Michael Hudson asks: “In light of the enormous productivity gains since the end of World War II – and especially since 1980 – why isn’t everyone rich and enjoying the leisure economy that was promised?”
The answer (per Hudson) is painfully obvious, but bears repeating (ad infinitum):
What was applauded as a post-industrial economy has turned into a financialized economy. The reason you have to work so much harder than before, even when wages rise, is to carry your debt overhead. You’re unable to buy the goods you produce because you need to pay your bankers. And the only way that you can barely maintain your living standards is to borrow even more. This means having to pay back even more in years to come.
That is the Eurozone plan in a nutshell for its economic future. It is a financial plan that is replacing industrial capitalism – with finance capitalism.
Industrial capitalism was based on increasing production and expanding markets. Industrialists were supposed to use their profits to build more factories, buy more machinery and hire more labor. But this is not what happens under finance capitalism. Banks lend out their receipt of interest, fees and penalties (which now yield credit card companies as much as interest) in new loans.
The problem is that income used to pay debts cannot simultaneously be used to buy the goods and services that labor produces. So when wages and living standards do not rise, how are producers to sell – unless they find new markets abroad? The gains have been siphoned off by finance. And the financial dynamic ends up in austerity.
And to make matters worse, it is not the fat that is cut. The fat is the financial sector. What is cut is the bone: the industrial sector. So when writers refer to a post-industrial economy led by the banks, they imply deindustrialization. And for you it means unemployment and lower wages.
As they say, read the whole damn thing.
(Image: jesse.millan, Flickr)
The pullquote from one of David Frum’s latest eviscerations of contemporary USian conservative folly, a meditative riff on Susan Sontag’s infamous “Were our enemies right?” speech, was making the rounds yesterday (eventually getting linked by the subject of Frum’s counterfactual). And yeah, it’s sharply on point. However, a preceding passage also deserves to be highlighted; though directed towards conservatives, I think all who are generally concerned about ideology trumping pesky facts can relate to varying degrees:
When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty.
I know this is far from the first time that Frum has taken the contemporary GOP to task for marginalizing conservatives who aren’t down with the JBS and understand there’s a time/place for Keynesian stimulus. But still, it bears repeating, especially for a Canadian audience all too aware of Mr. Frum’s movement pedigree: Even David fucking Frum has watched his once-seemingly unbreakable bond with rigid right-wing ideology unravel in the wake of cataclysmic circumstance (ie, the biggest global economic downturn since the capitol-’D’ Depression. That, and the GOP Big Tent collapsing under the weight of a steaming pile of Tea Party batshit.)
Now if only the White House weren’t seemingly joined at the hip with the status quo.
Image: Urban Sea Star, Flickr
[T]he real issue isn’t bonuses. It’s your compensation, period. It’s the fact that, after doing your very best to wreck the world economy, you regard yourselves as entitled to levels of compensation that people who actually make things can only fantasize about. The bonus part is just the icing on the cake.Oddly, though, the idea that bonuses have something to do with performance isn’t limited to us outsiders. The WSJ article also contains this gem:
“Under the forthcoming rules, bonuses could come to no more than one-third of the total annual compensation paid to employees covered by the restrictions. Some compensation experts view the bonus limits as a mistake that turns the notion of pay for performance on its head, despite Wall Street’s culpability for the recession and credit crisis.”Oh noes! We can’t have the notion of pay for performance turned on its head! Not on Wall Street!
As someone who thinks that levels of compensation in the US are absurdly unequal, and that this is bad for the country, it’s tempting to say: oh, go ahead, you idiots. Keep your sense of entitlement to other people’s money. Make people come after you with pikes and tumbrils. See if I care.
The thing is, I don’t think that rage normally leads to good policy. (Though, as I’ve said before, I really believe that it would help a lot with moral hazard if people found the experience of having the government bail out their firms profoundly unpleasant.) And I’m sure that my inner policy wonk will shortly regain control. Still, at the moment, it’s awfully tempting. I think of people I’ve known who have worked hard all their lives for not very much money, only to be completely bankrupted by unforeseen medical catastrophes, and I imagine these people being asked to support investment bankers in the style to which they have become accustomed, and fury feels like exactly the right response.”
Here’s hoping Hil’s inner policy wonk doesn’t regain control any time soon — she definitely needs to include the phrase “pikes and tumbrils” in more posts.
h/t Sarah (who has a must-read piece over at GC on growing public fury with AIG –GO!!!)
Jim Hightower has never let his pitchfork grow dull, as he shows in this merciless skewering of the latest idiotic bleat from token NY Times conservative columnist Bobo Brooks:
There is a fury in the countryside toward these plutocratic purse-snatchers who are being allowed to keep their exalted executive positions, draw fat paychecks and get trillions of dollars in bailout money from common taxpayers. People don’t merely resent them, they yearn for the legalization of tar-and-feathering!
