to Bill Clinton!

Hillary represents a continuation and a vindication of the Clinton administration. I did not see any reason to carry on with “Clintonism” in 2000, and I do not see any now. Bill Clinton spent six of his eight years in the White House hanging on to power and doing little for the country. No health care program, no reduction of wasteful military spending, no real reduction of poverty, no serious federal aid to education, etc. Global warming got worse under Clinton.

The Clintons have consistently supported the interests of their wealthy campaign contributors. They are not New Deal Democrats. The Clintons are active supporters of the Democratic Leadership Conference, which is, at best, a moderate to conservative group, which caters to the interests of corporate America. Jesse Jackson called them the Democrats of the Leisure Class.

Barack Obama’s life story is compelling. He is a product of the civil rights movement and represents the coming of age of that movement. He will literally offer a new face for America to the world. I think this is a positive and necessary change for the good.

I do not know how the politics of 2008 will play out. We might see a Romney/McCain ticket with the GOP. We might even see a Clinton/Obama ticket on the Democratic side. Nonetheless, I think it is important to give Obama a boost in Massachusetts. This will encourage Hillary to reconsider some of her positions and might even change the entire dynamic of the Democratic contest.

If Hillary wins big on Super Tuesday that will be good news for her and Bill, but it will not be good news for the Democratic Party.

Yours truly,
25 January 2008 John J. Fitzgerald

Bruce E. Levine has an interesting article over at Alternet on the use of psychiatric medication to tame defiant youth. Some tantalizing excerpts:

For a generation now, disruptive young Americans who rebel against authority figures have been increasingly diagnosed with mental illnesses and medicated with psychiatric (psychotropic) drugs.

Disruptive young people who are medicated with Ritalin, Adderall and other amphetamines routinely report that these drugs make them “care less” about their boredom, resentments and other negative emotions, thus making them more compliant and manageable. And so-called atypical antipsychotics such as Risperdal and Zyprexa — powerful tranquilizing drugs — are increasingly prescribed to disruptive young Americans, even though in most cases they are not displaying any psychotic symptoms.

Many talk show hosts think I’m kidding when I mention oppositional defiant disorder (ODD). After I assure them that ODD is in fact an official mental illness — an increasingly popular diagnosis for children and teenagers — they often guess that ODD is simply a new term for juvenile delinquency. But that is not the case.

Young people diagnosed with ODD, by definition, are doing nothing illegal (illegal behaviors are a symptom of another mental illness called conduct disorder). In 1980, the American Psychiatric Association (APA) created oppositional defiant disorder, defining it as “a pattern of negativistic, hostile and defiant behavior.” The official symptoms of ODD include “often actively defies or refuses to comply with adult requests or rules” and “often argues with adults.” While ODD-diagnosed young people are obnoxious with adults they don’t respect, these kids can be a delight with adults they do respect; yet many of them are medicated with psychotropic drugs.

…

Throughout American history, both direct and indirect resistance to authority has been diseased. In an 1851 article in the New Orleans Medical and Surgical Journal, Louisiana physician Samuel Cartwright reported his discovery of “drapetomania,” the disease that caused slaves to flee captivity. Cartwright also reported his discovery of “dysaesthesia aethiopis,” the disease that caused slaves to pay insufficient attention to the master’s needs. Early versions of ODD and ADHD?

In Rush’s lifetime, few Americans took anarchia seriously, nor was drapetomania or dysaesthesia aethiopis taken seriously in Cartwright’s lifetime. But these were eras before the diseasing of defiance had a powerful financial ally in Big Pharma.

…

It would certainly be a dream of Big Pharma and those who favor an authoritarian society if every would-be Tom Paine — or Crazy Horse, Tecumseh, Emma Goldman or Malcolm X — were diagnosed as a youngster with mental illness and quieted with a lifelong regimen of chill pills. The question is: Has this dream become reality?

Conflict of interest alert: I work for Chelsea Green Publishing, publishers of Levine’s recent book, Surviving America’s Depression Epidemic.

A friend just sent this to me. It’s an English folk poem, circa 1764, so he says.

They hang the man and flog the woman
That steal the goose from off the common,
But let the greater villain loose
That steals the common from the goose.

The Law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.

The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.

The law locks up the man or woman
Who steals the goose from off the common’
And geese will still a common lack
Till they go and steal it back.

