The Stranger, Seattle's Only Newspaper: Slog: Economy

This Pope Understands Capitalism

Charles Mudede — Wed, 22 May 2013 14:45:00 -0700

The Pope for once sounds like the founder of his religion...

Rome: Pope Francis has attacked the ''dictatorship'' of the global financial system and warned that the ''cult of money'' is making life a misery for millions.
He said free market capitalism had created a ''tyranny'' and that people were being judged purely by their ability to consume goods.
Money should be made to ''serve'' people, not to ''rule'' them, he said on Thursday, calling for a more ethical banking system and curbs on financial speculation. Countries should impose more control over their economies and not allow ''absolute autonomy'', in order to provide ''for the common good''.

More real talk...

''The worship of the golden calf of old has found a new and heartless image in the cult of money and the dictatorship of an economy which is faceless and lacking any truly human goal,'' he told the ambassadors.

That Pope has got some real big testicles, saying stuff like that in public. Neoliberalism might be dead as an ideology but it's still in effect, still in power, still ruling the third world from the sun.

The tip for this post came from Lark.

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Browse the Medicare Hospital Charges and Payment Data

Jonathan Golob — Fri, 17 May 2013 13:31:44 -0700

As I wrote about last week, Medicare (for the first time ever) released what hospitals in the United States charged, and what they were paid, for the top 100 diagnoses in 2011.

If you're curious, I've written a simple (and ad-free) web app you can use to browse the data. (I suggest comparing the Las Vegas, NV region to Baltimore, MD.)

Be gentle, but have at it.

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Globalisation Today: Shoe Factory in Cambodia Collapses

Charles Mudede — Thu, 16 May 2013 09:01:19 -0700

Two dead; six injured:

Last month, a nine-storey factory complex outside Dhaka, the capital of Bangladesh, collapsed, killing 1,127 people, in one of the world's worst industrial disasters.

The collapse prompted pressure on Western retailers that rely on cheap labour in the region, where safety standards are often substandard.

The garment industry is Cambodia's biggest export earner, with more than $4bn worth of products shipped to the US and Europe in 2012.

About 500,000 people work in more than 500 garment and shoe factories throughout the country.

A series of strikes by workers has pointed to festering discontent over low wages and tough conditions.

In February 2012, three women, employees of Puma supplier Kaoway Sports, were wounded when a gunman opened fire on protesters demanding better working conditions at factories.

The shooting prompted Puma, Gap and H&M to express their "deep concern" and urge a thorough investigation.

Which do you want? Cheap commodities or safe factories? Cheap commodities or fair wages? Which? You must chose one or the other.

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Our Man in Asia Sends Postcards from a Bangkok Mall

Brendan Kiley — Tue, 14 May 2013 16:54:29 -0700

Our man in Asia has sent some images and observations from one of Bangkok's new malls. Malls are a big damn deal there. When I was in SE Asia this past New Year's season, a Thai newspaper wrote a story about the ten most important things that had happened that year—a mega-mall opening in Bangkok was on the list. (The enormous protests, during which thousands of people "calling for the overthrow of the Thai government" clashed with police, were not.)

OMIT
Soldiers of fashion.

As Bangkok develops more and more in to a tropical version of Tokyo—in affluence and just plain simulated weirdness—megastore owners have been branching out to make themselves not just places to buy, but to have an experience. It is not the product that is the commodity, it is the process of buying the product.

OMIT
This is a real person, getting paid to make like a mannequin.

Terminal 21 is a mall in Bangkok that I would have loved to have heard the pitch for. The salesperson who put this over was a genius. The idea behind the place is that the mall looks like it is an airport terminal with eight floors.

So, on the top floor, for example, your arrival gate is Los Angeles (or rather Hollywood.) This floor has the movie theaters and video games. Other cities are Tokyo, Rome, Paris, Istanbul, London and San Francisco, which confusingly has two floors.

In the basement is—and it is hard not to read a Thai prejudice against darker skin in to this—is “the Caribbean.” The higher one’s head is in this society, the more prestige. Thus, in movie theatres the more money you pay for a ticket, the further back and higher elevated you are.

I don’t think that the Caribbean in the basement is a coincidence, but on the other hand Istanbul is higher than Paris and Rome, so who knows?

OMIT
The Terminal 21 mall.

On each floor, the signifiers of the city are, aside from convincing airport displays, usually other modes of transport. London has its double decker buses and Underground signs, Paris has the Metro stops, San Francisco has cable car tracks, bicycles and the Golden Gate Bridge there are Vespas in Rome and Istanbul has a Trojan horse (this is stretching, I know).

You are in a mall formed like an airport with cities on each level and to represent the cities they use other types of transportation. Is this how we classify ourselves—by how we get from place to place? Also, each floor’s
cleaning and security staff wears a stereotypical outfit of that region.

OMIT
San Fran level.

This is an era of wonder, which future generations will hear stories of and not believe. With the complete domination of capitalism crowding out politics or philosophy or even religion as pastimes*, people need increasingly more exciting ways to shop. It is not the need of items to buy as much as the need to fill time. Not only do we have more people who have their basic needs met than at any other time in history, but this fulfillment has led to boredom and more creative ways to simulate and stimulate want.

*This is not entirely bad.

OMIT
In through the out door.

And that's the news from our man in Asia. (Coming in our next episode—visiting a police inspector's museum in Laos.)

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America Works!

