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Welcome to Peak Capitalism - 0 views

www.macrofugue.com/welcome-to-peak-capitalism
shared by anonymous on 05 Mar 13 - Cached
  • Let’s back pause a minute to define what this means:  Capitalism is the system of relationships between the labour class and the capital class.
  • Individual relationships are really bilateral.  There are two channels:  the wage channel, whereby the capitalist negotiates with the worker for the highest output at the lowest salary, and the price channel, whereby capitalists compete with one another to provide the highest quality products and services for the worker at the lowest prices.
  • This system provides a unique suite of incentives to each class which is responsible for providing the West a previously unimaginably high standard of living, even for the lower classes.
  • ...16 more annotations...
  •  The worker is incentivised to produce more and higher quality goods, thereby increasing his advantage in competing with other labour for higher wages.
  • The capitalist is incentivised to produce higher quality goods at lower prices, thereby increasing her advantage in competing with other companies for sales, and ultimately the capital she can accumulate.
  • The character of change now represents a shift, not from labour to capital, but away from the classical capitalist bilateral relationship between the labour class and the capital class (through wages and prices) to a unilateral one (prices).
  • Thus we get to the fundamental reality:  capitalists have been compensated for serving the poor and the elderly.  The system has worked for everyone.  The government has brokered a deal whereby capitalists accumulate capital by providing the infirm and the retired working class sustenance.  Perhaps you would change the proportions of profit and transfer payments, but the basic system of transactions and incentives has been proved out.
  • When the worker retires, the government subsidises his means of sustenance by crediting new deposits to his bank account.  He uses these credits to purchase sustenance from the capitalist class.  The retired worker has already pre-paid for these newly government-created deposits with the massive productivity gains throughout his career.  As long as the retired worker, and the present labour force, are able to increase productivity at a rate faster than the retiree’s new deposits are created by the government, the capitalist gets paid, her worker is employed, and the retired worker is provided sustenance.
  • At the most basic level, the worker does not pre-pay his retirement through social security and pension fund contributions, but even more so by productivity.
  • The enemy of both capital and labour in the system of capitalism is running out of new markets.
  • Capitalist income has long since maximised consumption, and is now focused on maximising capital accumulation.
  • Since capitalist’s goal is to accumulate more capital, she is going to re-invest when she sees opportunity, and this free cash-flow is exchanged with new labour for more future production.
  • But what happens when the capitalist sees her opportunity set decline?  Her expectation that the payment she makes to the new workers she’d hire would materialise into higher revenue later diminishes, and she decides to book her profit as cash.
  • Who could blame her?  She isn’t going to operate at an anticipated loss.
  • We have previously observed that these variations in investment horizon — and consequently rate of investment — are responsible for most of the economic cyclical variations.
  • The second is a glut of capital relative to the population.  There appear to be two chief reasons for this:  a rapid expansion in technology-driven productivity and demographically-driven declining final sales growth.
  • The way to mitigate the transition pain from capitalism to rentierism is to have the government pay retired workers for years of uncompensated productivity gains.
  • The principal political driving force away from bilateral capitalism to trilateral government-brokered rentierism will, perhaps ironically, be the same force that is trying desperately (and likely with futility) to hang on to more capitalist relationships:  baby boomers.  But even the conservative baby boomers will move to ensure their entitlements are maintained, for they will need more than they anticipated as a result of the 2008 crisis.
    • anonymous
      anonymous on 05 Mar 13
       
      This is a fascinating departure from the usual line that Baby Boomers are simply milking capitalist relationships. The suggestion that even *they* will be negatively affected by the economic downturn offers some perverse hope (for me) that a 'shared sense of sacrifice' might actually be possible.
  • We have been shifting at the margins away from bilateral capitalist relationships for decades.  What replaced it has successfully navigated the needs and demands of each class – accumulation to capital for enterprise value, sustenance to workers for labour and sustenance to the retiree for decades of productivity growth.
  • anonymous on 05 Mar 13
     
    "Has the United States of America reached, and perhaps passed, "peak capitalism" - the point where the maximum number of people participate in capitalist relationships? The argument could be made, at least on a relative basis, that it has indeed crested, and we are on the slow, inevitable march away."
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How the internet is making us poor - Quartz - 2 views

qz.com/...how-the-internet-made-us-poor technology unemployment computing
shared by anonymous on 27 Mar 13 - Cached
  • Sixty percent of the jobs in the US are information-processing jobs, notes Erik Brynjolfsson, co-author of a recent book about this disruption, Race Against the Machine. It’s safe to assume that almost all of these jobs are aided by machines that perform routine tasks. These machines make some workers more productive. They make others less essential.
  • The turn of the new millennium is when the automation of middle-class information processing tasks really got under way, according to an analysis by the Associated Press based on data from the Bureau of Labor Statistics. Between 2000 and 2010, the jobs of 1.1 million secretaries were eliminated, replaced by internet services that made everything from maintaining a calendar to planning trips easier than ever.
  • Economist Andrew McAfee, Brynjolfsson’s co-author, has called these displaced people “routine cognitive workers.” Technology, he says, is now smart enough to automate their often repetitive, programmatic tasks. ”We are in a desperate, serious competition with these machines,” concurs Larry Kotlikoff, a professor of economics at Boston University. “It seems like the machines are taking over all possible jobs.”
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  • In the early 1800′s, nine out of ten Americans worked in agriculture—now it’s around 2%. At its peak, about a third of the US population was employed in manufacturing—now it’s less than 10%. How many decades until the figures are similar for the information-processing tasks that typify rich countries’ post-industrial economies?
  • To see how the internet has disproportionately affected the jobs of people who process information, check out the gray bars dipping below the 0% line on the chart, below. (I’ve adapted this chart to show just the types of employment that lost jobs in the US during the great recession. Every other category continued to add jobs or was nearly flat.)
  • Here’s another clue about what’s been going on in the past ten years. “Return on capital” measures the return firms get when they spend money on capital goods like robots, factories, software—anything aside from people. (If this were a graph of return on people hired, it would be called “Return on labor”.)
  • Notice: the only industry where the return on capital is as great as manufacturing is “other industries”—a grab bag which includes all the service and information industries, as well as entertainment, health care and education. In short, you don’t have to be a tech company for investing in technology to be worthwhile.
  • For many years, the question of whether or not spending on information technology (IT) made companies more productive was highly controversial. Many studies found that IT spending either had no effect on productivity or was even counter-productive. But now a clear trend is emerging. More recent studies show that IT—and the organizational changes that go with it—are doing firms, especially multinationals (pdf), a great deal of good.
  • Winner-take-all and the power of capital to exacerbate inequality
  • One thing all our machines have accomplished, and especially the internet, is the ability to reproduce and distribute good work in record time. Barring market distortions like monopolies, the best software, media, business processes and, increasingly, hardware, can be copied and sold seemingly everywhere at once. This benefits “superstars”—the most skilled engineers or content creators. And it benefits the consumer, who can expect a higher average quality of goods.
  • But it can also exacerbate income inequality, says Brynjolfsson. This contributes to a phenomenon called “skill-biased technological [or technical] change.” “The idea is that technology in the past 30 years has tended to favor more skilled and educated workers versus less educated workers,” says Brynjolfsson. “It has been a complement for more skilled workers. It makes their labor more valuable. But for less skilled workers, it makes them less necessary—especially those who do routine, repetitive tasks.”
  • “Certainly the labor market has never been better for very highly-educated workers in the United States, and when I say never, I mean never,” MIT labor economist David Autor told American Public Media’s Marketplace.
  • The other winners in this scenario are anyone who owns capital.
  • As Paul Krugman wrote, “This is an old concern in economics; it’s “capital-biased technological change”, which tends to shift the distribution of income away from workers to the owners of capital.”
  • Computers are more disruptive than, say, the looms smashed by the Luddites, because they are “general-purpose technologies” noted Peter Linert, an economist at University of Californa-Davis.
  • “The spread of computers and the Internet will put jobs in two categories,” said Andreessen. “People who tell computers what to do, and people who are told by computers what to do.” It’s a glib remark—but increasingly true.
  • In March 2009, Amazon acquired Kiva Systems, a warehouse robotics and automation company. In partnership with a company called Quiet Logistics, Kiva’s combination of mobile shelving and robots has already automated a warehouse in Andover, Massachusetts.
  • This time it’s fasterHistory is littered with technological transitions. Many of them seemed at the time to threaten mass unemployment of one type of worker or another, whether it was buggy whip makers or, more recently, travel agents. But here’s what’s different about information-processing jobs: The takeover by technology is happening much faster.
  • From 2000 to 2007, in the years leading up to the great recession, GDP and productivity in the US grew faster than at any point since the 1960s, but job creation did not keep pace.
  • Brynjolfsson thinks he knows why: More and more people were doing work aided by software. And during the great recession, employment growth didn’t just slow. As we saw above, in both manufacturing and information processing, the economy shed jobs, even as employment in the service sector and professional fields remained flat.
  • Especially in the past ten years, economists have seen a reversal of what they call “the great compression“—that period from the second world war through the 1970s when, in the US at least, more people were crowded into the ranks of the middle class than ever before.
  • There are many reasons why the economy has reversed this “compression,” transforming into an “hourglass economy” with many fewer workers in the middle class and more at either the high or the low end of the income spectrum.
  • The hourglass represents an income distribution that has been more nearly the norm for most of the history of the US. That it’s coming back should worry anyone who believes that a healthy middle class is an inevitable outcome of economic progress, a mainstay of democracy and a healthy society, or a driver of further economic development.
    • anonymous
      anonymous on 27 Mar 13
       
      This is the meaty center. It's what I worry about. The "Middle Class" may just be an anomaly.
  • Indeed, some have argued that as technology aids the gutting of the middle class, it destroys the very market required to sustain it—that we’ll see “less of the type of innovation we associate with Steve Jobs, and more of the type you would find at Goldman Sachs.”
  • So how do we deal with this trend? The possible solutions to the problems of disruption by thinking machines are beyond the scope of this piece. As I’ve mentioned in other pieces published at Quartz, there are plenty of optimists ready to declare that the rise of the machines will ultimately enable higher standards of living, or at least forms of unemployment as foreign to us as “big data scientist” would be to a scribe of the 17th century.
  • But that’s only as long as you’re one of the ones telling machines what to do, not being told by them. And that will require self-teaching, creativity, entrepreneurialism and other traits that may or may not be latent in children, as well as retraining adults who aspire to middle class living. For now, sadly, your safest bet is to be a technologist and/or own capital, and use all this automation to grab a bigger-than-ever share of a pie that continues to expand.
  • anonymous on 27 Mar 13
     
    "Everyone knows the story of how robots replaced humans on the factory floor. But in the broader sweep of automation versus labor, a trend with far greater significance for the middle class-in rich countries, at any rate-has been relatively overlooked: the replacement of knowledge workers with software. One reason for the neglect is that this trend is at most thirty years old, and has become apparent in economic data only in perhaps the past ten years. The first all-in-one commercial microprocessor went on sale in 1971, and like all inventions, it took decades for it to become an ecosystem of technologies pervasive and powerful enough to have a measurable impact on the way we work."
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Jaron Lanier: The Internet destroyed the middle class - 2 views

www.salon.com/...net_destroyed_the_middle_class technology
shared by anonymous on 15 May 13 - Cached
  • His book continues his war on digital utopianism and his assertion of humanist and individualistic values in a hive-mind world. But Lanier still sees potential in digital technology: He just wants it reoriented away from its main role so far, which involves “spying” on citizens, creating a winner-take-all society, eroding professions and, in exchange, throwing bonbons to the crowd.
  • This week sees the publication of “Who Owns the Future?,” which digs into technology, economics and culture in unconventional ways.
  • Much of the book looks at the way Internet technology threatens to destroy the middle class by first eroding employment and job security, along with various “levees” that give the economic middle stability.
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  • “Here’s a current example of the challenge we face,” he writes in the book’s prelude: “At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has become Instagram. When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people. Where did all those jobs disappear? And what happened to the wealth that all those middle-class jobs created?”
  • But more important than Lanier’s hopes for a cure is his diagnosis of the digital disease. Eccentric as it is, “Future” is one of the best skeptical books about the online world, alongside Nicholas Carr’s “The Shallows,” Robert Levine’s “Free Ride” and Lanier’s own “You Are Not a Gadget.”
  • One is that the number of people who are contributing to the system to make it viable is probably the same.
  • And furthermore, many people kind of have to use social networks for them to be functional besides being valuable.
  • So there’s still a lot of human effort, but the difference is that whereas before when people made contributions to the system that they used, they received formal benefits, which means not only salary but pensions and certain kinds of social safety nets. Now, instead, they receive benefits on an informal basis. And what an informal economy is like is the economy in a developing country slum. It’s reputation, it’s barter, it’s that kind of stuff.
  • Yeah, and I remember there was this fascination with the idea of the informal economy about 10 years ago. Stewart Brand was talking about how brilliant it is that people get by in slums on an informal economy. He’s a friend so I don’t want to rag on him too much. But he was talking about how wonderful it is to live in an informal economy and how beautiful trust is and all that.
  • And you know, that’s all kind of true when you’re young and if you’re not sick, but if you look at the infant mortality rate and the life expectancy and the education of the people who live in those slums, you really see what the benefit of the formal economy is if you’re a person in the West, in the developed world.
  • So Kodak has 140,000 really good middle-class employees, and Instagram has 13 employees, period. You have this intense concentration of the formal benefits, and that winner-take-all feeling is not just for the people who are on the computers but also from the people who are using them. So there’s this tiny token number of people who will get by from using YouTube or Kickstarter, and everybody else lives on hope. There’s not a middle-class hump. It’s an all-or-nothing society.
  • the person who lost his job at Kodak still has to pay rent with old-fashioned money he or she is no longer earning. He can’t pay his rent with cultural capital that’s replaced it.
  • The informal way of getting by doesn’t tide you over when you’re sick and it doesn’t let you raise kids and it doesn’t let you grow old. It’s not biologically real.
  • If we go back to the 19th century, photography was kind of born as a labor-saving device, although we don’t think of it that way.
  • And then, you know, along a similar vein at that time early audio recordings, which today would sound horrible to us, were indistinguishable between real music to people who did double blind tests and whatnot.
  • So in the beginning photography was kind of a labor saving device. And whenever you have a technological advance that’s less hassle than the previous thing, there’s still a choice to make. And the choice is, do you still get paid for doing the thing that’s easier?
  • And so you could make the argument that a transition to cars should create a world where drivers don’t get paid, because, after all, it’s fun to drive.
  • We kind of made a bargain, a social contract, in the 20th century that even if jobs were pleasant people could still get paid for them. Because otherwise we would have had a massive unemployment. And so to my mind, the right question to ask is, why are we abandoning that bargain that worked so well?
    • anonymous
      anonymous on 15 May 13
       