Is the New Supply Side Better Than the Old? by Austan Goolsbee is getting a lot of play in the econoblogosphere today. It’s an interesting article that points out some of the weaknesses in the supply-side argument for cutting income tax rates on the highest income people. One small point of correction, however: when referencing the fact that top incomes soared after the tax cuts of the 1980s and 2001, but also soared after tax hikes in other periods, Goolsbee says:

Seeing the same pattern when taxes rose as when they fell indicates that tax cuts weren’t responsible. It suggests that cuts for high-income taxpayers likely gave windfalls to those whose incomes were already rising sharply because of broader market forces.

One might note the impact of the policy climate in various periods, as well. Since the 1980s, it hasn’t just been tax policy that has favored high-income earners over their less fortunate fellows, but deregulation and lax enforcement on a broad range of policies including labor and the environment, as well as overt war-on-the-poor measures such as welfare reform.

Hat tip to Mark Thoma.

By Amit Basole
CPE Staff Economist

Global Charity
In the year 2000, the richest 10 per cent of the world’s population held 85 percent of its total income and wealth. The bottom half owned a mere 1 percent. Such glaring global asymmetries have long justified redistribution of wealth from the “Global North” to the “Global South” in the form of development aid and loans. So much so, that the stock image of a developing country that springs to mind (particularly in sub-Saharan Africa) is that of a heavily indebted economy which continually borrows simply to repay its old loans and receives food and other forms of aid to feed and clothe its “naked and hungry masses.” Persistent poverty is often blamed on inadequate aid, and rich countries are periodically exhorted to donate more generously. This form of global charity is visible to all. But there is another flow of wealth across national borders, greater in magnitude and more clandestine. This is the flow from poor countries to the rich. Yes, the world’s poorest countries are today financing the richest. Far from being heavily indebted, many developing countries are net creditors vis-à-vis the rest of the world. How is this possible?

Who is financing whom?
Recent analysis of flows of income and wealth across national borders reveals a startling and different story than that of global charity towards the South. Economists have found that more money flows out of developing countries in the form of interest payments, profits of foreign corporations, and clandestine investments in financial markets of the rich countries than flows into them as loans, aid, and foreign direct investment. According to a recent United Nation’s report, in 1995 the net inflow of money into developing countries was $40 billion, but by 2006 this had reversed to a net outflow of $657 billion! The global financial system is sucking wealth out of developing countries, making them poorer in the process. Sub-Saharan Africa in particular is associated with highly indebted poor countries. Indeed, in 1996 the combined external debt of 25 countries of sub-Saharan Africa, owed to rich countries and to institutions such as the IMF and the World Bank, stood at $178 billion—a large sum indeed. But even more significantly, the flow of wealth out of these same countries over 26 years (1970-1996) equaled more than $193 billion. To make matters worse, much of this wealth flowing out of poor countries ends up in the US economy, which absorbs two-thirds of world savings. The ecologically-damaging consumption boom in the world’s rich countries is financed by its poor countries where consumption is a matter of survival. The insanity of this situation puts a question mark on the entire logic of the international financial system.

How does this happen?
But wait a minute. We might wonder, aren’t developing countries poor by definition? How then do they have resources to transfer to rich countries? We must remember here that although the majority of the population in a developing country is indeed poor, most countries have a small elite class that owns a disproportionate share of its income and wealth. In other words, the poor are poor precisely because the rich are rich. Further, a government may be highly indebted but what about its private citizens, in particular the rich ones? Several African leaders have amassed personal fortunes even as the governments they head have incurred large debts. At least in part these extraordinary assets are held abroad in rich countries. The problem is that while public debts are scrupulously recorded, many private assets are just as scrupulously concealed. To take just one famous example, the Swiss bank accounts of the family of General Sani Abacha, who ruled Nigeria for five years, reportedly contain as much as $2 billion.

This phenomenon is also known as “capital flight.” There are several avenues by which money flows from the poor countries to the rich. Repayment of earlier debt and accumulation of foreign exchange reserves with Central Banks in developing countries are two big ones. Since reserves often take the form of US treasury bills, reserve accumulation essentially means lending scarce capital to the US, a classic case of the poor lending to the rich. But there is yet a third, more hidden, avenue as well. This is trade mis-invoicing: under-reporting exports and over-reporting imports. Exporters in a country may understate the value of their export revenues, so that they can retain abroad the difference between their true value and their declared value, while importers may over-state the value of their imports to obtain extra foreign exchange, which can then be transferred abroad.

