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anonymous

Companies won't even look at résumés of the long-term unemployed - 0 views

  • Matthew O’Brien reports on a striking new paper by Rand Ghayad and William Dickens of Northeastern University. The researchers sent out 4,800 fake résumés at random for 600 job openings. What they found is that employers would rather call back someone with no relevant experience who’s only been out of work for a few months than someone with lots of relevant experience who’s been out of work for longer than six months.
  • Here’s what this looks like in chart form:
  • the long-term unemployed are struggling to find work no matter how many job openings pop up.
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  • there’s some ambiguity about whether companies are discriminating irrationally against the unemployed or whether they have good reason for screening out people who have been out of work for six months or more.
  • Dozens of states have been considering legislation that would make it illegal to discriminate against the long-term unemployed. Some proposals would even allow unsuccessful applicants to sue under the same discrimination laws that apply to race or gender bias.
  • These proposals have plenty of critics. But it’s also unclear whether they would have much impact.
  • The Obama administration, for its part, has proposed a few other ideas, including training programs and tax credits for businesses that hire the long-term unemployed. (The latter were even included in the American Jobs Act that Republicans blocked in Congress.)
  • Yet economists have argued that while these programs might help at the margins, they won’t necessarily bring down the overall unemployment rate. For instance, a company might just hire a subsidized worker over someone else.
  • It’s worth noting, as Matt Yglesias points out here, that long-term unemployment was a major structural problem after the Great Depression too. But as this old essay by Richard Jensen suggests, it took World War II to finally solve the problem: “The war, by removing millions of prime men from the labor market, by restructuring the work process, by subsidizing wages, and by massive retraining, finally gave the private sector the methods and the incentives to rehire the hard-core.” That’s not really an option today, but it underscores a bleak fact about the recession. When the labor market stays weak for years on end, the damage becomes long-lasting — and extremely difficult to reverse.
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    "Here's one big reason why America's unemployment crisis may be here to stay. Thanks to the lasting effects of the recession, there are currently 4.7 million workers who have been out of work for at least 27 weeks. And new research suggests that employers will almost never consider hiring them."
anonymous

Occupy America: Is History Repeating Itself? - 0 views

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      In the spring and summer of 1932, in the throes of the Great Depression, approximately 17,000 World War I veterans, their families, and affiliated groups descended upon Washington, D.C. These protesters who were popularly named the Bonus Army.        Many of these war veterans had been continuously unemployed since the advent of the Great Depression. Earlier, in 1924, The World War Adjusted Compensation Act  had awarded them bonuses in the form of service certificates that could not be redeemed before 1945. Each service certificate, issued to a qualified veteran soldier, bore a face value equal to the soldier's promised payment plus compound interest. The primary demand of the Bonus Army was that they be allowed to redeemed their service certificates in exchange for cash payments immediately.
anonymous

How We Teach Our Kids That Women Are Liars - 0 views

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    "Two weeks ago a man in France was arrested for raping his daughter. She'd gone to her school counselor and then the police, but they needed "hard evidence." So, she videotaped her next assault. Her father was eventually arrested. His attorney explained, "There was a period when he was unemployed and in the middle of a divorce. He insists that these acts did not stretch back further than three or four months. His daughter says longer. But everyone should be very careful in what they say." Because, really, even despite her seeking help, her testimony, her bravery in setting up a webcam to film her father raping her, you really can't believe what the girl says, can you?"
anonymous

Who cares about a career? Not Gen Y - 0 views

  • While we Baby Boomers typically place high value on pay, benefits, stability and prestige, Gen Y cares most about fun, innovation, social responsibility, and time off.
  • While the article focuses on the horrible job market for today's twenty-somethings, it suggests that these new adults are pretty much unfazed that they're not launching into a dream career.
  • Apart from 14% of young adults who are unemployed today, 23% are not even seeking work, according to the Bureau of Labor Statistics. The New York Times notes that the total, 37% of young adults unemployed or not seeking work, is the highest rate in more than three decades and reminiscent of the 1930s.
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    By Patricia Sellers at Postcards (Fortune) on July 7, 2010. The comments are a priceless example of generational angst.
anonymous