Charles Mudede — Tue, 14 May 2013 08:34:29 -0700

This series celebrates the great industriousness of the American workforce. The inaugural image: A white dog (name unknown) proudly guarding construction equipment in Columbia City. The protection of property is something that's very important to the American way of life. Without property there would be communism and Hitler.

The white dog works hard and doesn't like his pay, a bowl of food, to be taxed by the government.

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But I Thought That Was the Way a Free Health Care Market Was Supposed to Work...

Goldy — Sat, 11 May 2013 09:38:25 -0700

Texas, of course, but still:

SANTA FE, Texas (AP) - A Southeast Texas woman is facing a felony charge for allegedly delaying hospital treatment of her teenage son's gunshot wound until she researched treatment options online.

And this in a nutshell is why the market cannot function on its own to provide efficient and affordable health care.

Markets only function properly when consumers have the ability and opportunity to make informed comparisons of products, services, and prices. It's not the wisdom of the capitalist that drives innovation but the wisdom of the market—the mass of consumers for whom's dollars the capitalists compete. Without the ability for consumers to make informed purchasing decisions there is no rational competition for products and services, and thus no rational market. And without a rational market to allocate resources, there is no inherent efficiency.

But who is going to shop around for the best health care product at the best price when oneself or one's child is suffering from a high fever, or a kidney stone attack or, say, a gunshot wound? Not only does one not have the luxury of taking the time to shop around for the right deal in the midst of a health care crisis, one might even be prosecuted for behaving like market theories dictate an informed health care consumer should behave. Instead, when faced with unbearable pain or impending death, most of us head to the nearest emergency room, and then deal with the hospital bill as best we can after the fact.

Under those circumstances, there is no market at all. And in that context—with little or no consumer feedback—it is a fantasy to insist that a private health care market can efficiently allocate health care resources.

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Seattle, You Should Be Better Than This

Unpaid Intern — Thu, 09 May 2013 12:54:43 -0700

Ansel Herz

Posted by news intern Ansel Herz

A small group calling themselves Women In Black held a silent vigil on Wednesday across from City Hall. For more than a decade, they've been holding vigils to bring attention to the deaths of homeless people in King County.

"We stand out here to acknowledge the fact that... their value as human beings is important to us," Elizabeth Iverson, who lives at Tent City 3 in North Seattle, told me. She said she's been homeless since losing her nursing job in 2010.

Homelessness is a big and complex issue, obviously, but the group says the most important thing right now is that winter shelters stay open throughout the entire summer. Normally they'd have closed by March 31, but last month, the city council designated $150,000 to keep them open through June 15.

"For [the city], that was a big concession—and it isn't nearly enough," Tim Harris, director of Real Change, told me. He said the shelter system is "radically under-resourced."

The shelters are "near capacity," David Takami, a spokesman for Seattle Human Services, confirmed. "There's definitely a need, and it's a question of whether we have the funding."

But as of now, the funding's not available. And winter conditions or not, the chronically homeless are four to nine times more likely to die than the general population.

So I called the Committee to End Homelessness in King County, expecting to hear about their efforts to keep the shelters open. Instead, what I got were a lot of long, awkward pauses, as Gretchen Bruce, the interim director who's been on the job about six months, struggled to say as little as possible.

"I'm not qualified to speak to the death count," she spluttered, when I asked her to comment on the spate of homeless deaths this year. Should the shelters stay open? "We are in conversation," she kept repeating. "We are trying to address it through the community." Whatever that means.

"It's above her pay grade," Harris said. According to him, the committee's governing board is engaged in an "intense debate" over spending on long-term solutions (e.g. creation and facilitation of affordable housing) versus immediate shelter.

That's the logic of austerity of speaking, though, not advocacy for the homeless population, which is what you might expect from something called the Committee to End Homelessness (CEH). "The challenges are going to be the shrinking resources and the continuing shredding of the social safety net," Bill Block, CEH's previous director, told the Seattle Times last year. Sounds like those challenges are continuing to go unmet in Seattle.

"'Without shelter, people die' isn't just a slogan," Harris said. "It's the reality." According to Women in Black, which credits King County Medical Examiners and Health Care for the Homeless for the data, 19 people have died outdoors or by violence in the past five months—matching the total for all of last year.

The group says of the last three individuals, who died in the last five weeks: one collapsed at a breakfast program, one died near a Bellevue doughnut shop, and one was shot to death while sleeping in his car.

Here's their full list of homeless dead so far this year. RIP.

Cause of Death	Who	When	Where
Acute Intoxication	Byron Barnes, 47	January 2013	Ballard
Hypothermia	Kathryn Ann Blair, 60	January	1200 bl Rainier S
Pending	Brian Chambers, 59	January	Renton
Pending	Heather Pinney, 24	January	5th/Harrison
Burned to Death	John Wallis, 59	January	Harborview
Pending	Patrick Dawson, 53	January	East Marginal Way/Ellis
Acute Intoxication	Joshua Walmsley, 28	January	NE 92nd/I-5
Drowned	Fernando Alonzo-Valencia, 25	January	Kenmore
Pending	LuAnn Bustamante, 56	February	Elliott/W Lee
Suicide	Kimberly Johnson, 49	February	Tuwila/Int'l Blvd
Suicide	Greg Zimmerman, 55	February	1300 bl S Dearborn
OD	Erik Johnson, 46	February	Federal Way
Anoxic Encephalopathy	Daniel Garton, 49	February	5th/Harrison
Natural Causes	Bradley Fernandez, 49	February	Salmon Bay
Natural Causes	Irvin Giesler, 60	March	Redmond
Pending	Michael Huntington, 37	March	Kent
Pending	Clinton Jackson, 28	April	Bellevue
Pending	Michael "Mikey" Hall, 56	April	Ballard
Shot to Death	Derrick Hargress, 50	May	Rainier Valley

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The American Health Care Market

Jonathan Golob — Wed, 08 May 2013 20:28:44 -0700

How much a plate of spaghetti is going to cost you isn't usually a mystery. Sure, the price can vary quite a bit—from a few cents if you're making the plate yourself from groceries, to dozens of dollars at a fancy restaurant. You shouldn't be too surprised by the bill at the end; the price is right there on the menu, or on the box—same for you as anyone else.