What can be done?
Should we simply chalk this up as a typical case of Third World mismanagement and corruption, a problem of “failed states,” a lack of democratic accountability and transparency? It is all that, but that is not the whole story. Rich country governments and international lending institutions are often complicit in maintaining corrupt rulers and in transferring their assets abroad. The Financial Times remarks in an editorial on the freezing of General Abacha’s bank accounts, “Financial institutions that knowingly channeled the funds have much to answer for, acting not so much as bankers but as bagmen, complicit in the corruption that has crippled Nigeria.”

If development aid is used to amass private fortunes while external creditors look the other way, why should a developing country’s poor citizens be forced to pay the price of painful “reforms” such as cutbacks in government spending on essential services, when most of that aid has not benefited them at all in the first place? Rather citizens of developing countries and their governments could tell their foreign creditors that old debt will only be treated as legitimate if the creditors can provide evidence for how the money was used for genuine development goals. This shifts the burden of proof onto the lenders. Needless to say, such a proposal would be extremely unpopular with rich country governments as well as with the IMF and the World Bank.

In addition to “bottom-up” approaches to development, such as strengthening government accountability and democracy from below in developing countries, there is a role for us here in the developed world to play: we can do our bit by raising awareness about capital flight and odious debt, and holding our own governments accountable for who they lend or give aid to and how that money is spent.

Sources:

1. Isabel Ortiz (2007) Putting Financing for Development in Perspective: The South Finances the North, IDEAS Network (http://www.ideaswebsite.org/news/nov2007/Putting_Financing.pdf)

2. World Economic Situation and Prospects, 2007- United Nation Development Policy and Analysis Division (http://www.un.org/esa/policy/wess/wesp.html)

3. James Boyce and Leone Ndikumana (2000) Is Africa a Net Creditor? New Estimates of Capital Flight from Severely Indebted Sub-Saharan African Countries, 1970-1996. (http://www.umass.edu/economics/publications/econ2000_01.pdf)

Today’s NYTimes article on Federal Reserve Chairman Ben Bernanke’s testimony to Congress yesterday, and the simultaneous drop in the stock market, includes a few noteworthy passages:

The stock market plunged again on Thursday on bad economic news, taking little comfort from reassuring words by the chairman of the Federal Reserve or an emerging consensus about a stimulus plan that many worry could be too late.

On a day when stocks were pushed down another 3 percent on reports of more weakness in housing and manufacturing — bringing the decline this year to a stomach-churning 9 percent — all the major players in Washington agreed on the need for putting extra money into people’s hands quickly.

President Bush publicly confirmed for the first time that he would propose a package of emergency measures, outlining its basic principles on Friday, in an effort to restore the eroding confidence of investors and consumers. The package is expected to include more than $100 billion in one-time tax rebates for individuals and an opportunity for businesses to rapidly write off their capital investments.

…

Adding to the pessimism, which drowned out the reassurances by Mr. Bernanke that a recession could be averted, were reports that manufacturing activity could be slowing even more than analysts had expected, and that housing starts dropped 14 percent last month and reached their lowest level in 16 years.

Mr. Bernanke insisted that despite concerns about “slowing growth,” the economy remained “extraordinarily resilient.”

I say “noteworthy” in light of Dean Baker’s ongoing crusade to right the wrongs in mainstream media reporting on the economy–and in mainstream economists’ ability to figure out what exactly is happening in the real world. Several of his recent posts deal with the failure of most economists to recognize when a recession begins until long after the fact: “economists have an enormous bias against seeing recessions. Virtually no economist saw the recession coming in 2001, even after the stock bubble was already well on its way to deflating (okay, none of them saw the bubble either). This includes all the official forecasters, CBO and OMB both projected solid growth in 2001.” Scroll through all of Dean’s recent posts and you’ll see more of the same clear-eyed view.

In light of this, how reassured should anyone be when Bernanke says a recession can be avoided? What are the odds that a year from now, the economics establishment won’t have determined that the recession actually started a few months back in 2007? And on top if it all, given that it took the stock market five years (and a terrorist-induced recession and boondoggle war) to largely deflate from the peak of the 1990s bubble (only in 1995 did the S&P 500’s price-to-earnings ratio drop down to the 25-year average — and even that average is well above the longer-term average [pdf chart]), how shocking can it be when it tumbles again and again in face of reality?

My day job is as an assistant editor at Chelsea Green Publishing. I’ve been particularly excited about one book that we’ve been working on, Peter Barnes’ Climate Solutions: A Citizen’s Guide: What Works, What Doesn’t, and Why. Well, it’s just shipped from the printer, so now’s your chance to get a copy and check it out.

[update] I just came across a little BusinessWeek article focusing on Barnes’ ideas for a carbon dividend. They don’t get all the details quite right (all the more reason for you to read the book!) and they don’t mention the book (curses!), but “cap-and-dividend” just might be turning into a powerful and politically relevant meme.