Glenn Beck and the Oakland shooter - 0 views

  • Other than two mentions of Tides on the show of Beck's Fox colleague Sean Hannity, Media Matters said it was unable to find any other mention of Tides on any news broadcast by any network over that same period. Beck declined comment.
  • The killings came after Beck told Fox viewers that he "can't debunk" the notion that FEMA was operating such camps -- but before he finally acknowledged that the conspiracy wasn't real.
  • Beck has at times spoken against violence, but he more often forecasts it, warning that "it is only a matter of time before an actual crazy person really does something stupid."
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  • Beck has prophesied darkly to his millions of followers that we are reaching "a point where the people will have exhausted all their options. When that happens, look out." One night on Fox, discussing the case of a man who killed 10 people, Beck suggested such things were inevitable. "If you're a conservative, you are called a racist, you want to starve children," he said. "And every time they do speak out, they are shut down by political correctness. How do you not have those people turn into that guy?"
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    "Late on a Saturday night two weeks ago, an unemployed carpenter packed his mother's Toyota Tundra with guns and set off for San Francisco with a plan to kill progressives." I think you can see where this is going... By Dana Mibank at The Washington Post on August 1, 2010.
anonymous

The Social Effects of the European Crisis - 0 views

  • Tens of thousands of protesters took to the streets in Lisbon and other Portuguese cities March 2 to demand an end to the government's austerity measures and, in some cases, to call for the resignation of Portuguese Prime Minister Pedro Passos Coelho. The European Union considers the Portuguese government a success story in implementing austerity measures after it received a bailout in 2011. However, unemployment doubled in Portugal between 2008 and 2012 and currently affects more than 16 percent of the country's workforce.
  • In Spain, the government announced March 4 that more than five million people in the country are unemployed -- the highest rate seen there in more than three decades -- and a series of suicides committed by people who were to be evicted from their homes has spurred widespread protests.
  • In Greece, reports suggest that the country is going through a shortage of medicines; hundreds of drugs, including antibiotics and anesthetics, are in short supply.
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  • In Portugal, the Secretary of State for Emigrant Communities recently said that up to 240,000 people (roughly 2 percent of the nation's population) have left the country since 2011, due in large part to unemployment and economic contraction.
  • As the recurrent protests in Spain, Greece and Portugal show, there is a growing dissatisfaction in many of the EU member states with the austerity measures proposed by the European Union and applied by national governments.
  • Independent of their ideological orientation, most EU governments have applied the austerity policies proposed by the European Union and the International Monetary Fund. The traditional parties' lack of alternatives to austerity has generated a growing unease among local populations.
  • Such crises of legitimacy are often accompanied by an increase in euroscepticism, since many of these new parties blend anti-establishment rhetoric with opposition to the European Union or Germany's leadership of the bloc.
  • The combination of economic, social and political crises growing in Europe concerns Brussels for a number of reasons.
  • First, political uncertainty often generates instability in the financial markets.
  • Second, and perhaps most important, the economic crisis creates an environment conducive to the growth of extremist political views, both from the left and from the right.
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    "In recent weeks, many European bureaucrats and national leaders have expressed optimism about the future of the economic situation in the European Union and have suggested that the worst of the crisis has passed. However, events over the past few days show that the crisis is not over and that it continues to have a deepening social impact on eurozone states."
anonymous

The Inequality That Matters - 1 views

  • 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.
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  • 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
       
      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
       
      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
       
      Painfully straightforward.
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    "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?"
anonymous

Thirty More Years of Hell - 1 views

  • 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).
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  • 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.
  •  
    "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."
anonymous

For a New Generation, an Elusive American Dream - 0 views

  • Complicating the generational divide, Scott’s grandfather, William S. Nicholson, a World War II veteran and a retired stock broker, has watched what he described as America’s once mighty economic engine losing its pre-eminence in a global economy. The grandfather has encouraged his unemployed grandson to go abroad — to “Go West,” so to speak.
  • Yet surveys show that the majority of the nation’s millennials remain confident, as Scott Nicholson is, that they will have satisfactory careers. They have a lot going for them.
  • The Great Depression damaged the self-confidence of the young, and that is beginning to happen now, according to pollsters, sociologists and economists. Young men in particular lost a sense of direction, Glen H. Elder Jr., a sociologist at the University of North Carolina, found in his study, “Children of the Great Depression.” In some cases they were forced into work they did not want — the issue for Scott Nicholson.
  •  
    By Louis Uchitelle at The New York Times on July 6, 2010.
anonymous