Yet, Brooks and his political brethren are now bemoaning the plight of the plutocrats, assailing the “redistributionists” who talk of spreading America’s wealth. In his column, Brooks cried out for a conservative vision of “a nation in which we’re all in it together – in which burdens are shared broadly, rather than simply inflicted on a small minority.”
Do we look like we have suckerwrappers around our heads? Where were these tender-hearted champions of sharing throughout the last 30 years, when that same “small minority” was absolutely giddy with redistributionist fervor – redistributing upward, that is?
With the full support of their political hirelings from both parties, this minority created tax dodges, trade scams, corporate subsidies, deregulation fantasies, financial hustles, de-unionization schemes, bankruptcy loopholes and other mechanisms that turned government into a redistributionist bulldozer, shoving wealth from the workaday majority into their own pockets.
Brooks might have missed this 30-year class war, but most folks have been right in the thick of it and are not the least bit squeamish about supporting a national effort to right those wrongs. After all, even a dog knows the difference between being stumbled over – and being kicked.
If only Hightower’s fellow populist Texican rabble-rouser Molly Ivins was still among the living; we need her brilliantly pointed insight now more than ever to help puncture bloated elite windbags like Bobo.
Related: Ok, I can kinda sorta grok fiddling as Rome goes up in flames. But dancing on tables at brunch while sipping on $2,500 ($2,500!) jeroboams of champagne–in the middle of the afternoon? Un-fucking-believable.
h/t Erik Loomis
The most recent edition of openDemocracy’s 50/50 quarterly features an interview with Dr. Yakin Erturk, the United Nations Special Rapporteur on Violence against Women, on how the global economic crisis is affecting women. Dr. Erturk also notes the import of ‘political economy’ in the pursuit of women’s rights, especially during a time of financial upheaval.
We refer to human rights as if they were confined to civil and political rights; this is also reflected in the twin covenants which have divided rights into civil and political on the one hand, and economic and social on the other. The latter is generally seen as inspirational and the first one as the real thing. But we know from women’s lives that unless we have a holistic approach to women’s rights, whereby women can achieve economic independence or are at least empowered socially and politically, the rights they may read about in books do not reach them. So my final report to the council this year is taking up this challenge: I have argued that underneath the surface of many of the things that we talk about as being cultural, there is a solid, material basis which feeds certain concrete interests and relationships; and that unless we dig down into that base we are talking at a very abstract level. Culture can take on a life of its own, so that we assume that that is the reality, when half the time nobody really understands its true impact.
We are all cultural beings: it is very hard to attack cultures. What I wanted to do in my culture report was to connect this to a more profound analysis of concrete interests, real power – hence political economy. Particularly in the neo-liberal era, it is political economy which is creating new challenges for women’s rights, while at the same time, of course, creating some new opportunities.
As they say, read the whole damn thing.
Uncle Steve is looking onward and upward:
Faced with complaints he wasn’t doing enough to soothe a nervous nation, Harper offered a detailed, if unemotional, dissertation on the economy.
“For Canada, this crisis does offer opportunity,” Harper told more than 400 people at a joint gathering of the Brampton and Mississauga boards of trade.
“Ultimately, it is an opportunity to position ourselves so that when the economic recovery comes, we’re among the first to catch the wave.”
The Prime Minister said that the government, though projecting a budget deficit for the next few years, is in the best financial shape of all G7 governments.
Harper noted that while Canada’s economy shrank at a 3.4 per cent annualized rate in the fourth quarter of 2008, it was half the decline experienced by the United States and Europe, and only a quarter of the devastating drop in Japan.
He said Canada’s stable banking system, low debt, low inflation rate and skilled workforce puts the country in a position of “significant comparative strength” to ride out the downturn.
“I say to you, as business people, as community builders, as citizens, if there ever was a time to put away that legendary Canadian modesty, it is now,” Harper said to applause.
Alas, the facts (yeah, those pesky things) belie Harper’s feigned deadpan optimism:
The parliamentary budget officer says the Canadian economy is doing even worse than published figures would suggest.
Kevin Page says in a new assessment of the economy that last quarter’s 3.4 per cent contraction in gross domestic product doesn’t begin to reflect how far Canada’s performance has fallen.
He says an even better indicator is gross domestic income, which measures Canadians’ purchasing power, and that shows a plunge of 15.3 per cent in the fourth quarter over the previous three months.
Oh, and about that 3.4 per cent figure so heartily humped by the PM?
The report says even the often-cited GDP figures which finds the U.S. economy shrinking by 6.2 per cent in the fourth quarter compared to Canada’s 3.4 per cent are misleading.
Those are annualized figures, Page notes, adding that compared to a year ago, Canada’s GDP is down 0.7 per cent and the U.S. by 0.8 per cent, almost identical records.
Don’t opportunistically and immodestly grab your surfboards just yet, kids — the wave of economic recovery is likely to crash long before it crests.
Related: Michael Ignatieff: The Harvey Dent of Canadian politics.