      I think that's a worthy question considering the high-speed with which we adopt every possible technology; to hell with foresight.
  • Of course jobs become obsolete. But the only reason that new jobs were created was because there was a social contract in which a more pleasant, less boring job was still considered a job that you could be paid for. That’s the only reason it worked. If we decided that driving was such an easy thing [compared to] dealing with horses that no one should be paid for it, then there wouldn’t be all of those people being paid to be Teamsters or to drive cabs. It was a decision that it was OK to have jobs that weren’t terrible.
  • I mean, the whole idea of a job is entirely social construct. The United States was built on slave labor. Those people didn’t have jobs, they were just slaves. The idea of a job is that you can participate in a formal economy even if you’re not a baron. That there can be, that everybody can participate in the formal economy and the benefit of having everybody participate in the formal economy, there are annoyances with the formal economy because capitalism is really annoying sometimes.
  • But the benefits are really huge, which is you get a middle-class distribution of wealth and clout so the mass of people can outspend the top, and if you don’t have that you can’t really have democracy. Democracy is destabilized if there isn’t a broad distribution of wealth.
  • And then the other thing is that if you like market capitalism, if you’re an Ayn Rand person, you have to admit that markets can only function if there are customers and customers can only come if there’s a middle hump. So you have to have a broad distribution of wealth.
    • anonymous
      anonymous on 15 May 13
       
      Ha ha. Ayn Rand people don't have to admit to *anything,* trust me, dude.
  • It was all a social construct to begin with, so what changed, to get to your question, is that at the turn of the [21st] century it was really Sergey Brin at Google who just had the thought of, well, if we give away all the information services, but we make money from advertising, we can make information free and still have capitalism.
  • But the problem with that is it reneges on the social contract where people still participate in the formal economy. And it’s a kind of capitalism that’s totally self-defeating because it’s so narrow. It’s a winner-take-all capitalism that’s not sustaining.
    • anonymous
      anonymous on 15 May 13
       
      This makes me curious. Is he arguing that there are fewer *nodes* because the information access closes them?
  • You argue that the middle class, unlike the rich and the poor, is not a natural class but was built and sustained through some kind of intervention.
    • anonymous
      anonymous on 15 May 13
       
      My understanding was that the U.S. heads of business got the nod to go ahead and start manufacturing things *other* than weapons, because our industrial capabilities weren't anhialated (sp?) relative to so many others.
  • There’s always academic tenure, or a taxi medallion, or a cosmetology license, or a pension. There’s often some kind of license or some kind of ratcheting scheme that allows people to keep their middle-class status.
  • In a raw kind of capitalism there tend to be unstable events that wipe away the middle and tend to separate people into rich and poor. So these mechanisms are undone by a particular kind of style that is called the digital open network.
  • Music is a great example where value is copied. And so once you have it, again it’s this winner-take-all thing where the people who really win are the people who run the biggest computers. And a few tokens, an incredibly tiny number of token people who will get very successful YouTube videos, and everybody else lives on hope or lives with their parents or something.
  • I guess all orthodoxies are built on lies. But there’s this idea that there must be tens of thousands of people who are making a great living as freelance musicians because you can market yourself on social media.
  • And whenever I look for these people – I mean when I wrote “Gadget” I looked around and found a handful – and at this point three years later, I went around to everybody I could to get actual lists of people who are doing this and to verify them, and there are more now. But like in the hip-hop world I counted them all and I could find about 50. And I really talked to everybody I could. The reason I mention hip-hop is because that’s where it happens the most right now.
  • The interesting thing about it is that people advertise, “Oh, what an incredible life. She’s this incredibly lucky person who’s worked really hard.” And that’s all true. She’s in her 20s, and it’s great that she’s found this success, but what this success is that she makes maybe $250,000 a year, and she rents a house that’s worth $1.1 million in L.A.. And this is all breathlessly reported as this great success.
  • And that’s good for a 20-year-old, but she’s at the very top of, I mean, the people at the very top of the game now and doing as well as what used to be considered good for a middle-class life.
    • anonymous
      anonymous on 15 May 13
       
      Quite true. She's obviously not rolling in solid gold cadillacs.
  • But for someone who’s out there, a star with a billion views, that’s a crazy low expectation. She’s not even in the 1 percent. For the tiny token number of people who make it to the top of YouTube, they’re not even making it into the 1 percent.
  • The issue is if we’re going to have a middle class anymore, and if that’s our expectation, we won’t. And then we won’t have democracy.
  • I think in the total of music in America, there are a low number of hundreds. It’s really small. I wish all of those people my deepest blessings, and I celebrate the success they find, but it’s just not a way you can build a society.
  • The other problem is they would have to self-fund. This is getting back to the informal economy where you’re living in the slum or something, so you’re desperate to get out so you impress the boss man with your music skills or your basketball skills. And the idea of doing that for the whole of society is not progress. It should be the reverse. What we should be doing is bringing all the people who are in that into the formal economy. That’s what’s called development. But this is the opposite of that. It’s taking all the people from the developed world and putting them into a cycle of the developing world of the informal economy.
  • We don’t realize that our society and our democracy ultimately rest on the stability of middle-class jobs. When I talk to libertarians and socialists, they have this weird belief that everybody’s this abstract robot that won’t ever get sick or have kids or get old. It’s like everybody’s this eternal freelancer who can afford downtime and can self-fund until they find their magic moment or something.
  • The way society actually works is there’s some mechanism of basic stability so that the majority of people can outspend the elite so we can have a democracy. That’s the thing we’re destroying, and that’s really the thing I’m hoping to preserve. So we can look at musicians and artists and journalists as the canaries in the coal mine, and is this the precedent that we want to follow for our doctors and lawyers and nurses and everybody else? Because technology will get to everybody eventually.
  • I have 14-year-old kids who come to my talks who say, “But isn’t open source software the best thing in life? Isn’t it the future?” It’s a perfect thought system. It reminds me of communists I knew when growing up or Ayn Rand libertarians.
  • It’s one of these things where you have a simplistic model that suggests this perfect society so you just believe in it totally. These perfect societies don’t work. We’ve already seen hyper-communism come to tears. And hyper-capitalism come to tears. And I just don’t want to have to see that for cyber-hacker culture. We should have learned that these perfect simple systems are illusions.
  • You’re concerned with equality and a shrinking middle class. And yet you don’t seem to consider yourself a progressive or a man of the left — why not?
  • I am culturally a man on the left. I get a lot of people on the left. I live in Berkeley and everything. I want to live in a world where outcomes for people are not predetermined in advance with outcomes.
  • The problem I have with socialist utopias is there’s some kind of committees trying to soften outcomes for people. I think that imposes models of outcomes for other people’s lives. So in a spiritual sense there’s some bit of libertarian in me. But the critical thing for me is moderation. And if you let that go too far you do end up with a winner-take-all society that ultimately crushes everybody even worse. So it has to be moderated.
  • I think seeking perfection in human affairs is a perfect way to destroy them.
  • All of these things are magisterial, where the people who become involved in them tend to wish they could be the only ones.
  • Libertarians tend to think the economy can totally close its own loops, that you can get rid of government. And I ridicule that in the book. There are other people who believe that if you could get everybody to talk over social networks, if we could just cooperate, we wouldn’t need money anymore. And I recommend they try living in a group house and then they’ll see it’s not true.
    • anonymous
      anonymous on 15 May 13
       
      Group House. HAH!
  • So what we have to demand of digital technology is that it not try to be a perfect system that takes over everything. That it balances the excess of the other magisteria.
  • And that is doesn’t concentrate power too much, and if we can just get to that point, then we’ll really be fine. I’m actually modest. People have been accusing me of being super-ambitious lately, but I feel like in a way I’m the most modest person in the conversation.
  • I’m just trying to avoid total dysfunction.
    • anonymous
      anonymous on 15 May 13
       
      See, now I like this guy. This is like the political equivalent of aiming for the realist view in geopolitics. We separate what is likely from what is unlikely and aim not for "the best" situation, but a situation where the worst aspects have been mitigated. It's backwards thinking that both parties would have a hard time integrating into their (ughhh) brand.
  • Let’s stick with politics for one more. Is there something dissonant about the fact that the greatest fortunes in human history have been created with a system developed largely by taxpayers dollars?
  • Yeah, no kidding. I was there. I gotta say, every little step of this thing was really funded by either the military or public research agencies. If you look at something like Facebook, Facebook is adding the tiniest little rind of value over the basic structure that’s there anyway. In fact, it’s even worse than that. The original designs for networking, going back to Ted Nelson, kept track of everything everybody was pointing at so that you would know who was pointing at your website. In a way Facebook is just recovering information that was deliberately lost because of the fetish for being anonymous. That’s also true of Google.
  • I don’t hate anything about e-books or e-book readers or tablets. There’s a lot of discussion about that, and I think it’s misplaced. The problem I have is whether we believe in the book itself.
  • Books are really, really hard to write. They represent a kind of a summit of grappling with what one really has to say. And what I’m concerned with is when Silicon Valley looks at books, they often think of them as really differently as just data points that you can mush together. They’re divorcing books from their role in personhood.
    • anonymous
      anonymous on 15 May 13
       
      Again, a take I rarely encounter.
  • I was in a cafe this morning where I heard some stuff I was interested in, and nobody could figure out. It was Spotify or one of these … so they knew what stream they were getting, but they didn’t know what music it was. Then it changed to other music, and they didn’t know what that was. And I tried to use one of the services that determines what music you’re listening to, but it was a noisy place and that didn’t work. So what’s supposed to be an open information system serves to obscure the source of the musician. It serves as a closed information system. It actually loses the information.
    • anonymous
      anonymous on 15 May 13
       
      I have had this very thing happen to. I didn't get to have my moment of discovery. I think Google Glass is going to fix that. Hah. :)
  • And if we start to see that with books in general – and I say if – if you look at the approach that Google has taken to the Google library project, they do have the tendency to want to move things together. You see the thing decontextualized.
  • I have sort of resisted putting my music out lately because I know it just turns into these mushes. Without context, what does my music mean? I make very novel sounds, but I don’t see any value in me sharing novel sounds that are decontextualized. Why would I write if people are just going to get weird snippets that are just mushed together and they don’t know the overall position or the history of the writer or anything? What would be the point in that. The day books become mush is the day I stop writing.
  • So to realize how much better musical instruments were to use as human interfaces, it helped me to be skeptical about the whole digital enterprise. Which I think helped me be a better computer scientist, actually.
  • Sure. If you go way back I was one of the people who started the whole music-should-be-free thing. You can find the fire-breathing essays where I was trying to articulate the thing that’s now the orthodoxy. Oh, we should free ourselves from the labels and the middleman and this will be better.I believed it at the time because it sounds better, it really does. I know a lot of these musicians, and I could see that it wasn’t actually working. I think fundamentally you have to be an empiricist. I just saw that in the real lives I know — both older and younger people coming up — I just saw that it was not as good as what it had once been. So that there must be something wrong with our theory, as good as it sounded. It was really that simple.
  • anonymous on 15 May 13
     
    "Kodak employed 140,000 people. Instagram, 13. A digital visionary says the Web kills jobs, wealth -- even democracy"
9More

Who Makes The Randroids? Inside an ARI Weekend Workshop. - 0 views

aynrandcontrahumannature.blogspot.com/...droids-inside-ari-weekend.html objectivism criticalthinking
shared by anonymous on 31 May 11 - Cached
  • A typical Objectivist assurance that rational debate is welcome and encouraged. So how did it measure up? Well, let's find out.
  • One, while arguing that abortion is permissible in the third trimester, added this classic Objectivist line to his argument: A is A. A is A entails that abortion is moral? Call the press! The pro-lifers have been officially refuted. And absolutely hilarious was the debate between a Randroid and an ideological anarchist (Editor: did the anarchist call the Randroid a "statist"?? They really hate that!). If only we had a dogmatic libertarian, we could have had the cultist right trifecta!
  • And another remarkable statement: Mr. Biddle told several students that morally we would be justified in overthrowing our government because it is more powerful than the one the Founders overthrew (he does not advocate it because it would be unpractical - but then what happened to Rand's claim that the moral is the practical?)
  • ...5 more annotations...
  • To be fair, I don't think that most students were as enamored of the book as he was, but still there was an air of fawning about the sessions. The professors helped guide the discussions but otherwise generally stayed out of the way. Interesting to note that the handful of times I criticized Objectivism or Atlas, they were sure to 'correct' me. Not brusquely or rudely, but nonetheless the message was that we were supposed to believe what Rand said (in the group think model, they would be the "mind guards").
  • Unfortunately, his topics were pretty standard fare for those well versed in libertarianism: communism is evil, the welfare state is pretty darn bad too, we need to go back to a commodity standard, and the Fed was the prime mover behind America's Great Recession.
  • So what is the net sum of this potpourri of ideas, quackery, and economics? Some good, I'm sure, but a dangerous potential for evil. I had been a libertarian and Objectivist fanatic for long enough to be familiar with most of the ideas presented in Clemson, but my roommate, who is new to the movement, said he learned a lot, so there's a good chance that many students picked up on a lot of radical right ideas. And there's nothing inherently wrong with that.
  • The trouble is that there were almost no caveats. Dr. Thomson's encouragement to free thinking aside, Rand's ideas were presented as the truth, without any warnings that they were controversial.
  • All too often, as Robert A. Heinlein once said, man is not a rational animal, he is a rationalizing animal. And what's been 'proved' with 'reason' usually turns out to be some arbitrary claim by Rand. As Dr. Eric Daniels said: "To understand political economy, you need to understand man". Sadly, man is perhaps what Objectivism understands the least.
  • anonymous on 31 May 11
     