Mr. America - 0 views

  • As the 41st Republican in an institution that requires 60 out of 100 votes to pass legislation, he’s had the power to stop, or at least massively slow down, everything from health care to financial reform. But Brown actually looms much larger than even this calculus would suggest. In his concerns, priorities, and, maybe most important, his confusion about the economy, Brown has come to represent the average voter in 2010. If Democrats are going to be successful this November, they’ll have to figure out a way to seize the territory that Brown currently holds.
  • A recent Globe poll illustrates the point nicely, crowning Brown the most popular politician in his overwhelmingly Democratic state. According to the poll, Brown’s favorable/unfavorable split is 55-18, versus 52-37 for Kerry and 54-41 for Barack Obama. Brown accomplishes this feat on the strength of his appeal to independents (55-11) and a surprisingly robust showing among Democrats (41-32). Given that Democratic candidates are highly unlikely to win many Republican votes this fall, they’ll have to limit their defections among Democrats and carry independents in order to hold Congress. Judged against Brown’s performance in Massachusetts, they are currently failing at this task.
  • Brown has been following a simple formula for building public support as a Republican: Toe as right-wing a line as you can without alienating the political middle. To take the subject of his interactions with Tim Geithner, Brown has used his influence as a pivotal Senate vote to extract loopholes for financial firms (like easing restrictions on their investments in hedge funds) and to beat back a tax on big banks. But, in the end, there’s little doubt he’ll embrace the financial reform bill.
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  • One of his first acts as a senator was to vote for a $15-billion Democratic measure giving companies a payroll tax-break if they hire unemployed workers.
  •  
    "Why Scott Brown is the key to U.S. politics" By Noam Scheiber in the New Republic on July 12, 2010. All I can say is, "hmmmmmm, okay...."
anonymous

The Myth of the Yellow Peril: Overhyping Chinese Migration into Russia - 0 views

  • Since 1989 the population of the Russian Far East declined by 14% to 6.7 million in 2002; shorn of subsidies from the center, it is now dependent on the rest of East Asia for food and consumer imports. It sits next to Chinese Manchuria (the provinces of Heilongjiang, Liaoning and Jilin), an environmentally-strained rust belt of 108 million souls. Thus it is not surprising to see American geopolitical jockeys, Russian xenophobes and anti-Putin "liberals" alike (i.e. Radio Free Europe's Aleksandr Golts and Echo Moskvi Radio's Yulia Latynina, etc) claiming that a stealth demographic invasion of Russia is well underway which will in a few years result in a Chinese Far East.
  • The issue of Chinese migration to Russia and its political consequences starts with one main question - how many of them are there? All reputable estimates are in the range of 200,000 to 400,000, with 500.000 as the absolute maximum, most of them shuttle traders or seasonal laborers. The academic Gel'bras first came with these figures in 2001, based on adding up numbers from separate towns and regions.
  • Most migrants come from cities or small towns, and only 20% from villages - although the latter figure is higher in Moscow. Only 5% were employed in agriculture back in China. 38% were "workers" and 11% were "worker-peasants". Although only 6% admitted they had been unemployed, the real figure is much higher since 70% of workers and 68% of worker peasants said they migrated because they couldn't find a job in China.
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  • Chinese Migration - Facts, Objectivity and Subjectivity: a Kazakh perspective. As in Russia, they massively overstate the Chinese presence, mixed marriages, etc. Ironically twice as many Kazakhs visit China every year than vice versa. What's happening with Chinese expansion in Russia?: a comprehensive and sarcastic recounting of prior alarmist estimates of the numbers of Chinese in Russia. The Russian vector in global Chinese migration: notes that the alarmism of the 1990's and early 2000's is dwindling away and being replaced by more scientific views of Chinese migration to Russia. Notes that Russian migration as a share of total Chinese global migration is tiny - as of 1990, the total number of Chinese overseas was about 37mn, including 30% of the population in Malaysia, 10% in Thailand, 17% in Brunei and 4% in Indonesia. Lots of other stuff.
  • I will now go beyond demography into geopolitics. China is not the monolith that it is usually painted as in the West; its strong central government conceals a greater deal of simmer, dynamism and regionalism.
  • China aimed to achieve three geopolitical aims in the following order:
  • 1) Maintain central authority over the commercial seaboard and the peasant hinterland 2) Surround itself by a buffer of vassal states on land - Tibet, Sinkiang, Mongolia, Manchuria, etc. 3) Build a strong navy to repel sea-based foreign predation, protect its trade and extend its influence over East Asia. Now and in the future, China is going to have cope with a panoply of threats to those geopolitical goals - rising inequalities, a disconnected bureaucracy, ethnic separatism and American and Japanese sea power. In other words, it's going to have its hands full and Chinese willingness to pursue reconciliation and friendship with Russia is a reflection of its need for a safe strategic rear (see Sino-Russian Relations in China Debates the Future Security Environment, Michael Pillsbury).
  •  
    "One of the staples of alarmist, pessimistic and/or Russophobic (not to mention Sinophobic) commentary on Russian demography is a reworking of the yellow peril thesis. In these fevered imaginations, Chinese supposedly swim across the Amur River in their millions, establishing village communes in the taiga, and breeding prolifically so as to displace ethnic Russians and revert Khabarovsk and Vladivostok back to their rightful Qing Dynasty-era names, Boli and Haisanwei." By Anatoly Karlin at Russia Blog on April 1, 2009.
anonymous