The American healthcare system remains remarkably opaque—particularly if you are among the uninsured. The cost of a hospitalization for a heart attack varies tremendously depending upon the hospital giving the treatment. And, unlike a restaurant, hospitals generally refuse to state the price up front.

To reduce healthcare costs, the plan for the past few decades has been to pass on costs to the consumer. The idea here is to use the market (in the Adam Smith sense of the word) to force down prices—expecting patients to find the most efficient, cheapest, hospital for a given problem. (Spoiler: It hasn't worked.)

But, how can you decide which hospital is most efficient, if you have no idea what they're charging? The net result is underinsured or uninsured Americans understand that getting sick is a good way to end up bankrupt, without any real sense of how to pick a more efficient provider.

Something exciting has happened this week, possibly changing this dynamic: The Center for Medicare Services, for the first time, has published the list prices charged by hospitals around the country (to Medicare) for the top one hundred reasons patients end up in the hospital.

Let's look at what hospitals are charging, and receiving, in the Seattle area. In each of these charts, the blue bars is the bill charged to Medicare by the hospital, the red the payment the hospital actually received (from Medicare and all copayments or deductibles paid by the patient). You'll note, like almost all insurers in the US, Medicare pays a significant discount from the billed cost. A patient without insurance can expect the full, undiscounted rate.

First up, the charge for a pneumonia admission:

For a COPD (rotten lungs, usually after a lifetime of smoking) flare:

Coronary artery disease, requiring a stent (either a heart attack or a heart-attack-to-be):

The overbilling is (in part) a negotiation tactic between the hospitals and the insurers—a way of amplifying the percentage discount to a prospective insurer while maintaining revenues. The side effect is to leave the uninsured or underinsured as road-kill—charged two or three times the total bill payed from an insured person.

If nothing else, the Affordable Care Act (i.g. Obamacare) will make this better by shifting a majority of people from the uninsured into the insured group—paying the discounted rate, with insurance picking up most of the total tab.

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Life Without Economics: Part Five

Charles Mudede — Wed, 08 May 2013 08:50:16 -0700

The question in this post: How do the rich in rich countries make such huge sums of money? The answer to this question can be found at this point (17:00), of a lecture delivered at LSE by Richard B. Freeman, a labor economist who teaches at Harvard...

Freeman states that the rich (the 0.1%) make money not from salaries, nor from bonuses.

The big way they make money is through options, and now that the share market is [doing well], actual stocks received. People are making large sums money through ownership of shares and option of shares.

In short, they make money from capital income. To understand this is to understand the nature, function, and importance of the Washington-Wall Street Revolving Door...

Jack Lew is President Obama's new chief of staff — arguably the most powerful office in the White House that isn't shaped like an oval. He used to work for the giant banking conglomerate Citigroup. His predecessor as chief of staff is Bill Daley, who used to work at the giant banking conglomerate JPMorgan Chase, where he was maestro of the bank's global lobbying and chief liaison to the White House. Daley replaced Obama's first chief of staff, Rahm Emanuel, who once worked as a rainmaker for the investment bank now known as Wasserstein & Company, where in less than three years he was paid a reported eighteen and a half million dollars.

Jack Lew, who is not an economists (he is a financial manager—he ran "hedge funds and private equity at Citigroup"), now runs the United States Secretary of the Treasury (a job for an economist). With all this in mind we can now understand why the economy has not recovered from the crash of 2008 but the stock market is just booming:

The Dow Jones Industrial Average closed above 15000 for the first time Tuesday as stocks continue a historic four-year run that investors are finding increasingly irresistible.

Dow closes above 15000 in another landmark on the market's record run. Matt Jarzemsky joins The News Hub with a look back at the day in the markets.

The Dow is off to its fastest start to any year since the dot-com-fueled bull market of 1999. But this time around the surge isn't driven by blind optimism—many investors simply see few alternatives to stocks

Meaning, there is no other way to make obscene amounts of money in a post-economy society but the stock market. When there is no real scarcity in the present, then there is nothing left to exploit but the future. This is why American political discourse is so focused on government debt and not the real monster, private debt. In the past, when a market was completely saturated, the rich turned to markets in other lands; for the past 30 years or so, however, by mechanisms facilitated by private debt and derivatives, it is future-time that's more and more colonized to sustain present profit rates.

Freeman also makes this point:

The total pay going to security commodities brokers is nearly equal to total pay for everyone working for the federal government.

And at the end of the lecture, brings up the fact that in the early 00s, when the FBI were, for the purpose of detecting terrorists and drug dealers, given power to monitor bank accounts, they found almost no terrorists but instead rampant mortgage fraud. The FBI actually went public and warned the government of this financially dangerous situation in 2004, but the government and public did nothing about it...

WASHINGTON (CNN) — Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an "epidemic" of financial crimes which, if not curtailed, could become "the next S&L crisis."

Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions.

"It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said.