    "Our ARCHNblog mole "Mr A" goes undercover at an Ayn Rand Institute weekend student workshop. Once a year, the Clemson Institute for the Study of Capitalism hosts a free conference for college students on "The Moral Foundations of Capitalism" and the greatest book ever written in defense of it...oops, I forgot, Atlas Shrugged isn't primarily about capitalism, but hey, it STILL made the best defense of capitalism in the history of the world!"
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The Geopolitics of the United States, Part 1: The Inevitable Empire - 0 views

www.stratfor.com/...tates-part-1-inevitable-empire geopolitics u.s.
shared by anonymous on 24 Aug 11 - Cached
  • All of the New World entities struggled to carve a modern nation and state out of the American continents. Brazil is an excellent case of how that struggle can be a difficult one. The United States falls on the opposite end of the spectrum.
  • The Greater Mississippi Basin together with the Intracoastal Waterway has more kilometers of navigable internal waterways than the rest of the world combined. The American Midwest is both overlaid by this waterway, and is the world’s largest contiguous piece of farmland. The U.S. Atlantic Coast possesses more major ports than the rest of the Western Hemisphere combined.
  • Two vast oceans insulated the United States from Asian and European powers, deserts separate the United States from Mexico to the south, while lakes and forests separate the population centers in Canada from those in the United States.
  • ...109 more annotations...
  • The United States has capital, food surpluses and physical insulation in excess of every other country in the world by an exceedingly large margin. So like the Turks, the Americans are not important because of who they are, but because of where they live.
  • Climatically, the continent consists of a series of wide north-south precipitation bands largely shaped by the landmass’ longitudinal topography.
  • The Rocky Mountains dominate the Western third of the northern and central parts of North America
  • Farther east of this semiarid region are the well-watered plains of the prairie provinces of Canada and the American Midwest
  • East of this premier arable zone lies a second mountain chain known as the Appalachians.
  • North of the Great Lakes region lies the Canadian Shield, an area where repeated glaciation has scraped off most of the topsoil.
  • The continent’s final geographic piece is an isthmus of varying width, known as Central America, that is too wet and rugged to develop into anything more than a series of isolated city-states, much less a single country that would have an impact on continental affairs. Due to a series of swamps and mountains where the two American continents join, there still is no road network linking them, and the two Americas only indirectly affect each other’s development.
  • The most distinctive and important feature of North America is the river network in the middle third of the continent.
  • Very few of its tributaries begin at high elevations, making vast tracts of these rivers easily navigable. In the case of the Mississippi, the head of navigation — just north of Minneapolis — is 3,000 kilometers inland.
  • The unified nature of this system greatly enhances the region’s usefulness and potential economic and political power.
  • shipping goods via water is an order of magnitude cheaper than shipping them via land.
  • in the petroleum age in the United States, the cost of transport via water is roughly 10 to 30 times cheaper than overland.
  • This factor is the primary reason why the major economic powers of the past half-millennia have been Japan, Germany, France, the United Kingdom and the United States.
  • the watershed of the Greater Mississippi Basin largely overlays North America’s arable lands.
  • The vast bulk of the prime agricultural lands are within 200 kilometers of a stretch of navigable river.
  • the river network’s unity greatly eases the issue of political integration.
  • All of the peoples of the basin are part of the same economic system, ensuring constant contact and common interests. Regional proclivities obviously still arise, but this is not Northern Europe, where a variety of separate river systems have given rise to multiple national identities.
  • It is worth briefly explaining why STRATFOR fixates on navigable rivers as opposed to coastlines.
  • First, navigable rivers by definition service twice the land area of a coastline (rivers have two banks, coasts only one).
  • Second, rivers are not subject to tidal forces, greatly easing the construction and maintenance of supporting infrastructure.
  • Third, storm surges often accompany oceanic storms, which force the evacuation of oceanic ports.
  • coastal regions are a poor second compared to lands with navigable rivers.
  • There are three other features — all maritime in nature — that further leverage the raw power that the Greater Mississippi Basin provides.
  • First are the severe indentations of North America’s coastline, granting the region a wealth of sheltered bays and natural, deep-water ports.
  • Second, there are the Great Lakes.
  • Third and most important are the lines of barrier islands that parallel the continent’s East and Gulf coasts.
  • Thus, the Greater Mississippi Basin is the continent’s core, and whoever controls that core not only is certain to dominate the East Coast and Great Lakes regions but will also have the agricultural, transport, trade and political unification capacity to be a world power — even without having to interact with the rest of the global system.
  • There are many secondary stretches of agricultural land as well
  • The rivers of the American Atlantic coastal plain — flowing down the eastern side of the Appalachians — are neither particularly long nor interconnected. This makes them much more like the rivers of Northern Europe in that their separation localizes economic existence and fosters distinct political identities, dividing the region rather than uniting it. The formation of such local — as opposed to national — identities in many ways contributed to the American Civil War.
  • What is now Mexico lacks even a single navigable river of any size. Its agricultural zones are disconnected and it boasts few good natural ports.
  • Canada’s maritime transport zones
  • Its first, the Great Lakes, not only requires engineering but is shared with the United States.
  • The second, the St. Lawrence Seaway, is a solid option (again with sufficient engineering), but it services a region too cold to develop many dense population centers.
  • So long as the United States has uninterrupted control of the continental core — which itself enjoys independent and interconnected ocean access — the specific locations of the country’s northern and southern boundaries are somewhat immaterial to continental politics.
  • The eastern end of the border could be anywhere within 300 kilometers north or south of its current location (at present the border region’s southernmost ports — Brownsville and Corpus Christi — lie on the U.S. side of the border). As one moves westward to the barren lands of New Mexico, Arizona, Chihuahua and Sonora, the possible variance increases considerably. Even controlling the mouth of the Colorado River where it empties into the Gulf of California is not a critical issue, since hydroelectric development in the United States prevents the river from reaching the Gulf in most years, making it useless for transport.
    • anonymous
      anonymous on 24 Aug 11
       
      As a fun project, I'd love to create a map that depicts what could be the outer edges of the American political map without changing its core strategic position.
  • In the north, the Great Lakes are obviously an ideal break point in the middle of the border region, but the specific location of the line along the rest of the border is largely irrelevant. East of the lakes, low mountains and thick forests dominate the landscape — not the sort of terrain to generate a power that could challenge the U.S. East Coast.
  • The border here could theoretically lie anywhere between the St. Lawrence Seaway and Massachusetts without compromising the American population centers on the East Coast
  • So long as the border lies north of the bulk of the Missouri River’s expansive watershed, the border’s specific location is somewhat academic, and it becomes even more so when one reaches the Rockies.
  • On the far western end of the U.S.-Canada border is the only location where there could be some border friction. The entrance to Puget Sound — one of the world’s best natural harbors — is commanded by Vancouver Island.
  • Most of the former is United States territory, but the latter is Canadian — in fact, the capital of British Columbia, Victoria, sits on the southern tip of that strategic island for precisely that reason.
  • It is common knowledge that the United States began as 13 rebellious colonies along the east coast of the center third of the North American continent. But the United States as an entity was not a sure thing in the beginning
  • France controlled the bulk of the useful territory that in time would enable the United States to rise to power, while the Spanish empire boasted a larger and more robust economy and population in the New World than the fledgling United States.
  • Most of the original 13 colonies were lightly populated by European standards — only Philadelphia could be considered a true city in the European sense — and were linked by only the most basic of physical infrastructure. Additionally, rivers flowed west to east across the coastal plain, tending to sequester regional identities rather than unify them.
  • But the young United States held two advantages.
  • First, without exception, all of the European empires saw their New World holdings as secondary concerns.
  • With European attentions diverted elsewhere, the young United States had an opportunity to carve out a future for itself relatively free of European entanglements.
  • Second, the early United States did not face any severe geographic challenges. The barrier island system and local rivers provided a number of options that allowed for rapid cultural and economic expansion up and down the East Coast.
  • This was not England, an island that forced the early state into the expense of a navy. This was not France, a country with three coasts and two land borders that forced Paris to constantly deal with threats from multiple directions. This was not Russia, a massive country suffering from short growing seasons that was forced to expend inordinate sums of capital on infrastructure simply to attempt to feed itself.
  • Instead, the United States could exist in relative peace for its first few decades without needing to worry about any large-scale, omnipresent military or economic challenges, so it did not have to garrison a large military.
    • anonymous
      anonymous on 24 Aug 11
       
      Maybe our obsession with some mythical, truly free market stems from these early roots and is nourished by continued favorable geographic conditions. I wonder if that's one reason we're incredulous that other nations don't adopt our various policies. We have unique circumstances and are oblivious to the fact. 
  • it is inevitable that whoever controls the middle third of North America will be a great power.
    • anonymous
      anonymous on 24 Aug 11
       
      In classic StratFor fashion, the monograph extensively lays out the geographic (and some brief historical relevance) situation without reference to founding fathers or 'sacred' mentalities. On a very personal note, this is a reason that I prefer this style. On the left and right, there's a strong desire to steer perceptions. Surely, StratFor is no different, but it steers perceptions to a particular frame of scale.
  • The United States’ strategic imperatives are presented here in five parts. Normally imperatives are pursued in order, but there is considerable time overlap between the first two and the second two.
  • 1. Dominate the Greater Mississippi Basin
  • The early nation was particularly vulnerable to its former colonial master.
  • There are only two ways to protect a coastal community from sea power. The first is to counter with another navy.
  • The second method of protecting a coastal community is to develop territories that are not utterly dependent upon the sea.
  • Achieving such strategic depth was both an economic and a military imperative.
  • The United States was entirely dependent upon the English imperial system not just for finished goods and markets but also for the bulk of its non-agricultural raw materials, in particular coal and iron ore.
  • The Appalachians may not be the Swiss Alps, but they were sufficiently rugged to put a check on any deep and rapid inland expansion.
  • The Ohio River faced the additional problem of draining into the Mississippi, the western shore of which was the French territory of Louisiana
  • The United States solved this problem in three phases.
  • First, there was the direct purchase of the Louisiana Territory from France in 1803.
  • At the time, Napoleon was girding for a major series of wars that would bear his name. France not only needed cash but also to be relieved of the security burden of defending a large but lightly populated territory in a different hemisphere.
  • The Louisiana Purchase not only doubled the size of the United States but also gave it direct ownership of almost all of the Mississippi and Missouri river basins.
  • The inclusion of the city of New Orleans in the purchase granted the United States full control over the entire watershed.
  • The second phase of the strategic-depth strategy was the construction of that different route: the National Road (aka the Cumberland Road).
  • This single road (known in modern times as Interstate 40 or Interstate 70 for most of its length) allowed American pioneers to directly settle Ohio, Indiana, Illinois and Missouri and granted them initial access to Michigan, Wisconsin, Iowa and Minnesota.
  • For the better part of a century, it was the most heavily trafficked route in the country
  • the original 13 colonies were finally lashed to the Greater Mississippi Basin via a route that could not be challenged by any outside power.
  • The third phase of the early American expansion strategy was in essence an extension of the National Road via a series of settlement trails, by far the most important and famous of which was the Oregon Trail.
  • The trail was directly responsible for the initial settling of Kansas, Nebraska, Wyoming, Idaho and Oregon. A wealth of secondary trails branched off from the main artery — the Mormon, Bozeman, California and Denver trails — and extended the settlement efforts to Montana, Colorado, Utah, Nevada and California.
  • That project’s completion reduced East Coast-West Coast travel time from six months to eight days and slashed the cost by 90 percent (to about $1,100 in 2011 dollars).
  • Collectively, the Louisiana Purchase, the National Road and the Oregon Trail facilitated the largest and fastest cultural expansion in human history.
  • From beginning to end, the entire process required less than 70 years.
  • The Columbia River Valley and California’s Central Valley are not critical American territories.
  • among other things, they grant the United States full access to the Pacific trading basin — only that control of them is not imperative to American security.
  • 2. Eliminate All Land-Based Threats to the Greater Mississippi Basin
  • The first land threat to the young United States was in essence the second phase of the Revolutionary War
  • the British navy could outmatch anything the Americans could float
  • Geopolitically, the most critical part of the war was the participation of semi-independent British Canada.
  • Canadian forces, unlike the British, did not have a supply line that stretched across the Atlantic.
  • Canada is far enough north that its climate is far harsher than that of the United States, with all of the negative complications one would expect for population, agriculture and infrastructure.
  • What few rivers Canada has neither interconnect nor remain usable year round.
  • Most of these river connections also have rapids and falls, greatly limiting their utility as a transport network.
  • the St. Lawrence Seaway — a series of locks that link the St. Lawrence River to the Great Lakes and allow full ocean access — was not completed until 1959.
  • Newfoundland and Prince Edward Island — are disconnected from the Canadian landmass and unable to capitalize on what geographic blessings the rest of the country enjoys
  • what population centers Canada does have are geographically sequestered from one another by the Canadian Shield and the Rocky Mountains.
  • All four provinces have been forced by geography and necessity to be more economically integrated with their southern neighbors than with their fellow Canadian provinces.
    • anonymous
      anonymous on 24 Aug 11
       