Caucasian Nation - 0 views

  • But it’s futile to insist on nuances of history and law when we’re speaking the language of “offense.” The mythical heartland Sarah Palin speaks from, or for, is full of these voiceless, downtrodden plain folk who are constantly being offended, for whom there is no end to the offenses, real or imagined, perpetrated against them: the Mexican immigrant speaking his native tongue, the Muslim at his prayers, the black man drinking from a public water fountain (oh wait, that one’s not offensive anymore . . .). One of the more charming stories in Budiansky’s history of Reconstruction concerns a Southern gentleman who wanted a freed slave whipped because he had the temerity to wish him “good morning” without being spoken to first. These offended people see with such dreadful clarity things that don’t exist, and so remake reality to suit their grievances.
  • Of course, the majority of white Americans, like the majority of all other kinds of Americans, have good reason to feel aggrieved. They are the victims of bad economic and foreign policies; their state budgets are crippled by debts, their federal legislature is paralyzed, environmental catastrophe stalks their shores, oceans, and atmosphere. But when they go to the polls in November, if they go at all, a fair number of them will cast their vote on the basis of who stood up for them against imaginary Muslim hordes invading lower Manhattan to pray to their terrorist God.
  • In a late interview by turns confessional and triumphant, Lee Atwater, author of the strategy that turned the solidly Democratic, racist South into the solidly Republican, racist South, described the Southern Strategy’s metamorphosis over the years, “You start out in 1954 by saying, ‘Nigger, nigger, nigger.’ By 1968 you can’t say ‘nigger’ — that hurts you. Backfires. So you say stuff like forced busing, states’ rights and all that stuff. You’re getting so abstract now [that] you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is blacks get hurt worse than whites.” Partly through Atwater, Republicans developed a kind of reverse means test, an economic version of the old “one-drop rule.” Policies that were likely to help blacks, even if they were also likely to help poor whites, because they were policies largely designed to help the poor, regardless of color, became issues to campaign against: welfare, health care, federal education funding, progressive taxation, clean air regulations, funding for public transportation, just about any “progressive policy” you can think of. Some whites would be hurt, but blacks would be hurt worse. This has proved true. African Americans as a group are still poorer than whites as a group, regardless of the achievements of this generation’s talented tenth and of the growing army of the unemployed of all colors.
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  • The ideology of states’ rights against federal enforcement, the metastasized right to bear arms, the fear of “big government” intervention — these were the pillars on which the Confederate and later segregationist South sought to erect a white plantation nation.
  • As of right now, there exists no serious strategy to combat this new bigotry. The Democratic leadership appears content to hope that once these radical Republican race-baiters take control of Congress after the midterm elections, the ordinary responsibilities and realities of power will force them to abandon the strategies they used to obtain power.
  • Instead of being “overcome,” historic American racism against nonwhite people has gone into deep cover and, with the irrefutable illogic of the unconscious, emerged as a newfangled American antiracism for the protection of white people.
  • “This guy, is, I believe, racist,” said Glenn Beck of Obama back in 2009, probably because he believed, like Breitbart, that when you accuse somebody of racism, however baselessly, the burden of proof shifts to the accused.
  • The crowds thronging to join Beck’s march on Washington — conveniently coinciding with the 47th anniversary of King’s “I had a dream” speech — showed the rest of us that Obama’s “postracial” America looks a lot like racial America.
  • In fact there has been an authentic white culture in American history, or rather a way of life concerned above all with the protection and preservation of white ethnic domination, and playing up the white victim has always been a part of it.