Enough said for now. My final post in this series will present a boy who appears in the early pages of Adam Smith's long but great book The Wealth of Nations. Wealth of Nations.

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Washington Has the Third Lowest Workplace Death Toll in the Nation

Goldy — Tue, 07 May 2013 10:35:26 -0700

For all the bitching from Republicans and their corporate patrons about the allegedly crushing burden of our state's workers compensation system and workplace safety regulations, at least it's not the workers themselves who are being crushed. In fact, a new AFL-CIO report finds that Washington state has the third lowest workplace death toll in the nation: 1.9 fatalities a year per 100,000 workers, compared to a national average of 3.5.

So congratulations to Washington businesses and workers for making our state a relatively safe place to work. But also—and here's something I'm guessing they don't hear too often—three cheers to the Washington State Department of Labor and Industries for a regulatory job well done!

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The Death of Neoliberal as an Ideology Continues

Charles Mudede — Mon, 06 May 2013 08:50:42 -0700

Evidence of the death of market ideology? Two weeks ago, there was this...

A paper by two economists (Carmen Reinhart, now a professor at Harvard Kennedy School, and Kenneth Rogoff, an economist at Harvard University) who came up with some number (90%) that showed such and such a thing was true (government debt at this point slows growth) has been debunked only two years after it was published.

And now there is this...

Harvard professor and famous historian Niall Ferguson reportedly made some bizarre and offensive remarks about economist John Maynard Keynes at an investment conference yesterday.
According to financial writer Tom Kostigen, the editor at large of Private Wealth and Financial Advisor magazines, Ferguson made two startling suggestions about Keynes at the Tenth Annual Altegris Conference in Carlsbad, California:
Keynes' economic philosophy, Ferguson reportedly suggested, was the result of Keynes not caring about future generations.

Keynes didn't care about future generations, Ferguson reportedly suggested, because Keynes was gay and did not have children.

Back in the day, pro-market types used mathematics to prove Keynesian economics was wrong. But now that this mathematics has been shown to be riddled with holes, pro-market types are switching to the next best thing: argumentum ad hominem.

But know that the only mainstream economist to seriously think about the future of Western society is Keynes. Indeed, if you live in the West, the only piece of economic writing you need to bother with is his short paper "Economic Possibilities for our Grandchildren." All other economic works are useless to you and your condition.

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The Dow Jones Crossed 15,000

Charles Mudede — Fri, 03 May 2013 07:30:09 -0700

When you have a socialist in power, like Obama, the "job creators" are handcuffed. So today, the rich suffered to learn that the Dow Jones crossed into the unknown...

U.S. stocks rose after government data showed the economy added more jobs than expected last month, offsetting a report that nonmanufacturing growth slowed and offering some relief to investors who had grown concerned that employment growth was stalling.
The Dow Jones Industrial Average closed in on the 15000 level, up 150 points, or 1%, at 14982.

The US economy added 165,000 jobs last month. At this point, Obama has the wind in his sails. This job report is a big deal. But let's see if can (and I doubt he will) make anything meaningful for the left out of it.

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Life Without Economics: Part Four

Charles Mudede — Thu, 02 May 2013 11:49:30 -0700

Before I go into how the rich really make their money in our post-economy society, and how this explains the amount of political energy that our society spends on maintaining the illusion of the stock market's economic centrality, and why this political expenditure results in the public's inability to recognize the difference between economics and financial management, between real scarcity and culturally imposed scarcity, I want to return to the subject of my first post in this series, working hours. The Star Tribune calls this progress:

Minnesota lawmakers are looking to make 40 hours of work standard for all Minnesota workers, give them more family leave and increase their wages.
The current Minnesota law sets all three measures below the federal standards, which results in a patchwork of rules for state employers.
Under current law, about 80,000 to 115,000 Minnesota employees get overtime only after working 48 hours and workers at about 8,500 small businesses only have a right to six weeks of family leave. If the measure, approved in committee on Monday becomes law, all of those workers would get overtime after 40 hours and would have a right to 12 weeks of unpaid leave.
The measure approved Monday would also raise the Minnesota minimum wage to $9.50 an hour by 2015 for employees at large businesses...

This is not progress. Real progress would mean that the hours we work a day actually matched the scale of socially produced wealth that our society has achieved (that would be somewhere between three to four hours a day). But what would we (the working classes) do with the free time, if suddenly the rich gave up their sad game and got real about the impossibility of compound growth? The British economist Maynard Keynes actually saw more trouble in that question than this more element one: How do we make a poor society rich? But free time is not such a big problem. The more free time we have, the more our society will be open to other and unexpected possibilities.

You are already calling me a dreamer. But think about this point, which I first read about in Richard Wrangham's excellent book Catching Fire: How Cooking Made Us Humans but is reported here on Livescience.

The researchers measured the tooth sizes and body masses of four extinct hominids, modern humans, chimpanzees and other modern apes, using this information from modern animals to estimate time spent chewing in the extinct species. Chimpanzees, they found, spend 10 times longer chewing and eating than humans do, 48 percent versus 4.7 percent of their days.

Humans are definite outliers in primate chew time, because we eat cooked and processed food.

You must see work, in the economic sense, as this chewing business. The chimpanzee is not going anywhere soon if it's forced to spend 6 hours a day just chewing down food. Fire liberated our mouths and, as a consequence, body and minds from this dull work of breaking matter with our teeth. And with this extra time on our hands (yes, hands), we were finally free to do and develop other things. We would not be humans if we were stuck chewing all day. We will not be more than humans if we continue to spend so much time doing work that can be done in a few hours.