      Here's a key fact that I have never read anywhere else. I would love to learn more about this. It's surely plausible; I just find it funny that it's been omitted from view.
  • The British were exhausted from the Napoleonic Wars in Europe and, with the French Empire having essentially imploded, were more interested in reshaping the European balance of power than re-engaging the Americans in distant North America.
  • the Americans were mobilized, angry and — remembering vividly the Canadian/British sacking of Washington — mulling revenge.
  • This left a geographically and culturally fractured Canada dreading a long-term, solitary confrontation with a hostile and strengthening local power. During the following decades, the Canadians had little choice but to downgrade their ties to the increasingly disinterested British Empire, adopt political neutrality vis-a-vis Washington, and begin formal economic integration with the United States. Any other choice would have put the Canadians on the path to another war with the Americans (this time likely without the British), and that war could have had only one outcome.
  • Using a combination of illegal settlements, military pressure and diplomacy, the United States was able to gain control of east and west Florida from Madrid in 1819 in exchange for recognizing Spanish claims to what is now known as Texas
  • the United States’ efforts to secure its southwestern borders shifted to a blatant attempt to undermine and ultimately carve up the one remaining Western Hemispheric entity that could potentially challenge the United States: Mexico.
  • the United States quickly transformed itself from a poor coastal nation to a massively capital-rich commodities exporter.
  • But these inner territories harbored a potentially fatal flaw: New Orleans.
  • the biggest potential security threat to the United States was newly independent Mexico, the border with which was only 150 kilometers from New Orleans. In fact, New Orleans’ security was even more precarious than such a small distance suggested.
  • Just as the American plan for dealing with Canada was shaped by Canada’s geographic weakness, Washington’s efforts to first shield against and ultimately take over parts of Mexico were shaped by Mexico’s geographic shortcomings.
  • In the United States, the cheap transport system allowed early settlers to quickly obtain their own small tracts of land.
  • in time the wealth accumulated to the point that portions of the United States had the capital necessary to industrialize.
  • Mexico, in contrast, suffered from a complete lack of navigable rivers and had only a single good port (Veracruz).
  • First and most obviously, the lack of navigable waterways and the non-abundance of ports drastically reduced Mexico’s ability to move goods and thereby generate its own capital. Second, the disassociated nature of Mexico’s agricultural regions forced the construction of separate, non-integrated infrastructures for each individual sub-region, drastically raising the costs of even basic development.
  • Third, the highland nature of the Mexico City core required an even more expensive infrastructure, since everything had to be transported up the mountains from Veracruz.
  • the 410-kilometer railway linking Mexico City and Veracruz was not completed until 1873. (By that point, the United States had two intercontinental lines and roughly 60,000 kilometers of railways.)
  • very different economic and social structure
  • Instead of small landholdings, Mexican agriculture was dominated by a small number of rich Spaniards
  • The Mexican landowners had, in essence, created their own company towns and saw little benefit in pooling their efforts to industrialize. Doing so would have undermined their control of their economic and political fiefdoms.
  • This social structure has survived to the modern day, with the bulk of Mexican political and economic power held by the same 300 families that dominated Mexico’s early years, each with its local geographic power center.
  • In just two generations — by 1870 — the American population had ballooned to 38.6 million while Mexico’s was only 8.8 million.
  • The American effort against Mexico took place in two theaters.
  • The first was Texas, and the primary means was settlement as enabled by the Austin family.
  • anonymous on 24 Aug 11
     
    "This installment on the United States, presented in two parts, is the 16th in a series of STRATFOR monographs on the geopolitics of countries influential in world affairs."
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Cautiously Toward Utopia: Automation and the Absurdity of Capitalism - 2 views

ieet.org/...abbott20130404
shared by anonymous on 06 Apr 13 - Cached
  • Solid analyses of the present automation conundrum abound, ranging from Marshall Brain's classic treatment to recent pieces here at IEET by Brian Merchant and Federico Pistono.
  • Contesting the many economists who insist that the market will adapt, Brain and company articulate the straightforward thesis that replacement of human workers by robots will lead to unemployment, particularly for so-called unskilled workers.
  • As Jaron Lanier writes, if artificial general intelligence remains elusive and software resource use continues to bloat, the need for technical support could keep employment high.
  • ...20 more annotations...
  • With those caveats, I do consider waxing unemployment precipitated in part by automation an extremely likely near-term future scenario.
  • In rough strokes, the story of machines displacing and immiserating skilled workers reiterates the very genesis of capitalist modernity.
  • In contrast with the Neo-Luddites of today, the nineteenth-century Luddites expressed no desire to terminate civilization but instead fiercely defended their economic interests against capitalist competition that would reduce them dependent wage labor.
  • Despite the lack of even basic computers – much less artificial intelligence – some radicals in the nineteenth century already proposed that necessary labor could be reduced to a few hours per day.
  • The later Technocracy movement made automation the core of their analysis, argued it would cause mass unemployment, and promoted a society of equally distributed abundance managed by technical experts.
  • As concise distillation of the desires described above, the following passage for Oscar Wilde's “The Soul of Man under Socialism” poetically proclaims a techno-utopian position years before the dawn of twentieth century
  • Looking at this corpus of radical discourse on automation and how mechanization has already displaced and impoverished workers provides context for today's debate.
  • Thus far, capitalism has managed to reinvent itself and weather numerous crises. Prophesies that automation would result in total economic collapse and dreams that it could create a post-scarcity paradise to date remain unrealized.
  • Even manufacturing still requires vast human labor at the moment. Living and working conditions for many twenty-first-century factory workers aren't meaningfully better than over a hundred years ago. State-socialist attempts at rationally planned industrial development have had dubious material benefits while inflicting intense environmental damage and human suffering.
  • Our current circumstances suggest automation of at least basic physical tasks will keep advancing; lights-out factories already exist. The prospect of robots replacing humans at the majority of present-day jobs appears genuinely plausible if far from certain.
  • This allows us to imagine the scenario that folks like the Technocrats were ahead of their time, that the robotization of workforce will lead to long-structural unemployment as it becomes cheaper buy and maintain a robot than pay a human employee. If this comes to pass, widespread poverty seems inevitable without significant changes to actually existing capitalism.
  • As Pistono writes, increasing “[c]ivil unrest, riots, police brutality, and general distress of the population” would at least initially define such a future. I see welfare capitalism, old-fashioned dictatorship, corporate feudalism, state socialism, fascism, and/or anarchism emerging from the ashes.
  • I favor the latter.
    • anonymous
      anonymous on 06 Apr 13
       
      I find that surely dubious. Perhaps that's because anarchism seems no less a naive idealism than Libertarianism.
  • Social relations would become profoundly altered if – consistent with Wilde's utopian vision – each individual had independent access to basic necessities and comforts without having to toil.
  • When it comes to post-scarcity, the differences between libertarians and anarchists like myself blur.
  • Barring nanotech genies who grant unlimited wishes, I assess community control of the means of production as my desired arrangement. With proper political mobilization, robotization may allow for prosperous self-sufficient or largely self-sufficient communities.
  • Whatever labor machines could not perform could be divided amongst the populace. Given the magical and alien quality of complete automation – a world without drudgery – the conservative communal scenario akin to nineteenth-century radical utopias intuitively feels more creditable to me. But I know better – or worse – than to always trust intuition.
  • Although the life of any single worker means little or nothing to them, they cannot annihilate the working class without doing the same to their own privilege. Robots change this. Human obsolescence could spell doom for the masses. If structural dynamics drive behavior, a powerful enough group of elites might simply liquidate the unruly hordes of no-longer-need labors.
  • More believably, the rich could withdraw to their own well-guarded estates – whether terrestrial, orbital, or beyond – and live decadently off the fruits of their robotic slaves. Those of us without capital would then be at the mercy of automation's aristocracy for our daily survival. This scenario conflicts with dominant notions of modern morality, but I'd rather have class organization on my side than rely on the sentiments of the oppressors.
  • I want to give automated utopia an honest try, but I also desire fertile landbases for my primitivist comrades. As personally enamored as I am with the transhumanist path, I encourage and endeavor to practice a revolutionary pluralism that respects meaningful diversity.
  • anonymous on 06 Apr 13
     
    "The longstanding and growing concern over structural unemployment caused by automation highlights the absurdity of capitalism. Like homelessness caused by too many houses, poverty from mechanization looks perverse and nonsensical from a system-optimization standpoint. This article briefly sketches the history of both fears and hopes surrounding automated labor in order to argue against economic status quo of coercion, inequality, and inefficiency."
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Thirty More Years of Hell - 1 views

exiledonline.com/thirty-more-years-of-hell generations
shared by anonymous on 12 Feb 12 - No Cached
  • A Pew poll from a few weeks back asked Americans how they felt about capitalism versus socialism. The results said all you need to know about how much longer we’re going to have to wade through this misery. You guessed it: until the Boomers finally croak.
  • For maybe the first time in modern history, we now have a generation that actually has warmer feelings about socialism than it does capitalism: 49% to 46%.
  • And a few days later, amid a multi-billion dollar war on public sector workers, another poll was released demonstrating that a whopping 69% of Millennials think teachers are underpaid (compared to 56% for Americans of all ages).
  • ...24 more annotations...
  • I first heard the “s”-word from by my sixth grade history teacher—this was in the early days of Yeltsin. She said socialism is when you have to wait in line for hours just for a Happy Meal.
  • Read the fine print: it’s 5% of wages, income from “investments” is excluded. Tax the poor wage-slave, spare the wealthy rentier. Americans still can’t see the play even with Buffett rubbing his secretary’s tax return in our faces.
  • And it’s a servitude from which we can never escape. Forget bankruptcy. Default on a student loan and the government will garnish your wages until they get it all back, plus interest. They can even go after your social security money, off limits for all other debts.
  • Mike Konczal sees this as just another sign of a “submerged state”—the unholy fertilizer that keeps the American libertarian discourse in full bloom. None of the “welfare,” but all of the “state.”
  • “After the Great Society program in the 1960s,” says Leo Panitch, “left-wing Democrats, rather than calling for more public housing to rebuild America’s cities instead called for the banks to lend money to poor black communities…one of the effects of winning those demands was a channeling of those communities more deeply into the structures of finance, the most dynamic sector of neoliberal capitalism.”
  • While a liberal looks upon the New Deal and Great Society generation as a pantheon of benevolent patriarchs, I see a bunch of technocrats who slapped together a crude simulacrum of social democracy and called it “free-enterprise.”
  • Unlike the nations of Western Europe, American workers failed to get a good deal of the social democratic compact written into law, which means it was all the easier to dismantle over here.
  • There are the wars, of course—now pretty much the only way for a good many of us to get a debt-free education.
  • Then there’s the ever-popular Drug War, always trolling for some fresh blood. The Millennials are, after all, the least white generation in U.S. history, making us perfect fodder for the country’s ongoing race war.
  • As The Wire’s David Simon has pointed out, it was Clinton—the first Boomer president—that passed some of the most draconian “anti-crime” laws. Even business in the for-profit juvenile prisons sector is a-boomin’. Same goes for our expanding network of privatized immigration detention centers—a direct beneficiary of the Tea Party campaign for a brutal crackdown on “illegals.”
  • Much of the Patriot Act itself was comprised of legislation creeping around the halls of powers well before 9/11, much of it written with the burgeoning “anti-globalization” movement
  • The fact is that being arrested is pretty much a rite of passage today—or the end-of-the-line for your hopes and dreams if you happen to be a darker shade of pale.
  • Which is why I love the Tea Party so much. They don’t dick around about any of this. It’s a full-scale generational war they’re after.
  • The Ryan Budget—and the GOP campaign around it—divides the American populace into “those who are 55 or older now, and those who are younger.” Meaning Boomers will receive Medicare and Social Security checks unchanged, whereas Millennials get the axe—despite the fact that many of us have been paying into these programs for the past 15 years. Let the record show that it was they who fired the first shot.
  • All of the hippies who skulked off into the world of children’s programming to ride out the counterrevolution have cursed us with both our potential salvation (respect for the commons) and our ultimate weakness (pacifist nonsense).
  • But mostly our decency stems from the fact that we’ve all been muzzled and defanged by student debt, slave wages and mass unemployment. Unlike our parents, we’ll never even get the chance to gobble up our own children and leave them with the tab.
  • Which is why, psychologically, this Great Depression of ours can never hurt us like it hurts them. I see it all the time: the unemployed Boomer thinks himself a loser. He’s spent his life watching his peers accumulate wealth and power. Now he feels like the rug has been pulled from under him. Something has gone terribly wrong. When he files for food-stamps, he feels exactly what the Ruling Class wants him to feel: shame and personal failing.
  • Whereas a Millennial shrugs and swipes the SNAP card at the farmer’s market for a quart of fresh cider and a pomegranate muffin. Why should she feel guilty?
  • We Millennials have all the same ludicrous delusions of grandeur as our parents, but now, we’re ready to shuck capitalist gospel out the window. The Boomers call us spoiled, and ask us to do more with less, telling us to tamper our dreams. But the best thing we Americans have going for us is our entitlement, sans the free-market faith.
  • Way back in 1892, Friedrich Engels knew that success was the real curse of the USA. And that a powerful, anti-capitalist left could never take off in this country until the game stopped paying out: “Only when there is a generation of native-born workers that cannot expect anything from speculation any more will we have a solid foothold in America.” Sound familiar? That’s what Occupy is for most of us—a guttural roar that capitalism will not do.
  • The Boomers are right that it all smacks of entitlement. We are entitled. The world, and this country in particular, is awash in capital. With the billions floating in and out of this city every day, it’s amazing that you can walk around Manhattan and not end up with at least a grand worth of cash sifting around in your shoes like beach sand. The big lie is that the coffers are empty and budgets must be balanced. What a fucking joke. American workers have spent hundreds of years building this country and amassing this wealth, and it’s about time we claimed the vast majority of it.
  • Conservative apostate David Frum recently characterized the contemporary GOP’s platform as “a going-out-of-business sale for the Baby Boomer generation.” Which is pretty much the Democrats’ platform too. They just have better table manners.
  • Boomers know what they’ve wrought. Climate change? Don’t believe the polls. They know it’s happening. Yeah, if you confront one of them, he might put up a denialist front for a couple of minutes. But keep pelting him and it all crumbles, giving way to “well, it’s too late.” Translated: “I’ll be on, or near, my deathbed when the shit really hits the fan. You, youngster, will be hauling your family across the country George Romero style, scavenging for orphans to sell off as catamites to the warlord chieftains.”
  • Documentary filmmaker Adam Curtis has spent the past few years chronicling this ghastly mutation step-by-step—unraveling the seemingly incongruous strands and the hideous parentage of Boomer ideology. Their embrace of American libertarianism—with all of its absurdities, vulgarities and utopianism—was the final cry for help.
  • anonymous on 12 Feb 12
     