  • Even though we’ve mostly done away with outright racial violence, the memory of violence survives in the symbolism of  the Shirley Sherrod affair, the signs at Tea Party protests that say “the zoo has an African Lion and the White House has a Lyin’ African,” and the “open carry” demonstrations sponsored by the NRA, descendant of the Confederate gun clubs, at the town hall meetings for national health care.
  • Even so we have not yet achieved a more intriguing benchmark of progress: the election to the presidency of the descendant of an actual slave.
  • The most enduring behaviors of nations, like the hardest-to-break habits of individuals, are those we are least aware of. The new racists — that is to say, “concerned citizens” of Caucasian descent — seem only dimly conscious of past American racism, an ignorance no doubt unconsciously maintained, but more potent for that. Journalists for supposedly liberal publications like the Times and the New Republic have sought “actual racists” in the Tea Party movement and, because no one would say the N-word on the record, duly exonerated the Tea Partiers of racist intent. In exchange, Tea Party spokespeople acknowledge that the odd unreconstructed crank might turn up at one of their rallies. It’s a free country. All the reporters could find was that self-identified Tea Partiers were more likely than most Americans to pick a poll option asserting that “too much attention has been paid to problems facing Black Americans.”
  • Ostensibly, then, all the Tea Partiers want are the same contradictory things that most real Americans want: Medicare benefits, disproportionate federal spending on rural districts, and no taxes. As a T-shirt puts it, “I’ll keep my guns, money, and freedom, you can keep the ‘Change.’” But the summer’s events show that the defense of unthreatened freedoms counts for less than an apparently widespread white wish to make more out of their difficulties than other people. This is no longer a culture war, a revolt of stoics against the “culture of complaint,” but something deeper and older that precedes the identity politics movements it aims to subvert. Forty-two years after the Civil Rights Act, white people who still think of themselves predominantly as “white people” want to air their grievances with the aid of a social movement. One half of what passes for American two-party discourse calls now for another rebirth of a nation: the Caucasian States of America, a postmodern ethno-nationalist republic.
  • The Confederacy provided us with our own native opposition to classical 19th-century Liberalism, both economic and political, and it shouldn’t really be that surprising that contemporary antiliberalism with strong support in the former slave and border states borrows its language and gestures.
  • The robust case for dominating other people sounds awful to most American ears today. So the contemporary idea of ethnocracy relies instead on an opposite rhetoric of victimization. The simple-minded mantra we’re taught in grade school goes like this: blacks good because oppressed, whites bad because oppressors. So if whites suddenly became oppressed, even while remaining the majority, they would magically become good again. Many Americans are now being taught to think this way.
  • There is no dispute that both American common-law traditions of liberty of conscience and the First Amendment protect the construction of the center, regardless of its popularity. It shouldn’t be a big deal. And yet: “Ground Zero Mosque supporters: doesn’t it stab you in the heart, as it does ours throughout the heartland? Peaceful Muslims, pls refudiate,” tweeted Sarah Palin, white goddess of the victimization movement. This opening salvo was later amended, with little more grammatical success, to “Peaceful New Yorkers, pls refute the Ground Zero mosque plan if you believe catastrophic pain caused @ Twin Towers site is too raw, too real.” The idea that 9/11 somehow taints all of Islam, so that all Muslims should be honor-bound not to practice their religion within an unspecified radius of Ground Zero for fear of hurting other people’s feelings — this is like the blood libel meets Oprah.
  •  
    "Last week, the NAACP released a detailed report tracking racist elements in the Tea Party. Looking past smoking gun links to actual card-carrying white supremacists, Marco Roth argues that the rhetoric of the Tea Party is tainted, from its very origins, with a long-running strain of "white victimization" politics, dating back to the Confederate South's refusal to accept that it had lost the Civil War." By Marco Roth at n+1 on October 25, 2010.
anonymous