Via Memeorandum, some of the other progressive bloggers highlighting McHenry’s statement seem to be primarily concerned with how the Dem0cratic leadership in Congress can use the GOP’s apparent lack of ‘discipline’ to partisan advantage. Yeah, um, so what does the obstruction uber alles strategy mean for the economic health of the fucking nation and world, to ordinary people worried about the future?
We’re talking 4.4 million US jobs lost since the recession began (with more losses almost guaranteed to occur), further bank failures, potential state government bankruptcies. And yet it’s still all about scoring points and the perpetual fucking horse race?
This isn’t a fucking game; this is class warfare, kids.
Sharpen the goddamn fucking pitchforks.
Greg Sargent notes that House Taliban lieutenant Rep. Patrick McHenry has finally given voice to the blatantly obvious motivation driving the GOP obstruction uber alles strategy:
McHenry’s description is buried in this new article from National Journal (sub. only):
“We will lose on legislation. But we will win the message war every day, and every week, until November 2010,” said Rep. Patrick McHenry, R-N.C., an outspoken conservative who has participated on the GOP message teams. “Our goal is to bring down approval numbers for [Speaker Nancy] Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint.”
McHenry’s spokesperson, Brock McCleary, tells me his boss is standing by the quote.
Of course McHenry is standing by the quote. The leaderless GOP insurgency has nothing left in its depleted arsenal except recycled guerrilla tactics, the ideological equivalent of roadside IEDs. They are literally betting the House on the efficacy of this strategy.
And, as D-Day notes, the asymmetrical campaign goes beyond mere electoral gain:
Over the long term, all [Congressional Republicans] are doing is chipping away at the notion that government can perform its core function, demonizing the activities of the Congress, evoking mistrust in elected officials, and poisoning the whole notion of federal spending. That’s their REAL project.
So here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.
But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.
Bottom line is this: The GOP is perfectly willing to sacrifice the economic solvency of the United States–of the entire fucking world–simply to gain a few seats in 2010–and, in the process, will do whatever it takes to guarantee the fulfilment of its by-now tired contention that public investment never, ever works.
Frank Schaeffer is absolutely correct:
[T]he Republican Party has become the party of obstruction at just the time when all Americans should be pulling together for the good of our country. Instead, Republicans are today’s fifth column sabotaging American renewal.
Sharpen the pitchforks.
A Round-about Way of Calling David Brooks, Roger Cohen, David Broder and Jay Leno Fatuous Assholes (Because They, um, ARE Fatuous Assholes)
But the Obama budget is more than just the sum of its parts. There is, entailed in it, a promiscuous unwillingness to set priorities and accept trade-offs. There is evidence of a party swept up in its own revolutionary fervor — caught up in the self-flattering belief that history has called upon it to solve all problems at once.
But that does not change the fact that Obama, in his restorative counter-revolution, must be careful to steer clear of his French temptation.
“The financial [crisis] seems big enough,” Leno said. “[Obama is] also taking on energy and health care. Is he biting off too much? Should we just go, ‘All right, let’s fix the economy; next year we’ll talk about health care or energy.’ Should you pick one and focus on that? It’s like we’re doing everything all at the same time.”
But many of these governmental pros clearly are doubtful whether this administration—or any other—can make it work.
I’m still convinced the administration is trying to do too much too fast and that the hasty planning and execution of these complex policies will lead to untold problems down the road.
My, how farting out insubstantial conventional wisdom can quickly pollute the public commons! Really, it seems that Brooks & the rest of the head-up-ass Beltway pundit brigade are simply in love with the (muffled) sound of their own voices of ‘moderation’, “[offering] no substantive criticism of any particulars of any policy but rather an overall pessimism about the possibility of doing anything,” as DougJ puts it.
Pessimism. The default position for lazy, overpaid, woefully underqualified hacks who, during a time of political upheaval and economic crisis, offer no serious insight whatsoever, much less expertise. And it’s an all-too tired pose that was well-past its best-before date 10 fucking years ago.
Sharpen the pitchforks.
Yep, it’s that time of the month again, kids:
U.S. employers axed 651,000 jobs in February, pushing the unemployment rate to its highest in 25 years, as companies buckled under the strain of a recession that is showing no signs of ending, according to a government report.
The Labor Department on Friday said the unemployment rate surged to 8.1 percent in February, the highest level since December 1983. That was above market forecasts for a rise to 7.9 from January’s 7.6 percent.
Oh, and about the figures for December and January:
January’s job cuts were revised to show a steep decline of 655,000, while December’s payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, with more than half occurring in the last 4 months.
Y’know, at this point, I might as well just do up a template for posts on the monthly US job figures report. The latest numbers always seem to be the highest in umpteen years, with a swift recovery less likely than the possibility of Keith Olbermann STFUing about Rush Limbaugh any time soon. (Dude? Seriously? STFU about Rush Limbaugh. The obsession has going beyond grudgewank, beyond drama-humping, to fucking pathological. You need help–a 12 step program of recovery, to quote the best RNC chair EVA.)