    "Generational analysis is bullshit. Or so I'm told. Fit for netroots liberals and horoscope clippers, maybe. And to be fair, it's mostly thinktank types who've been profiting off that whole Millennials Rising genre. One of the authors of that book is a former writing partner of Pete G. Peterson's, the octogenarian billionaire who has spent the last couple of decades trying to kick over the Social Security ladder before us young'ns can scamper up and collect. Most of it reads like a debriefing after a recon mission-you can feel them sizing us up, drawing up blueprints for the generational counterrevolution that we're living through right now."
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Exploitation and Social Justice - 0 views

bhl.typepad.com/...tation-and-social-justice.html libertarian
shared by anonymous on 08 Mar 11 - Cached
  • All else being equal, it is a good thing for governments to prohibit harmful exploitation - at least when the unfairness rises to a high enough level that we regard it as a violation of the victim's rights.  Taking someone’s labor without giving them the money you promised them is such a case.  It is harmful, and seriously so – they come away worse off (sans their labor and their wages), you come away better off.  Laws that prohibit this protect the vulnerable and are a value tool in the promotion of social justice.
  • anonymous on 08 Mar 11
     
    "The normal tendency of classical liberals is to recoil upon hearing the term "exploitation," especially when its invocation is tied the demand for increased powers for the government. At least since the time of Marx, talk of "exploitation" has mainly been the domain of the political left, especially in critique of the relationship between capital and labor. But it would be a rhetorical and philosophical mistake for classical liberals to concede this concept to the left. Marx was wrong to think that capitalism is inherently exploitative, a mistake grounded in both a theoretical error about the nature of value and various empirical errors about the nature of a market economy. But this does not mean that there is no such thing as exploitation, nor that exploitation is not a serious moral wrong, nor even that capitalism as it exists today is not very often wrongfully exploitative."
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The Crisis of the European Common Market | Stratfor - 0 views

www.stratfor.com/...crisis-european-common-market
shared by anonymous on 15 Apr 13 - Cached
  • The creation of a common market where people, goods, services and capital could move freely was one of the main goals of the Treaty of Rome
  • The free movement of people is the principle that allows EU citizens to travel to or live and work in any member country.
  • The creation of the eurozone put 17 countries with varying levels of economic development and competitiveness in a currency union. This has created significant trade imbalances between the less developed economies in the eurozone periphery and Germany, Europe's main exporter.
  • ...5 more annotations...
  • The European Union is trying to address the problems of its banking sector through the creation of a banking union -- a mechanism that would put all the eurozone banks under the supervision of a single entity, provide joint funds to rescue banks in distress and provide all banks with the common deposit guarantee.
  • This idea has been controversial since the beginning.
  • First, there was a debate regarding which banks should be supervised. In December 2012, the European Union agreed that only the largest banks in the eurozone would be put under supervision.
  • Second, the idea of a joint insurance mechanism and bank resolution fund was highly controversial because countries with strong banking sectors refuse to take responsibility for failing banks.
  • As a result, EU leaders decided to postpone the insurance mechanism's implementation.
  • anonymous on 15 Apr 13
     
    "The European Union was founded on the free movement of people, goods, services and capital. All of these basic freedoms are inextricably intertwined with the European crisis. The free movement of people is being questioned in numerous countries, while the free movement of goods and services is in part responsible for the current crisis. The free movement of capital has forced EU leaders to face the consequences of different national banking regulations that allow capital flight and tax evasion. While better oversight and collaboration make tax collection across borders easier, they do little to stem capital flight, which weakens banking sectors in already struggling economies."
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Thomas Piketty: "You do need some inequality to generate growth" - The Globe and Mail - 0 views

www.theglobeandmail.com/...article18586580 capitalism economics democracy
shared by Ed Webb on 12 May 14 - No Cached
  • if people feel that a disproportionate share of growth only goes to the top-wealth minority, then a large fraction of public opinion in European countries or in North America might turn against globalization
    • Ed Webb
      Ed Webb on 12 May 14
       
      Seems Piketty's project is to save capitalism/liberal globalization. Deferring (indefinitely) structural change by applying minor corrections to the cycle of creative destruction and negative externalities. A kind of FDR project at the global level: dilute capitalism in order to prevent revolution.
  • I belong to the post-Marxist generation, if you wish – I turned 18 in 1989, with the fall of the Berlin Wall; I travelled to Eastern Europe to see those countries after the fall of their communist dictatorships, and I’ve never had any temptation for that. Anti-capitalists should read the history books.
    • Ed Webb
      Ed Webb on 12 May 14
       
      I am almost his exact contemporary. I visited Eastern Europe shortly after 1989. I have read many history books. I still want to overthrow capitalism.
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The Inequality That Matters - 1 views

www.the-american-interest.com/article-bd.cfm
shared by anonymous on 07 Jul 13 - Cached
  • there’s more confusion about this issue than just about any other in contemporary American political discourse.
  • The reality is that most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize. If our economic churn is bound to throw off political sparks, whether alarums about plutocracy or something else, we owe it to ourselves to seek out an accurate picture of what is really going on.
  • Let’s start with the subset of worries about inequality that are significantly overblown.
  • ...107 more annotations...
  • Most analyses of income inequality neglect two major points.
  • First, the inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well.
  • by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.
  • Compare these circumstances to those of 1911, a century ago. Even in the wealthier countries, the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world’s culture.
  • when average people read about or see income inequality, they don’t feel the moral outrage that radiates from the more passionate egalitarian quarters of society. Instead, they think their lives are pretty good and that they either earned through hard work or lucked into a healthy share of the American dream.
  • In narrowly self-interested terms, that view may be irrational, but most Americans are unwilling to frame national issues in terms of rich versus poor.
  • There’s a great deal of hostility toward various government bailouts, but the idea of “undeserving” recipients is the key factor in those feelings. Resentment against Wall Street gamesters hasn’t spilled over much into resentment against the wealthy more generally.
  • their constituents bear no animus toward rich people, only toward undeservedly rich people.
    • anonymous
      anonymous on 07 Jul 13
       
      Which is how the policy can be reframed to the benefit of those that understand this more cleanly.
  • in the United States, most economic resentment is not directed toward billionaires or high-roller financiers—not even corrupt ones. It’s directed at the guy down the hall who got a bigger raise.
    • anonymous
      anonymous on 07 Jul 13
       
      Provincialism!
  • The high status of the wealthy in America, or for that matter the high status of celebrities, seems to bother our intellectual class most. That class composes a very small group, however
  • All that said, income inequality does matter—for both politics and the economy.
  • To see how, we must distinguish between inequality itself and what causes it. But first let’s review the trends in more detail.
  • Income inequality has been rising in the United States, especially at the very top.
  • The data show a big difference between two quite separate issues
  • income growth at the very top
  • greater inequality throughout the distribution
  • When it comes to the first trend, the share of pre-tax income earned by the richest 1 percent of earners has increased from about 8 percent in 1974 to more than 18 percent in 2007. Furthermore, the richest 0.01 percent (the 15,000 or so richest families) had a share of less than 1 percent in 1974 but more than 6 percent of national income in 2007. As noted, those figures are from pre-tax income, so don’t look to the George W. Bush tax cuts to explain the pattern. Furthermore, these gains have been sustained and have evolved over many years, rather than coming in one or two small bursts between 1974 and today.1
  • Caution is in order, but the overall trend seems robust. Similar broad patterns are indicated by different sources, such as studies of executive compensation. Anecdotal observation suggests extreme and unprecedented returns earned by investment bankers, fired CEOs, J.K. Rowling and Tiger Woods.
  • At the same time, wage growth for the median earner has slowed since 1973.
  • But that slower wage growth has afflicted large numbers of Americans, and it is conceptually distinct from the higher relative share of top income earners. For instance, if you take the 1979–2005 period, the average incomes of the bottom fifth of households increased only 6 percent while the incomes of the middle quintile rose by 21 percent. That’s a widening of the spread of incomes, but it’s not so drastic compared to the explosive gains at the very top.
  • The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary.
  • Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat.
  • Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2
  • Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all.
  • And so we come again to the gains of the top earners, clearly the big story told by the data.
  • It’s worth noting that over this same period of time, inequality of work hours increased too. The top earners worked a lot more and most other Americans worked somewhat less. That’s another reason why high earners don’t occasion more resentment: Many people understand how hard they have to work to get there.
  • A threshold earner is someone who seeks to earn a certain amount of money and no more.
  • If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.
  • It’s not obvious what causes the percentage of threshold earners to rise or fall, but it seems reasonable to suppose that the more single-occupancy households there are, the more threshold earners there will be, since a major incentive for earning money is to use it to take care of other people with whom one lives.
  • For a variety of reasons, single-occupancy households in the United States are at an all-time high.
  • The funny thing is this: For years, many cultural critics in and of the United States have been telling us that Americans should behave more like threshold earners. We should be less harried, more interested in nurturing friendships, and more interested in the non-commercial sphere of life. That may well be good advice.
  • Many studies suggest that above a certain level more money brings only marginal increments of happiness.
  • What isn’t so widely advertised is that those same critics have basically been telling us, without realizing it, that we should be acting in such a manner as to increase measured income inequality.
  • Why is the top 1 percent doing so well?
  • Their data do not comprise the entire U.S. population, but from partial financial records they find a very strong role for the financial sector in driving the trend toward income concentration at the top.
  • The number of Wall Street investors earning more than $100 million a year was nine times higher than the public company executives earning that amount.
  • The authors also relate that they shared their estimates with a former U.S. Secretary of the Treasury, one who also has a Wall Street background. He thought their estimates of earnings in the financial sector were, if anything, understated.
  • Many of the other high earners are also connected to finance.
  • After Wall Street, Kaplan and Rauh identify the legal sector as a contributor to the growing spread in earnings at the top.
  • Finance aside, there isn’t much of a story of market failure here, even if we don’t find the results aesthetically appealing.
  • When it comes to professional athletes and celebrities, there isn’t much of a mystery as to what has happened.
  • There is more purchasing power to spend on children’s books and, indeed, on culture and celebrities more generally. For high-earning celebrities, hardly anyone finds these earnings so morally objectionable as to suggest that they be politically actionable.
  • We may or may not wish to tax the wealthy, including wealthy celebrities, at higher rates, but there is no need to “cure” the structural causes of higher celebrity incomes.
  • If we are looking for objectionable problems in the top 1 percent of income earners, much of it boils down to finance and activities related to financial markets. And to be sure, the high incomes in finance should give us all pause.
  • some investors opt for a strategy of betting against big, unexpected moves in market prices.
  • Most of the time investors will do well by this strategy, since big, unexpected moves are outliers by definition. Traders will earn above-average returns in good times. In bad times they won’t suffer fully when catastrophic returns come in, as sooner or later is bound to happen, because the downside of these bets is partly socialized onto the Treasury, the Federal Reserve and, of course, the taxpayers and the unemployed.
  • To understand how this strategy works, consider an example from sports betting.
  • if you bet against unlikely events, most of the time you will look smart and have the money to validate the appearance. Periodically, however, you will look very bad
  • Does that kind of pattern sound familiar? It happens in finance, too. Betting against a big decline in home prices is analogous to betting against the Wizards. Every now and then such a bet will blow up in your face, though in most years that trading activity will generate above-average profits and big bonuses for the traders and CEOs. To this mix we can add the fact that many money managers are investing other people’s money.
  • If you plan to stay with an investment bank for ten years or less, most of the people playing this investing strategy will make out very well most of the time. Everyone’s time horizon is a bit limited and you will bring in some nice years of extra returns and reap nice bonuses.
  • And let’s say the whole thing does blow up in your face? What’s the worst that can happen? Your bosses fire you, but you will still have millions in the bank and that MBA from Harvard or Wharton.
  • For the people actually investing the money, there’s barely any downside risk other than having to quit the party early.
  • Moreover, smart shareholders will acquiesce to or even encourage these gambles.
  • They gain on the upside, while the downside, past the point of bankruptcy, is borne by the firm’s creditors.
  • Perhaps more important, government bailouts minimize the damage to creditors on the downside.
  • Neither the Treasury nor the Fed allowed creditors to take any losses from the collapse of the major banks during the financial crisis. The U.S. government guaranteed these loans, either explicitly or implicitly.
  • For better or worse, we’re handing out free options on recovery, and that encourages banks to take more risk in the first place.
  • In short, there is an unholy dynamic of short-term trading and investing, backed up by bailouts and risk reduction from the government and the Federal Reserve. This is not good.
  • But more immediate and more important, it means that banks take far too many risks and go way out on a limb, often in correlated fashion. When their bets turn sour, as they did in 2007–09, everyone else pays the price.
  • And it’s not just the taxpayer cost of the bailout that stings. The financial disruption ends up throwing a lot of people out of work down the economic food chain, often for long periods.
  • In essence, we’re allowing banks to earn their way back by arbitraging interest rate spreads against the U.S. government. This is rarely called a bailout and it doesn’t count as a normal budget item, but it is a bailout nonetheless. This type of implicit bailout brings high social costs by slowing down economic recovery (the interest rate spreads require tight monetary policy) and by redistributing income from the Treasury to the major banks.
  • The more one studies financial theory, the more one realizes how many different ways there are to construct a “going short on volatility” investment position.
  • In some cases, traders may not even know they are going short on volatility. They just do what they have seen others do. Their peers who try such strategies very often have Jaguars and homes in the Hamptons. What’s not to like?
  • The upshot of all this for our purposes is that the “going short on volatility” strategy increases income inequality.
  • In normal years the financial sector is flush with cash and high earnings. In implosion years a lot of the losses are borne by other sectors of society. In other words, financial crisis begets income inequality. Despite being conceptually distinct phenomena, the political economy of income inequality is, in part, the political economy of finance.
  • If you’re wondering, right before the Great Depression of the 1930s, bank profits and finance-related earnings were also especially high.8
  • There’s a second reason why the financial sector abets income inequality: the “moving first” issue.
  • The moving-first phenomenon sums to a “winner-take-all” market. Only some relatively small number of traders, sometimes just one trader, can be first. Those who are first will make far more than those who are fourth or fifth.
  • Since gains are concentrated among the early winners, and the closeness of the runner-ups doesn’t so much matter for income distribution, asset-market trading thus encourages the ongoing concentration of wealth. Many investors make lots of mistakes and lose their money, but each year brings a new bunch of projects that can turn the early investors and traders into very wealthy individuals.
  • These two features of the problem—“going short on volatility” and “getting there first”—are related.
  • Still, every now and then Goldman will go bust, or would go bust if not for government bailouts. But the odds are in any given year that it won’t because of the advantages it and other big banks have.
  • It’s as if the major banks have tapped a hole in the social till and they are drinking from it with a straw.
  • In any given year, this practice may seem tolerable—didn’t the bank earn the money fair and square by a series of fairly normal looking trades?
  • Yet over time this situation will corrode productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it.
  • And it leads to periodic financial explosions. That, in short, is the real problem of income inequality we face today. It’s what causes the inequality at the very top of the earning pyramid that has dangerous implications for the economy as a whole.
  • A key lesson to take from all of this is that simply railing against income inequality doesn’t get us very far.
  • We have to find a way to prevent or limit major banks from repeatedly going short on volatility at social expense. No one has figured out how to do that yet.
  • It remains to be seen whether the new financial regulation bill signed into law this past summer will help.
  • The bill does have positive features.
  • First, it forces banks to put up more of their own capital, and thus shareholders will have more skin in the game, inducing them to curtail their risky investments.
  • Second, it also limits the trading activities of banks, although to a currently undetermined extent (many key decisions were kicked into the hands of future regulators).
  • Third, the new “resolution authority” allows financial regulators to impose selective losses, for instance, to punish bondholders if they wish.
  • We’ll see if these reforms constrain excess risk-taking in the long run. There are reasons for skepticism.
  • Most of all, the required capital cushions simply aren’t that high, so a big enough bet against unexpected outcomes still will yield more financial upside than downside
  • What about controlling bank risk-taking directly with tight government oversight? That is not practical. There are more ways for banks to take risks than even knowledgeable regulators can possibly control
  • It’s also not clear how well regulators can identify risky assets.
  • Some of the worst excesses of the financial crisis were grounded in mortgage-backed assets—a very traditional function of banks—not exotic derivatives trading strategies.
  • Virtually any asset position can be used to bet long odds, one way or another. It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.
  • For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism.
  • It’s no longer obvious that the system is stable at a macro level, and extreme income inequality at the top has been one result of that imbalance. Income inequality is a symptom, however, rather than a cause of the real problem.
  • The root cause of income inequality, viewed in the most general terms, is extreme human ingenuity, albeit of a perverse kind. That is why it is so hard to control.
  • Another root cause of growing inequality is that the modern world, by so limiting our downside risk, makes extreme risk-taking all too comfortable and easy.
  • More risk-taking will mean more inequality, sooner or later, because winners always emerge from risk-taking.
  • Yet bankers who take bad risks (provided those risks are legal) simply do not end up with bad outcomes in any absolute sense.
  • We’re not going to bring back torture, trial by ordeal or debtors’ prisons, nor should we. Yet the threat of impoverishment and disgrace no longer looms the way it once did, so we no longer can constrain excess financial risk-taking. It’s too soft and cushy a world.
  • That’s an underappreciated way to think about our modern, wealthy economy: Smart people have greater reach than ever before, and nothing really can go so wrong for them.
  • How about a world with no bailouts? Why don’t we simply eliminate the safety net for clueless or unlucky risk-takers so that losses equal gains overall? That’s a good idea in principle, but it is hard to put into practice.
  • Once a financial crisis arrives, politicians will seek to limit the damage, and that means they will bail out major financial institutions.
  • Had we not passed TARP and related policies, the United States probably would have faced unemployment rates of 25 percent of higher, as in the Great Depression. The political consequences would not have been pretty.
  • Bank bailouts may sound quite interventionist, and indeed they are, but in relative terms they probably were the most libertarian policy we had on tap. It meant big one-time expenses, but, for the most part, it kept government out of the real economy (the General Motors bailout aside).
  • So what will happen next?
  • One worry is that banks are currently undercapitalized and will seek out or create a new bubble within the next few years, again pursuing the upside risk without so much equity to lose.
  • A second perspective is that banks are sufficiently chastened for the time being but that economic turmoil in Europe and China has not yet played itself out, so perhaps we still have seen only the early stages of what will prove to be an even bigger international financial crisis.
  • A third view is perhaps most likely. We probably don’t have any solution to the hazards created by our financial sector, not because plutocrats are preventing our political system from adopting appropriate remedies, but because we don’t know what those remedies are.
  • Yet neither is another crisis immediately upon us. The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe.
  • They are sitting on money rather than lending it out. The biggest risk today is how few parties will take risks, and, in part, the caution of banks is driving our current protracted economic slowdown. According to this view, the long run will bring another financial crisis once moods pick up and external scrutiny weakens, but that day of reckoning is still some ways off.
  • Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.
    • anonymous
      anonymous on 07 Jul 13
       