Unemployment and jobs: Work for post-materialists - 4 views

  • I think Mr Yglesias' proposal that the Fed target a 3-4% rate of inflation is indeed the single best thing Washington can do to create jobs today.
  • there's something that bothers me slightly about this whole "job creation" discussion. The implicit idea seems to be that policy should aim to increase employer demand for employees. But it occurs to me that perhaps some of the long-term unemployed want remunerative work, but are a bit sick of "employment".
  • Philosophical questions of self-ownership and the alienability of labour aside, I am convinced that autonomy is profoundly important to most of us, and that the sort of self-rental involved in the employment relation is regularly experienced as a lamentable loss of autonomy, if not humiliating subjection. I think a lot of us would rather not work for somebody else.
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  • 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
  • This is me. I don't want to maximise income. I want to maximise autonomy and time for unremunerative but satisfying creative work. Reihan Salam has written provocatively on the subject of threshold earners, in addition to introducing me to David Roberts' related idea of "the medium chill".
    • Erik Hanson
       
      Word up. There are too many things I want to do that cost me money--or at least don't pay me.
    • anonymous
       
      This resonated with me, as well. I am actually pretty good at doing things that are completely tertiary to my job. I've been focused on turning my full-time job into that, but what I'd really like is some way to bounce from project to project, doing what I'm good at, getting some fulfillment, and getting something back from it. I feel like all these little internet-networks hold the potential for that, but - as the article points out - it's not as though you can get by that way.
  • as Ronald Inglehart has documented, the achievement of high levels of widespread material well-being has precipitated a momentous shift toward "post-materialist" values across the entire developed world.
  • Having secured a relatively comfortable standard of living, we have come to worry less about the stuff we need to get by and more about the pursuit of self-realisation, meaning in life, justice in society, and harmony with the natural world.
    • Erik Hanson
       
      I think this is part of the "we're slipping into European economic views" thing.
    • anonymous
       
      Speaking for my wife and I, we feel like our material focus isn't on keeping up with the joneses, but doing stuff that makes enjoy our days just a little bit more.
    • Erik Hanson
       
      Unamerican! ;)
  • Whatever our level of education, if unemployment benefits and odd jobs add up to enough to keep us above a socially acceptable material threshold, we will not be in a hurry to accept any available employment, no matter how unpleasant or unsuitable.  
  • So, yeah, I'd like to see wage subsidies and a 4% inflation target. But I'd also like to see a shift away from economic policy that pushes us so insistently into the "employee" role. What does the government call you if you are working but not on somebody's payroll with social security and Medicare taxes automatically deducted from your wages? Self-employed!
  • You must work for somebody, even if it's yourself.
    • Erik Hanson
       
      "Gotta Serve Somebody" is on my morning playlist. Dylan brings the truth.
  • But I don't want to be a tiny business that hires me. I don't want to be my own boss. I don't want to be a boss at all, or to have one. I just want to work and get paid for it, on terms agreeable to the parties involved.
  • Clearly, decoupling health benefits from employment would help a lot. Less obviously, but at least as importantly, we need to eliminate the insane patchwork of regulations that keep folks from legally cutting hair for money in a kitchen, or legally making a few bucks every now and then taxiing people around town in a 1988 Ford Escort. De-formalising and de-bureaucratising labour certainly makes it harder for government to track who has paid what to whom, who owes how much in various taxes, and so forth. But it would be truly pathetic if the legal/economic organisation of our society was optimised for government surveillance and tax collection and not for the exercise of autonomy in pursuit of a meaningful life.
    • Erik Hanson
       
      ... Maybe. The fact of the matter is that group insurance rates through employers tend to be much more affordable than getting individual coverage. There's a reason so many hipsters and art types work part-time at Starbucks and other shops that offer benefits to part-time workers. Just as there's a reason for regulation beyond just tracking how money moves. We don't just certify drugs or beef because we want to make sure we know what people are spending money on at the supermarket.
    • anonymous
       