But there are people who already have lots of time on their hands (the unemployed); why aren't they doing amazing things? And besides, what else can we really do with the free time? I will have answers to these questions in later posts, but know for now that the production of knowledge is to the human what the production of honey is to the bee.

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Goods News About the State of the American Workplace

Charles Mudede — Tue, 30 Apr 2013 12:09:52 -0700

The number of people who are actively disengaged with their job has dropped by two whole percent...

[T]he percent of workers who are “actively disengaged” has been dropping ever so slightly—from 20 percent in 2006 to 18 percent in 2012.

Altogether, 52 percent of Americans are not engaged and 30 percent are engaged. The reason why the one percent are worried about this sad state of things? Because they want to us to be more productive...

If the widespread emotional detachment isn’t enough to worry leaders, then perhaps it’s also worth noting that Gallup has found that an organization’s productivity and profitability are directly tied to employee engagement. So when only 30 percent of the U.S. workforce is motivated, that’s an economic problem as well as a morale problem.

But what if we just want to work less? Let's be realistic and admit there will always be jobs we do not want to do; but why should these bad jobs consume so much of our time? What if we were paid a decent wage and also had more time to ourselves, more time to do other things? To think about these questions, I refer you to my post Life After Economics: Part One.

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Tweet of the Day

Brendan Kiley — Mon, 29 Apr 2013 16:28:26 -0700

And here's a nice story from last May Day about a Seattle EMT who was cleared of charges of assaulting an officer—a favorite charge against demonstrators—after video testimony showed the officers' accounts of events to be simply untrue. (For example: "The detective went on to assert that Morales kicked a second officer. Video of the incident shows Morales' feet were secured by officers immediately after she hit the ground.")

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Big Government Is Hurting Under Obama

Charles Mudede — Mon, 29 Apr 2013 09:11:08 -0700

Time:

Economic pundits are bemoaning the fact that first quarter GDP numbers released last Friday were weaker than expected – growth was 2.5% rather than the 3% that everyone had been expecting.

I actually took it as positive news. For starters, was it really possible that we’d suddenly gone back to our normal, historic 3% trend growth? The optimism in the economic forecasts always seemed to have more to do with the fact that we didn’t fall completely off the fiscal cliff a few months back.

In fact, the economists and investors letting out a collective exhale a few months back made us forget about the coming effects of the sequester. But there was no denying them in the first quarter numbers – the slower than expected growth was all about the public sector slamming on the brakes. “The decline in government expenditure over the past two quarters is the biggest six month contraction since the Korean War ended,” notes Capital Economics’ chief US economist Paul Ashworth.

It's Democrats who got the neoliberal ball rolling. It's Democrats who will keep that ball rolling.

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Overheard on the Sidewalk

Brendan Kiley — Fri, 26 Apr 2013 13:58:50 -0700

Woman, talking to man: "See, that's the good thing about being married—you two can share a one-bedroom apartment."

If that's "the good thing" about marriage, our bank accounts are collectively busted.

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The International Connection Between a Book and a Local Restaurant

Charles Mudede — Fri, 26 Apr 2013 08:44:32 -0700

I want to make a connection between a book, The Making of Global Capitalism, I reviewed in this week's books section...

And a new Ethiopian restaurant, Wonder Coffee and Sports Bar, I reviewed in this week's chow section.

Here is the connection: In The Making of Global Capitalism, the Canadian authors (Leo Panitch and Sam Gindin—the first is a professor of political science and the second is an economist), convincingly argue that globalization is essentially Americanization. To understand their reasoning, you have to first understand this: There is no such thing as a pure capitalism, a capitalism as a kind of Platonic form. There are instead multiple capitalisms, each marked by the culture through which it is expressed—Singaporean capitalism, German capitalism, Brazilian capitalism, and so on. The kind of capitalism that went global during the second half of the 20th century was US capitalism. Not only that, this capitalism was made global not by capitalists or multinational corporations but by the US government. Only a powerful state has the kind of muscle needed to build, support, and reproduce an economic order on a global scale.

And how does this connect with the Wonder Coffee and Sports Bar? A passage from my review:

A part of the menu offers Ethiopian dishes. The other part offers plain American meals... Now here is where things get wonderfully weird: The Ethiopian dishes are in the Wonder Special Ethiopian section of the menu, and the American meals are in the Wonder Special International section. When you eat a hamburger down the street, it is not international—but when you eat it in Wonder, it is. America, not Ethiopia, is international in Wonder.

Wonder, however, is correct to categorize American plates (even in America) as international—it is the food/language/culture of global capitalism. A cheeseburger, no matter where it is served, is international; injera bread, no matter where it is served, is local.

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Life Without Economics: Part Three

Charles Mudede — Thu, 25 Apr 2013 11:02:19 -0700

How can we tell that Duvvuri Subbarao, the current Governor of the Reserve Bank of India, is an actual economist and, someone like Henry Paulson, "an American banker who served as... Secretary of the Treasury" under Bush, is not? Go to the question period of a lecture, "India - Macroeconomic Challenges, Some Reserve Bank Perspectives," Subbarao delivered at the London School of Economics and listen to the exchange that happens around the 65:00 mark. A member of the audience asks Subbarao to explain why macroeconomic indicators are not positive and yet the stock market is booming; Subbarao answers: "As the reserve bank governor, I'm expected not to take notice of the stock market. I have no comment on that... I have no informed or educated view on that."

That is something you would never hear from the mouth of someone running the US Treasury or Federal Reserve. Why? Because they are financial managers and not economists. Subbarao, on the other hand, is not a banker because his country, India, is growing not for the sake of growth but because it still faces problems with real scarcity—meaning, real and not culturally imposed poverty (read Part Two).

Now, go to the middle of the lecture (47:00), and I do recommend you listen to the whole lecture, and you will hear Subbarao discussing the argument that advanced capitalist societies (ACS) make to justify what is essentially unjustifiable—their continued economic compound growth. ACSs say that their growth is good because it translates into growth for the developing world. In short, they are growing not to benefit the West but the rest. No one in the world really believes this nonsense. Rich countries are growing not even for their own economies but for their stock markets. This gets us to a very important point in this series. In my first post, I explained why those who run the US Treasury of Federal Reserve are not economists. In my next, but not final post, I will explain exactly why they cannot ignore the stock market in the way that Subbarao can.

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How Much Do Lawmakers Really Care About America's 4.6 Million Longterm Unemployed?

Goldy — Wed, 24 Apr 2013 08:43:25 -0700

Hearing on long-term unemployment kicks off with... *one* lawmaker in attendance. twitter.com/nirajc/status/…
— Niraj Chokshi (@nirajc) April 24, 2013

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Avenge the Reagan

Charles Mudede — Wed, 24 Apr 2013 08:26:11 -0700

From a post on Souciant:

Charlie Bertsch.

Charlie Bertsch writes:

If this car were merely festooned with the “Commander in Thief” sticker, then, it wouldn’t be worthy of commentary. In states like Arizona, so many cars bear this sort of message that it no longer makes much of an impression. What sets this vehicle apart is the dialogue it creates between that anti-Obama sentiment and the sticker featuring a smiling Ronald Reagan that reads “Avenge me.” The implication is that the President has managed to undo the so-called “Reagan Revolution”, which, like the one Margaret Thatcher presided over in Great Britain, is credited with ushering in an era of leaner and, yes, meaner national government.

It must not be forgotten that it was the left—Labor (James Callaghan) in the UK and Democrats (Jimmy Carter) in the US—who, facing stagflation (inflation with no job growth), first implemented neoliberal policies. Indeed, it was Carter who picked Paul Volcker to run the Federal Reserve, and it was Volcker who, with the Volcker Shock (a sharp and painful increase interest rates), made it more than clear that the government's agenda was no longer full employment (Keynesian demand management economics) but low inflation (hardcore Chicago School). To this day, no leader in the US, and the UK, has, despite 2008 and the collapse of the market, broken with the neoliberal program, which was only accelerated by Reagan and Thatcher. WSJ:

Wealthy Americans took a hit when the global financial crisis sent the economy into a nosedive, yet new research shows they alone — specifically, the richest 7% — benefited as households rebuilt their wealth in the first two years of the recovery. From 2009 to 2011, the average wealth of America’s richest 7% — the 8 million households with a net worth north of about $800,000 — rose nearly 30% to $3.2 million from $2.5 million, according to a Pew Research Center report that analyzed recent Census data. By contrast, the average wealth of America’s remaining 93%, some 111 million households, actually dropped by 4% to $134,000 from $140,000. Wealth is the value of what a household owns minus what it owes.

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Fast Food Strike Spreads to Chicago

Goldy — Wed, 24 Apr 2013 08:08:56 -0700

First New York, now Chicago. Will Seattle be next?

Demanding a hefty raise and a fair chance to form a union, workers in Chicago’s growing fast food and retail sectors plan to walk off the job Wednesday morning. The one-day walkout begins at 5:30 a.m. Central Time, and organizers expect 500 workers from a dozen chains to participate. The work stoppage follows similar strikes by New York City fast food workers and by Wal-Mart retail employees across the country, and marks the latest escalation in the struggle between an embattled labor movement and two industries that increasingly dominate and define the new economy.

“At the end of the day,” Macy’s employee Krystal Maxie-Collins told Salon, “it feels like I’ve done all of this to help everyone else, to help the store, help the managers, help the customers, but it doesn’t feel like anyone is looking out for me.”

In this day and age, with the law and the media stacked against them, the idea that low-wage fast food and retail workers might actually organize a union is so ambitious it borders on the realm of science fiction. Given labor's trajectory this past half century, I'm just having trouble imagining this sort of alternative future. But it's uplifting to try.

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Canada's Left Abandons the Word "Socialism"

Charles Mudede — Tue, 23 Apr 2013 08:55:56 -0700

This is sad indeed...

The NDP voted Sunday to take references to socialism out of the party's constitution, a controversial move to modernize that the party had to set aside two years ago.

Delegates voted 960 to 188 in favour of the change. The result was met with cheers of "NDP! NDP!"

The move was supported by popular former leader Jack Layton, who died shortly after leading the party to its best-ever federal election result in 2011. Layton felt the party needed to modernize the preamble in order to appeal to more Canadians.

Without socialism, Canadians would not be better off than us. Bloomberg: "Hardheaded Socialism Makes Canada Richer Than U.S."...

On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news: For the first time in recent history, the average Canadian is richer than the average American.
According to data from Environics Analytics WealthScapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202, while the average American household’s net worth was $319,970.
A few days later, Canada and the U.S. both released the latest job figures. Canada’s unemployment rate fell, again, to 7.2 percent, and America’s was a stagnant 8.2 percent. Canada continues to thrive while the U.S. struggles to find its way out of an intractable economic crisis and a political sine curve of hope and despair.
The difference grows starker by the month: The Canadian system is working; the American system is not.

The situation for American neoliberalism is so bad, that you can even find long and generally favorable pieces about Karl Marx in mainstream outlets like Time.

A growing dossier of evidence suggests that [Marx] may have been right. It is sadly all too easy to find statistics that show the rich are getting richer while the middle class and poor are not. A September study from the Economic Policy Institute (EPI) in Washington noted that the median annual earnings of a full-time, male worker in the U.S. in 2011, at $48,202, were smaller than in 1973. Between 1983 and 2010, 74% of the gains in wealth in the U.S. went to the richest 5%, while the bottom 60% suffered a decline, the EPI calculated. No wonder some have given the 19th century German philosopher a second look. In China, the Marxist country that turned its back on Marx, Yu Rongjun was inspired by world events to pen a musical based on Marx’s classic Das Kapital. “You can find reality matches what is described in the book,” says the playwright.

Socialism, like communism, is an important word and powerful tool. How else can you clearly say "no" to capitalism?

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Life Without Economics: Part Two

Charles Mudede — Fri, 19 Apr 2013 09:00:10 -0700

On March 21, 2013, the sociologist Andrew Abbott delivered a lecture at the London School of Economics called "Scarcity, Abundance, Excess: Towards a Social Theory of Too Much." The heart of that lecture:

It argues that since excess and overabundance are a central phenomena of modern life, we should refound social theory on the concept of "too much of" rather than "too little of." I trace the origin of the scarcity theories that dominate our reasoning, and sketch the outlines of a social theory based on excess.

The problem facing "modern life" (meaning, life in advanced capitalists societies—ACS), is not dealing with free time but finding strategies that deal with excess—reduction strategies, rescaling, adjustment and adaptation strategies, and so on. As for scarcity in ACSs? Abbott makes a great suggestion but fails to develop it in the right or best direction (you can watch his wrong line of thinking at the 24:00 mark):

Scarcity, Abbott states, happens on two levels: one is the individual level and the other is the social. The reason why this distinction is so important is because it clearly explains the political/ideological function of promoting individualism in ACSs. It is not so much about generalizing the values of the rich, who do not need social supports, public assistance, and so on; instead, it's about enforcing scarcity on poor subjects. If a society has an abundance of wealth and does not want to distribute it fairly, then it desperately needs the category of the individual—a single person on whom scarcity can be imposed. Poor countries do not need or depend on the culturally fabricated category of the individual because scarcity is real on both the level of the subject and the state. But because scarcity is nonexistent in rich countries, those in power, those who refuse to distribute wealth in a meaningful way, have to invent it. The invention of scarcity is linked with the promotion of the individual. The society is rich but you yourself are poor.

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Alaska Airlines Contractor Fined for Failing to Protect Workers from Urine, Feces, Blood, and Vomit

Goldy — Thu, 18 Apr 2013 11:35:35 -0700

Um, yech...

The Washington State Department of Labor and Industries (L&I) has fined Alaska Airlines-contractor Bags, Inc. for failing to protect workers from exposure to blood borne pathogens and body fluids including vomit, urine, feces and blood. In issuing more than $12,000 in fines, L&I cited the Alaska contractor for four serious violations of state health and safety laws, and two general violations. Under state law, “serious violations” are issued when “there is a substantial probability that death or serious physical harm could result” if the problem is not fixed.

You can find the full text of the L&I enforcement action here.

itsourairport.org

Baggage handler, wheelchair agent, and cabin cleaner can be shitty jobs—sometimes quite literally—yet their wages at Sea-Tac Airport have declined 40 percent in real dollars since Alaska Airlines contracted these jobs out in 2005. Workers have repeatedly complained about both wages and working conditions, yet Alaska and its Sea-Tac contractors have consistently turned a deaf ear. That's why over a thousand Sea-Tac workers, most of them earning less than $10 an hour, recently voted to unionize.

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The Death of Neoliberal Ideology Is Real

Charles Mudede — Thu, 18 Apr 2013 08:43:27 -0700

There was a time when the models and mathematics of neoliberal economists (who are not really economists in the first place) could not be contested. When they said such and such a number or curve was telling us the truth, it was accepted as nothing but the truth. But because we are now stuck in the post-neoliberal world (a world we entered in 2008), we can finally challenge the findings of neoclassical economists without fear of losing our jobs. An example: A paper by two economists (Carmen Reinhart, now a professor at Harvard Kennedy School, and Kenneth Rogoff, an economist at Harvard University) who came up with some number (90%) that showed such and such a thing was true (government debt at this point slows growth) has been debunked only two years after it was published. The Economist:

The new paper, by Thomas Herndon, Michael Ash and Robert Pollin of the University of Massachusetts, Amherst, sought to replicate the Reinhart-Rogoff result for the post-war period. They reckon that mistakes in the analysis led Ms Reinhart and Mr Rogoff to understate average growth at high debt levels...Taken together, the authors of the new paper reckon that average post-war growth above the 90% threshold ought to have been reported at 2.2% rather than -0.1%.

Ms. Reinhart and Mr. Rogoff have acknowledged the error in their paper. Neoliberalism, however, continues as if nothing has changed, continues as austerity in the United States, the UK, Greece, Ireland, and elsewhere. Neoliberalism is now a body without a head.

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How an Error in a Microsoft Excel Spreadsheet Tanked the Global Economy

Goldy — Wed, 17 Apr 2013 17:58:00 -0700

The big scandal in economics this week (and yes, there are big scandals in economics) is the news that the most widely cited academic study driving austerity programs worldwide came to an erroneous conclusion due to... wait for it... an error in a Microsoft Excel spreadsheet! (Apparently a simple mistake that "all spreadsheet jockeys fear." Not Microsoft's error, a user error.)

The highly influential paper authored by economists Carmen Reinhart and Ken Rogoff warned that countries with debt-to-GDP ratios above 90 percent experience dramatically lower economic growth than countries with lower debt-to-GDP ratios. It is this alarming (but, now we know, nonexistent) 90-percent cutoff that has largely been cited as grounds for budget-slashing economic austerity in the US and abroad.

But... well... oops:

It turns out that the initial results were driven by simple computational and transcription errors. The most important of these errors was excluding four years of growth data from New Zealand in which it was above the 90 percent debt-to-GDP threshold. When these four years are added in, the average growth rate in New Zealand for its high debt years was 2.6 percent, compared to the -7.6 percent that R&R had entered in their calculation.

Since R&R country weight their data (each country's growth rate has the same weight), and there are only seven countries that cross into the high debt region, correcting this one mistake alone adds 1.5 percentage points to the average growth rate for the high debt countries. This eliminates most of the falloff in growth that R&R find from high debt levels. (HAP find several other important errors in the R&R paper, however the missing New Zealand years are the biggest part of the story.)

This is a big deal because politicians around the world have used this finding from R&R to justify austerity measures that have slowed growth and raised unemployment. In the United States many politicians have pointed to R&R's work as justification for deficit reduction even though the economy is far below full employment by any reasonable measure. In Europe, R&R's work and its derivatives have been used to justify austerity policies that have pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. In other words, this is a mistake that has had enormous consequences.

... If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit reduction policies being pursued in the United States and elsewhere.

But of course, facts don't matter.

This post has been updated since it was first published.

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Life Without Economics: Part One

Charles Mudede — Tue, 16 Apr 2013 07:27:27 -0700

According to The Making of Global Capitalism, a book by Leo Panitch and Sam Gindin, there are something like 200 economists working for the Federal Reserve. Most if not all of them have not really studied economics but simply financial management—meaning, theories about how to make the market make more money, how to beat the market with rent-seeking mathematics, the dark arts of arbitrage, and all the rest of it. They know nothing about actual scarcity—the primary concern of economics—because there is no actual scarcity in American society. There is only imposed scarcity. This is why the only document the student of economics in advanced capitalist societies, and not places like Malawi, should read is John Maynard Keynes' "Economic Possibilities for our Grandchildren." It was written in 1930, it's short, and it essentially states that when scarcity is resolved, the problem for society will be this: What will people do with the free time? Keynes:

For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!

Now here is the interesting thing. In How Much Is Enough?, a book by Keynes' biographer, Robert Skidelsky, and has the short essay "Economic Possibilities for our Grandchildren" as its starting point, it is explained that working hours in advanced capitalists societies were in decline until around the early seventies (the end of the social democratic truce between capital and labor) and have remained unmoved ever since. This fact is telling us something. What it indicates is that around the time economics was replaced by finance management and we started giving Nobel prizes to men who did not solve scarcity problems but instead dreamt up formulas for derivatives, real work (work that checks scarcity) was replaced by another form of work (work that just buys stuff).

If we had work that was real, the working hours would certainly continue their decline and the question at the heart of Keynes' paper would be confronting us directly: What do we do with freedom from economics?

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Why the Banks Hate Queen Elizabeth Warren

Charles Mudede — Mon, 15 Apr 2013 09:03:31 -0700

She really almost feels like the last pocket of democracy in American politics....

Hundreds of millions of dollars in checks from the Foreclosure Review settlement will start going out today, eventually topping $3.6 billion in the cash portion of the settlement, and yet it was revealed during yesterday’s Senate hearing that it was the actual banks that engaged in the illegal foreclosure actions that tallied up and classified their wrongdoing under various degrees of harm; deciding themselves how many people would receive $300 and how many $125,000. The outside consultants that were hired to compute the harm were in the dark about this final, and most important, stage of the review process.

Senator Warren puts it in a nutshell...

"So that leaves us with the banks that broke the law were then the banks that decided how many people lost their homes because of their lawbreaking. And, as a result, how many people would collect money in each of these categories. Is that right Mr. Alt?"

That's right. The thing about the financial sector is, even after the bailout, it is completely unapologetic and has no fear of facing serious punishment for its crimes. But now there is Warren; now she is a senator (thanks to the stupidity of the banks and their lobbyists); now there is no way to stop her from pointing out, again and again, how amoral the business of finance is.

Tip for this post came from Sgt Doom.

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The Neverending Minimum Wage Machine

Charles Mudede — Mon, 15 Apr 2013 08:45:29 -0700

Though by no means new, this work of art is still very relavent and meaningful...

The Minimum Wage Machine will pay you $7.15 for an hour of turning the crank-handle.

Workers will receive one penny for every 5.04 seconds' worth of work, which at $7.15 an hour is the minimum pay required by the NY state...

If I were the mayor of this city, the restless social engineer in me would not miss the opportunity of installing one of these instructive machines (they decrease the gap between what's in our heads and what is in reality) in every neighborhood.

In 2007, NY increased the minimum wage from $6.75 to $7.15. It is $7.25 today. Not only is the minimum wage ridiculously low and extremely slow to increase, but wages as a whole have been flat for the past 30 years. That is why inflation is still not a problem in the Great Recession (we are all Japan now), and why if inflation remains the main obsession of American economics (which is not economics, a profession that died around 1973, but mere finance management), wages will continue to be flat.

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