      Painfully straightforward.
  • anonymous on 07 Jul 13
     
    "Does growing wealth and income inequality in the United States presage the downfall of the American republic? Will we evolve into a new Gilded Age plutocracy, irrevocably split between the competing interests of rich and poor? Or is growing inequality a mere bump in the road, a statistical blip along the path to greater wealth for virtually every American? Or is income inequality partially desirable, reflecting the greater productivity of society's stars?"
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The PC16: Identifying China's Successors | Stratfor - 0 views

www.stratfor.com/...-identifying-chinas-successors
shared by anonymous on 30 Jul 13 - No Cached
  • China will have to behave differently from the way it does now, and thus other countries are poised to take its place.
  • Since the Industrial Revolution, there have always been countries where comparative advantage in international trade has been rooted in low wages and a large work force. If these countries can capitalize on their advantages, they can transform themselves dramatically. These transformations, in turn, reorganize global power structures.
  • When it is not in the throes of war, trade reshapes the international order. After World War II, Germany and Japan climbed out of their wreckage by using their skilled, low-wage labor to not only rebuild their economy but to become great exporting powers.
  • ...18 more annotations...
  • It's not just their work; it's their way of life. As workers move to factories, the social fabric is torn apart. But that rending of life opens the door for a mobile workforce able to take advantage of new opportunities. Traditional life disappears; in its place stand the efficiencies of capitalism.
  • As the process matures, low wages rise -- producing simple products for the world market is not as profitable as producing more sophisticated products -- and the rate of growth slows down in favor of more predictable profits from more complex goods and services. All nations undergo this process, and China is no exception. This is always a dangerous time for a country. Japan handled it well. China has more complex challenges.
  • Low-wage countries seize the opportunity and climb upon the escalator of the international system, and with them come the political and business elite and the poor, for whom even the brutality of early industrialism is a relief.
  • In looking at this historically, two markers showed themselves. One is a historical first step: garment and footwear manufacturing, a highly competitive area that demands low wages but provides work opportunities that the population, particularly women, understand in principle. A second marker is mobile phone assembly, which requires a work force that can master relatively simple operations. Price matters greatly in this ruthlessly competitive market.
  • We were not looking for the kind of large-scale movements that would be noticed globally, but the first movements that appear to be successful. Where a handful of companies are successful, others will follow, so long as there is labor, some order and transportation.
  • Some things are not necessary or expected. The rule of law, understood in Anglo-Saxon terms of the written law, isn't there at this stage. Things are managed through custom and relationships with the elite. Partnerships are established. Frequently there is political uncertainty, and violence may have recently occurred. These are places that are at the beginning of their development cycle, and they may not develop successfully. Investors here are risk takers -- otherwise they wouldn't be here.
  • The Cultural Revolution had ended a few years before. It was a national upheaval of violence with few precedents. Mao Zedong died in 1976, and there had been an intense power struggle, with Deng Xiaoping consolidating power in 1977. China was politically unstable, had no clear legal system, sporadic violence and everything else that would make it appear economically hopeless. In fact, Egbert F. Dernberger and David Fasenfest of the University of Michigan wrote a paper for the Joint Economic Committee of Congress titled "China's Post-Mao Economic Future." In this paper, the authors state: "In the next seven years as a whole, the rate of industrial investment and production, more than the total of the last 28 years, imply a level of imports and industrial labor force such that the exports, transportation facilities, social overhead capital, energy and middle-level technical personnel requirements would exceed any realistic assessment of Chinese capabilities."
  • I don't mean to criticize the authors. This was the reasonable, conventional wisdom at the time. It assumed that the creation of infrastructure and a managerial class was the foundation of economic growth. In fact in China, it was the result of economic growth. The same can be said for rule of law, civil society, transparency and the other social infrastructure that emerges out of the social, financial and managerial chaos that a low-wage economy almost always manifests.
  • Low-wage societies develop these characteristics possibly out of the capital formation that low-wage exports generates. The virtues of advanced industrial society and the advantages of pre-industrial society don't coincide.
  • There is no single country that can replace China. Its size is staggering. That means that its successors will not be one country but several countries, most at roughly the same stage of development.
  • The point to emphasize is that identifying the PC16 is not a forecast. It is a list of countries in which we see significant movement of stage industries, particularly garment and footwear manufacturing and mobile phone assembly.
  • we have excluded countries growing because of energy and mineral extraction. These countries follow different paths of development. The PC16 are strictly successors to China as low wage, underdeveloped countries with opportunities to grow their manufacturing sectors dramatically.
  • When you look at map, much of this new activity is focused in the Indian Ocean Basin. The most interesting pattern is in the eastern edge of Sub-Saharan Africa: Tanzania, Kenya, Uganda and Ethiopia. Sri Lanka, Indonesia, Myanmar and Bangladesh are directly on the Indian Ocean.
  • A special word needs to be included on Mexico. The area north of Mexico City and south of the U.S. borderlands has been developing intensely in recent years. We normally would not include Mexico but the area in central-southern Mexico is large, populous and still relatively underdeveloped.
  • It is in this area, which includes the states of Campeche, Veracruz, Chiapas and Yucatan, where we see the type of low-end development that fits our criteria. Mexico's ability to develop its low-wage regions does not face the multitude of challenges China faces in doing the same with its interior.
  • All of this has to be placed in context. This is not the only growth process underway. It is most unlikely that all of these countries will succeed. They are not yet ready, with some exceptions, for advanced financial markets or quantitative modeling. They are entering into a process that has been underway in the world since the late 1700s: globalism and industrialism combined.
  • It can be an agonizing process and many have tried to stop it. They have failed not because of their respective ruling classes, which would have the most to lose. It doesn't take place because of multinational corporations. They come in later. It takes place because of profit-driven jobbers who know how to live with instability and corruption. It also takes place because of potential workers looking to escape their lives for what to them seems like a magnificent opportunity but for us seems unthinkable.
  • The parabola of economic development dictates that what has not yet risen will rise and eventually fall. The process unleashed in the Industrial Revolution does not seem to be stoppable. In our view, this is the next turning of the wheel.
  • anonymous on 30 Jul 13
     
    "China has become a metaphor. It represents a certain phase of economic development, which is driven by low wages, foreign appetite for investment and a chaotic and disorderly development, magnificent in scale but deeply flawed in many ways. Its magnificence spawned the flaws, and the flaws helped create the magnificence."
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David Berreby - The obesity era - 0 views

www.aeonmagazine.com/...david-berreby-obesity-era
shared by anonymous on 27 Aug 13 - No Cached
  • And so the authorities tell us, ever more loudly, that we are fat — disgustingly, world-threateningly fat. We must take ourselves in hand and address our weakness. After all, it’s obvious who is to blame for this frightening global blanket of lipids: it’s us, choosing over and over again, billions of times a day, to eat too much and exercise too little. What else could it be? If you’re overweight, it must be because you are not saying no to sweets and fast food and fried potatoes. It’s because you take elevators and cars and golf carts where your forebears nobly strained their thighs and calves. How could you do this to yourself, and to society?
  • Hand-in-glove with the authorities that promote self-scrutiny are the businesses that sell it, in the form of weight-loss foods, medicines, services, surgeries and new technologies.
  • And so we appear to have a public consensus that excess body weight (defined as a Body Mass Index of 25 or above) and obesity (BMI of 30 or above) are consequences of individual choice.
  • ...42 more annotations...
  • Higher levels of female obesity correlated with higher levels of gender inequality in each nation Of course, that’s not the impression you will get from the admonishments of public-health agencies and wellness businesses.
  • Yet the scientists who study the biochemistry of fat and the epidemiologists who track weight trends are not nearly as unanimous as Bloomberg makes out. In fact, many researchers believe that personal gluttony and laziness cannot be the entire explanation for humanity’s global weight gain.
  • As Richard L Atkinson, Emeritus Professor of Medicine and Nutritional Sciences at the University of Wisconsin and editor of the International Journal of Obesity, put it in 2005: ‘The previous belief of many lay people and health professionals that obesity is simply the result of a lack of willpower and an inability to discipline eating habits is no longer defensible.’
  • Consider, for example, this troublesome fact, reported in 2010 by the biostatistician David B Allison and his co-authors at the University of Alabama in Birmingham: over the past 20 years or more, as the American people were getting fatter, so were America’s marmosets.
  • As were laboratory macaques, chimpanzees, vervet monkeys and mice, as well as domestic dogs, domestic cats, and domestic and feral rats from both rural and urban areas.
  • In fact, the researchers examined records on those eight species and found that average weight for every one had increased.
  • ‘Virtually in every population of animals we looked at, that met our criteria, there was the same upward trend,’ he told me.
  • It isn’t hard to imagine that people who are eating more themselves are giving more to their spoiled pets, or leaving sweeter, fattier garbage for street cats and rodents. But such results don’t explain why the weight gain is also occurring in species that human beings don’t pamper, such as animals in labs, whose diets are strictly controlled. In fact, lab animals’ lives are so precisely watched and measured that the researchers can rule out accidental human influence
  • On the contrary, the trend suggests some widely shared cause, beyond the control of individuals, which is contributing to obesity across many species.
  • In rich nations, obesity is more prevalent in people with less money, education and status. Even in some poor countries, according to a survey published last year in the International Journal of Obesity, increases in weight over time have been concentrated among the least well-off. And the extra weight is unevenly distributed among the sexes, too.
  • To make sense of all this, the purely thermodynamic model must appeal to complicated indirect effects.
  • The story might go like this: being poor is stressful, and stress makes you eat, and the cheapest food available is the stuff with a lot of ‘empty calories’, therefore poorer people are fatter than the better-off. These wheels-within-wheels are required because the mantra of the thermodynamic model is that ‘a calorie is a calorie is a calorie’: who you are and what you eat are irrelevant to whether you will add fat to your frame. The badness of a ‘bad’ food such as a Cheeto is that it makes calorie intake easier than it would be with broccoli or an apple.
  • Yet a number of researchers have come to believe, as Wells himself wrote earlier this year in the European Journal of Clinical Nutrition, that ‘all calories are not equal’.
  • The problem with diets that are heavy in meat, fat or sugar is not solely that they pack a lot of calories into food; it is that they alter the biochemistry of fat storage and fat expenditure, tilting the body’s system in favour of fat storage.
    • anonymous
      anonymous on 27 Aug 13
       
      RELEVANT.
  • if the problem isn’t the number of calories but rather biochemical influences on the body’s fat-making and fat-storage processes, then sheer quantity of food or drink are not the all-controlling determinants of weight gain. If candy’s chemistry tilts you toward fat, then the fact that you eat it at all may be as important as the amount of it you consume.
  • More importantly, ‘things that alter the body’s fat metabolism’ is a much wider category than food. Sleeplessness and stress, for instance, have been linked to disturbances in the effects of leptin, the hormone that tells the brain that the body has had enough to eat.
  • If some or all of these factors are indeed contributing to the worldwide fattening trend, then the thermodynamic model is wrong.
  • According to Frederick vom Saal, professor of biological sciences at the University of Missouri, an organic compound called bisphenol-A (or BPA) that is used in many household plastics has the property of altering fat regulation in lab animals.
  • BPA has been used so widely — in everything from children’s sippy cups to the aluminium in fizzy drink cans — that almost all residents of developed nations have traces of it in their pee. This is not to say that BPA is unique.
  • Contrary to its popular image of serene imperturbability, a developing foetus is in fact acutely sensitive to the environment into which it will be born, and a key source of information about that environment is the nutrition it gets via the umbilical cord.
  • The 40,000 babies gestated during Holland’s ‘Hunger Winter’ of 1944-1945 grew up to have more obesity, more diabetes and more heart trouble than their compatriots who developed without the influence of war-induced starvation.
  • It’s possible that widespread electrification is promoting obesity by making humans eat at night, when our ancestors were asleep
  • consider the increased control civilisation gives people over the temperature of their surroundings.
  • Temperatures above and below the neutral zone have been shown to cause both humans and animals to burn fat, and hotter conditions also have an indirect effect: they make people eat less.
  • A study by Laura Fonken and colleagues at the Ohio State University in Columbus, published in 2010 in the Proceedings of the National Academy of Sciences, reported that mice exposed to extra light (experiencing either no dark at all or a sort of semidarkness instead of total night) put on nearly 50 per cent more weight than mice fed the same diet who lived on a normal night-day cycle of alternating light and dark.
  • A virus called Ad-36, known for causing eye and respiratory infections in people, also has the curious property of causing weight gain in chickens, rats, mice and monkeys.
  • xperiments by Lee Kaplan and colleagues at Massachusetts General Hospital in Boston earlier this year found that bacteria from mice that have lost weight will, when placed in other mice, apparently cause those mice to lose weight, too.
  • These theories are important for a different reason. Their very existence — the fact that they are plausible, with some supporting evidence and suggestions for further research — gives the lie to the notion that obesity is a closed question, on which science has pronounced its final word.
  • It might be that every one of the ‘roads less travelled’ contributes to global obesity; it might be that some do in some places and not in others. The openness of the issue makes it clear that obesity isn’t a simple school physics experiment.
  • obesity is like poverty, or financial booms and busts, or war — a large-scale development that no one deliberately intends, but which emerges out of the millions of separate acts that together make human history.
  • In Wells’s theory, the claim that individual choice drives worldwide weight gain is an illusion — like the illusion that individuals can captain their fates independent of history. In reality, Tolstoy wrote at the end of War and Peace (1869), we are moved by social forces we do not perceive, just as the Earth moves through space, driven by physical forces we do not feel. Such is the tenor of Wells’s explanation for modern obesity. Its root cause, he proposed last year in the American Journal of Human Biology, is nothing less than the history of capitalism.
  • In a capitalistic quest for new markets and cheap materials and labour, Europeans take control of the economy in the late 18th or early 19th century. With taxes, fees and sometimes violent repression, their new system strongly ‘encourages’ the farmer and his neighbours to stop growing their own food and start cultivating some more marketable commodity instead – coffee for export, perhaps. Now that they aren’t growing food, the farmers must buy it. But since everyone is out to maximise profit, those who purchase the coffee crop strive to pay as little as possible, and so the farmers go hungry. Years later, when the farmer’s children go to work in factories, they confront the same logic: they too are paid as little as possible for their labour. By changing the farming system, capitalism first removes traditional protections against starvation, and then pushes many previously self-sufficient people into an economic niche where they aren't paid enough to eat well.
  • Eighty years later, the farmer’s descendants have risen out of the ranks of the poor and joined the fast-growing ranks of the world’s 21st-century middle-class consumers, thanks to globalisation and outsourcing. Capitalism welcomes them: these descendants are now prime targets to live the obesogenic life (the chemicals, the stress, the air conditioning, the elevators-instead-of-stairs) and to buy the kinds of foods and beverages that are ‘metabolic disturbers’.
  • a past of undernutrition, combined with a present of overnutrition, is an obesity trap.
  • Wells memorably calls this double-bind the ‘metabolic ghetto’, and you can’t escape it just by turning poor people into middle-class consumers: that turn to prosperity is precisely what triggers the trap.
  • ‘Obesity,’ he writes, ‘like undernutrition, is thus fundamentally a state of malnutrition, in each case promoted by powerful profit-led manipulations of the global supply and quality of food.’
  • The ‘unifying logic of capitalism’, Wells continues, requires that food companies seek immediate profit and long-term success, and their optimal strategy for that involves encouraging people to choose foods that are most profitable to produce and sell — ‘both at the behavioural level, through advertising, price manipulations and restriction of choice, and at the physiological level through the enhancement of addictive properties of foods’ (by which he means those sugars and fats that make ‘metabolic disturber’ foods so habit-forming).
  • In short, Wells told me via email, ‘We need to understand that we have not yet grasped how to address this situation, but we are increasingly understanding that attributing obesity to personal responsibility is very simplistic.’ Rather than harping on personal responsibility so much, Wells believes, we should be looking at the global economic system, seeking to reform it so that it promotes access to nutritious food for everyone.
  • One possible response, of course, is to decide that no obesity policy is possible, because ‘science is undecided’. But this is a moron’s answer: science is never completely decided; it is always in a state of change and self-questioning, and it offers no final answers. There is never a moment in science when all doubts are gone and all questions settled,
  • which is why ‘wait for settled science’ is an argument advanced by industries that want no interference with their status quo.
  • Faced with signs of a massive public-health crisis in the making, governments are right to seek to do something, using the best information that science can render, in the full knowledge that science will have different information to offer in 10 or 20 years.
  • Today’s priests of obesity prevention proclaim with confidence and authority that they have the answer. So did Bruno Bettelheim in the 1950s, when he blamed autism on mothers with cold personalities. So, for that matter, did the clerics of 18th-century Lisbon, who blamed earthquakes on people’s sinful ways. History is not kind to authorities whose mistaken dogmas cause unnecessary suffering and pointless effort, while ignoring the real causes of trouble. And the history of the obesity era has yet to be written.
  • anonymous on 27 Aug 13
     
    "For the first time in human history, overweight people outnumber the underfed, and obesity is widespread in wealthy and poor nations alike. The diseases that obesity makes more likely - diabetes, heart ailments, strokes, kidney failure - are rising fast across the world, and the World Health Organisation predicts that they will be the leading causes of death in all countries, even the poorest, within a couple of years. What's more, the long-term illnesses of the overweight are far more expensive to treat than the infections and accidents for which modern health systems were designed. Obesity threatens individuals with long twilight years of sickness, and health-care systems with bankruptcy."
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War and the American Republic - 0 views

www.3quarksdaily.com/...and-the-american-republic.html war geopolitics america ideas
shared by anonymous on 14 Sep 10 - Cached
  • I offer three reasons that I believe, taken together, provide an answer: (a) The demographics of the American military (b) Historical inexperience of war and the world, and (c) The impetus from corporate capitalism.
  • The Demographics of the American Military 
  • The composition of most militaries today, including the U.S., suggests that this is indeed the case. The economic and political elites tend not to serve in the military, but very much dictate its priorities. They increasingly have no skin in the game, and a diminishing sense of its human cost.
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  • Thucydides clearly cautioned against such trends: ‘The nation that makes a great distinction between its scholars and its warriors will have its thinking done by cowards and its fighting done by fools.’
  • Historical Inexperience of War and the World
  • The last real war on the U.S. mainland was the Civil War, 150 years ago. Not since then has the U.S. experienced war at home.
  • Europeans are also shrewder than Americans about non-Western societies—a byproduct of Europe’s geography, colonial empires, and in some ways, their salad-bowl model of immigration
  • and of this Kantian insight: ‘Out of the crooked timber of humanity, no straight thing was ever made.’ Keener than the Americans that is, whose relative naivete, insularity, and evangelical instincts (religious, political, and economic) only make them more vulnerable to demagogues who cry wolf about threats from foreign cultures.
  • The Impetus from Corporate Capitalism
  • Not usually through boardroom conspiracies, which surely happen, but by staying true to its dominant class character, like an animal who cannot help being any other way, whose one authentic instinct is to sustain and engorge itself. To that end, it uses every tool at its disposal.
  • One such tool is the news media, which has changed drastically in recent decades.
  • It tends to employ company men and women who uphold their bosses’ values and viewpoints—not from coercion but consent, in exchange for some of the spoils.
  • War often boosts the economy (especially via the military-industrial complex) and is usually good for the media.
  • anonymous on 14 Sep 10
     
    "War is always spoken of as an option; to be averse to it is taken as a sign of weakness. Indeed, why are the Americans so much more jingoistic today than, say, the Europeans? I offer three reasons that I believe, taken together, provide an answer: (a) The demographics of the American military (b) Historical inexperience of war and the world, and (c) The impetus from corporate capitalism. " By Namit Arora at 3 Quarks Daily on September 13, 2010.
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How Obama Saved Capitalism and Lost the Midterms - 0 views

opinionator.blogs.nytimes.com/...pitalism-and-lost-the-midterms american politics
shared by anonymous on 04 Nov 10 - Cached
  • anonymous on 04 Nov 10
     
    "If I were one of the big corporate donors who bankrolled the Republican tide that carried into office more than 50 new Republicans in the House, I would be wary of what you just bought. For no matter your view of President Obama, he effectively saved capitalism. And for that, he paid a terrible political price." By Timothy Egan at The New York Times Opinionator on November 2, 2010.
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U.S.-Brazil Tag Team Could Pique Beijing's Ire | STRATFOR - 0 views

www.stratfor.com/...-team-could-pique-beijings-ire geopolitics china brazil
shared by anonymous on 08 Feb 11 - Cached
  • China is using unilateral pro-export policies to flood foreign markets with its goods, undermining competitors, and it is using its massive cash surpluses to lock down foreign resources.
  • Even if Washington were not a military superpower on whose bad side Brazil would not want to be, the United States retains the world’s largest consumer market even with a relatively weak currency, and it imports a mix of Brazilian goods, rather than simply the raw materials.
  • anonymous on 08 Feb 11
     
    Geithner's comments in Sao Paulo gained extra attention because of the thinly veiled criticism of China's undervalued currency contained therein. Geithner said that the surge in capital flows into Brazil was not only the result of Brazil's rapid growth rates but has been intensified by "the policies of other emerging economies that are trying to sustain undervalued currencies, with tightly controlled exchange rate regimes." While Geithner has often pulled punches when speaking about China, and deliberately noted that China is not the only currency manipulator, nevertheless China remains the most conspicuous example of such exchange rate regimes and the obvious target of Geithner's comments. In short, he argued that because of nations like China with closed capital accounts and an exchange rate set by fiat, nations like Brazil are suffering excessive and rapid inflows that monetary policy is insufficient to control.
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The Robot Economy and the Crisis of Capitalism: Why We Need Universal Basic Income - 0 views

www.abc.net.au/...4048180.htm Pocket
shared by anonymous on 18 Jul 14 - No Cached
  • anonymous on 18 Jul 14
     
    The material prosperity that capitalism has wrought is the product of technology, as well as markets (and social norms and state institutions).
  • anonymous on 18 Jul 14
     
    The material prosperity that capitalism has wrought is the product of technology, as well as markets (and social norms and state institutions).
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Considering a Departure in North Korea's Strategy | Stratfor - 0 views

www.stratfor.com/...eparture-north-koreas-strategy
shared by anonymous on 12 Mar 13 - No Cached
  • My argument was that the three tenets -- ferocity, weakness and insanity -- form a coherent strategy.
  • North Korea's primary goal is regime preservation. Demonstrating ferocity -- appearing to be close to being nuclear capable -- makes other countries cautious. Weakness, such as being completely isolated from the world generally and from China particularly, prevents other countries from taking drastic action if they believe North Korea will soon fall. The pretense of insanity -- threatening to attack the United States, for example -- makes North Korea appear completely unpredictable, forcing everyone to be cautious. The three work together to limit the actions of other nations.
  • Kim Jong Un is only 30 years old, and many outside North Korea doubt his ability to lead (many inside North Korea may doubt his ability, too). One way to announce his presence with authority is to orchestrate an international crisis that draws the United States, Japan, China, Russia and South Korea into negotiations with North Korea -- especially negotiations that Pyongyang can walk away from.
  • ...24 more annotations...
  • It follows that little will change.
  • U.S. analysts of North Korea will emphasize the potential ferocity and the need for extreme vigilance. The Chinese will understand that the North Koreans are weak and will signal, as their foreign minister did March 9, that in spite of their vote at the United Nations, they remain committed to North Korea's survival. And most people will disregard Pyongyang's threat to resume the Korean War.
  • But because there are some analysts who think that such a resumption is plausible, I think it is worth considering the possibility that Pyongyang does want to restart the war.
  • For the record, I think the framework will hold, but I am simply examining the following hypothetical: This time, North Korea is serious.
  • To assess Pyongyang's sincerity, let's begin with two untested assumptions.
  • First, assume North Korea has determined that it is unable to develop a deliverable nuclear weapon within a meaningful time frame.
  • Alternatively, assume it has decided that any further development of weapons will likely lead to attacks by the United States against its nuclear facilities.
  • assume it expects to lose its nuclear capability
  • The second assumption, more likely accurate, is that North Korea has realized that the strategy it has followed since the 1990s is no longer working.
  • Rather than generating financial and other concessions, the strategy has simply marginalized North Korea, so that apart from sanctions, there will be no talks, no frightened neighbors, no U.S. threats.
  • Kim Jong Un would not announce himself with authority, but with a whimper.
  • Taken together, these assumptions constitute a threat to regime survival.
  • Unless its neighbors bought into the three premises of its strategy, North Korea could be susceptible to covert or overt foreign involvement, which would put the regime on the defensive and reveal its weakness.
  • For the regime, this would be a direct threat, one that would require pre-emptive action.
  • In this scenario, Pyongyang would have to re-establish credibility and unpredictability by taking concrete steps.
  • These concrete steps would represent a dramatic departure from the framework under which North Korea has long operated. They would obviously involve demands for a cease-fire from all players. There would have to be a cease-fire before major force could be brought to bear on North Korea. Last, they would have to involve the assumption that the United States would at least take the opportunity to bomb North Korean nuclear facilities -- which is why the assumptions on its nuclear capability are critical for this to work. Airstrikes against other targets in North Korea would be likely. Therefore, the key would be an action so severe that everyone would accept a rapid cease-fire and would limit counteraction against North Korea to targets that the North Koreans were prepared to sacrifice.
  • The obvious move by North Korea would be the one that has been historically regarded as the likeliest scenario: massive artillery fire on Seoul, the capital of South Korea.
  • The assumption has always been that over a longer period of time, U.S. air power would devastate North Korean artillery. But Seoul would meanwhile be damaged severely, something South Korea would not tolerate.
  • Therefore, North Korea would bet that South Korea would demand a cease-fire, thereby bringing the United States along in its demand, before U.S. airstrikes could inflict overwhelming damage on North Korea and silence its guns. This would take a few days.
  • Under this scenario, North Korea would be in a position to demand compensation that South Korea would be willing to pay in order to save its capital.
  • It could rely on South Korea to restrain further retaliations by the United States, and China would be prepared to negotiate another armistice. North Korea would have re-established its credibility, redefined the terms of the North-South relationship and, perhaps having lost its dubious nuclear deterrent, gained a significant conventional deterrent that no one thought it would ever use.
  • I think the risks are too great for this scenario to play out.
  • The North would have to assume that its plans were unknown by Western intelligence agencies. It would also have to assume that South Korea would rather risk severe damage to its capital as it dealt with North Korea once and for all than continue to live under the constant North Korean threat. Moreover, North Korea's artillery could prove ineffective, and it risks entering a war it couldn't win, resulting in total isolation.
  • The scenario laid out is therefore a consideration of what it might mean if the North Koreans were actually wild gamblers, rather than the careful manipulators they have been since 1991.
  • anonymous on 12 Mar 13
     
    "On Jan. 29, I wrote a piece that described North Korea's strategy as a combination of ferocious, weak and crazy. In the weeks since then, three events have exemplified each facet of that strategy. Pyongyang showed its ferocity Feb. 12, when it detonated a nuclear device underground. The country's only significant ally, China, voted against Pyongyang in the U.N. Security Council on March 7, demonstrating North Korea's weakness. Finally, Pyongyang announced it would suspend the armistice that ended the Korean War in 1953, implying that that war would resume and that U.S. cities would be turned into "seas of fire." To me, that fulfills the crazy element."
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Disruption guru Christensen: Why Apple, Tesla, VCs, academia may die - 0 views

www.bizjournals.com/...tion-guru-christensen-why.html technology
shared by anonymous on 19 Feb 13 - Cached
  • If a newcomer thinks it can win by competing at the high end, “the incumbents will always kill you.” If they come in at the bottom of the market and offer something that at first is not as good, the legacy companies won’t feel threatened until too late, after the newcomers have gained a foothold in the market. He offered as an example the introduction of cheap transistor radios. High fidelity, vacuum-tube powered incumbents felt no threat from the poor quality audio the transistors produced and missed the technological shift that eventually killed many of them.
  • Instead of coming in at the low end of the market with a cheap electric vehicle, Tesla Motors competes with premium offerings from legacy automakers. “Who knows whether they will be successful or not,” he said. “They have come up with cars that in fact compete reasonably well and they cost $100,000 and god bless them.” “But if you really want to make a big product market instead of a niche product market, the kind of question you want to ask for electric vehicles is, I wonder if there is a market out there for customers who would just love to have a product that won’t go very far or go very fast. The answer is obvious.
  • “The parents of teenagers would love to have a car that won’t go very far or go very fast. They could just cruise around the neighborhood, drive it to school, see their friends, plug it in overnight.” Because that kind of electric car offers something that doesn’t threaten incumbents and provides a low-end solution, Christensen says that has a greater chance of surviving and ultimately upending the auto market than Tesla’s flashy Roadsters and sedans.
  • ...5 more annotations...
  • Christensen said he thinks the venture capital world needs to be disrupted because it is focused too much on making big killings on big investments at a time when there are plenty of good smaller investments to be made on companies that will be disruptive.
  • “Venture capital is always wanting to go up market. It’s like the Rime of the Ancient Mariner. 'Water, water everywhere and not a drop to drink.' People in private equity complain that they have so much capital and so few places to invest. But you have lots of entrepreneurs trying to raise money at the low end and find that they can’t get funding because of this mismatch. I think that there is an opportunity there.”
  • “For 300 years, higher education was not disruptable because there was no technological core. If San Jose State wants to become a globally known research institution, they have to emulate UC Berkeley and Cal Tech. They can’t disrupt,” he said on Wednesday.
  • “But now online learning brings to higher education this technological core, and people who are very complacent are in deep trouble. The fact that everybody was trying to move upmarket and make their university better and better and better drove prices of education up to where they are today.
  • “Fifteen years from now more than half of the universities will be in bankruptcy, including the state schools. In the end, I am excited to see that happen.”
  • anonymous on 19 Feb 13
     
    "Basically, his theory of disruption centers around how dominant industry leaders will react to a newcomer: "It allows you to predict whether you will kill the incumbents or whether the incumbents will kill you.""
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Recognizing the End of the Chinese Economic Miracle - 0 views

www.stratfor.com/...g-end-chinese-economic-miracle
shared by anonymous on 23 Jul 13 - No Cached
  • A crisis can exist before it is recognized.
  • The admission that a crisis exists is a critical moment, because this is when most others start to change their behavior in reaction to the crisis.
  • First, The New York Times columnist and Nobel Prize-recipient Paul Krugman penned a piece titled "Hitting China's Wall." He wrote, "The signs are now unmistakable: China is in big trouble.
  • ...30 more annotations...
  • Later in the week, Ben Levisohn authored a column in Barron's called "Smoke Signals from China." He wrote, "In the classic disaster flick 'The Towering Inferno' partygoers ignored a fire in a storage room because they assumed it has been contained. Are investors making the same mistake with China?"
  • Meanwhile, Goldman Sachs -- where in November 2001 Jim O'Neil coined the term BRICs and forecast that China might surpass the United States economically by 2028 -- cut its forecast of Chinese growth to 7.4 percent. 
  • The New York Times, Barron's and Goldman Sachs are all both a seismograph of the conventional wisdom and the creators of the conventional wisdom. Therefore, when all three announce within a few weeks that China's economic condition ranges from disappointing to verging on a crash, it transforms the way people think of China.
  • Now the conversation is moving from forecasts of how quickly China will overtake the United States to considerations of what the consequences of a Chinese crash would be. 
  • Suddenly finding Stratfor amid the conventional wisdom regarding China does feel odd, I must admit. Having first noted the underlying contradictions in China's economic growth years ago, when most viewed China as the miracle Japan wasn't, and having been scorned for not understanding the shift in global power underway, it is gratifying to now have a lot of company.
  • One of the things masking China's weakening has been Chinese statistics, which Krugman referred to as "even more fictional than most."
  • China is a vast country in territory and population. Gathering information on how it is doing would be a daunting task, even were China inclined to do so. Instead, China understands that in the West, there is an assumption that government statistics bear at least a limited relationship to truth. Beijing accordingly uses its numbers to shape perceptions inside and outside China of how it is doing.
  • The Chinese release their annual gross domestic product numbers in the third week of January (and only revise them the following year). They can't possibly know how they did that fast, and they don't. But they do know what they want the world to believe about their growth, and the world has believed them -- hence, the fantastic tales of economic growth. 
  • China in fact has had an extraordinary period of growth. The last 30 years have been remarkable, marred only by the fact that the Chinese started at such a low point due to the policies of the Maoist period.
  • Growth at first was relatively easy; it was hard for China to do worse. But make no mistake: China surged. Still, basing economic performance on consumption, Krugman notes that China is barely larger economically than Japan. Given the compounding effects of China's guesses at GDP, we would guess it remains behind Japan, but how can you tell? We can say without a doubt that China's economy has grown dramatically in the past 30 years but that it is no longer growing nearly as quickly as it once did.
  • China's growth surge was built on a very unglamorous fact: Chinese wages were far below Western wages, and therefore the Chinese were able to produce a certain class of products at lower cost than possible in the West.
  • China had another essential policy: Beijing was terrified of unemployment and the social consequences that flow from it. This was a rational fear, but one that contradicted China's main strength, its wage advantage.
  • Growing the economy is possible, but not growing profitability. Eventually, the economy will be dragged down by its inefficiency. 
  • As businesses become inefficient, production costs rise. And that leads to inflation. As money is lent to keep inefficient businesses going, inflation increases even more markedly. The increase in inefficiency is compounded by the growth of the money supply prompted by aggressive lending to keep the economy going. As this persisted over many years, the inefficiencies built into the Chinese economy have become staggering. 
  • The second thing to bear in mind is the overwhelming poverty of China, where 900 million people have an annual per capita income around the same level as Guatemala, Georgia, Indonesia or Mongolia ($3,000-$3,500 a year), while around 500 million of those have an annual per capita income around the same level as India, Nicaragua, Ghana, Uzbekistan or Nigeria ($1,500-$1,700).
  • China's overall per capita GDP is around the same level as the Dominican Republic, Serbia, Thailand or Jamaica.
  • Stimulating an economy where more than a billion people live in deep poverty is impossible. Economic stimulus makes sense when products can be sold to the public.
  • The Chinese have maintained a strategy of depending on exports without taking into account the operation of the business cycle in the West, which means that periodic and substantial contractions of demand will occur. China's industrial plant is geared to Western demand. When Western demand contracted, the result was the mess you see now.
  • The Chinese can prevent the kind of crash that struck East Asia in 1997. Their currency isn't convertible, so there can't be a run on it. They continue to have a command economy; they are still communist, after all. But they cannot avoid the consequences of their economic reality, and the longer they put off the day of reckoning, the harder it will become to recover from it.
  • The Chinese are not going to completely collapse economically any more than the Japanese or South Koreans did. What will happen is that China will behave differently than before. With no choices that don't frighten them, the Chinese will focus on containing the social and political fallout, both by trying to target benefits to politically sensitive groups and by using their excellent security apparatus to suppress and deter unrest.
  • The Chinese economic performance will degrade, but crisis will be avoided and political interests protected. Since much of China never benefited from the boom, there is a massive force that has felt marginalized and victimized by coastal elites. That is not a bad foundation for the Communist Party to rely on.
  • The Chinese are, of course, keeping a great deal of money in U.S. government instruments and other markets. Contrary to fears, that money will not be withdrawn. The Chinese problem isn't a lack of capital, and repatriating that money would simply increase inflation.
  • Had the Chinese been able to put that money to good use, it would have never been invested in the United States in the first place.
    • anonymous
      anonymous on 23 Jul 13
       
      I'm having a hard time following all the econ stuff, but I understand this to mean that the U.S. is 'old reliable': Not an investment of last resort, but an investment to run to when you don't have a sure thing.
  • Rather than the feared repatriation of funds, the United States will continue to be the target of major Chinese cash inflows.
  • In a world where Europe is still reeling, only the United States is both secure and large enough to contain Chinese appetites for safety. Just as Japanese investment in the 1990s represented capital flight rather than a healthy investment appetite, so the behavior we have seen from Chinese investors in recent years is capital flight:
  • money searching for secure havens regardless of return. This money has underpinned American markets; it is not going away, and in fact more is on the way. 
  • The major shift in the international order will be the decline of China's role in the region. China's ability to project military power in Asia has been substantially overestimated.
  • Its naval capacity is still limited compared with the United States. The idea that it will compensate for internal economic problems by genuine (as opposed to rhetorical) military action is therefore unlikely.
  • In our view, the most important shift will be the re-emergence of Japan as the dominant economic and political power in East Asia in a slow process neither will really want.
  • China will continue to be a major power, and it will continue to matter a great deal economically. Being troubled is not the same as ceasing to exist. China will always exist. It will, however, no longer be the low-wage, high-growth center of the world. Like Japan before it, it will play a different role.
  • anonymous on 23 Jul 13
     
    "Major shifts underway in the Chinese economy that Stratfor has forecast and discussed for years have now drawn the attention of the mainstream media. Many have asked when China would find itself in an economic crisis, to which we have answered that China has been there for awhile -- something not widely recognized outside China, and particularly not in the United States."
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