      Quite true. Will's a bit too anti-regulatory for my taste. To expand your observation: if we let the free market do its thing, it does not logically follow that all our food will be safer, absent a regulatory apparatus. In fact, my hazy recollection is that the mix of regional laws and patchwork of safety requirements is one reason that some industries _crave_ regulation, so they can do business without quadrupling the size of their legal department.
  •  
    "The Atlantic, with the support of McKinsey & Company, has put together a forum on the question: 'What's the single best thing Washington can do to jump-start job creation?'"
anonymous

The Crisis of the Middle Class and American Power - 0 views

  • At the same time, I would agree that the United States faces a potentially significant but longer-term geopolitical problem deriving from economic trends.
  • The threat to the United States is the persistent decline in the middle class' standard of living, a problem that is reshaping the social order that has been in place since World War II and that, if it continues, poses a threat to American power.
  • The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000.
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  • It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. This is where the difference in the meaning of middle class becomes most apparent.
  • In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.
  • Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher.
  • At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn't cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids.
  • And this is for the median. Those below him -- half of all households -- would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities.
  • I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis. People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II.
  • The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn't they were trapped, but given history, they were not making an irresponsible assumption.
  • American history was always filled with the assumption that upward mobility was possible. The Midwest and West opened land that could be exploited, and the massive industrialization in the late 19th and early 20th centuries opened opportunities. There was a systemic expectation of upward mobility built into American culture and reality.
  • The Great Depression was a shock to the system, and it wasn't solved by the New Deal, nor even by World War II alone. The next drive for upward mobility came from post-war programs for veterans, of whom there were more than 10 million. These programs were instrumental in creating post-industrial America, by creating a class of suburban professionals. There were three programs that were critical:
  • The GI Bill, which allowed veterans to go to college after the war, becoming professionals frequently several notches above their parents.
  • The part of the GI Bill that provided federally guaranteed mortgages to veterans, allowing low and no down payment mortgages and low interest rates to graduates of publicly funded universities.
  • The federally funded Interstate Highway System, which made access to land close to but outside of cities easier, enabling both the dispersal of populations on inexpensive land (which made single-family houses possible) and, later, the dispersal of business to the suburbs.
  • There were undoubtedly many other things that contributed to this, but these three not only reshaped America but also created a new dimension to the upward mobility that was built into American life from the beginning.
  • there was consensus around the moral propriety of the programs.
  • The subprime fiasco was rooted in the failure to understand that the foundations of middle class life were not under temporary pressure but something more fundamental.
  • the rise of the double-income family corresponded with the decline of the middle class.
  • But there was, I think, the crisis of the modern corporation.
  • Over the course of time, the culture of the corporation diverged from the realities, as corporate productivity lagged behind costs and the corporations became more and more dysfunctional and ultimately unsupportable.
  • In addition, the corporations ceased focusing on doing one thing well and instead became conglomerates, with a management frequently unable to keep up with the complexity of multiple lines of business.
  • Everything was being reinvented. Huge amounts of money, managed by people whose specialty was re-engineering companies, were deployed. The choice was between total failure and radical change. From the point of view of the individual worker, this frequently meant the same thing: unemployment.
  • From the view of the economy, it meant the creation of value whether through breaking up companies, closing some of them or sending jobs overseas. It was designed to increase the total efficiency, and it worked for the most part.
  • This is where the disjuncture occurred. From the point of view of the investor, they had saved the corporation from total meltdown by redesigning it. From the point of view of the workers, some retained the jobs that they would have lost, while others lost the jobs they would have lost anyway. But the important thing is not the subjective bitterness of those who lost their jobs, but something more complex.
  • As the permanent corporate jobs declined, more people were starting over. Some of them were starting over every few years as the agile corporation grew more efficient and needed fewer employees. That meant that if they got new jobs it would not be at the munificent corporate pay rate but at near entry-level rates in the small companies that were now the growth engine.
  • As these companies failed, were bought or shifted direction, they would lose their jobs and start over again. Wages didn't rise for them and for long periods they might be unemployed, never to get a job again in their now obsolete fields, and certainly not working at a company for the next 20 years.
  • The restructuring of inefficient companies did create substantial value, but that value did not flow to the now laid-off workers. Some might flow to the remaining workers, but much of it went to the engineers who restructured the companies and the investors they represented.
  • Statistics reveal that, since 1947 (when the data was first compiled), corporate profits as a percentage of gross domestic product are now at their highest level, while wages as a percentage of GDP are now at their lowest level.
  • It was not a question of making the economy more efficient -- it did do that -- it was a question of where the value accumulated. The upper segment of the wage curve and the investors continued to make money. The middle class divided into a segment that entered the upper-middle class, while another faction sank into the lower-middle class.
  • American society on the whole was never egalitarian. It always accepted that there would be substantial differences in wages and wealth. Indeed, progress was in some ways driven by a desire to emulate the wealthy. There was also the expectation that while others received far more, the entire wealth structure would rise in tandem. It was also understood that, because of skill or luck, others would lose.
  • What we are facing now is a structural shift, in which the middle class' center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).
    • anonymous
       