Paul Krugman has a NYTimes op-ed column on the economic policies of all the big-name presidential contenders. One of his final comments is, “on Sunday Mr. Obama came out with a real stimulus plan. As was the case with his health care plan, which fell short of universal coverage, his stimulus proposal is similar to those of the other Democratic candidates, but tilted to the right…. I know that Mr. Obama’s supporters hate to hear this, but he really is less progressive than his rivals on matters of domestic policy.”

A friend had sent me a link to Krugman’s column, and knowing that she’s been torn between backing Clinton or Obama I replied to her

Go Hillary! (Right?)

Or,

Go Barack! (Not right but Left!)

To which she replied

Haha, I don’t know…I mean, maybe slightly right on economic policy isn’t such a bad thing…? There sure are a lot of moderately right leaning economists…I just thought it was an interesting (and new) way to compare the candidates

To which I replied

No, slightly right on economic policy is bad. Slightly right on economic policy means slightly closer to:

• ever-growing government deficits and/or slashed social services
• ever-growing economic inequality
• greater turbulence in the economy thus increasing risks of more frequent and deeper recessions
• more frequent and larger government bailouts of high-risk corporate losses (see point above)
• and a total ban on all cheese. [My friend loves cheese more than life itself.]

There are a lot of moderately right leaning economists because most economists have never been exposed to any genuinely left economic thinking and there’s a tendency for left leaning people who might otherwise become economists to instead become sociologists. They think Paul Krugman is a lefty when in reality he’s only mildly left leaning.

Just thought I’d share. Feel free to add more bullet points in the comments.

(And if you’re wondering about my mention of hairstyles in the title of this posting, just read Krugman’s column and you’ll see.)

Check out Lane Kenworthy’s piece on Taxes at the Top. Interesting and timely, given the likely call for making Bush’s high-income tax cuts permanent.

BusinessWeek says it probably won’t be all that costly.

Scientific American has some dudes debate the issue.

And don’t forget my own brilliant observations.

A 20-minute video about where the stuff we buy comes from, where it goes, and what it does (or doesn’t do) for us in between. And an interview with the creator. One of these days I swear I’m going to read Small Is Beautiful.

The first President Clinton focused his 1992 campaign with the motto, “it’s the economy, stupid.” As the second President Bush enters his final year in office, with the pressure on to prevent a total rout of the Republican Party next November, he’s discovering a new concern for the economy himself.

President Bush said Tuesday that he is watching very carefully to see if the struggling U.S. economy needs a short-term boost from the federal government.
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“We’re listening to different ideas about what may or may not need to happen,” he said. “We’ll work through this. We’ll work through this period of time.”

He wouldn’t comment on any specific ideas he is considering, such as tax cuts aimed at lessening the chance of a recession. “We’ll look at all different options.”

On Monday, Bush talked about recent indicators that have been “increasingly mixed,” a new recognition of the challenges now facing the economy, primarily resulting from a severe housing crisis. Previous Bush statements have paid attention to the financial fears of many American families and the effects of the housing slump, but focused on what he calls the strong fundamentals underpinning the economy… [cont’d]

How shocked! shocked! will we be if he ends up pushing for new tax cuts designed to work some trickle down magic?

We are living in a period of unprecedented corporate wealth. This is similar to the 1890s and the 1920s, but the extreme disparity is far worse today. We have a growing number of billionaires in our society and the numbers of the poor and homeless are growing. Most people are in debt with credit cards and mortgages and car loans. There are few people with substantial savings. Labor unions are weak and most Americans like to ignore the realities of class in our society.

Consumerism is the engine that keeps the cornucopia flowing and consumerism is having a head on collision with the environment. Global warming is a real phenomena and that is why the oil and energy companies are denying it. They know that it is real, but their business depends on selling oil. Their main partners the automobile companies are trying to get the public to ignore the global warming activity that is caused by carbon burning vehicles, aircraft and ships.

I think we will need to break out of the old ways of doing things. Corporate capitalism is the main problem and governmental intervention is the only way to rein it in. I don’t see Hillary doing this. Edwards and Obama have the potential to change things. I think a major economic shock will be necessary to reorient the economic system. Cf. The 1930s.