      I would revise: "(breakdown of the contentional family) is too unclear. The 'conventional family' that Friedman notes was very much outlier behavior for most Americans. Having enough money for a wife to stay home was an unprecedented situation in American history.
  • The inherent crisis rests in an increasingly efficient economy and a population that can't consume what is produced because it can't afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.
  • In political debates, someone must be blamed. In reality, these processes are beyond even the government's ability to control. On one hand, the traditional corporation was beneficial to the workers until it collapsed under the burden of its costs. On the other hand, the efficiencies created threaten to undermine consumption by weakening the effective demand among half of society.
  • The greatest danger is one that will not be faced for decades but that is lurking out there.
    • anonymous
       
      One decade, but not two, if you ask me.
  • The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon.
  • That means that a core assumption is at risk. The problem is that social stability has been built around this assumption -- not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.
  • If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated.
    • anonymous
       
      Which is why this is an effective tactic for linking 'evil Socialist' programs to national security.
  • Other superpowers such as Britain or Rome did not have the idea of a perpetually improving condition of the middle class as a core value. The United States does. If it loses that, it loses one of the pillars of its geopolitical power.
  • The left would argue that the solution is for laws to transfer wealth from the rich to the middle class. That would increase consumption but, depending on the scope, would threaten the amount of capital available to investment by the transfer itself and by eliminating incentives to invest. You can't invest what you don't have, and you won't accept the risk of investment if the payoff is transferred away from you.
  • The right will argue that allowing the free market to function will fix the problem.
  • The free market doesn't guarantee social outcomes, merely economic ones.
  • In other words, it may give more efficiency on the whole and grow the economy as a whole, but by itself it doesn't guarantee how wealth is distributed.
  • The left cannot be indifferent to the historical consequences of extreme redistribution of wealth. The right cannot be indifferent to the political consequences of a middle-class life undermined, nor can it be indifferent to half the population's inability to buy the products and services that businesses sell.
  • The most significant actions made by governments tend to be unintentional.
    • anonymous
       
      Unintended consequences: A thing that always happens but which politicians are allergic to.
  • The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates.
  • The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership.
  • The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.
  • The United States has been a fortunate country, with solutions frequently emerging in unexpected ways.
  • It would seem to me that unless the United States gets lucky again, its global dominance is in jeopardy. Considering its history, the United States can expect to get lucky again, but it usually gets lucky when it is frightened.
  • And at this point it isn't frightened but angry, believing that if only its own solutions were employed, this problem and all others would go away.
  • I am arguing that the conventional solutions offered by all sides do not yet grasp the magnitude of the problem -- that the foundation of American society is at risk -- and therefore all sides are content to repeat what has been said before.
  •  
    "When I wrote about the crisis of unemployment in Europe, I received a great deal of feedback. Europeans agreed that this is the core problem while Americans argued that the United States has the same problem, asserting that U.S. unemployment is twice as high as the government's official unemployment rate. My counterargument is that unemployment in the United States is not a problem in the same sense that it is in Europe because it does not pose a geopolitical threat. The United States does not face political disintegration from unemployment, whatever the number is. Europe might."
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