We still have a number of New Deal era reforms in place to cushion the shock, but the Reagan/Bush era has waged an outright war on the New Deal and the usefulness of government in peoples’ lives. The Reagan/Goldwater ideology opposes the welfare state in the name of liberty. But in the name of security it asks the federal government to support a bloated military machine. This military machine is the main reason we have international trade with cheap goods from abroad. It requires massive amounts of oil to run on and that is why we are in the Middle East with guns blazing away. Our oil based war machine is designed to protect oil and to continue using massive amounts of it in ships, planes, tanks, etc.

2008 will be a turning point because of the mortgage crisis, decline of housing starts, decline of housing market values. The price of oil will continue to rise.

I think we are headed for a serious recession and the Federal Reserve will not pull us out of it. A change in fiscal policy, not monetary policy, is required. Fiscal policy involves raising or lowering taxes and initiating expenditures. The right wing fears fiscal policy because it is a threat to their privileged inequality.

I see the Democrats building a larger majority in both houses this Fall. The Democrats will win the Presidency. Getting out of Iraq will be a consensus position, if it is not already. (The military is having serious problems recruiting soldiers and retaining existing ones.) The future health of the economy will be the main concern and this will require a greater role for the federal government.

To conclude, there are similarities with the 1890s and the 1920s and both of those boom eras ended in serious recession/depression. We are headed for a serious accounting for the past 8 reckless years of Bush and Company. Not exactly a rendezvous with destiny, but very similar. My main worry is whether we will remain a democracy as we go through the crisis.

I see this as a realistic, not a pessimistic, analysis of our current situation.

From the ‘going-to-great-lengths-to-prove-the-obvious’ department:

The Historical Origins of Africa’s Underdevelopment, by Nathan Nunn, Vox EU: Africa’s poor economic performance is one of the largest puzzles in growth and development economics. A large literature has emerged trying to explain the source of Africa’s growth tragedy. See for example Easterly and Levine (1997), or Sachs and Warner (1997).

African historians have documented the detrimental effects that the slave trades had on the institutions and structures of African societies. Historical evidence from case studies show how the slave trade caused political instability, weakened states, promoted political and social fragmentation, and resulted in a deterioration of domestic legal institutions.

Read the rest of the article.

h/t to Mark Thoma.

Devilstower at DailyKos has done us the favor of a great analysis of the past few years experiment in privatized social security.

Congratulations, Citizen!
by Devilstower
Sun Dec 02, 2007 at 10:29:22 AM PST

Back on 2001, right after Inauguration Day, $10,000 of your Social Security funds were placed in a special private personal magic pony account where it would enjoy the explosive benefits of the our surging prosperity, and the Longest Peacetime Terra-fightin’ Expansion in HISTORY… History… history. All of this made possible by cutting taxes on the productive people at the top of the food chain and removing those regulations that prevented our financial institutions from using all their imagination in creating new ways to loan give… to give you money! We at the Treasury know there was some discussion about not going along with the president’s plan, but I think you’ll agree that what we’ve learned over the last seven years is that the president can do anything he wants and no one will do more than talk about stopping him. So we just did it! Say, why not send us a subpoena? That’d be a hoot!

Now, as we close in on the last year of this glorious wondertime, here’s a quick report on how your outsourced, privately-managed fund has done.

[cont’d]

It’s hard to think of something that counts as an “econ-atrocity” more than the health insurance industry’s practice of paying bonuses to employees who meet targets for cancelling policies of sick customers or refusing to cover the care that the customers need. My uncle sent me this link to the latest revelation published in the LA Times:

Health insurer tied bonuses to dropping sick policyholders

By Lisa Girion, Los Angeles Times Staff Writer
November 9, 2007
One of the state’s largest health insurers set goals and paid bonuses based in part on how many individual policyholders were dropped and how much money was saved.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

As my uncle put in his email’s subject line, “did somebody say, ’single-payer health plan?’”

See the blog post I wrote for my employer’s website.

A friend of mine, who knows from my own previous email missives that there are important things afoot in Congress regarding pending legislation on global warming, forwarded me this message from MoveOn.org.

From: Ilyse Hogue, MoveOn.org Political Action
Sent: Tue, 30 Oct 2007 12:23 pm
Subject: Corporate windfall or clean energy economy

Click here to add your name: “Any climate legislation that gives ‘pollution credits’ away for free means windfall profits for big polluters. Congress should ensure that corporations pay taxpayers for these credits. The money raised should help develop clean energy sources and support the workers and consumers affected by the shift to clean energy.”

[cont’d]

CPE advisory board member Jim Boyce and staff economist Liz Stanton have co-edited (along with Sunita Narain) Reclaiming Nature: Environmental Justice and Ecological Restoration, newly out from Anthem Press. Here’s the description from the back of the book: