Film by Alfonso Cuarón setting out the thesis of the book.
I wasn’t far through The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein when I realized that this quite probably is the most important book I’ve read all year and certainly a must-read for anyone interested in what caused the ongoing global economic catastrophe that’s spreading poverty and helping the elite hoard more and more of the world’s wealth. (Right now 2% of the population owns 50% of the wealth, and 50% of the population collectively owns 1%, a human rights catastrophe by the measure of anyone whose soul and mind hasn’t completely been hardened by ideology.) I won’t lie; it’s a depressing book. I burst into small tears of relief at the end when Klein managed to carve out some signs of hope for the world, a light at the end of the tunnel for democracy and justice in light of the past 30 years, which is best described as a long-range racketeering scheme of the wealthiest designed to loot the assets of the poor and the middle class until we have nothing.
Of course, you can’t just walk into the collective houses of a nation, steal all their shit, sell it, and hand it over to the wealthy. No, you need an ideological justification, and Milton Friedman and the Chicago School of economics that we know best as “free market” capitalism* provided the cover story with an economic ideology they called neoliberalism, but in practice tends to turn into neoconservatism or what I cheerily call neofeudalism—slash taxes, especially for the rich, moving the tax burden onto the working class, free trade, slashed social services, privatize national assets, abandon price controls, government austerity that leads to massive layoffs. By the strict orthodoxy, government intervention should be absent, but most anyone who buys into this economic philosophy immediately realizes that it’s just a fancy way of saying that the best economic system is one where the nation’s wealth is rapidly redistributed into the coffers of the few, with massive poverty for everyone else. Friedman felt that it was the only economic theory compatible with true freedom,** but even he and certainly all of his followers around the world quickly realized that the system was incompatible with democracy and had to be forced down the throats of people worldwide, with a thick dose of flag-waving and talk of freedom to make the destruction of democracy more palatable. Which meant that despite libertarian bullshit about “small government”, the governments would not be small when it came to any function of the direct redistribution of wealth or the forcing of the system at gunpoint. It’s a book about economics, but it’s not dry at all, and in fact, is a real page-turner, albeit one where you find your eyes bugging out in anger or tearing up in despair at your fellow humans’ cruelty to one another.
Thus the “shock doctrine”, a strategy idea that Klein traces straight back to the supposedly anti-tyrannical Friedman, which was the idea that neoliberal economic reforms should all happen at once, “shocking” a population so badly that they didn’t have time to regroup and protest. Of course, in a democracy, people can and will simply refuse to vote for someone who openly plans to “shock” them out of retirement, health services, and a job so some asshole in a mansion can get even richer, so you have to shock them into submission through other means or gain control of their democracy through deceit in order to get the power to induce these economic shocks.
Klein then carefully details around the world how the Chicago School orthodoxy was spread by force country by country, leaving a wave of misery in its wake. She starts with the military juntas in South America, the very ones openly supported by the U.S., with training and funding supplied by the CIA, economic theories, and mass murder and torture to make sure that the people were too afraid to rebel to get their democracy back. “Free market” capitalism required the deaths of 10s of thousands in South America and the torture and imprisonment of hundreds of thousands of others. The beginning of the free market revolution came on September 11, 1973 when neocon hero Pinochet sacked the capital, causing the fairly elected president Allende to commit suicide rather be taken alive. It was a telling beginning, and that our own September 11th came on the anniversary of that day strikes me as unlikely to be a pure coincidence.
A good protection racket, however, doesn’t require non-stop violence, just a lot at the beginning to show you’re serious, and only intermittent violence afterwards to remind people you’re serious. After the wild success of wealth redistribution in South America, the world’s elite were hungry to get their share of the stolen goods, and better methods of causing people to live in fear and pain so they’ll give you anything they want were developed, methods that required less squawking from Amnesty International. The two favored methods that Klein then details are to pounce on a pre-existing catastrophe like a war or a natural disaster and use the chaos to shove neoliberalism down the unwilling throats of the people or to create the catastrophe by choking off a country economically until they agree to debt relief from the IMF and the World Bank, with the string attached that they starve their poor to pamper their rich (or better yet from the IMF’s perspective, starve the whole country to line the coffers of American elites). One country after another has faced catastrophes, only to be strong-armed during its weak period into forsaking democracy for this economic agenda: England and America (to a minor degree), Bolivia, Poland, South Africa, China, the rest of Asia, Russia, many Pacific islands post-tsunami, and Israel has managed to pull off Bush’s dream of non-stop low-level warfare to keep people in economic submission. For a lot of these countries, IMF debt alone has been enough to cause their leaders to sign away their economy against the will of the people, selling national assets at cut-rate prices to capitalists, cutting social services, allowing their working class to slide into grinding poverty. Within our own country, we’ve had to figure out a backdoor way to do it, and the solution has been to militarize the economy, cut social services and use the money as a giant cash giveaway to security and defense contractors—Klein doesn’t mince words on this and describe Halliburton as using our Treasury as an ATM machine. It’s a direct transfer of wealth from your pockets to the rich through cronyism.
In Iraq, of course, there was no waiting around for the shocks to just happen so the capitalists could swoop in unnoticed and take everything. For various economic reasons, oil rich Middle Eastern nations have been able to hold off the looters, so the Bush administration, finally sick to the teeth of it, decided to shock (and awe) Iraq into submission. Klein’s assessment is that it’s not working nearly as well as planned; turns out the Iraqi people have more nerve to fight back than Cheney and Rumsfeld thought. Our reasons for torturing, it turns out, are not different in any relevant way than strategy of disappearing people in South America.
So, she ends on a muted note of hope. Very, very muted. Economic devastation around the world has had some serious and obvious ugly effects, most notably the rise of racist violence, terrorism, and religious fundamentalism. Racists and fundamentalists recruit from desperate people well, even though some of these groups (like Lebanon’s Hezbollah) have taken on enough economic populism and have redirected a lot of the blame to the blame-worthy economic elite that there’s hope that the good might outweigh the evil with them. Latin America is regrouping, lucky to have had a tradition of knowing exactly who’s to blame for this shit, they might be able to work out a form of independence from worldwide neofeudalism. Klein’s faith in the idea that people can in fact run a democracy as long as they are able to recover from chaos and shock to see the reality of the world around them is persuasive, and despite the fact that this is a very sad book, that thread of optimism buoys it.
Visit the site here. If you can’t watch the movie right now, the article resource page is a good starting point. Klein was a Milliband Fellow at the London School of Economics and as such, can piece together economic information that might be very confusing to those of us who aren’t as well-versed.
*I refuse to call it that. Friedman equated the right of the wealthy to stomp all over the working class with “freedom”, but I disagree. I think freedom only exists when it’s shared alike, which can’t happen in an oligarchy. Even free markets can’t happen in an oligarchy; the captains of capitalism forcefully disallow competition, making us all subjects to our corporate monarchs.
**Apparently on the justification that the word “free” got dropped a lot, but it makes a certain kind of sense if you assume that “freedom” is only appreciated by the 1-2% of the population who needs to be free to rob the rest at paperwork gunpoint.
186 Responses to “The pulse of economic terror”
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It sounds like a good complement to this book would be “Confessions of an Economic Hit Man” which details the ways that the shock doctrine dovetails with crippling debt from foreign lenders to force the sale of domestic industry to foreign investors. The end goal is to create a situation where the globalized upper class can milk the third world poor for every last penny.
The great irony of the neocon/Chicago School axis is that it presents itself as the alternative to communism and/or socialism, arguing that the ideological focus of collectivist ideology is disconnected from the real dynamics of the economy, leading inevitably to oppression. Of course, the free market ideology is based on idealized theoretical models which are known to be based on flawed assumptions, and its imposition inevitably leads to - you guessed it: opression! tadaaa!
I’m so glad this is beginning to get noticed. It’s one of the most scary and, yeah, depressing books I’ve read in a while. Want to feel worse? Read a book about fascism at the same time! I just finished reading Naomi Wolf’s Letter to a Young Patriot before I started Shock Doctrine and it’s eery how well fascism and neoliberalism work together. But this put together a whole lot of things for me that have been happening over the past couple of decades. It’s gonna be a really long haul for progressives for a while.
I’m so glad this is beginning to get noticed. It’s one of the most scary and, yeah, depressing books I’ve read in a while. Want to feel worse? Read a book about fascism at the same time! I just finished reading Naomi Wolf’s Letter to a Young Patriot before I started Shock Doctrine and it’s eery how well fascism and neoliberalism work together. But this put together a whole lot of things for me that have been happening over the past couple of decades. It’s gonna be a really long haul for progressives for a while.
I wasn’t far through The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein when I realized that this quite probably is the most important book I’ve read all year
I just started reading it and I heartily agree. IMO, the theories of Milton Friedman and “The Chicago Boys” are nothing more than Social Darwinism burnished with academic trappings. If there is any justice in the universe, Friedman’s theories will be consigned to the dustbin of history alongside Karl Marx’s.
Along with The Shock Doctrine I would also heartily recommend John Dean’s book Conservatives Without Conscience which does a good job examining the authoritarian mindset that is the basis of the so-called “conservative movement”.
Dean references the research of University of Manitoba psychologist Bob Altemeyer who has devoted over 30 years to the study of the authoritarian mindset. At Dean’s urging, Altemeyer wrote a book which offers a simplified look at his research called The Authoritarians. His detailed descriptions of what he calls the “Right Wing Authotarian” and “Social Dominance” mindsets are a must-read (especially chiling is his description of the people he calls “Double Highs”–people who score high on both the Right Wing Authoritarian and Social Dominance scales).
I think you’ve misunderstood what a Miliband Fellow is: it’s someone who gives a few public lectures and perhaps a few to the students. It’s not an academic appointment in the sense you imply here (as, for example, Atrios’ sojourn at the same place was an academic appointment).
Also, the LSE does not only teach economics (although that was my subject there) but a whole range of social sciences. It’s entirely possible to go through the place without learning any economics at all.
No, I haven’t read the book but I have read her articles based upon it and a number of reviews of it. The problem is that Klein doesn’t actually understand either economics or history.
“must-read for anyone interested in what caused the ongoing global economic catastrophe that’s spreading poverty and helping the elite hoard more and more of the world’s wealth.”
For example, the poor are not poorer than they were. They are richer. For the economy is not a zero sum game: wealth is created.
“economic ideology they called neoliberalism”
No, Friedman called himself a classical liberal, as did Hayek. It’s their opponents who called them neoliberals.
“slash taxes, especially for the rich, moving the tax burden onto the working class, free trade, slashed social services, privatize national assets, abandon price controls, government austerity that leads to massive layoffs.”
You refer later to the UK havin suffered this. Slash taxes on the rich? Certainly, the top rate was 98%! more revenue is brought in now that the rate has dropped (yes, at extremes, the Laffer Curve really is true). The tax burden on the working class has risen, yes, but that’s the European Union that, insisting upon a VAT of 17.5%. We all know that consumption taxes are regressive, don’t we? Free trade is something bad now? Social services are larger now than they ever were in the UK, in both cash terms and as a percentage of th economy. Privatise national assets? Sure, why should the phone com+pany be owned by hte Govt? The car manufacturer? The airline? You do know that the private water companies in England work better (ie, are cheaper, have better water quality and cause less environmental damage) than the Govt owned one in Scotland, or the directly Govt provided water service in N. Ireland?
Abandon price controls? What are you talking about? You think it’s better than bureaucrats set prices? You’ve seen the horrors caused by rent control in NYC?
We’ve not even had Govt austerity. There’s been no cuts in spending: even under Maggie Thatcher that kept rising.
But the grander point is that Klein’s got it entirely the wrong way around. Every crisis has brought forth greater State control, greater government intervention. It’s crisis statism that has been the driving force (from the Great Depression leading to Roosevelt’s interventions to 9/11 and the idiocies of Homeland Security), not crisis capitalism. Whether or not those interventions are desirable (I happen to think not) is different from whether a crisis was used to reduce State power or increase it, It’s the latter, not the former that Klein avers.
The real problem is I think that Klein’s written a book of economic history and she knows next to nothing about either economics or history.
You don’t seem to know any more:”in light of the past 30 years, which is best described as a long-range racketeering scheme of the wealthiest designed to loot the assets of the poor and the middle class until we have nothing.”
How on earth can you say something like that when hundreds of millions of Asians, both Chinese and Indian (and many others) have risen up out of poverty in hte past few decades? Since WWII we’ve seen the biggest reduction in poverty of any period of human existence so far!
in light of the past 30 years, which is best described as a long-range racketeering scheme of the wealthiest designed to loot the assets of the poor and the middle class until we have nothing
If this is true, then the level of real wealth possessed by the poor and the middle class in 1977 should be considerably higher than the level of real wealth possessed by those classes today.
Was it?
Every crisis has brought forth greater State control, greater government intervention. It’s crisis statism that has been the driving force (from the Great Depression leading to Roosevelt’s interventions to 9/11 and the idiocies of Homeland Security), not crisis capitalism.
I was able to tell you’re not an American pretty quickly, Tim.
You do know that, right now, the Bush administration is pressuring the US Congress to immunize our telecom companies for the actions that the telecom companies took at the behest of the administration, yes? They want Congress to say that it was perfectly fine that the telecom companies broke the law, because they did it on behalf of the administration. In fact, it’s been shown that the administration actually punished a telecom company that refused to go along with the administration’s scheme for illegally monitoring the calls of US citizens. And it’s not a gray area — what the companies did is flat-out illegal, and has been for 30 years. But now they’re gaming the system to try and have what they did declared legal in retrospect.
How, exactly, is that the free market capitalism that you’re touting when the government and the telecom industry are working together against the citizens of the country? It sounds like a quite different system to me. You know, the one where the government and corporations work hand-in-hand to keep the country’s population in check. What is that system called again? Something about sticks in a bundle being stronger than single sticks …
mnemosyne, in addition, the FDA has fast-tracked a new board for approving drug trials that includes, among others, CEOs of major drug corporations.
If this is true, then the level of real wealth possessed by the poor and the middle class in 1977 should be considerably higher than the level of real wealth possessed by those classes today.
Was it?
Yes, it was. Wages have been depressed for 30 years. Adjusted for inflation, workers today are making less in real dollars than they did in 1977.
Did you not know this basic economic fact?
mnemosyne:
What makes you think President Bush is anything like a free-market capitalist?
Tim:
To be fair, both increases in the standard rate of VAT since its inception have been made by Conservative governments. The EU rules mean we can’t reduce the rate, and can’t exempt things that are currently taxed, but I don’t think you can blame the EU for the tax rises.
Wages and wealth are not the same thing.
Oh, bravo, QT. “I have two TeeVees so I’m wealthy!” What a compelling argument.
Tim–if the poor are richer now than they were 30 years ago (and I’m not conceding that they are), that’s only due to technological progress, and not due to the economy. The overall standard of living has gone up, in the west at least, but the gap between the wealthiest and the poorest has widened to Gilded Age levels. What you’re really saying is that since poorer people have mobile phones now, and they didn’t have them 30 years ago, they’re richer, because 30 years ago, only the very wealthy had mobile phones. That’s dishonest.
meomosyne: I did call the Homeland security thing idiocies, didn’t I? In normal usage that means that I think they’re silly, you know, not things I approve of?
Your second paragraph rather makes my point for me. The crisis of 9/11 hasn’t lead to greater freemarket capitalism, it’s lead, as you point out, to greater corporatism, to greater State power. The opposite to what Klein was stating.
In your second comment, sorry, but you’re missing something. Using hourly wages of all employees over that time span doesn’t tell you that the composition of the workforce has changed over that time.
The series that graph is taken from measures the hourly wages of everyone working. But, from 1970 there’s been a huge explosion of both women and part timers into the workforce.
As we know (it’s said often enough around here) both women and part timers make less per hour than full time males do per hour. So that apparent “no increase” since 1970 is actually an effect of the change in the composition of the workforce.
Sorry, but it just isn’t true that average (whether mean or median) wages for full time male workers are lower now than they were in 1977. Nor are female, nor are part time wages of either sex (all fully adjusted for inflation).
What we’ve seen is a change in the composition of the workforce from being one made up primarily of full time males to one much more varied. That’s one of the problems with averages: they can conceal more than they reveal.
“Tim–if the poor are richer now than they were 30 years ago (and I’m not conceding that they are), that’s only due to technological progress, and not due to the economy. The overall standard of living has gone up, in the west at least, but the gap between the wealthiest and the poorest has widened to Gilded Age levels. What you’re really saying is that since poorer people have mobile phones now, and they didn’t have them 30 years ago, they’re richer, because 30 years ago, only the very wealthy had mobile phones. That’s dishonest.”
This is where I’m beginning to see the wisdom of one of Paul Krugman’s saysings, that it can be very difficult to explain economic ideas when people don’t have a grasp of the underlying reasoning.
There’s two concepts here, common in economics. Absolute poverty and relative poverty. Start in 1970. I have $1 and you have $2 a year. It’s now, and my income has risen to $2 a year and yours to $5 a year.
(All after inflation, of course).
We have both absolutely gained in wealth. But you have gained relatively more than I. Thus, while my absolute poverty has decreased, my relative poverty has increased.
Now, my stating that my absolute poverty has reduced is not dishonest: it’s simply the truth. Just as your implied statement that my relative poverty has increased is not dishonest, it’s also the truth.
But we both have to be very clear about the terms we’re using. Relative or absolute?
When someone says “poverty is increasing” then as the qualifier is absent then I assume they’re talking about absolute. And in general they usually are: I’m sure that Amanda thinks that the poor are getting poorer in absolute terms. It’s just that they’re not. They are getting richer in absolute terms, even if they are getting poorer in relative terms.
I would also recommend “Confessions of an economic hit man” for the mechanics of how the corporate interests subdued nations and peoples.
Are you always this disingenuous or is it just a good day?
No, the reason you can’t explain economic ideas is because economics doesn’t study real things. It’s like theology and astrology - you’re not modeling reality. You pretend that people are rational actors when they aren’t. You pretend like your equations don’t have catastrophic effects on the lives of actual people, when they do. Absolute poverty, relative poverty, who the fuck cares? I somehow doubt people who are starving give two shits about your semantics. Look, the people who read this site are intelligent, highly educated individuals. So your knowledge of tea leaves isn’t going to impress anybody here.
FDR was a hero, but maybe if you’re not American and don’t have family members who lived throught the Depression you don’t realize it. The grinding poverty my grandparents experienced permanantly warped them. I don’t believe anybody should go through that, but then I’m not an economist.
>>Wages and wealth are not the same thing.
True. Ironically, those with the most wealth don’t work for wages…
But for the rest of us, wages = wealth. Our wages have less purchase power than they had in the past, thus we are poorer than we were.
No, the reason you can’t explain economic ideas is because economics doesn’t study real things. It’s like theology and astrology - you’re not modeling reality.
Actually, economics does a pretty good job of modeling reality and people are rational, which explains why given the choice of paying less money than more for the same item, we’d prefer to pay less.
Regards.
>>FDR was a hero
I’ve had this discussion before on Orcinus. I’ll summarize my position briefly:
1) It was business leaders who drafted the plan for the New Deal and pressured FDR to adopt it
2) The labor movement at the time was in full force and it is quite likely, IMO and that of other far left thinkers, that these gains would have been obtained eventually through its actions, and potentially more would have been gained by continued direct action and strikes
3) The New Deal had the effect of buying off a section of the working class, mostly its radicals and leaders, with access to a middle class lifestyle, which resulted in unions becoming a factor of conservativism in American politics rather than a factor for radicalism
4) Therefore it is not far-fetched to think that the New Deal was deliberatly drawn up as a way to make the labor movement irrelevant in the public mind and by buying off certain of its more radical elements
5) Therefore, for the far left FDR is far from a hero. We believe the New Deal was basically the first of many knifes put in the back of the American labor movement, which incidently happens to be the most morribund of all industrial nations, having the lowest unionization rate in the West.
Even assuming that FDR did it out of genuine concern for the working class, this narrative still posits the Big Man theory of history, where history is made by the actions of a few discrete heroic men (and women, but mostly men considering who writes history) instead of the actions of masses. IMO it is more accurate to say that the labor movement, due to its mass actions, resulted in concessions being made by the state and businesses, which expressed themselves through FDR’s New Deal.
It’s just that they’re not. They are getting richer in absolute terms, even if they are getting poorer in relative terms.
But those relative differences wind up mattering more than the absolute ones do. It’s the relative differences that cause the poor to get their torches and pitchforks and march on the mansion on the hill, both metaphorically and literally.
And if that were the only thing economists were saying with their models, you’d have some kind of a point.Did you see someone claiming that consumers will, given two equivalent items, fail to go for the cheaper chicken? Who on earth are you responding to?
Hey, look–my astrology tells me that the sun rises in the east! Therefore, astrology is deliciously valid. Take that, cranky skeptics!
Your second paragraph rather makes my point for me. The crisis of 9/11 hasn’t lead to greater freemarket capitalism, it’s lead, as you point out, to greater corporatism, to greater State power. The opposite to what Klein was stating.
That’s the funny thing — you seem to have a pretty idiosyncratic idea of what “freemarket capitalism” means. What we have right now is what was designed to be “freemarket capitalism” by Friedman and his pals, which is basically allowing corporations to run rampant over citizens with no check by the government. And when you have a conflict between a corporation with access to millions of dollars and dozens of high-paid lawyers, and a citizen with only a citizen’s financial resources, who do you think is going to win?
That’s why the government needs to be available to run interference. Otherwise, corporations are happy to destroy their own market just to make a little extra money in that particular quarter. Look at the dissolution of the housing market that’s going on here in the United States. Banks and mortgage companies made a series of bad but profitable loans, and now people are defaulting on them in droves. Mortgage companies are laying people off. Home values are plummeting. Foreclosures are at a record high, with more to come.
And what is the government doing? They’re protecting the banks and mortgage companies from their bad decisions and letting homeowners dangle in the wind. Because everyone knows that businesses are more important than people, and the poor innocent banks had no way of knowing that people wouldn’t be able to pay back their loans just because they didn’t have enough income to cover the loan payments!
Sorry, but it just isn’t true that average (whether mean or median) wages for full time male workers are lower now than they were in 1977. Nor are female, nor are part time wages of either sex (all fully adjusted for inflation).
Link, please. Because every article I’ve seen has said that the wages for white males working full-time have stagnated since the 1970s. You may not believe that’s what’s happened, but you seem to have a lot of beliefs that don’t match up with reality.
Sigh. I hate moderation.
There was an economist named Steven E. Landsburg that asked the oh-so-important question “Why do people walk up stairs but not escalators?” I shit you not, this is how economists spend their time. Apparently people are also supposed to walk up escalators because it is more effiecient. Ok, it probably is. I might do it if I’m in a hurry, but not if I’m tired or don’t feel like it or for any number of other random reasons. The point is that it might be rational to walk up the escalator, but not everybody is going to walk up the escalator 100% of the time because it’s the rational thing to do. This is the brilliant and necessary work done by economists? Work that models a reality where we’re all escalator-climbing automatons?
“and people are rational, which explains why given the choice of paying less money than more for the same item, we’d prefer to pay less.”
So explain Haagen-Dazs to me. The company was failing until they simply raised the price of their existing formulation and called it “premium”.
People say “you get what you pay for”, implying that a more expensive purchase is seen as being more capable, powerful, and satsifying, even though it may be none of these.
Interesting. I’ve never looked at it that way, but it does make a lot of sense.
Quiet Truths — yes, actually. The distribution of wealth has been changing so that it is more concentrated int he hands of a few. No, really. Even in the last decade there has been a drastic change.
Some of this has to do with depression of wages, but, admittedly, it also has to do with the rich just getting richer. Which is still ab problem, cause if they can do it, why isn’t it happening anywhere else too?
Yes, we might have gained in monetary wealth, but perhaps we have actually lost in all other forms of weath:
1) Can $2 a year now pay for as much square feet of housing as $1 in 1970?
2) Can the housing afforded by $2 a year now be as crime-free as the housing available at $1 year in 1970?
3) Can the public education a child receives in a neighborhood that is affordable at $2 a year now be good as in $1 a year housing available in 1970?
4) Does $2 a year now provide as much college-level education as $1 a year in 1970?
5) Does $2 a year now provide as much health care as $1 a year in 1970?
6) Does $2 a year now buy as much healthy groceries as $1 a year in 1970?
I could go on for a LONG time. The point is: yes, if you focus only on the inflation-adjusted money available, we seem to be richer now than in 1970, but you look at what that money can actually buy — even after adjusting for inflation — most people are getting far less for their time.
Sure, we have more TVs, more computers, safer cars, and vastly more medical options, but we really have less access to the things we actually need than we did in 1970. If you break a bone today even WITH good health care, you might be set back hundreds of dollars for the doctors to take the SAME X-rays and put the SAME cast on it as they did in 1970. If you want a low-end new car that will last at least three years before the first major repair, it will cost in absolute terms much more than it did in 1970.
Finally, speaking economics: as the raw natural resources of the world get scarcer and the demand grows with increasing population, the price MUST go up. Der. Ecomonists today are spending their time justifying this situation rather than trying to fix the root issue (reduce world population growth) or even pushing for the technology to find new resources that could sustain the current model (mining for materials in space).
It’s just an internet poll, I know, so it doesn’t mean anything, but it’s interesting all the same given our conversation here. The question is
Guess which one is winning–the absolute or the relative?
in fact few people are rational, not when “rational” depends on prioritizing currency above all else. why don’t we sell off our children? that would be an efficient way to make money now and save money later, right?
anyway, really i just wanted to say that “debt relief” isn’t the right phrase in that context, amanda, and i wouldn’t be so nitpicky except it’s the opposite of what you mean, which is plain old debt.
I really hate to keep nitpicking on this, but this is a habit amongst progressives that drives me nuts. Neoliberalism has nothing what so ever to do with feudalism. Calling it that simply deflects attention from the fact that neoliberalism represents nothing more than a reversion to classical capitalist orthodoxy and that its effects, particularly in terms of inequality and exploitation, are not qualitatively different from most of capitalism’s history in most of the world except US/Europe 1945-1970.
Milton Friedman and Frederich Hayek by and large re-asserted the doctrine of the classical liberals a la Locke.
How can anyone watch that video and take what it says seriously? It’s the most absurd hyperbole. The only shock is to free-marketers who see the straw men they’ve falsely been portrayed as.
It seems many of these comments, in addition to not distinguishing between the distribution of wealth and its quantity, fail to recognise that the economy and technological progress are inter-twined. If you think that a government-controlled industry would be able to provide me a computer as good as the one I now use as cheaply or quickly as the company I purchased it from then…well, incredulity springs eternal. it is the combination of profit-incentive and fierce competition that requires and rewards innovation. See how the Middle East has managed to stump capitalism’s growth at their cost: they now enjoy the pleasures of stagnation.
Tim,
Without wanting to aid in the derailment of this thread into the discussion of minutia, as to your point about the working poor today all I’ll note is that the statistics on household income adjusted for inflation and hours worked by the household will very quickly demonstrate stagnant to falling household income for the majority of people in the U.S. since 1977. I do recall a statistic being bandied about that something like 95% of the wealth created in the last thirty years has gone entire to the wealthy in the U.S.
This leads precisely to one of Klein’s questions; how to enforce neoliberalism in the face of it being obviously antithetical to the interests of the great majority. In the global South the answer has been rather unpleasant, involving CIA sponsored coups, death squads, murderous dictators supported for their support of neoliberalism (i.e. Pinochet), IMF and World Bank loan conditionalities and structural adjustment programs (such as the one that reduced Russia’s standard of living by 50% for the majority while giving away most of its assets to the oligarchs).
In the global North the answer is much more complex and subtle. The question is how have people been convinced that ‘there is no alternative’ and how has neoliberal orthodoxy enmeshed itself in the vast majority of parties both right and left. In the U.S. for instance there is no non-neoliberal party.
cpp, don’t you know what inflation is? Measures of inflation can take all those costs (at least indirectly) into account. They normally operate on the ability to purchase a hypothetical “basket of goods”, which can include services such as healthcare and education. Tim’s example could take all those into account and his point would still stand about the difference of absolute and relative poverty and the different moral issues they represent.
Byron Crawford hip hop “shock” blogger reviews Shock doctrine here:
http://www.byroncrawford.com/2007/10/the-shock-doctr.html
Cuaron’s “Children of Men” was probably my faborite film last year.
Damn, Tim Worstall sure gave a black mark for the negative team didn’t he? Yo Tim, you’re pretty unclear, and have not so small signs of idiocy and common contempt.
Anyways, I also have pretty serious reservations about Naomi Klein’s book (tho’ I just read her article in this month’s Harpers). I vehemently disagree that this is an important book, at least for the content (as much as I am aware of what that is).
As I posited on The Agonist and on Brad Delong’s site, Naomi Klein isn’t really talking about anything new. Insofar as she *is* talking about something new, Chalmers Johnson goes quite a bit more in depth about the modern day economic pictures and its antecedents.
This is the thing, what Naomi Klein is talking about is an artifact of industrial era imperial (mass) capitalism. It’s been going on since England started fiddling around with water power. As Henry C Liu explained in one of his ultra long economic articles for asiatimes.com, industrial capitalism is about a system of collectivation, because industry is so massively capital intensive, of savings that constantly seeks high returns investments. Corporations with these capital assets, all the way from the East India Company (which Adam Smith railed against) destabilizing Subcontinent nations and using the Pitt era governments to collect profits for it from the New World–remember Boston Tea Party? The end result was the loss of American colonies and a massive series of wars on the European continent that nearly unseated British power.
The Soviets did the same thing, I mean, Troskyism isn’t all that much different from capitalist shock strategy. Bolshevik attempts at rapid collectivization in places like the Ukraine led to famines, which surprised gave the central government more control. If you were familiar with Hayek, it’s one of the themes of his work.
Anyways, this isn’t really economic history, which is why it’s apparently easy to read. If you wanted to understand why the world is the way it is, and how this particular situation came about, you need to read quite a few books, actually. Chalmers Johnson for example. Some others that be good…
Overthrow by Steven Kinzer
The Great Divergence by Ken Pomeranz
American Theocracy by Kevin Phillips
The Great Transformation by Carl Polanyi
The Market System by Charles Lindblom
One will have a much more ready appreciation of what is actually going on with this mixture of books, some for the more lay reader, some for the more cerebral reader. I quite suspect Naomi Klein is part of the same kind of mixing society that Seymore Hersch is. Bright people, but they do have a social network, and they do have their own interests, and one should most definitly not take them at their words without checking to figure out the angle…
cpp: all of the things you mention are in fact encompassed in the word “inflation”. That is, the change in prices over the years. Now, we normally talk about the average level of inflation but in reality each and every different thing has its own inflation rate. We also tend to find that services have higher inflation rates than manufactures (it’s called the Baumol effect). Because wages generally rise faster than average inflation (yes really) then things that contain a lot of human labour like services go up in price faster than things that don’t. It’s also true that we know how to raise productivity in manufacturing better than we do in services (that is, reduce the amount of labour we have to use). This is why manufacturing employment has been going through the floor in the US while manufacturing output keeps going up (yes, really!).
This is an example of two things mentioned above: how difficult it is to discuss economics with those who don’t have a basic grounding and, as entomologista disagrees, why economists do indeed do interesting and useful things. We expect the price of education, of health care, of a haircut, to become more expensive relative to the price of a manufactured good. It isn’t a “what the hell happened there?” question, it’s something well known.
As to a sq foot of housing, well, building it has fallen after accounting for inflation. But the land to build it on, at least in places, along with the permission to do so, has gone up. Partly because lots of people want to live in certain places, thus there’s a shortage of land, plus zoning ordinances, meaning that in certain places there’s a shortage of permissions. Then on top of that there’s the effect of the last few years of interest rates below inflation rates: that was always going to create a bubble in house prices (err, something that economists were predicting, Paul Krugman for one, Dean Baker another, if you want another example of what the subject can be used for).
“as the raw natural resources of the world get scarcer and the demand grows with increasing population, the price MUST go up. Der.”
No, there’s more than that going on. Sure, more people demanding more resources will push prices up. But people don’t want resouces, they want the things resources do. We don’t actually want gas, we want transport, we don’t actually want copper, we want the transmission of information. My car in the early 80s in Virginia did 10 mpg. My current one does 30. We could have twice as many cars doing 30 mpg instead of 10mpg and gas prices would fall, not rise: we need to balance the two effects. Similarly, we can have millions more connected to the net and the telephone system but the demand for copper falls because we’re using fibre optics now.
“I could go on for a LONG time. The point is: yes, if you focus only on the inflation-adjusted money available, we seem to be richer now than in 1970, but you look at what that money can actually buy — even after adjusting for inflation — most people are getting far less for their time.”
You really don’t understand what is being said here. “Inflation adjusted” means looking at what the money will actually buy, not the nominal sum of money available. What you’re doing there is looking at the nominal sum, that is, before adjusting for inflation.
As I’ve said several times now, tough to discuss matters economic with people who don’t have the most basic grounding.
Holy Shit, Praxis, you’ve really nailed so much of the problem I had with Klein’s book in so short a comment!
Blackbloc, You left out the part where the New Deal was a disaster for black people in the South, as FDR allowed southern white people to be lifted more out of poverty, even as black people were left behind.
I still think FDR was a hero. Anyone who knows much about the 30s knows just how far from a nasty revolution we were. Not by much. The conflicting winds that tore apart Weimar Germany were affecting both UK and US societies…I don’t think unions would have gotten a better deal with more action. What is more likely is the same game Hindinberg played in Germany. Some right wing idiot like George W Bush gets forcibly installed to put down the rabble under cover of authority…
Just an aside (in context of your whole argument, with which I agree) — no one actually knows if Allende committed suicide. It’s just as possible, and probably more likely, that he was simply killed when Pinochet’s forces overran the presidential palace. It was far more convenient for the purposes of the coup for him to be dead rather than alive and protesting, and also far more convenient for the purposes of the coup to say he “gave in” & took his own life as opposed to being murdered in the office to which he was democratically elected.
As I’ve said several times now, tough to discuss matters economic with people who don’t have the most basic grounding.
It’s really tough to discuss economic matters with people who insist that when their theories conflict with reality, it’s the theory that’s right, and reality is wrong.
There’s two concepts here, common in economics. Absolute poverty and relative poverty. Start in 1970. I have $1 and you have $2 a year. It’s now, and my income has risen to $2 a year and yours to $5 a year.
(All after inflation, of course).
We have both absolutely gained in wealth. But you have gained relatively more than I. Thus, while my absolute poverty has decreased, my relative poverty has increased.
You have two problems with your ideas, Tim:
i, People measure themselves against their peers, not their past. There’s an assumed “standard of living” in any society; the middle class these days find it harder and harder to stop themselves slipping away from that. Stating “oh, you have it better than in the 70s, or the Middle Ages” doesn’t cut it.
ii, If your income has risen from $1 to $2 - but you’re paying $0.50 more in health insurance and getting $0.25 less in government services while paying the same tax then, hey, you haven’t doubled the utility your income is giving you.
True. I didn’t think the precision was necessary here as I think most of the posters here would know that middle class privilege was mostly extended to whites and males, but it doesn’t hurt to mention it.
I don’t believe in heroes anymore. I believe in mass struggle.
As one of those who do work on getting that revolution going, that’s most of my beef with FDR’s New Deal.
I wish I could be on the next leg of the revolutionary journey instead of having to rebuild what was lost in the last half century.
Tim, you’re amazing at trying to distract from the main point by bringing up inconsequential details. Yes, yes, the elite are robbing the rest of us at gunpoint but LOOK OVER HERE!
People are catching on, and you won’t be able to stop it with the hand-waving. Slow it down, at best.
Sigh…if only my PhD were in economics, then I might feel more secure in questioning our esteemed, English, American-progressive-blog-reading, LSE-graduated, upper-(middle-?)class, economist(s).
But I’ll do it anyway.
What was your point with the horrors of NYC rent-controled apts? That to have a *few* rent-controled buildings means that other places are more expensive? If that’s what you mean, I have to disagree. I love the idea of a rent-controled place (if I could find one!). If you live somewhere with rent control, don’t be surprised when you go to renew your lease and there’s a 24% increase in your already heart-(and wallet-)breaking rent. Landlords raise rent depending on the market, any renovations, and personal sadism. This is just my observation over the past 3 years of living in Manhattan. If I missed your point, oops.
I also had another question: How much does it cost to attend a big Economics school, in any country? Do institutions offer generous scholarships to underpriveleged students? Are there a varietey of approaches and contexts in which one studies Economics? Do students and professors from underpriveleged backgrounds contribute to the discussion of absolute and relative poverty?
Because Economics, to me, sounds like something a bunch of stuffy, conservative, priveleged, white men like to lord over the rest of us in order to make us feel stupid for a)even questioning and b)not “naturally” understanding and therefore proving our unworthiness to join the discussion. (the same can be said of much of academia, but I tend to see more openness and diversity in the Lib. Arts).
Cheers to whoever suggested Confessions of an Economic Hitman; second most non-fic eye-opening book I read in undergrad. The first, and another reading recommendation if you want to find out more about 9/11, is The New Pearl Harbor. The coincidence of Pinochet and WTC occuring on that day is intriguing. Like all the stuff that happens on Halloween in Harry Potter. (sorry, had to get in a reference somewhere!)
Rock on Amanda!
That’s the funny thing — you seem to have a pretty idiosyncratic idea of what “freemarket capitalism” means. What we have right now is what was designed to be “freemarket capitalism” by Friedman and his pals, which is basically allowing corporations to run rampant over citizens with no check by the government.
Well, one kind of check—the check we’re writing them for billions. Right now the Bush administration is in the process of a giant wealth transfer from our pockets to the very rich through the use of taxes. Taxes should pay for the commonwealth, but right now more and more of them don’t come back to the taxpayers in commonwealth but to the elite in direct cash payments that are technically legal and all sorts of graft.
I’m sure that Amanda thinks that the poor are getting poorer in absolute terms.
The middle class is getting poorer in absolute terms. By any reasonable measure, my boyfriend and I should be doing better than our parents, especially since we’re white collar professionals and my parents really weren’t, especially when I was a little kid. But my parents were able, in 1976, to start a family, buy a house, etc. and I’m just not. I don’t want a family, but if I did, I’d be SOL. House? Out of the question. Health care? Iffy. New car like my parents had when they were years younger than me? Ha! Retirement savings? Now I’m going to cry.
But it’s true—we do have a bigger TV than they really made in the 70s. Conservatives appear to believe that the only economic measure worth paying attention to is the screen inches index.
“Conservatives appear to believe that the only economic measure worth paying attention to is the screen inches index.”
It’s all part of the size obsession on the right - Houses, TV’s, SUV’s, codpieces, etc…
BlackBloc: Good luck getting mass action without someone to spark/spearhead/figurehead it. Most revolutions come complete with a charismatic leader. There’s a reason we don’t talk so much about “French Revolutionary Era” as “Napoleonic Era”….
Oh, and as far as FDR is concerned: short-circuiting revolution is usually a good thing, because revolutions are messy and difficult to control. there’s no gaurentee you’ll end up with your anarcho-communist utopia instead of a grinding totalifascist dictatorship. ‘Swhy I much prefer co-opting and reforming existing structures, esecially when they aren’t, you know, absolute and pure evil.
Tim, you’re the one who doesn’t understand how inflation works. Because it’s a measure of a ‘basket’ of goods it can seriously misrepresent things. For example, over the last several years some basic things have been going up faster than inflation such as housing, healthcare, and education. This is ‘balanced’ by the fact that many items have decreased in price such as most consumer goods. In other words, the inflation rate can be low if ‘luxury’ items are going down in price while ‘essential’ items increase in price–because inflation is an average. If this happens, many people can be worse off even if their wages adjusted for inflation is stable or even increases.
Ironically, it seems that you are the one that doesn’t have a “basic grounding” in economics, yet you seem to want to project that on everyone else.
“Average inflation” hides much more inflation than it reveals. The fact is that there is a much greater increase in the money supply per year than is reported by the gov’t. Actual inflation rate for the US in the past decade is something like 10-12% per year.
“In the last decade, M3 has increased 120%.”
Directly from the belly of the beast: http://www.mises.org/story/2302
No, the main reason manufacturing employment is going through the floor is because of the petrodollar. By tying oil to US dollars in the 70’s, Nixon virtually guaranteed that global labor and products would be forced to lower their value in relation to US goods and labor, insuring that the price of both labor inside and outside the US would be artificially suppressed in value. Nixon was a Freidmanite as well.
The increasing US manufacturing output is more funny number crunching. Actually, the US produces far less than it used to, and although it does produce more high value goods which would account for some “increases”, much of the increase in manufacturing output are actually calculated due to the phantom GDP created by including overseas outsourced manufacturing.
Read it and weep: http://www.truthout.org/docs_2006/061107P.shtml
More about growing inequality:
http://select.nytimes.com/2006/09/15/opinion/15krugman.html?_r=1&oref=slogin
my boyfriend and I should be doing better than our parents, especially since we’re white collar professionals and my parents really weren’t
Um, no.
That’s been the historical trend in the United States: children do better economically than their parents did. Now the trend has been reversed, and many children are doing worse economically than their parents did.
You can complain about the philosophy of expecting to do better than your parents, but don’t ignore the facts, please.
Because it’s a measure of a ‘basket’ of goods it can seriously misrepresent things. For example, over the last several years some basic things have been going up faster than inflation such as housing, healthcare, and education.
And don’t forget that most inflation calculations leave energy and food out of the mix. Barry Ritholz over at The Big Picture rails against this all the time. My money does not go farther now than it did ten years ago, even though I’m making a lot more of it.
Three things:
1) People are not rational. They’re not irrational. They are simply non-rational. I think one of the biggest problems economics has is the assumption of rationality–it works sometimes, but is often flat-out wrong.
2) Economic forecasts can only forecast for the metrics they track (kind of obvious…). Many metrics we currently use don’t convey good information–GDP is a measure of economic activity, but what about the *quality* of that activity? Why do we look at nations rather than cities as the major functional economic units?
3) Economics wishes to be the physics of the social sciences, but it is not. Much of its current approach to analysis is based on either the small-and-simple kind of problems in Newtonian physics or the large-and-homogenous kind of problems in statistical mechanics. But economics exists somewhere in between, in the middle-range often inhabited by nonlinear systems, game theory, etc. These sorts of problems are large/medium-and-diverse.
Basically, while I do think economics can tell us very important things and has some decent functionality at present, I also think that it’s joined at the hip with the state and is solving problems using the wrong tools.
As my father is fond of saying,
“The rational is not always reasonable.”
(It’s got better nuance in French, though.)
Libertarian:
Sure, because Amanda couldn’t possibly know her own familial economic history better than you do.
Libby, I’m afraid you’ve already exceeded your allotted pomposity quota for this thread. No cookie for you.
Suspect Timmy is a Brit -writes that way - probably Conservative.
Or the more pejorative—’Thatcherite’
He also credentializes, here:
“As I’ve said several times now, tough to discuss matters economic with people who don’t have the most basic grounding.”
“Well phew on you…hoi polloi!”, sez he.
Fuc*k that everytime.
AToL is an excellent place to try to think economic…
lot of it’s well over my head. Or TMI.
Features Chalmers Johnson, Tom Englehardt and the inimitable Pepe Escobar…I’ve no idea how he he seems to be -on the scene- so often.
Liu is excellent..but as per caveat longish.
His last piece…I thought worth reading…two sections, 9 pages…but I learned a few things…even me.
[disclaimer…don’t even subscribe to the magazine/journal…just on my book marks]
And the Altemeyer book can be had for free .pdf and is terrific. Wouldn’t even let me leave a donation.
Several people above have recced “Confessions of an Economic Hit Man.” I can’t agree: it rang my bullshit-o-meter something *fierce*, mostly because of the Sexy Lady Who Trained & Seduced Me While Talking Like a the Old Guy in a Heinlein Novel. It’s a pity, because much of it comes across as extremely plausible — but I can’t trust the whole when some of the crucial parts reek of fiction.
Do you mean that white collar professionals shouldn’t be earning more than non-white collar professionals? Do you mean that Amanda and her boyfriend are bad people, so they should be poor? I mean, this is pretty much a “TWINKIE HOUSE!” level of incoherence. Try a little harder, please.slash taxes, especially for the rich, moving the tax burden onto the working class, free trade, slashed social services, privatize national assets, abandon price controls, government austerity that leads to massive layoffs.
One question. What form of price controls do you feel should be maintained? How would you account for the potential rise of black marketeering and government corruption that may result when the demand for necessities outstrips the supply available at that given controlled price?
This question arises from having family and neighbors who lived in countries with government mandated price controls.
Their recollection was that while the controlled prices were nice to have for basic necessities, they also dealt with shortages/nonavailability of those necessities that resulted. This meant they ended up paying much more and risks associated with dealing with black marketeers and/or corrupt government regulators that were on the take…or more often, they ended up doing without those necessities.
Hey, financially things are pretty good for me, therefore the system is working great! Anyone can get money, you just have to apply yourself. Duh.
One of the interesting things about the doctrinaire “conservative” economists that’s kinda funny is the way that they insist on measuring everything in units — money — that everyone knows are a bad representation of utility. You’d almost think they had some kind of religious belief going on.
” Libertarian: my boyfriend and I should be doing better than our parents, especially since we’re white collar professionals and my parents really weren’t
Um, no. ”
Do you mean that white collar professionals shouldn’t be earning more than non-white collar professionals? Do you mean that Amanda and her boyfriend are bad people, so they should be poor? I mean, this is pretty much a “TWINKIE HOUSE!” level of incoherence. Try a little harder, please.
grendelkhan,
I can see two somewhat intertwined possibilities.
1. Has mentality that no one is entitled a job/certain standard of living.
2. If a non-white collar professional: Possible anger or annoyance at the implication that white collar work automatically entitles one to higher pay/status.
On absolute vs relative changes in income:
If capitalism–or for that matter absolutely any human economic system whatsoever–is not completely dysfunctional, we would expect the “absolute” income to rise over time, because productivity–which is just the measure of how much material stuff gets produced by a given number of work hours–should increase with the general advance of human knowledge. To be sure, if meanwhile population is increasing or resources are being depleted irreversibly, it is harder to produce a given amount per capita at any given state state of the art; these trends have very often overwhelmed the pace of the advance of technical progress in human history. Indeed through most of history the pace of advancing states of the arts has been so slow as to be unnoticable in anyone’s lifetime.
Capitalism very definitely facilitates the rapid employment and continued development of technology; I think it is fair to say that modern science as we know it co-evolved with capitalism. Thus, if there were not an absolute rise in human standards of living at any level of income, even the lowest, under capitalism, that would be an especially damning indictment of capitalism in that time and place. (Of course, we all know–well, those of us who aren’t trained neoliberal economists, anyway–that that indictment has been brought fairly against the modern global capitalist system in this past generation. Some people are enjoying an explosion of absolute wealth undreamed of; many of us are basically stagnating, gaining stuff like Web access and cell phones but becoming less able to rely on our drinking water and finding the prices of new homes skyrocketing out of reach while rents also climb. And many more are losing ground, even absolutely.
Relative impovershment matters very much, even when absolute wealth commanded by the relatively shrinking income is indeed actually rising, because wealth is power. Ownership of things is power; control of land is power; political influence is power; ability to buy better legal representation is power; belonging to a social class court judges are comfortable associating with is power; access to better (or for that matter any) health care is power; better schools for your kids and yourself are power.
And I had much to say on the power–the class power–involved in maintaining a class of snotty, supercilious high priests of mumbo-jumbo in the guise of academic “economists,” but it turned into a long rant.
“That’s the funny thing — you seem to have a pretty idiosyncratic idea of what “freemarket capitalism” means. What we have right now is what was designed to be “freemarket capitalism” by Friedman and his pals, which is basically allowing corporations to run rampant over citizens with no check by the government.”
No, I have a very clear idea of free market capitalism, what it should be. I agree absolutely that what is being implemented by the Bush Administration isn’t it: that’s Big Government Conservatism. Milton Friedman, just as an example, argued very strongly in favour of the legalisation of all drugs (look for his open letter to Bill Benett). His PhD thesis was on the power of the AMA in raising the cost of health care by restricting the number of doctors. The USA today may be many things but it’s not Friedmanite.
As to others above: yes, I’m English, yes, I’m a classical liberal. I blog, for example, for the Adam Smith Institute, something of a sign of that.
University education? In my day, fees paid by Govt, plus a maintenance grant (the grant was means tested). No one did or did not go to that school because of the costs.
“all I’ll note is that the statistics on household income adjusted for inflation and hours worked by the household will very quickly demonstrate stagnant to falling household income for the majority of people in the U.S. since 1977.”
If you can show that I’d love to see the cites. It’s a subject I’ve written on extensively. Working hours (+paid and unpaid together) for both men and women have been declining while incomes have risen.
“I love the idea of a rent-controled place (if I could find one!).”
Yes, that’s the point. If you lower the cost of a good or a service below its cost of production then you’ll end up with a shortage of it as people will no longer produce it. That’s the horror: that you can’t find a place because of rent control.
“The middle class is getting poorer in absolute terms.”
Amanda, I would happily debate you on that subject in a more formal manner. It’s not true and I could show that to be so. You decide whether you’d like to take me up on that outside a comments section.
“Tim, you’re the one who doesn’t understand how inflation works. Because it’s a measure of a ‘basket’ of goods it can seriously misrepresent things. For example, over the last several years some basic things have been going up faster than inflation such as housing, healthcare, and education. This is ‘balanced’ by the fact that many items have decreased in price such as most consumer goods.”
John, reread the above comments, I both note this and explain why it happens. We always expect the inflation rate for services (education, health care) to be higher than that for manufactured items. It’s one of the lessons that economics has for us.
“Tim, you’re amazing at trying to distract from the main point by bringing up inconsequential details. Yes, yes, the elite are robbing the rest of us at gunpoint but LOOK OVER HERE!”
No, it’s not an inconsequential detail, It’s the very heart of the entire debate. 1) Are we being robbed? 2) Who by? If it turns out that we’re not actually being robbed, both you and I, children of the middle classes, then the second question is really rather moot, isn’t it?
Thus question 1) is the most important to answer: and Klein and you assume it. What you need to do first is prove it, before moving on to the second.
As a final note, no, I don’t think things are perfect. I regard myself as a liberal, a progressive and a radical. I am interested in the maximal possible wealth for all along with as much freedom and liberty as it’s possible for people to have without them bursting from the sheer pleasure of it. I assume also that those are the desires and aims of those here.
All we disagree about is how to achieve those things….at least, I hope that’s what any disagrements are based upon.
Dead on.
One needs to define what utility means to the economists that use the term.
I think McKibben & Herman Daly.
It’s an important definition and not intuitive.
Over to you.
“If capitalism–or for that matter absolutely any human economic system whatsoever–is not completely dysfunctional, we would expect the “absolute” income to rise over time, because productivity–which is just the measure of how much material stuff gets produced by a given number of work hours–should increase with the general advance of human knowledge.”
I agree absolutely. Thing is, of all the economic systems we humans have invented, that liberal capitalism (and here liberal does indeed mean regulated, monopolies should be crushed, etc etc) is the one we’ve found that encourages this best.
Doctor Science — I SO SO SO second your “b.s. meter” reaction to _Confessions of an Economic Hit Man_. That sexy trainer lady was straight out of the james frey school of memoir….
To more of an emphasis on something…
One of the reasons I am more impressed by Chalmers Johnson is that his work puts the “disaster capitalism” in it’s proper context as an endstage of economic growth. I.E., “disaster capitalism” in the global north is an indication of autoconsumption, and things are cracking up or is about to. Naomi Klein *seems* to think that this type of economic system can persist, when it’s really a case of burning furniture to keep warm one more night. That is, the wealthy class burning everyone else’s furniture in order to warm one more party…
Of course, there is one school of economics that has opened my eyes to how real-world capitalism works; that indicates numerous and useful explanations for our every-day reality; that harmonizes with rather than is contradicted by history and anthropology; that gives us a handle on understanding the actual workings of our economy without trying to commit us all to the insane theology of Homo economus derided so neatly by Thorsten Veblen in this quote I just re-discovered today, pasted into my blog:
http://ratracebypass.blogspot.com/2007/10/teh-veblen-quote-self-contained-globule.html
And here’s a quote from the introduction to the 1976 edition of the foundational work of this school, outlining what it can and has actually accomplished:
http://ratracebypass.blogspot.com/2007/02/because-it-apparently-has-to-be-said.html
God, this blog attracts a lot of cranks.
Welcome to cranks anon, Philip Thomas! Do you take your coffee with supercillious naming or just black?
Well that’s just convenient isn’t it? “Oh, the reason your money doesn’t ACTUALLY go further in the categories you list is because of the well-known Baumol Effect, and the fact that the items you list account for some 80% of an average family’s spending is more than offset by the fact their cellphones/TVs/cars are cheaper or more efficient. But still, you’re wealthier than your parents. Really.”
So if the Baumol Effect explains why my parents had more leisure time and more disposable income than my siblings and I, what is the solution?
/me reads Philip’s website.
Wow, I suppose you do find this place comfortable to do a little cranking off, eh?
If you think that a government-controlled industry would be able to provide me a computer as good as the one I now use
Well in fact it did–who do you think were the initial customers and specifiers for Silicon Valley’s products?
Hah, Tim.
Wait till you see what I think about where your vaunted liberal capitalism is going. It’s currently tied up in moderation. (my post, not capitalism–I only wish that is what had happened in history…)
Human progress is the product of human labor. Period. We are arguing about forms of organizing that labor, and what is rational for the working-class majority of this world is to consider which forms will deliver the best results for them. Not for a few people made richer and hence more powerful than anyone could dream of before, but them. I argue that even if a rising standard of living can be sustained for the majority–even so, if the elite minority gains too much relative to them, this will reduce the majority to slavery to the power of the wealthy.
And of course the countertendencies I indicated–shrinking resource base per capita, basically–are compounded by the rise of wealth, insofar as this means more resources are needed. The working class under capitalism is damned if it does–if it seeks to maintain some relative parity with their betters, since this would greatly hasten the collision between limited resources (however rapidly expanded by technical progress) and exponential growth of both per capita demands and the population itself. And damned if it doesn’t; if for the sake of treading more lightly on the earth, the majority of human beings were to accept a fixed material standard and take what progress in human capability there is in the form of more leisure, then the capitalist owners would gain all the more power relative to the rest of us.
An optimist might hope that our corporate masters would use this power benignly and wisely. A realist looks at the evidence Amanda has offered us today, notes that it jibes with all our life experiences and knowledge of current events over those lifetimes, and laughs at that notion.
As I said in the moderated post, there is an economist, and a school of economics, I respect for its accomplishments in usefully and lucidly analyzing the capitalist system so as to be able to make actual predictions of its general trajectory as well as make sense of its real-world features, as opposed to some abstract marginalist Flatland. A school that used real business data to say something about what would really happen.
I decided to omit my judgements on the character of mainstream economics, so-called, in the interest of brevity and civility.
Just one question, Tim.
What have you marginalist economists ever actually accomplished, outside the realm of politics, I mean? You’re real good at projecting a sober aura of gravitas and pomposity over political behavior that amounts to banditry without this cloud of squid ink covering it–but can you, you know, explain anything useful about the world as it is today? Can you show how the evolution of human history is consistent with your notions of who and what we are?
Whenever asked to explain some concrete thing that has actually happened in human history, such as for instance the Great Depression, or the underlying causes of actual wage distributions, or anything real like that, all the mainstream economists I’ve ever heard of wave their hands, mumble, and wind up saying nothing more than “that’s the way it happened.”
So, you hold we are just too ignorant of your noble science to follow your clear reasoning. Well then, choose a simple example and let us see a glimpse of your mysteries.
But it won’t be easy–despite that characteristic economist smarm, the vast majority of us have indeed heard all about your premises and arguments. We just don’t all think they make any sense as applied to reality.
Yeah, as a sociologist, I have to say, we do consider economics kinda silly. Kinda like that annoying pompous uncle that goes on about his importance, while everyone else in the family considers him a bore. The jokes that fly around the table at sociologist get-togethers about economics are many.
Economics is a study of society without accounting for things like how people, groups, and, you know, society, actually operate. It’s a social science that is hamstrung by it’s own narrowness of vision and insecure attempts to suck-up to the ‘big-boys’ of the ‘hard’ sciences and be accepted.
In all seriousness, as a descriptive science it’s not bad, so long as its lack of objectivity is heavily, and OVERTLY, policed. But as a predictive science? It’s really terrible, and really only operates in really narrow sets of ideal conditions.
Except for the fact that all other first world developed nations run a version of a social(ist) democratic redistributive economic systems … except for, you know, the US. Wonderful success rate, I have to say.
Funny that.
shah8,
me “crank off”?…what?…oh..oh, wait, I see what you did there…
In the rant I censored, I shared some anecdotes about what Caltech students thought of our vaunted campus Economics department. So committed is (or was) the Caltech administration to the notion that Ec, at least as studied and taught there, is indeed the Queen of Social Sciences that they’ve defined Political Science as “Non-Market Decisionmaking,” teh Magick of the Marketplace being how we normally make all decisions.
I hope my second post ever comes out of mod; I finally found that Thorsten Veblen quote, the one about how economists like to imagine that human beings are “self-contained globules of desire.”
I agree absolutely. Thing is, of all the economic systems we humans have invented, that liberal capitalism (and here liberal does indeed mean regulated, monopolies should be crushed, etc etc) is the one we’ve found that encourages this best.
Of course (at least, so far) - but the problem is that we assume the market and capitalism will be tools used in the service of the greater community good when they tend to take over and subvert that wider commons for their own benefit. When money buys political power, citizens become consumers.
As regards relative vs absolute wealth, consider this scenario, Tim:
Imagine a society with two classes, say the nomenclatura and the proles. Imagine that resources are allocated between them by a bureaucracy, and that this allocation is justified by propaganda about the glorious Collectivist Harmony and the sacrifices of the nomenklatura in managing society for the benefit of all.
Now, imagine a disease with no treatment, giving everyone a 50% chance of dying. If you’re a prole and your kid gets this disease, it’s a tragedy.
Imagine a cure being invented. Imagine it being allocated mostly to the nomenclatura. This now gives proles a 40% chance of dying, and the nomenclatura a 10% chance of dying. If you’re a prole and your kid gets the disease, it’s a tragedy - and also a political matter. You might even start resenting the system and questioning the justification for it as possibly self serving bullshit. Claims that your kid is *absolutely* better off aren’t going to mollify you.
Now, imagine a second society with two classes, say the wealthy and the workers. Imagine that resources are allocated between them the ability to throw money around, and that this allocation is justified by propaganda about the glorious Market System and the sacrifices of the wealthy in creating business for the benefit of all…
Priceless. Seriously, economists. WTF?
Human progress is the product of human labor.
Heh. Human progress owes more to smart lazy bastards trying to avoid human labour.
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain social sectors has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of those same sectors?
Honestly?
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the proprietors of those same pockets?
Honestly?
Amanda -
The odds are very high that you, in fact, are in a better relative position to buy a house than your parents were. You just aren’t in a better position to buy the same house that they did, relative to the socioeconomic context. That is, by spending 30% of their income on housing, they could afford a house that was at (say) the 45th percentile of American housing.
By spending 30% of your income on housing, you can afford a house that is (say) at the 20th percentile of American housing.
The 20th percentile house in 2007 is a significantly better house than the 45th percentile house of 1977. No asbestos, for one. Less lead paint. A lot more fireproof and energy efficient. There are other improvements that have been made, as well. So you can actually buy a BETTER house than your parents could buy - but your neighbors and peers can buy a better house than you can.
As for being “white collar” - that’s a label without economic significance. The teenager who collates my copies down in the printing room is “white collar”; the lady who puts together wireless networks in the IT group is “blue collar”. Guess which one has the 401(k)? The question is what skills you bring to the labor marketplace, and what those skills are worth in comparison to your peers, versus the same calculation for your parents. I don’t know what they or you do; if your dad was an auto mechanic and your mom was a registered nurse, while you’re a clerk and your boyfriend is an entry-level accountant, well, no wonder you’re not doing as well as they did; your work isn’t as valuable to the rest of us as theirs was.
The other part of this, which I’m pretty sure you’re going to reject out of hand, is that in your parents’ era a big chunk of the national income was, in essence, getting taken away from black and brown people and being given to white people. That still happens, but to a much lesser extent. To some degree, you are less rich than your parents because you’re in a society that’s trying to be less racist. You’re blaming capitalism for part of the loss of your privilege, but it’s actually our own ideals in action. (A cost worth paying, I should say.)
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the proprietors of those same pockets?
Honestly?
If you think that a government-controlled industry would be able to provide me a computer as good as the one I now use
Carolyn Dougherty
Well in fact it did–who do you think were the initial customers and specifiers for Silicon Valley’s products?
What have the original mainframes got do with modern PC’s, the likes of which you’re using right now? Modern PCs came about through the development of the consumer market for computers rather than the government: the fact that computer manufacturers saw potentially millions of customers for their wares. Moreover the fierce competition between thousands of private and public companies is what leads to the continued rate of advancement.
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the proprietors of those same pockets?
Honestly?
exholt, I see what you mean, and I agree that commodities which are legally controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. Tactics intended to regulate commodities in the name of the greater social good often generate untoward social consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How are problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the guys who own the contents of those same pockets?
Honestly?
“go further in the categories you list is because of the well-known Baumol Effect,”
Yup, go read John Quiggin. A social democrat, very close to the usual views around here, blogs at his place and Crooked Timber. This is an interesting point: how can you all be talking econonics if you don’t know this stuff? I’m not stating anything that is right wong or stuff: this is generally agreed to be true amongst all economists (and I should point out, no, I’m not an economist, in the sense of being a member of the academy…an interested amateur, no more)
“Just one question, Tim.”
The answer, I think, is that economics, from Smith, through Ricardo, to Friedman and Hayek, has managed to explain both what wealth is and how it is created. Please note the “I think”.
Mark: Thorstein Veblen is not, at least any more, considered an anti-economist. His analysis of conspicuous consumption is very much part of the mainstream now.
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the owners of the contents of those same pockets?
Honestly?
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the owners of the contents of those same pockets?
Honestly?
If a non-white collar professional: Possible anger or annoyance at the implication that white collar work automatically entitles one to higher pay/status.
Well, I know our resident libertarian nut is all for stratified social hierarchies, so the mild income differences that have traditionally existed between the blue and white collar working class shouldn’t insult him since he’s in love with the HUGE disparities between the superrich and everyone else.
I will say that it occured to me that, “The poor have TVs now!” will probably go down in history as our day’s version of “Let them eat cake.”
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the owners of the contents of those same pockets?
Honestly?
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the owners of the contents of those same pockets?
Honestly?
My comment seems lodged permanently in moderation, or perhaps it just vanished.
Ah well I’m not at my best this afternoon–given my workweek and work times, for me it’s about like 11 Pm on a Friday night right now. In other words, this is what I do for fun…
Well, here’s a link to the Veblen quote on my blog. As a witty aphorism it’s a bit lengthy, but I think you’ll see that Veblen put long-windedness and big words to somewhat more effective and refreshing use than I can generally manage.
http://ratracebypass.blogspot.com/2007/10/teh-veblen-quote-self-contained-globule.html
exholt, I see what you mean, and I agree that commodities which are price-controlled often get to be the focus of corruption and black marketeering. Anybody who doubts that ought to take a good look at the results of the Drug War. So: tactics intended to regulate commodities in the name of the greater social good often generate untoward consequences. That’s a proposition with which I don’t argue.
OTOH: we can also see, in light of the events of the last few years, that attempts to deregulate commodities in the name of the greater social good also have a way of generating untoward consequences. Anyone who doubts that ought to take a good look at the results of the Iraq war. It’s tempting to think that, because governmental tries at improving citizens’ access to jobs, goods, and power often fall flat, the solution is simply to allow the major powers/major players to have free run of the field and to do as they will. But we’ve been experimenting with that idea for the better part of the last 30 years, and the result of the experiment has been that the quality of life has diminished perceptibly for most Americans.
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
What’s more, the Administration with which we are now burdened, the Administration which has proven loudest and most consistent in defense of the free-market gospel, and which has lent the defense of that gospel an explicitly religious tone it lacked during the Reagan incumbency, has turned out to be an Administration as corrupt as the Administration of the Harding Presidency—if not more so. Now, I know that correlation and causation are not equivalent. But do you really think that the aggregation of giant clumps of money in certain sets of pockets has no bearing on the corruptness of the very same governmental functionaries who most avidly defend the interests, financial and otherwise, of the owners of the contents of those same pockets?
Honestly?
Tim, most of what you’re arguing has nothing to do with hardcore economics–your ‘it’s hard to argue economics with non-economists’ is a dodge. Going back to your first comment you say that the private water company in England does a good job. That may be, but it has been disastorous for some third world countries (see here for example) and yet the World Bank still pushes it as a prerequisite to get debt relief (even though much of the time the debts of these countries were run up by a previous totalitarian government supported by the first world countries). Could the World Bank demand have to do with the fact that first world companies benefit?
Now why exactly do we need an economics degree to discuss that?
Ha, Quiet! I love it—when faced with reality, just deny that I know my own life. “The poor have TVs” is a distraction from the fact that what hardline capitalism is about is destroying the middle class, creating a giant underclass, and making the elite far, far richer—recreating, in other words, feudalist economic classes. I pointed out that “middle class” has be defined down—my boyfriend and I are freelancers now, but our combined income in real dollars from last year when I was a financial aid officer and he was an assistant director at a university probably has less than 3/4 the buying power of my parents’ buying power when they were many years younger than me and working as a bank teller and a fire fighter. When I was born in 1977, my parents owned a 3 bedroom home with a two car garage, and they were able to support two children comfortably in a middle class lifestyle, and eventually send us to college. My dad retired at 50 years of age.
There is exactly no way that could happen for me, not the house, the retirement fund, or the kids in college, and I’ve supposedly moved UP the class ladder from my folks and my boyfriend (at least in his old job) was a step up the ladder even from that. Our story is typical—increasing inequalities in America, which has been only mildly hit by free market atrocities that have created giant slums in other countries, is slowly defining down what is considered “middle class”.
Look, I’m not complaining. I do much better and live in a lot less fear than most people I know my age, who have children to support and therefore have no extra income for that health care and retirement fund. I’ll be fine; people in my generation have to make the necessary lifestyle cuts to subsidize our leech class (the wealthy), and my choice—no children—was simple. For people who want children, though, they’re kind of fucked.
Our story is typical—increasing inequalities in America, which has been only mildly hit by free market atrocities that have created giant slums in other countries, is slowly defining down what is considered “middle class”.
When we had the big grocery store strike out here in California a few years ago, one of the things I kept hearing was, “I’m a college-educated white collar worker and I don’t have health insurance, so why should a bunch of grocery store clerks get health insurance?” The resentment from some people was pretty frightening, like their class status was threatened by the fact that people who got paid less than they did got benefits.
Of course, they never stopped for a minute to think, “Hey, if that grocery store clerk gets health insurance, I should get it, too! Why aren’t I getting it?”
Set the classes against each other. Oligarchy 101.
when faced with reality, just deny that I know my own life
Sorry, that wasn’t my intention. I am sure you know more about your own life than anyone. That doesn’t mean your perceptions are accurate; I know my own life better than anyone and (for example) would have told you I was the least popular and most hated kid in high school. But ten years later I realize that wasn’t true; my perception of my experience was accurate, but my knowledge of the universe in which that perception was happening was less than complete. There were other people much more hated than me.
I pointed out that “middle class” has be defined down—my boyfriend and I are freelancers now, but our combined income in real dollars from last year when I was a financial aid officer and he was an assistant director at a university probably has less than 3/4 the buying power of my parents’ buying power…
Why say “probably”? We can tell. Ask your folks what they made in 1977, run it through an inflation calculator, and see who’s actually better off.
I love how Tim Worstall, Quiet and other defenders of the rulers’ status quo have derailed away from the point that regardless of whether or not today’s children of yesterday’s various classes are poorer, richer, or the same in absolute terms–what matters to our statuses in society is, our relative wealth.
So if you take up Quiet’s challenge, Amanda, and recompute your parents’ income in 2007 terms or your current one in 1970s-80s terms–see if you can’t find the incomes of the top 10 richest families of those years of yore, or the top 0.01 percent or something else, run them thru the inflation calculator too–and see whether or not yesterdays elites would indeed be small fry in today’s inner circles of wealth.
As I’ve suggested before, the greater the relative wealth of the wealthy, the less democracy we have. Which was Amanda’s original point I think, only with cause and effect reversed. Each one favors the other reciprocally so I don’t know which is cause and which effect–both are both I guess. Part, as I like to say, of a system.
In fact, all this arguing about economic theory has very neatly distracted from the outrageous facts that Naomi Wolf puts forth–that after all, despite all the soothing stuff we hear about how the magic of the marketplace merely reflects our preferences, and how our society is after all ultimately ruled by the people–in fact, the wealth of the rich has leveraged power enabling them to game the system to get even more wealthy, thus leveraging them more power, etc.
And that this doesn’t just mean higher incomes. it means death squads. It means the systematic wrecking of working infrastructure, both to compel people to turn over to directly profitable privatized schemes and to discredit the possibility of alternatives to corporate rule by sabotaging them. “Infrastructure” here covers everything from water supply and phones to systems of democratic government and justice in the courts!
When they aren’t wrecking the commons, the owners of the “ownership society” are building up their privatized replacements, including means of violence that increasingly substitute for the authority and power of the democratic governments. These private institutions include entire governments owned and operated by global corporations, in effect.
In short–capitalism is in crisis. Its elites, who once were expansive in their outlooks, see an upcoming collision of the drive for exponential growth with resource limits. And rather than accommodate to these stringencies in a way that can ease us all through the narrow passage alive together, they want to start thinning the herd now and secure that passage for themselves and those most servicable to them. It’s now lifeboat mentality capitalism.
People, I need to go off line.
But remind me–why exactly is it that “everyone knows Marx was crazy and wrong?”
Isn’t this world a whole lot like what he foresaw and getting more like it daily?
In order to know if that’s true or false of course people would have to have some idea what Marx was actually saying. I wonder how many people who think they know will get it right…
Our water is worse, our air is worse, our access to health care tends to depend strictly on our never getting sick, and our infrastructure is rotting. How problems such as these to be solved by less, not more, big-money accountability?
bekabot,
I hear ya….have a friend who is a state insurance regulator who frequently tells me the horror stories of people who lack coverage or whose insurance companies are fighting tooth and nail to get out of their coverage obligations.
I’m not against all government regulation….just against those that are counterproductive and harmful in the long term.
Das Kapital==good
Communist Manisfesto==bad
Die, Hegel, DIE!!!!!!!
But remind me–why exactly is it that “everyone knows Marx was crazy and wrong?”
Personally, I don’t think Marx was crazy…just mistaken in his overestimation of the human capacity for altruism and caring for each other and underestimation of their capacity for being corrupted by absolute power.
The quote “from each according to his ability, to each according to his needs” assumes a critical mass of human beings in a given society would be capable of putting forth the utmost effort and only taking what they actually needed…..not what they themselves believe they may deserve from their productive efforts.
Call me cynical, but I disagree…especially when such altruism and caring is motivated by fear of coercive sanctions. When family and neighbors who lived in societies where they attempted to put this idea into practice….most workers they witnessed ended up exerting the bare minimum effort to get by and/or attempt to game the system for their family’s benefit to everyone else’s expense.
Moreover, there is at least one major flaw in his idea of how the revolution should proceed.
1. Workers should overthrow the advanced capitalist state and seize all means of production.
2. A council of workers (vanguard) should form a dictatorship of the proletariat to root out dissent from those with bourgeois capitalist sympathies and ideological remnants.
3. After this dissent and all other ideological remnants of the former bourgeois capitalist society are rooted out over some period of time….the dictatorship of the proletariat would eventually fade out as they are no longer necessary.
4. True communism.
Somewhere between steps two and three….he and Engels seem to forget to account for the corrupting effects of absolute power a dictatorship could have on those in power. What if those in the proletariat dictatorship actually like to remain in power with its ego stroking effects and nice perks??
This was what ended up happening in many communist societies such as the USSR, Mainland China, etc. Granted, there was the exception of some parts of Eastern Europe, many communist states cropped up in areas that have not reached the stage of advanced capitalism. However, in every one of these communist states, the tyranny of the bourgeois capitalists was replaced with the tyranny of the “dictatorship of the proletariat”/ruling communist parties.
Instead of making the majority of the populace’s lives better….those in the communist party ruling elite became the new ruling class while everyone else became serfs to fulfill their supposedly “socialistic” desires. While those in the ruling communist party elite enjoyed their fancy homes with servants and other perks of power, everyone else toiled to serve these elites.
While Marx and Engels were not crazy, their critical oversight in this area meant that the revolutionaries, however well-intentioned they may be initially, could easily use their ideology to justify their continuing rule by stating “we have not reached a sufficient state of proper socialistic consciousness yet” once they become the new ruling elite.
It’s disconcerting to me how easily and quickly these discussions get to ideology and theory with no seeming connection to the fact there are actual people living this out in their own lives. Who gives a crap about ‘relative’ poverty and ‘absolute’ poverty? It’s still poverty. It’s still a life on a hamster wheel desperately attempting to keep up with simple survival. It kills me that people actually question whether or not I (and we are talking about me and my family) really have it all that bad compared to my parents or my grandparents or the “average” of some definition of “wealth”.
By the time my grandparents had been married 15 years, they owned a home, 2 cars, had savings and insurance and were putting money into a pension, on one income. They had 2 children to support and one grandchild. My grandfather was a truck driver. My grandmother stayed home.
By the time my parents had been married 15 yrs, they owned a home, 2 cars, had remodeled their home, had 3 children to support and did so without too very much difficulty. I always had school clothes and lunch money. My dad is a mechanic and my mom started out as a clerk at a home improvement company.
By this time my husband and I have been married 15 yrs. We do not own a home and it looks like we never will. We have one car and can barely make the payments on it and we need a second. We have 2 children. It’s the second month of school and we still haven’t been able to get them school clothes and it’s starting to get colder. It was all we could do to get their supplies. My husband is a mechanic and I am a secretary.
The number one way I can tell that things blow for me in a way it never did for my parents or grandparents? There was always food in the pantry and the fridge at their houses. Mine is empty. Right this very moment, mine is empty and I have no idea how we’re going to eat until Thursday when my husband gets paid. My husband and I have been eating one meal per day so we can feed our kids three. It probably means a trip to the plasma donation place so we can sell our plasma for $30. I do not ever recall my parents or grandparents having to sell any part of their bodies in order to feed us.
Another insult, my grandfather worked like a dog for 45 years pushing a truck down the road 120/hrs a week so folks could have all the things they want available on the shelves of their local store. He was doing okay, but each year things seemed to get harder and harder. Now, at 81 yrs old, he can’t help me or anyone else. He can barely afford his health care since he’s still paying on my grandmother’s hospital bills and her funeral. His wife of 56 years dies and he has to worry about how he’s going to bury her. And now, his little $400/mo pension is running out. He’s looking for a job at 81 yrs old with heart problems.
My parents would help us, but they can’t either. After 20 yrs at the same company, my dad’s now worried about his plant closing down and how the heck he’s going to go on a job hunt at 57 years old and who is going to hire him. My mom’s income, after 10 years and several promotions still isn’t enough to cover things if he doesn’t have a job. He’s trying to save some money for that inevitability but the cost of living keeps getting higher and higher and he can’t even save for a catastrophe he sees coming. He’s helpless to help us or himself.
Does it help to know that it’s all a conspiracy against us? Not really. But, you know what? If someone told me the Revolution was going to happen tomorrow, I’d go buy a gun and I’d be on the front lines. What do I have to lose? It’s not getting better; it’s getting harder each year. So again, what do I have to lose?
And that, right there, is the danger for all these apologists for unchecked greed. You can redistribute wealth voluntarily though government programs and fair wages or it can be redistributed for you. I’m pretty sure the French aristocracy thought it could never happen in France either.
You know what I don’t understand (and would love to see a post on by someone who does)? Why economics, especially as explained by conservatives, is this GIANT MYSTERY that I the little person will never get. I call bullshit. I’m an engineer. I’m in grad school to become a scientist. I have plenty of experience in making technical explanations comprehensible to people who don’t have a background in my area. The only only possible explanation is that the people who make economics confusing want it to be that way. I have a good idea why they’d like me in the dark, but not enough background to be able to refute them. That is frustrating.
Mark..
Our general ignorance or misinformation (we have been thoroughly misinformed) about that which Marx actually put on paper …
is something in which I have shared…or am simply equally guilty.
So I am again going to recommend the recent Liu piece in AsiaTimesonLine which was for me so broadly informative about all things economic , even Marxian…about which I am pretty uninformed.
It was very helpful as an overview, covered a lot of history and other bases and made sense to this economic creature I’m going to call Regulationist…me, that is..how I feel about sharing and what that brings to my sense of that which is…Economics.
And how to be fair and even kind. Here:
http://www.atimes.com/atimes/Global_Economy/IJ12Dj01.html
Very worthy but longish.
And this from you…
And all of this goes to the ‘growth’ paradigm which says that for the Financialators (gamer, schemer scammer crowd) ongoing appreciation has to happen or the Wall Street gambler mentality and the income accruing to that mindset must…vanish.
That’s the whole ‘growth’ thing
which they use to reassure (or terrify) us…and it’s illusion.
So it seem to me that once we see through the whole GDP
smoke & mirror show we begin to see that ‘growth’ - benefiting almost entirely a small percentage of folks who tend to be those sitting really comfortably atop us - as we have known it - is no longer at all so awfully neccesary and may even be harmful.
Others…e.g.Andrew Leonard at Salon whom I revere…disagree so I stand ready to be re-informed….but I’ve heard too that the French
have a really pretty crappy GDP and everybody’s fairly happy.
Happy goes to the Utility Index to which some economists hold.
Has to do with human betterment and how you’re doin’.
’nuff
Why economics, especially as explained by conservatives, is this GIANT MYSTERY that I the little person will never get.
It’s the same reason that the Emperor wants you to have a degree in tailoring before you say he has no clothes. The entire point is to do whatever it takes to obscure what is obvious to the most casual observer - “economists” are making it up as they go; there’s no rigor to their field.
But remind me–why exactly is it that “everyone knows Marx was crazy and wrong?”
Mark,
Marx and Engels were not crazy, but mistaken on many points. One point was his underestimation of the corruptive influence of absolute power.
Through his advocating for the “dictatorship of the proletariat” and assuming it would fade away after it has rooted out all bourgeois capitalist sympathies and ideologies, this has allowed many ruling elites in communist states to maintain their privileges and perks of power while the rest of the population worked as effective serfs. Several family members and friends had the dubious privilege of working as those “serfs”.
Don’t know about you…but exchanging one form of tyranny for another is not a viable means of bringing about a better world.
I have a post at my blog that sort of touches on this a little bit. Any feedback would be appreciated as it’s my first attempt at a substantive piece.
The problem flows from big government, not from free market capitalism. If the government is small, there is little incentive for corporations to seek out favors (”rent-seeking”), and little opportunity for rent-seekers to fleece the taxpayers. What is happening right now in the US IS a fleecing of the taxpayers: war drives up the price of oil, oil companies who control oil get rich, campaign money flows accordingly. Fractional-reserve banking encourages debt, central banks literally create money and loan it to banks, who in turn re-loan it like it was real…every day is christmas at the Federal Reserve. Add to that special sessions of injecting extra liquidity to bail out institutions that are deemed too big to fail (too big campaign contributor to fail). The resulting explosion of money leads to boom-bust economic cycles; we are about to bust big time.
We ARE being robbed. The government borrows money from foreigners to finance the war. The borrowed money flows to big corp USA. The taxpayers have to pay it back sometime or another. The continued borrowing causes devaluation of the US dollar (inflation), robbing us of buying power. What do the foreigners do with their dollars? They buy US businesses. Dubai now owns 20% of the NASDAQ exchange. When we are all working for foreign-owned businesses, the fruits of our labor will be exported to pay off the debt. That is how it works.
But it is not the free market system that is robbing us. It is big government. The free market system creates wealth; only government can redistribute it. Government DOES have a duty to protect the commons.
I’m glad someone mentioned the stock market because as they enlighten you, I’d like to be enlightened as well. My question is: exactly what is the difference between looking at the stock market to see how the economy is doing and looking at the football pool in Las Vegas to see how the NFL is doing?
Seriously, I really want to know.
Economics is the science of self-fulfilling prophecies, that’s why it seems so wrong to the rest of us non-economist types. We expect that a science will follow certain rules and when those rules don’t work a new theory is created. In economics, examples that don’t follow the rules are thrown out instead of leading to a paradigm shift.
It’s not that economics is some great mystery, it’s that it’s just wrong. If I were to drop a brick off a building and 75% of the time the brick hits me in the face instead of falling to the ground, I would have to rethink the theory of gravity. But economists would just say that the brick wasn’t following the rules and throw out the 75%.
Chet,
Economists love to believe they are the most rigorous of the social sciences because of their increasing heavy emphasis on the use of mathematically intensive models and the use of advanced math, especially at the graduate level. Funny how their analysis can get so narrow that they have a hard time accounting for factors hard to quantify economically such as a clean environment, national security, and cultural autonomy among other things.
One point of irony about economics as a field I gathered from talking to a few econ grad students. It seems econ Phd programs feel an average undergrad econ major does not adequately prepare one for entering their programs unless their mathematical preparation is equivalent to a math major. Several of those grad students were former engineering, math, or physics majors in undergrad.
Tim,
Nevermind that neo-classical economics is wholly antithetical to classical political economy in the tradition that ran from Smith to Ricardo and was abandoned in favor of marginalism precisely because of the very short trip from Ricardo to Marx’s critique of classical political economy.
Also, Veblen was anti-economist to the extent that the Neo-classicists have attempted to wholly monopolize the field and term of economics and have attempted, since the 1970s (with a great deal of success I’ll note) to systematically exclude Keynesians from the field, much less more radical understandings in the institutionalist or Marxian traditions.
What have the original mainframes got do with modern PC’s, the likes of which you’re using right now? Modern PCs came about through the development of the consumer market for computers rather than the government: the fact that computer manufacturers saw potentially millions of customers for their wares.
And just where did that huge consumer market, with its “potentially millions of customers”, come from?
I’ll spell it out for you. If not for the internet, I’d have absolutely no use for a computer. The government created that consumer market by creating that which makes pc’s useful for most of us.
It was also government investment for the initial stages of development and manufacturing that gave rise to a computer industry positioned to take advantage of a big consumer market. And I don’t use the term ‘take advantage’ loosely. F*ck them and their planned obsolescence.
Em said:
See, that’s why they’ll never be the ‘physics’ of anything. Richard Feynman, a great physicist, once said something like how if you couldn’t come up with an explanation that made sense to your grandmother, you didn’t understand what you were trying to explain. I think at the time, he was talking about a very obscure thing, indeed.
And it’s the same with biology. That can also be made comprehensible to people, even many aspects of it that relate to nothing the reader will ever see the direct evidence of because it’s either too slow or too small. Need an explanation of evolution? Cell biology? DNA? Germ theory? Selective serotonin re-uptake inhibition? Check. Can do. Biologists can explain these things in ways that make sense even to elementary school children.
But these towering geniuses can’t make the *study of human decision-making* comprehensible to other human beings who make decisions every day.
They’re not scientists. They’re the Wizards of Oz.
Most of the commentators here are amateurs, so I offer no apology for my own amateurish observation. These rich people that you claim are “loot(ing) the assets of the poor and the middle class…” have become rich by providing these very victims with something that they want. If you don’t want them to take up the wealth, you have the power to refuse to buy that Plasma TV, PC, I-pod, new car with all the gas to go in it, flight to wherever etc. etc.
By purchasing these products you directly contribute to the problem. The marketplace regulates itself - were the same product available in three places. at $10 dollars in the first two but at $5 in the third, the third place would do fantastically well and the first two would most likely go bankrupt. You are quite happy to take advantage of the third place’s prices, because there’s more money left for you, yet when the owner becomes mega-rich as a result of providing the likes of you such good value, you are up in arms about it. That seems to be a little unfair to me.
Private enterprise makes the people at the top very rich, but surely it enriches everyone’s lives. Would we be able to have this online conversation without the efforts of the (now very rich) pioneers of the internet? Would anyone have developed the internet, or mobile phone technology if they didn’t feel there was something in it for them? Of course not.
But I assume, seeing as you so passionately hate the idea of the wealthy becoming wealthier, that you don’t have a computer, or a cellphone, or a car? After all you wouldn’t want to contribute further to the problem would you? Obviously, though, that’s not true. You complain that you and your boyfriend can’t afford a similar house to your parents. I’d love to know why you think that owning a property is a right.
Another of your arguments against free market capitalism is that it caused the deaths of many people, notably in Chile. This is a strong point, but I’m sure you wouldn’t like to see how many people have died as the result of communism, socialism or a Middle East Dictator, because once again, foul as Pinochet was, the amount of bloodshed caused by capitalism is no more than a tiny speck compared to any one of the other three methods of government listed above. While no fan of the Iraq War, many of your comments on it are either too peurile or factually incorrect to mention. Your comment that “the Iraqi people have more nerve to fight back than Cheney and Rumsfeld thought…” is particularly telling, seeing as it is Iran and Syria that are doing the fighting back and the Iraqis (admittedly with a few exception) fighting side by side with the coalition troops.
I would also take issue with your comments on the tax burden. While undoubtedly true that many of Bush’s tax cuts have benefited the wealthy, especially at a corporate level, to infer that the working class pay more tax is plainly wrong, both as a flat figure and a percentage of income.
All that aside, the main premise that 1 or 2% owning half the wealth is a bad thing, is something I’d agree with. I also agree that the Treasury adding to Big Business’ coffers is also something to be objected to. The latter point, though, far from being an argument for greater government control and regulation, is surely an argument against it. I’m afraid on the poverty issue I agree with Tim Worstall - relative poverty and real poverty are often confused yet totally different. Relative poverty is inevitable in a free market economy yet not necessarily harmful to those in that bracket; real poverty is every government’s responsiblity and, as you say, a humanitarian tragedy.
Yet real poverty is at a lower level than ever. A roof over your head, basic provisions and acceptable conditions of living are readily available for 99.9% of us nowadays, usually with plenty of money left aside for a social life and luxury goods. Relative poverty now means not being able to afford to buy a house or a car, a TV or an I-Pod, not being able to take a holiday abroad. It is categorically not any government’s responsibility to enable people to do these things. You make some fair points in your post, but too often it seems that you are just yet another of these people who see rich people living great lives and spending big money, and, without ever considering how hard they’ve had to work to get there, wanting some of that for yourself.
You want to stop the rich getting richer, stop buying their products. Of course you won’t, because then it’ll cost you in the end.
Well, I know our resident libertarian nut is all for stratified social hierarchies, so the mild income differences that have traditionally existed between the blue and white collar working class shouldn’t insult him since he’s in love with the HUGE disparities between the superrich and everyone else.
Ya kinda missed my point. Which was that you have no special right to a level of income, nor should you have any expectation of a level of income, based on your being a white collar professional (as I think one or two commenters noted). You want to make more money? Deliver goods and/or services that others desire and will pay for. It’s not hard. It’s just not what you want to do.
And you’re upset that you don’t make what you think you deserve for doing what you think is important. You can do whatever you want, but, if making more money is what you want, try to sell something people want. Unlike you, and apparently others here, there are millions of young people with good paying jobs, houses, kids, vacations, etc. They figured out how to make money. That may not be your goal, which is fine - I’m not all that big on material goods myself - but your reference to your “status” as a white collar professional shows some ignorance about what is important if making money is your goal.
And working hard does not entitle you to make a certain level of income either. Who cares how hard you work making goods no one wants, or services no one needs. To use the old chestnut, who cares how hard you work making buggy whips? You don’t deserve to make money doing it.
GH, in the world you describe Bill Gates (or some other sufficiently grasping, amoral uber-capitalist) would be the monarch of America and all of use (even you) would be serfs working for him.
Saying something as stupid as “Well, don’t buy anything,” makes as much sense as the wingnuts on the other thread complaining that no one should have a child unless they can guarantee the child will never have a major medical crisis that will cost millions to help.
You may long for the Golden Age of the Robber Barons, but the rest of us live here too, are just as human as the top 1%, and are at least as deserving of respect and support from our fellow citizens as they are.
When I was born into my lower-class, blue-collar family, I did not agree to be treated second class for the rest of my life. And I resent in the extreme when some asshole starts talking like everything shitty that has ever happened to me, and those like me, is my own fault because I didn’t follow your (impossible) prescription: “If you don’t want them to take up the wealth, you have the power to refuse to buy that Plasma TV, PC, I-pod, new car with all the gas to go in it, flight to wherever etc. etc.”
Why don’t you just add in “Don’t buy food, don’t live in a house, don’t wear clothes” while you’re at it?
Are you related to Marie Antoinette by any chance? Are you a (evil) character from a Dickens novel? Is your last name Bush by any chance?
You claim the book is “a must-read for anyone interested in what caused the ongoing global economic catastrophe that’s spreading poverty…”
Perhaps you are unaware of a recent United Nations report (United Nations! Not some right-wing think tank) entitled State of the Future 2007. It recognizes the good and the bad. It acknowledges the income gaps which have concentrated significant wealth in the hands of a small percentage of people.
But it also observes:
• “People around the world are becoming healthier, wealthier, better educated, more peaceful, and increasingly connected and they are living longer.”
• “The global economy grew at 5.4% in 2006 to $66 trillion (PPP). The population grew 1.1%, increasing the average world per capita income by 4.3%.”
• “At this rate world poverty will be cut by more than half between 2000 and 2015, meeting the UN Millennium Development Goal for poverty reduction except in sub-Saharan Africa.”
Sorry to confuse the issue with facts, but that is hardly consistent with “spreading poverty.”
Also, representing Milton Friedman’s views by quoting a purported expert (“Millibank Fellow”) as saying, “Friedman equated the right of the wealthy to stomp all over the working class with ‘freedom,’” is sloppy at best, intellectually dishonest at worst. I defy anyone to cite a quote or any other evidence that Friedman believed any such thing.
I think being a fat while male wearing a suit is the only real qualification necessary to discuss economic policy.
I’m with Amanda here, our money definitely doesn’t purchase what it used to. This is hardly radical news - newspapers the world over have been commenting on how young people today are putting off the big life decisions because they can’t afford it.
This is a fairly well known statistical fact - you can find lots of articles from Australian newspapers about how young Australians can’t afford to enter the housing market. It’s not that they aren’t satisfied getting a house in the bottom 10th percentile when their parents got one in the bottom 45th (as someone observed earlier). They can’t get a house.
As an example of this, I know a middle-aged woman who bought her first apartment in Sydney in a very spiffy suburb when she was 23 years old, using her unemployment payout from her first full-time job. That was 30 years ago. Living in Sydney as a Statistician on an above-average wage, I could not buy an equivalent apartment an hour and a half from the city centre on an unemployment payout (which of course in the modern labour market I wouldn’t get). I would have to save for years for that.
Another newspaper summarised it simply - in the 80s a mortgage payment for one month on a decent apartment in Sydney was 1/4 of a flight to London. Now it is a flight to London. Even though air travel has become cheaper in the last 20 years, housing has become much more of a luxury.
Also Tim Worstall, “Libertarian” et al, answer this: if the capitalist system is working so well, how come the price of food has increased 50% in the last 6 years (WFP stats)? We all see this in fresh fruit and vegetables daily, and if it is not so marked here, how bad must it be in those countries where ordinary incomes don’t stretch much further?
This system is fucked, and only an idiot would deny it. A large reason it is fucked is that our rich, middle-aged leaders are taking away from young people the benefits they themselves received, so that they can have bigger tax cuts and cheaper cafe service now that they don’t need childrens’ health and education services.
Further to that, it’s a regularly reported fact in Australia - housing affordability is lower now than it was when interest rates were 19% in the 80s. Someone is robbing us, and it isn’t anyone else in our social class…
You claim the book is “a must-read for anyone interested in what caused the ongoing global economic catastrophe that’s spreading poverty…”
Perhaps you are unaware of a recent United Nations report (United Nations! Not some right-wing think tank) entitled State of the Future 2007. It recognizes the good and the bad. It acknowledges the income gaps which have concentrated significant wealth in the hands of a small percentage of people.
But it also observes:
• “People around the world are becoming healthier, wealthier, better educated, more peaceful, and increasingly connected and they are living longer.”
• “The global economy grew at 5.4% in 2006 to $66 trillion (PPP). The population grew 1.1%, increasing the average world per capita income by 4.3%.”
• “At this rate world poverty will be cut by more than half between 2000 and 2015, meeting the UN Millennium Development Goal for poverty reduction except in sub-Saharan Africa.”
Sorry to confuse the issue with facts, but that is hardly consistent with “spreading poverty.”
Also, representing Milton Friedman’s views by quoting a purported expert (“Millibank Fellow”) as saying, “Friedman equated the right of the wealthy to stomp all over the working class with ‘freedom,’” is sloppy at best, intellectually dishonest at worst. I defy anyone to cite a quote or any other evidence that Friedman believed any such thing.
(Sorry if this is a duplicate - I posted it once and it didn’t seem to show up.)
gator80, how do you know that is because and not despite the efforts of the world economic system?
MikeEss
My answers may surprise you. I suppose I would be middle class, aged around 30 and I do not yet own my own home, and I earn the USD equivalent of around $25,000-$30,000 p.a. and work pretty hard for it. In other words, well below the mean and median levels of income, possibly even in some peoples’ version of poverty.
I meet rich and privileged people in my line of work every day and often wish I had their financial power. However, I trust that with hard work, some luck maybe and good decision making I may one day rise further towards the top of the ladder. I certainly don’t share your resentment towards the uber-rich, for the reasons I gave above. If I could invent a product that everyone wanted to buy off me that would make me rich, I’d do it tomorrow. But I am where I am for a reason, and I don’t see how punishing those who’ve done better than me is going to make my life any better. But there again I’m not bitter, envious or jealous. My life is comfortable and largely enjoyable - though finances are tight.
You say that my prescription is impossible, but most of it isn’t really. You don’t have to fly abroad, or own a PC, or top electrical equipment. These are not your rights. You say “Why don’t you just add in “Don’t buy food, don’t live in a house, don’t wear clothes” while you’re at it?” Well, of course you have to buy clothes and feed yourself - something which I’m sure you’re able to do. But you don’t have to buy your food from Walmart and wear clothes from top brand names and major high street stores, where you can be sure that the fat-cat company directors are raking in millions for themselves (with the full approval of their shareholders of course). Instead you can buy food from the local store round the block, and clothes from small retailers - you’re covering the essentials, but then at least you’re not lining the pockets of big business. The owners of these small stores are probably feeling the pinch as well.
“You may long for the Golden Age of the Robber Barons, but the rest of us live here too, are just as human as the top 1%, and are at least as deserving of respect and support from our fellow citizens as they are.”
I don’t long for this at all, indeed I agree this 1%/99% split is a problem that needs rectifying in some way, but I don’t buy the respect and support thing at all. As I say so long as you can live, work, eat and have a roof over your head, medical care if you become ill, and protection from the Police if someone commits a crime against you, then I don’t see why anyone owes you support. It is the Government’s responsibility to ensure that no-one is denied those basic things listed above. Foreign holidays, cable TV, a top Hi-Fi system, a top PC and the ability to go out and get smashed on a Saturday night are yours if you are able to. And I just don’t buy this respect thing. Even when I was unemployed and totally broke a few years back, most people respected me. Those that didn’t weren’t worth bothering with. However, if you walk around with a giant chip on your shoulder looking enviously up at those who’ve done well and talk about how you deserve support so you can live the same way, well that doesn’t go down well with everybody.
“GH, in the world you describe Bill Gates (or some other sufficiently grasping, amoral uber-capitalist) would be the monarch of America and all of use (even you) would be serfs working for him.”
Bill Gates provides a valuable service to billions of people worldwide - a product and service they choose to take advantage of - and he makes excellent money for it, money that people are happy to pay. He also gives massive amounts to charities. Good luck to him. And your comments on serfdom are plainly ridiculous.
You imply that shitty things have happened to you in your life. I am sorry to hear that, but doubt that they have happened as a direct result of rich people lording it over you.
“As I say so long as you can live, work, eat and have a roof over your head, medical care if you become ill, and protection from the Police if someone commits a crime against you, then I don’t see why anyone owes you support. It is the Government’s responsibility to ensure that no-one is denied those basic things listed above.”
GH, you seem to be missing a major point here: In America, the government (as envisioned by the current Cheney/Bush junta) has no responsibility to the average citizen at all.
Bill Gates? Yes - he and Microsoft can have a legal monopoly here forever as long as there are sufficient Republicans in office.
Paris Hilton? The Reichwing needs her as a diversion, as much as anything. And they make sure she doesn’t need to pay taxes.
Me or people like me? We’re on our own. We aren’t Halliburton stock holders, Microsoft stock holders, Blackwater stockholders, etc.
BTW, those things you mentioned above, like housing, food, a place to work, police protection - those thing ARE “support”. I’m not asking for a check, and most people I know aren’t either, but I do believe there needs to be a social safety net…
The proles do not count in today’s America.
“However, I trust that with hard work, some luck maybe and good decision making I may one day rise further towards the top of the ladder. I certainly don’t share your resentment towards the uber-rich, for the reasons I gave above.”
Again GH, in America things are different. We’ve all been raised on myths like the non-existence of classes in America, how anybody can start in the mailroom and work their way up to being CEO, stories about all the plucky hard-working people who’ve turned a good idea into an immense fortune, blah blah blah.
While those things are not 100% fabrications, the truth is far more bleak. Class mobility in the US is very low. There are a handful of people who’ve ever started and the bottom of a company and ended at the top. Most of the time when somebody has a great idea, it’s stolen by somebody else with stronger lawyers…
I would love to believe in the myths, but I’ve lived here too long…
GH,
Yes, well, except for that whole fascism thing that grew up directly as the liquidation of democracy in defense of capitalism against widespread social unrest and radical political agitation in Germany, Italy, Spain, etc. Or do you wish us to simply continue forgetting that fascists got their start beating communists in the streets?
Or perhaps the misery of the English enclosure movement where millions were pauperized on the brink of starvation–and then dealt with under the poor laws!– so as to liberate the English peasantry from the land so that they could be structurally coerced into wage-labor by their empty bellies?
In light of such horrors it seems that Pinochet, the El Salvadorian death squads and the ’structural adjustment’ packages which have immiserated millions are but a drop in the bucket.
But of course nevermind that! We must focus instead on a handful of nations run by brutal dictators claiming the the name of communism–if not its form, policies, or spirit–as demonstrating the horror that would await the vast majority of the earths population who continue to exist at or near subsistence levels to the benefit of the owners of economic property.
Good question by Flashheart, and one of the problems often encountered in economics. How do we know what would have happened in an alternative scenario?
A couple of things. First and foremost, there is a lot of evidence that freedom and free enterprise are spreading. As quoted in the same UN report I referenced earlier, “According to Freedom House, the number of free countries grew from 46 to 90 over the past 30 years, accounting for 46% of the world’s population, and for the past several years 64% of countries have been electoral democracies.” That refers to democracy but the same trend is occurring for capitalism-based economies. Correlation is admittedly not causation, but the implication – more freedom, more prosperity - is pretty clear.
Second, your good question begs another good question, which is what would be the dynamic where the “efforts of the world economic system” act to restrain growth, yet growth occurs anyway?
GH:
A roof over your head, basic provisions and acceptable conditions of living are readily available for 99.9% of us nowadays, usually with plenty of money left aside for a social life and luxury goods. Relative poverty now means not being able to afford to buy a house or a car, a TV or an I-Pod, not being able to take a holiday abroad.
As someone who lives and works in center city Philadelphia, at a nonprofit serving some of the poorest population centers, I respectfully submit that you are smoking crack.
Poverty today means the same as it always did: that you fucking cry when your kids go hungry. That you wear clothes that don’t fit anymore because that’s what you have. When you stay in a horrible neighborhood and fear for your family because thanks to gentrification and the housing boom, there’s nowhere else you can go. Poverty is when you sleep under a goddam bridge. I know plenty of people who do.
I’m going to stop typing, because I’m too angry.
Bill Gates provides a valuable service to billions of people worldwide - a product and service they choose to take advantage of - and he makes excellent money for it, money that people are happy to pay. He also gives massive amounts to charities. Good luck to him. And your comments on serfdom are plainly ridiculous.
GH,
As someone who has worked with computers since the mid-1990’s, this statement above reveals plenty of ignorance about Bill Gates’ business practices and motives.
Contrary to popular belief fostered by the mostly technologically illiterate MSM and the current socio-political climate, Bill Gates did not really innovate and work hard for the billions he had.
One big instance of that was when Apple’s computers came out with the graphical user interface (GUI) though their legally hiring people who worked on the defunct Xerox Parc GUI project versus the command-line interface of MS-Dos on the PC, Microsoft decided to copy this then innovative system and then called it “MS-Windows”. When they were hamstrung by Apple’s IP rights to the graphical user interface, Microsoft used convoluted, coercive, and ethically questionable legal maneuvers to effectively blackmailed Apple to drop their IP lawsuit in the late 1980’s even though most IP lawyers at the time felt Apple had an strong case.
Once this happened, Microsoft was effectively able to steal IP from another company that did more to innovate it and the rest is history. Microsoft Windows propelled Bill Gates and company into the big leagues. In the process, Microsoft strengthened its operating system dominance on the PC compatible and later leveraged this dominance to both force OEM PC builders to only bundle their operating system and software at the risk of severe punitive financial sanctions. This leveraging of dominance also included eliminating competition perceived to be looming threats by either buying them out or squeezing them out through ethically questionable tactics.
In fact, these monopoly-leveraging tactics was one reason why they were eventually investigated and found guilty of such practices in the US and the EU.
Unfortunately, the verbal slipup of the prosecuting attorney and the arrival of the Bush administration meant that the guilty verdict was effectively quashed in the US. The jury’s still seemingly out in the EU case. Interestingly enough, this was when Bill Gates started his philanthropy. In my view, this philanthropy was mostly motivated out of PR considerations, not altruism. Judging by how news of his philanthropy has overshadowed news of his company’s monopolistic behavior and continuing legal programs in other places like the EU, it is another example of Microsoft’s brilliant marketing and PR.
So in short, I cannot agree with your assessment that Bill Gates and Microsoft earned their money through fair hard work.
MikeEss - “There are a handful of people who’ve ever started and the bottom of a company and ended at the top.”
That is because that isn’t how capitalism works. One doesn’t rise to the top by being a cog in someone else’s machine, one rises by building one’s own machine. Bill Gates didn’t start in the mailroom at Microsoft, he started Microsoft. HP is called HP because Hewlitt and Packard started out making stuff in their garages, and sold it under their own names. HP then grew. Anyway, the road to the top of existing companies goes through an MBA program and a rolodex, not a mailroom.
Bill Gates, by the way, is a Democrat, not a fat-cat Republican. He never sought power. Microsoft only ‘came to Washington’ and started lobbying in response to the Justice Department crusade against them(which was driven and motivated by jealous rival companies, not dissatisfied customers - NETSCAPE was the ‘victim’ of Microsoft monopolistic practices, not customers. Microsoft can impose terms on computer companies, because customers want their product, and not someone else’s OS). Had they been left alone, they would have left DC alone. He has given to charity more money in the past 5 years or so than the US has spent on foreign aid - some PR. Republicans have nothing to do with him being the richest man in the world, and have nothing to do with keeping him there. There has been a lot of ignorant crucification of Gates and his company. (McDonald’s effect - Mickey D has better employment practices and no more unhealthy food across the board than most of its rivals, but the clown has a big red target on his chest because he’s the biggest player in the market.) Corporate socialism, not capitalism, by the way, involves thinking it cheating, somehow, if Microsoft looks at what Apple did right, and imitates them. Corporations like trying to make the case that it is evil and subversive to do that, and using government power (ludicrous levels of copywrite, patent, trademark protection) to enforce it. Real capitalism calls that imitation progress. (What, was Ford supposed to have a monopoly on the mass-production of cars, because he invented it? Toyota, Honda, GM - evil cheaters. You deserve cars in any color you like, if you like black.)
Someone up there asked how much an Economics education at high-class schools cost. The answer is, if you have the talent, pretty much nothing(other than not making the wage you would if you got a job) once you have your BS degree. PhD students at high-end universities routinely get full tuition waivers and either fellowships(free money) or assistantships(10-20 hour a week jobs acting as lackeys to professors or teaching intro classes), which are enough(barely) to cover expenses for a frugal, single person. Graduate education can cost - law school, medical school, business school are intensely expensive, not least because the degrees earned are extremely lucrative. (Free market in action.) Academic grad school is cheap for the students with potential - of course, given job prospects in academia (the primary job for PhDs in most fields), for most you get what you pay for. Economists have non-academic prospects, so an Econ PhD can be a bargain, if you have the talent and drive to do it. Rule of thumb in the sciences/social sciences for PhD applicants - if they don’t offer you a free ride, they don’t think you have the chops to finish the PhD - think about aiming lower.
Housing - In Australia, the typical house is 6-8 times the annual salary of the typical household. Demographia rates most major metro areas in Australia as “Severely unaffordable”. So yeah, Sydney is pricey - about 8 times median income for the median house, against 3 or so in the non-coastal US. (Austin is 3.1) Sydney is comparable, for Americans, to San Jose, and more expensive for housing than New York. 90% of the rise in cost in Australia is a result of land inflation, which screams ‘Government Policy Breakdown’ in a country with as much open space as Australia for development. Land use restrictions are the problem, not something inherent to capitalism.
Amanda - your dad (I assume from demographics he’s the firefighter) had a high risk/high reward type of job. So he was paid. An Austin firefighter today would make about 58k per year after 3 years. The median Austin home runs about $175,000, which is within the range of a firefighter with a working spouse(I’m imputing about 20k per year to a bank teller position) at today’s interest rates - and would be considerably larger in square feet than the one your parents bought in the ’70s. Your financial aid officer position, I suspect, was considerably down the economic spectrum from there - working academia in a non-teaching position really constrains earning potential. I’d guess that your boyfriend at best probably made about that the same as the firefighter, though his title was sufficiently generic that his income could have been anything. Still, with a few years worth of stable income (which your parents probably had by the time you were born), a nice sized place in Round Rock or Pflugerville, or in South Austin south of Ben White, would be within range for a couple earning 60-80k per year (your parents’ range, and I’m guessing yours). You could probably trade distance for size and get a ‘cozy’ place closer in, maybe even in the Arboretum area. Hyde Park is out of the question, but that neighborhood isn’t ‘middle class’ anymore, it has gentrified. So has Travis Heights. West Austin/Westlake/Bee Caves aren’t really middle class, and expansion is constrained there by the golden-cheeked warbler and black-capped vireo, and water regulation.
People who think the ’70s were better than today are romanticising their childhood. Cancel your cable TV and Internet, stop eating out, and live in a 1100 sf house, like your parents did. You’ll have PLENTY left over on your parents’ inflation-adjusted wage. (That 175k house in Austin? 32k in 1970. That is the amount of inflation we’ve had. I’ll bet inflation-adjusted dollars that you can get a better education on $10.62(an inflation-adjusted $2) than you could on $1 in 1970, cpp.)
Other orange - real poverty does suck, yeah. Being unable to feed one’s kids isn’t relative poverty, though, it is honest to god absolute poverty. What is lost in the “Blue state/Red state” argument is that the blue states look rich, but are often quite poor, once you adjust for cost of living. New York and Pennsylvania have a higher median income than most red states, but once you adjust for cost of living, Brooklyn and Philly start looking as bad as Sparta, Mississippi. $20k is a livable, if sparse, income in the rural South for a family - that is, relative poverty, but it just isn’t doable in the urban north. The Feds don’t adjust for cost of living, so New York ends up giving Georgia money, even though Georgia is rich and New York poor. (One argument for getting the feds out of this function, btw - the states should know better the local situation.)
GH & Rvman,
If you examined the publicly available accounts of how the Apple IP lawsuit against Microsoft went down in the late 1980’s….what Microsoft did went well beyond mere “imitation” as you implied. While this behavior may be acceptable to the MBA corporate set, it really undermines the credibility of Microsoft’s self-proclaimed status as technical “innovator” in the eyes of most older hardcore computer programmers/IT techs.
I should also add that there is a question of whether most consumers of personal computers really had a choice with Microsoft leveraging their operating system monopoly on the PC compatibles that dominated the corporate world mainly because of IBM’s reputation in the business world rather than evaluation on technical merits.
Considering computers were much more expensive and difficult to master back then, most consumers of personal computers went with the type they mastered and used for work so they do not have to master multiple operating systems with different interfaces. As most corporations used PC compatibles, they became dominant and with them…MS-Dos and later, MS-Windows.
While Apple was in the market, their product’s GUI interface and counter-cultural institutional culture turned most of the stodgy 80’s corporate types off as most dismissed the Apple as a “toy” for creative/artistic/counter-cultural types.
With the PC compatible gaining dominance in the mid-late 80’s, Apple and other personal computing companies were marginalized or edged out. When computers started to become mass consumer items in the mid-1990’s most people went with the PC compatible and MS-Windows as that was what was “standard” in most corporate workplaces and thus, mastering it was necessary if they wanted to have jobs which increasingly required such skills. It also does not help that marketing and widespread technological ignorance has made it so the average computer consumer felt computers by definition were PC compatible with MS-Windows.
With these factors under consideration, I am not sure these consumers were making a free unfettered choice considering most were either unaware of the alternatives….or were corralled by the need to gain employable skills in a mostly PC/Windows dominated environment. Doesn’t help that most consumers understandably have a hard time evaluating such products considering the difficulty most have with technical minutiae.
As for whether consumers were victimized, I’ve personally witnessed many computer consumers and corporate higher-ups lament the crappy quality of the Windows operating systems that were buggy, ridden with security holes, and crash-prone. I’m betting millions of dollars of lost productivity was incurred from those problems. As there was no real viable alternative back then with the overwhelming dominance of the PC compatible and MS-Windows….it took years of complaints from the IT/computer tech community coupled with increasing competition from Linux (Hard to beat a free technologically superior and increasingly easier to use OS) and a resurgent Apple and its BSD unix based OSX before Microsoft finally got around to fixing those problems and placing more importance on security. Even so, security holes and bugginess is still a problem with the gravity combined with previous history being so bad that a majority of corporate users finally stood up and demanded that XP sales and support be extended beyond Microsoft’s plan to obsolete the OS. As bad as XP was, it was far more mature with bugs and holes corrected to the point of usability than Vista.
Unless you’re an IT professional whose livelihood depends exclusively on servicing Microsoft based operating systems and hardware, a technically illiterate corporate type whose mentality is “no one ever got fired for going Microsoft”, a shill, or someone who sees nothing wrong with unethical monopolistic practices…one has to admit that Microsoft’s growth is rooted in constraining competition and free unfettered consumer choice.
As for whether internet access is a luxury, I would have agreed with that line of thinking if we were living in the early to mid-1990s in the era of 2400 baud modem access through terminal to a unix-based account. It is a necessity, however, especially if you want to search/apply for employment, continuing ed to gain job skills, and/or utilize government services in an increasing number of areas. The few people I know who lack internet access due to poverty are further hobbled by the fact their lack of a computer and internet access not only prevents them from searching/applying for employment, but also gaining the computer skills critical for an increasing number of entry-level/”low-skill” jobs.
Cancel my cable and internet? And allow my children to be part of the Technology Gap? Allow my daughter’s grades to suffer b/c most of her teachers require her papers to be turned in on disc? Go to the library you say? We tried that. There’s a 45 min. limit and then you have to wait another hour or more to get on the computer again. So, that doesn’t work when you have a 5 page research paper due. We never eat out. I can’t even begin to tell you the last time we had even fast food let alone a real sit-down restaurant dinner.
I wish my house had 1100 sq ft! I live in a 1940’s 2bd bungalow with a converted garage. I live in a poor area of town. We have no credit cards whatsoever.
So, do I have PLENTY? Please. I have much, much less than my parents did. As other orange said, you’re smoking crack.
Perhaps we should remove statist obstacles such as enforceability of contracts, recognition of private property rights by the polity, and the monopoly of force enjoyed by the state, and see how our “free market” works.
I believe we’ve got some good examples of that in Iraq- one of the “free”-is places on Earth as far as that goes.
Anyway, perhaps some of this might be familiar to the econ-geeks in the room…
http://en.wikipedia.org/wiki/Pareto_efficiency
Under certain idealised conditions, it can be shown that a system of free markets will lead to a Pareto efficient outcome. This is called the first welfare theorem. It was first demonstrated mathematically by economists Kenneth Arrow and Gerard Debreu. However, the result does not rigorously establish welfare results for real economies because of the restrictive assumptions necessary for the proof (markets exist for all possible goods, markets are perfectly competitive, transaction costs are negligible, and there must be no externalities).
In other words, people who think this can be applied to the markets we have on THIS planet need to go back to their home planet…
Going on…
Pareto efficiency does not require an equitable distribution of wealth. An economy in which the wealthy hold the vast majority of resources can be Pareto efficient.[citation needed] This possibility is inherent in the definition of Pareto efficiency; by requiring that an allocation leave no participant worse off, Pareto efficiency tends to favor outcomes that do not depart radically from the status quo.
Amartya Sen has elaborated the mathematical basis for this criticism, pointing out that under relatively plausible starting conditions, systems of social choice will converge to Pareto efficient, but inequitable, distributions.[citation needed] A simple example is the distribution of a pie among three people. The most equitable distribution would assign one third to each person. However the assignment of, say, a half section to each of two individuals and none to the third is also Pareto optimal despite not being equitable, because none of the recipients is left worse off than before, and there are many other such distributions. An example of a Pareto inefficient distribution of the pie would be allocation of a quarter of the pie to each of the three, with the remainder discarded. The origin of the pie is conceived as immaterial in these examples. In such cases, in which a “windfall” that none of the potential distributees actually produced is to be allocated (e.g., land, inherited wealth, a portion of the broadcast spectrum, or some other resource), the criterion of Pareto efficiency does not determine a unique optimal allocation.
The short version of this is that if we devise a perfect free market economy dictating that 99 out of 100 live in misery and 1 person lives like Bill Gates… it’s perfectly fine, as far as being being a potentially optimally functioning free market economy.
Oh, and then there’s this…
http://en.wikipedia.org/wiki/Liberal_paradox
What can society do, if the paradox applies and no corresponding social decision function can handle the trade off between pareto-optimality and liberalism. One sees that mutual acceptance and self-constraints or even contracts to trade away actions or rights are needed.
I believe we call those some of these things “governments” and “taxes”- possibly even things like “estate taxes” or “social welfare programs”. In other words, rich people accept that having poor people getting some claim on the collective output of society to keep them from abject misery is more preferable than unlimited acquisition of that output through private property rights.
rvman at 136 indicates the shallowness of modern conservative economic thought, and the disingenuity of free market “thinkers”, with this claim:
Land use restrictions are not the problem, and neither is space relevant. It is cheaper to rent in Hiroshima, Japan, which has a much higher population density. The reason Sydney - and all other major Australian cities - is so expensive to buy a house in is that the government has encouraged speculation in land. Negative gearing tax concessions, first home grants, low interest rates (i.e. printing money) and tax cuts for those who can most afford to buy a home, have forced the price of housing up from 3 times the median income to 6 times in just 10 or 15 years.
The free marketeers want to claim this is government failure, but they are lying. This is government success. The government aims to set up a “market” which favours the rich in robbing the poor. This is what this “disaster capitalism” idea is based on - not the idea that free markets are right or wrong, but that our so-called defenders of the free market have sided with government to stack the market so it is only easy to enter and exploit if you are rich.
Libertarians want to turn this into the standard libertarian lefty-bashing “free markets good, social democracy bad” debate, but this is not the point. The point is that free marketeers and conservatives have ganged up to make markets unfree, and distort them in favour of the rich in the name of free trade.
Also Tim or someone else earlier mentioned John Quiggin. His latest post at Crooked Timber is about this:
http://crookedtimber.org/2007/10/17/bad-teeth/
rvman- Yes, it’s true, $20,000 goes further in places with less price inflation. But here’s the thing- jobs pay more in the cities than they do in other areas. A pink-collar receptionist job in Philly might pay $22,000-28,000; the same job in Ohio might pay $16,000-20,000. So it’s not simply a matter of saying, well, I’ll take a $30,000 job in a rural area and live like a king ! Those jobs often simply aren’t there. It’s making a choice between higher pay in an urban center (that often has better transportation and more social activities) or a lower-paying job in a less expensive location.
Across the board, people suffer, unfortunately.
Christina- you’re so right about the technology gap. Hundreds of thousands of the poorest kids don’t have the skills and equipment that society practically demands they have (and of course, society isn’t willing to provide it, either.) Schools require that stuff, but many don’t offer the resources to meet the requirements. It’s ridiculous.
By the same token, my aging father is now faced with needing to learn computer skills for the job he’ll have to take after retirement. I want to cry just typing that, but that’s how it is. The technology gap is so real, and such a hurdle for many people. Anybody saying “just cancel your internet” probably hasn’t checked in with reality in the last six years.
Anybody saying “just cancel your internet” probably hasn’t checked in with reality in the last six years.
Christina,
Agreed. The thing with people who make this assertion is that either they have no clue as to the critical utility of the internet as a way to function and participate in our increasingly information based economy or are stuck in the era (Pre-mid 1990s) before the computer and the internet became commonly accessible mass consumer products.
In many places, if you want to apply for work/have the skills for work, you need a decent computer with current software and internet access. Heck, in some localities, you need the internet to apply/access state and local government services like unemployment, license renewal, etc as these institutions want to cut back on the expense of providing and processing handwritten forms.
Sorry..other orange…just realized that was your quote.
There are computer labs in my kids’ suburban schools (kind of suburban…it’s somewhere in between urban and suburban.) the problem is that the kids can’t do research on them with the nanny net restrictions, there often aren’t enough for everyone in the class to have one and they have very little time, say 15-20 minutes/kid on the machine. The software is often outdated as well.
We’re paying through the nose for our computer but I can save money since I work for a university–I can get things like Office Suite for $24.00–once.
Here’s the other thing that keeps coming up. “cancel your cable”. Well, we bundle it with the net. We have a 27″ TV, and just the one. We do not go to the movies, we do not go to bars, we do not go to concerts, plays, we’ve never had a vacation. The cable is our only form of entertainment at all. Compared to how much folks in higher tax brackets than ourselves spend on entertainment, that little $40/mo is nothing. And we have to have some kind of entertainment for Cods sake.
Christina,
Out of curiosity, what kind of computer are you running. Having been in a situation of financial scarcity growing up and lucking out by getting my first computer as a gift from an uncle, I can somewhat relate to your situation.
It is one reason why I have used my computer skills to find abandoned surplus computers in my area, fix them up, and give them away to people who need a machine for basic office and internet applications.
Oh thats just ducky, another book I should read.
I never thougth Milton Freidman did us that much of a favor anyway.
Praxis
“But of course nevermind that! We must focus instead on a handful of nations run by brutal dictators claiming the the name of communism–if not its form, policies, or spirit–as demonstrating the horror that would await the vast majority of the earths population who continue to exist at or near subsistence levels to the benefit of the owners of economic property.”
I was thinking more about the USSR and China, hardly basket cases run by a passing dictator. How many deaths did Communism bring there? And for what quality of life?
“Yes, well, except for that whole fascism thing that grew up directly as the liquidation of democracy in defense of capitalism against widespread social unrest and radical political agitation in Germany, Italy, Spain, etc. Or do you wish us to simply continue forgetting that fascists got their start beating communists in the streets?”
Fascism was what caused the deaths, not free market capitalism. Pinochet’s coup was a reaction to perceived wrongs from Allende’s government. So if Capitalism caused Fascists to kill millions, then Allende caused Pinochet to do the same. Or maybe you’re equating fascism and capitalism? Your post does not make that clear. Remember that NAZI was short for “National Socialist”.
“Or perhaps the misery of the English enclosure movement where millions were pauperized on the brink of starvation–and then dealt with under the poor laws!– so as to liberate the English peasantry from the land so that they could be structurally coerced into wage-labor by their empty bellies?”
That did cause bloodshed and death around 500 years ago, and did set us on the way to individual property rights. The poverty bit is not so clear - the enclosure movement resulted from many years of poverty largely brought about by the plague and more latterly, Henry VIII’s dictatorial mismanagement of the country’s finances. It may be fair to say that the enclosure movement failed to relieve poverty, but to say it caused it is probably unfair. In conclusion, whilst not the most distinguished part of England’s history, this can hardly be described as causing death on the scales of Communism or Nazism (or even anything comparable to), nor can it be attributed to modern free market capitalism.
Exholt: Many interesting points - I admit to being largely ignorant on Microsoft’s court proceedings. I do not suggest that big businesses are saintly, and it is the duty of every Government to curb their propensity to intimidate in order to get their own way - this is an area that the market cannot control, and, sadly, that the State controls inadequately.
Another Orange: “Poverty today means the same as it always did: that you fucking cry when your kids go hungry. That you wear clothes that don’t fit anymore because that’s what you have. When you stay in a horrible neighborhood and fear for your family because thanks to gentrification and the housing boom, there’s nowhere else you can go. Poverty is when you sleep under a goddam bridge. I know plenty of people who do.”
I am forced to bow to your superior knowledge on this one, but fear that your comment on “smoking crack” is one that could be attributed to some of these peoples’ situation. I also fear that these people have gotten into this situation by overborrowing in order to try and live a millionaire’s lifestyle. Both the drug and the credit issues have been swept under the carpet for years and need to be addressed. Credit is another area that the market cannot regulate for itself because of human fallibility. I would still be very surprised if Americans who work or look for work, live their lives responsibly and legally, and live within their means have kids starving and underclothed or are homeless. I just can’t see it, though I may be wrong.
“Also Tim Worstall, “Libertarian” et al, answer this: if the capitalist system is working so well, how come the price of food has increased 50% in the last 6 years (WFP stats)?”
I would be absolutely amazed if “food prices” have risen by 50% in the last 6 years. Astonished.
I know that corn in the US and wheat in Europe have risen by more than that but that’s a result of the entirely insane ethanol and biofuel programs. That is, an increase in Govt control of the economy.
It’s the interference in the free market system (which is not, BTW, the same things as a capitalist system) which is causing the problem there.
Making excuses for the practice of disappearing, which was not limited, as GH is implying, to Chile, but was practiced in all South American countries that had military juntas to enforce “free market” capitalism. Next from GH: How Nazis were really good guys, and the tactics they used to enforce the state-corporate merger weren’t so bad. At least the gas chambers weren’t socialized medicine.
That last comment by Amanda Marcotte is disgraceful. As I am sure she understands, resorting to personal attacks just gives the impression that one has run out of arguments. GH spent a lot of time crafting his posts and has been nothing but civil. Beyond which, he is generating interest and traffic in your site. And you somehow find it appropriate to call him a Nazi??? I guess that is easier than responding to his arguments.
“That last comment by Amanda Marcotte is disgraceful.”
How DARE the owner of this blog say what she wants in response to GH’s comments. After all, he’s driving up her traffic!
GH only said: “Fascism was what caused the deaths, not free market capitalism. Pinochet’s coup was a reaction to perceived wrongs from Allende’s government. So if Capitalism caused Fascists to kill millions, then Allende caused Pinochet to do the same. Or maybe you’re equating fascism and capitalism? Your post does not make that clear. Remember that NAZI was short for “National Socialist”.”
First, the phrase “Socialist” in Nationalsozialistische Deutsche Arbeiterpartei does NOT mean anything like what is called “socialism” over here. This is similar to the way the CDU (Christlich Demokratische Union Deutschlands) or Christian Democratic Union is not really like our Democratic Party.
Second, the blending of Nazi political power with the needs and desires of German capitalists made them virtually indistinguishable. When tanks, airplanes, and ships/submarines (and lots of Zyklon B) were needed, there was a ready and eager list of German industrialists to provide everything Hitler needed, and more. In fact, the peculiar symbiosis between fascist politics and capitalism is a distinguishing feature of fascism, as opposed to communism where it expected that there will be little to no private ownership of anything.
Third, Amanda did not call GH a nazi, she just projected that he would defend nazi practices. Not. The. Same. Thing.
GH is trying to say that capitalism is entirely blameless for anything bad that has happened in history. Amanda is just calling him on the bullshit.
But I’m sure you knew that already…
“Making excuses for the practice of disappearing, which was not limited, as GH is implying, to Chile, but was practiced in all South American countries that had military juntas to enforce “free market” capitalism.”
I think you’ll find that “disappearing” is a commonplace of any dictatorial society, whether fascist, communist, plain strongman or tribal variety. That’s a feature of a dictatorship, that people who disagree with the people doing the dictating get imprisoned or killed.
There’s nothing specific about it to a dictator following free market or any other economic policy.
It’s also, for anyone versed in economics, hilarious to see the other Latin American military dictatorships being described as “free market”. Peron in Argentina, the various Generals in Brazil, followed something called import substitution: very much the opposite of a free trade, free market prescription of the type that Friedman (or I) would advocate. In fact, their economic policies were much closer to those of Chavez in Venezula or Morales in Bolivia now.
I’m going to tacitly agree with Tim that “disappearing” is the result of dictatorships, not of the official ideological bent of the dictator. Everything else is utter nonsense and shows why the ridiculous term “free market” is meaningless; it means whatever the defender pretends it means, and its definition changes according to convenience.
Most of the Communist leaders that did horrible things to their own people were power-mongerers and when it became clear they could get even more powerful and even more wealthy by switching over to free market capitalism, they did it in a heartbeat. Witness: China, Russia. It just really points up to why it’s very silly to point to the excesses of Communism to defend an equally horrific pro-capitalism. Both economic extremes leave no checks and balances, both are unpopular, and both need to be shoved down people’s throats through torture, mass murder and other undemocratic methods.
Amanda Marcotte
MikeEss
Amanda assumes that because I state that capitalism has caused fewer deaths than other methods of government that I am a Nazi sympathiser.
MikeEss says that I said that capitalism is entirely blameless for anything that has ever happened.
Anyone who read my posts will know that neither is remotely close to the truth. I made some points, based as much as possible on fact, and offered an alternative argument. That Amanda and Mike have resorted to ad hominem attacks with no basis whatsoever, rather than debating the issues hardly help their cause. Incidentally Mike makes a good point, that the Nazis were little more than a spin-off of the German National Socialist movement, and in their latter days bore little resemblance to the former. It is interesting (not to mention horrifying) to examine how their views developed.
It is a shame that his arguments will be remembered for their unfounded slurs rather than the good points.
“Both economic extremes leave no checks and balances, both are unpopular, and both need to be shoved down people’s throats through torture, mass murder and other undemocratic methods.”
Sorry? You’re saying that a free market in apple juice is something imposed by torture, mass murder and other undemocratic methods? Isn’t it really the other way around? A controlled market in apple juice has to be supported by those methods. For if people refuse to be controlled then someone has to persuade them to submit to that control: that’s where the torture and the mass murder come in, isn’t it?
A farmer growing apples, a manufacturer purchasing and crushing them, a bottler bottling them and stores retailing this product do not appear to contain any force in it. Nor is the consumer forced to purchase such.
But when someone decides that they should insist upon who is to do the growing of what, who is to manufacture what and what is to be consumed: when things are planned, rather than left to the market, isn’t that where force has to be used? To force people to follow the plan?
The point of a free market (and yes, I know that no market is ever entirely free, let’s take it that I mean freer markets rather than less free ones) is that the only things that happen are voluntary exchanges. Voluntary, you see, exchanges that do not require the use of force to make them happen.
So where is the torture and mass murder in them?
I’ll admit up front that I haven’t had much time to read through this thread, though it looks like there’s a good discussion about Klein’s premise that I’m eager to get to.
However, there’s one piece of rhetorical excess that I’d like to address:
So Bin Laden == Che?
This is pretty egregious post hoc thinking. For one thing, any date would come up with an historical event regarding econimic oppression. More importantly, Bin Laden may be difficult to track down (OK, difficult for this Administration to track down), but before 9/11 he gave numerous interviews, where he gave no indication that he had any motive other than getting US troops out of Saudi Arabia. At most, he might have spoken of a pan-national Islam, but to suggest that he planned the date of his attack around — or even knew of — the anniversary of a coup in a non-Muslim country halfway around the world is a major, major stretch.
“Sorry? You’re saying that a free market in apple juice is something imposed by torture, mass murder and other undemocratic methods?”
Tim, ever heard of the United Fruit Company?…
I would be absolutely amazed if “food prices” have risen by 50% in the last 6 years. Astonished. […] It’s the interference in the free market system (which is not, BTW, the same things as a capitalist system) which is causing the problem there.
REEEEEEEEALLY?
Can you explain why food prices are rising in New Zealand, then, which has the least Government “interference” of teh OECD food producers?
Tim?
MikeEss:
1. Of course she can say whatever she wants on her own blog! That doesn’t make it less disgraceful.
2. Your argument in the next few paragraphs, while nonsense (“the peculiar symbiosis between fascist politics and capitalism”), is at least an argument.
3. So if I defend racist practices you would not accuse me of being a racist?
4. That. Putting. A. Period. Between. Each. Word. Thing. Is. Really. Cool.
Most of the Communist leaders that did horrible things to their own people were power-mongerers and when it became clear they could get even more powerful and even more wealthy by switching over to free market capitalism, they did it in a heartbeat.
Though they were power-mongerers, not all of them started that way. Some were idealistic people who genuinely wanted to cure the social ills of their day. Unfortunately, once they embraced Marx-Engels’ ideology with its requirement of a “dictatorship of the proletariat” combined with the corrupting influence of such absolute power, even those idealists became part of the self-interested Communist party elite.
Though all authoritarian regimes share the tendency of being corrupted by absolute power and becoming self-interested in perpetuating their privileges and perks, the Communist regimes had Marx-Engels’ idea of the “dictatorship of the proletariat” an effective ideological tool to justify their political legitimacy, perpetuation of their privileges and perks, and harsh brutal policies that effectively enserfed the rest of the populace.
Though all authoritarian regimes share the tendency of being corrupted by absolute power and becoming self-interested in perpetuating their privileges and perks, the Communist regimes had Marx-Engels’ idea of the “dictatorship of the proletariat” an effective ideological tool to justify their political legitimacy, perpetuation of their privileges and perks, and harsh brutal policies that effectively enserfed the rest of the populace.
I suspect it was less the ideological justification as the lack of any other poles of power. In a Communist society, all is subsumed to the Government - economic power, media power, military power. There’s no *space* for dissent.
I suspect it was less the ideological justification as the lack of any other poles of power. In a Communist society, all is subsumed to the Government - economic power, media power, military power. There’s no *space* for dissent.
“No space for dissent” and control of all spheres of society could be applied to any authoritarian/totalitarian political system. Monarchies, fascists, as well as communists have been able to tightly control all of these spheres of society.
The difference with the Communist state was that by Marx and Engels calling for the “dictatorship of the proletariat”, the Communist states have a solid ideological tool to justify their elite’s political legitimacy and thus, their maintaining access to the privileges and perks of power.
Tim, it was in a WFP report. Go dig it up.
Once again, the libertards are trying to turn this into a debate about communism vs. capitalism. it is not. It is about social democratic capitalism vs. unbridled capitalism. The former makes us happier and freer, the latter makes some of us richer and the majority of us poorer. Not poorer in PCs and plasma screen tvs, but poorer in the important ways:
1) we have to eat shit food because fresh food is soaring in price
2) our environment is decaying because we need “market solutions” to social problems
3) our public spaces are becoming desolate and empty and dangerous because anything public is being privatised
4) housing is becoming impossible to buy, so to secure our futures we have to go into hock until we die; our grandparents went into hock for 10 years.
These things would all be different if we had more public services and less private markets. Saying so does not make one a communist, merely a realist.
Uhm…I’m running a black box with pretty lights that costs $50/mo for the next 3 years. Don’t ask what the interest rate was, I covered my eyes at that part.
It’s a pretty good computer, will serve my daughter well throughout high school, probably won’t be obsolete next week and I’m told has capacity for more memory so we can upgrade it. Also, it’s powerful enough that we’ll be able to use it for our website business when we can afford to start it up.
Also, we’re hoping it will help us establish some credit history.
My folks gave us their old printer, so all we have to do is get a cable for it and we’ll be smokin’ in the 20th century.
Seriously, though, the reason I’m putting my business out here isn’t because I’m looking for any sympathy or pity or anything, or because I don’t understand that anecdotal evidence isn’t statistically significant. I get that one data point is a statistically insignificant subset of the whole.
The reason I’m doing it is to remind those who are going on in this thread about the wonders of free market capitalism that there are real people on the receiving end of this ideology who are losing. Men, women, children, old folks, middle-aged folks, young people, whole neighborhoods full of people like me, living like me, doing the kinds of things I have to do in order to feed their families. It’s so easy to forget that every single number in the studies is person with a name. One of those names is Christina. She’s married to a man named Keith. They work their butts off and are losing the struggle despite doing everything they are “supposed” to do. Just trying to make things a little less abstract.
flashheart,
Hope I’m not one of those “libtards” you are referring to. Just trying to flesh out one major flaw in Marx and Engels’ ideology and the reasons why regimes that adopted such ideologies became another variant on the old tyranny theme in the history of human social systems. It was not a defect, but a feature that grossly exceeded intended parameters.
Personally, I do believe government has the responsibility to provide some safeguards against the excesses of unbridled capitalism.
Just trying to provide responses as to why adopting Marx and Engels’ solution as proposed by one earlier commenter would be a catastrophic mistake.
“No space for dissent” and control of all spheres of society could be applied to any authoritarian/totalitarian political system
Not all authoritarian systems, however, subsume all other possible forms of power within their own ideological system. Consider the problems Burma is having with the Buddhist religion, or the somewhat limited protection the industrialists had in Nazi Germany. Communism denies the legitimacy of seperate sources of economic or religious power.
I wonder if there is any actual evidence that
1. fresh food is soaring in price
2. our environment is decaying…because we need “market solutions”
3. our public spaces are becoming desolate and empty and dangerous
4. housing is becoming impossible to buy (should be the easiest to support, although ‘impossible’ is a big claim!)
Let alone that things would be better with “less private markets.”
PhoenicianRomans,
Unless I am mistaken, the business industrialist class in fascist countries like Nazi Germany were co-opted and were, in turn, co-opted by their respective fascist regimes. A symbiotic co-opting that nonetheless meant that the fascist ruling elite ended up in full effective control over all spheres of the society. One example of this was when certain German military officers and industrialists upon seeing the writing on the wall had to resort to an attempted assassination to forestall Germany’s impending catastrophic defeat. When it failed, the Gestapo had little trouble eliminating them.
The Burma case is complex. First, Burma is not unified due to various ethnic minorities and quasi-military(Golden triangle) groups vying for independence and/or autonomy from Burmese government rule since it gained independence from Britain in 1948. Second, Burma has had two different types of military junta regimes since the first military coup in the early 1960s. The first junta wanted to rule was headed by General Ne Win who attempted to implement the “Burmese Way to Socialism” that entailed Burma’s increasing isolation from the outside.
When 1988 rolled around, pro-democracy activists attempted to push for change only to be crushed in a military crackdown that brought in the current junta which does not seem to have a coherent ideology beyond maintaining their hold on power, extreme intolerance for any signs of dissent, and privileging the military over everyone else.
In both of the Juntas, however, the Buddhist religion was largely co-opted by the ruling elite, especially in the senior monks and monastary heads. This was one of the reasons why the recent protest by Buddhist monks was so newsworthy. Few expected the largely co-opted Buddhist monks to join pro-democracy activists in protesting the regime.
I think we’re talking at cross-purposes, exholt. My idea of subsuming rival sources of power is not incompatible with your observation of co-option - co-opting a rival is what you do when you can’t absorb it.
exholt, I tried to post yesterday to say no I don’t count you amongst the libtards. But it got lost.
ALso I don’t think Marx and Engles are relevant to the central theme here. It’s not about markets vs. communism, but about how we want to arrange our markets, and the fact that certain sorts of market economy can only be brought into existence through force (because no-one wants them).
Who was it wanted to know about food price rises?
Anecdotal evidence, Central Maine, 2005-2007.
Please note that The Squirrel and I are hardcore cheapskates whose pantry and freezer are full of closeouts, short-codes, weird store brands, small lots, and after-the-holiday sale items. List below is of “the average lowest price in Central Maine” for commodity items.
Eggs, per dozen:
2005- around $1.00
2006 - around $1.25
2007 - around $1.50 (regular grocery store brand price has been closer to $1.85)
Milk, 1.5%, per gallon:
2005 - around $2.65
2006 - around $2.85
2007 - around $3.65 (grocery store brand is going for around $3.85, regional big label is going for over $4.00 last I saw.)
100% Juice concentrate, frozen, 12 oz can:
2005 - around $0.99
2006 - around $1.29
2007 - around $1.49 (Same for store brand or name brand, Orange or 100% juice blend)
Lettuce, iceberg, per head:
2005 - $0.99
2006 - $1.19
2007 - $1.29
Bread, whole wheat, per loaf:
2005 - $0.99
2006 - $1.19
2007 - $1.49 (this is at the day-old-bread store, grocery stores are almost twice this)
Most food stuff is up in about the same proportion. Given that oil costs have a double impact here in the northeast (transportation and heat) the increase in food prices (blamed on freight costs, or weather, or whatever) just adds insult to injury.
Well, I couldn’t get back to this thread until it had gone dead.
But as I feared, the commentary on Marx is overwhelmingly not at all about Marx’s valid economic theory, but about Leninist revolutionary theory.
The thing is, insofar as Marx theorized about how working people might seize power and create a socialist society (which he did, sketchily) it was very different from Leninist maxims–because Lenin was making revolution in a peripheral, essentially Third World country, whereas Marx was predicting revolution in the capitalist core countries.
In fact, all the leftist revolutions, great and small, in the 20th century, were in Third World nations–China, Vietnam, Cuba, Nicaragua, and lately Venezuala and Bolivia, plus of course a lot of very marginal regimes in Africa and the Carribean.
It makes a huge difference, and indeed Lenin and the other Bolsheviks was counting on triggering this properly Marxist revolution in Germany, the Allied countries, or ideally both. When this did not happen (though it came close, especially in Germany) the Bolsheviks were in big trouble.
In this thread I was talking about the validity of Marx’s economic theory versus the bankruptcy of marginalism, and also about the accuracy of Marx’s predictions about the general trajectory of capitalist society.
It seems that with just one or two exceptions, hardly anyone here actually knows what political economy based on the labor theory of value is, much less what it says.
This is where Marx went the most wrong–he didn’t forsee how effective the ideological mechanisms of capitalist rule have actually been. I consider the general ignorance of Marx to be a clear example of that triumph.
Thena, Sultana of Stale Raisin Bread,
Second your comments as I’ve also noticed food price increases. Some of the prices you cite are a bit higher than what I’ve been paying…though they are well-within the ranges I’ve seen throughout NYC.
Coincidentally, just heard on the news that wheat prices are going to increase beyond the current levels. Now am just wondering if corn and other food commodity prices will rise further.
Eggs milk and bread are all highly dependent upon the costs of corn and or wheat. Both of which have been driven up by the State intervention into the markets for them by the insistence upon ethanol and biofuels.
As I said above, this part of the food price rises is nothing to do with free markets: it’s to do with intervention into them.
Tim, state intervention into markets for food with these new biofuel rules are new, and are having effects on food from now. The price rises pointed to above are older than that. This stuff is regularly talked about now too, it’s no mystery - today’s Sydney Morning Herald has an article on the latest inflation figures there which point to food and vegetables as the big rises, and Australia is completely isolated from this biofuel scare. These price rises are real and are just going to get worse. As are house price rises (and as I said above, they have nothing to do with land release policies and everything to do with markets and speculation).
Also as I said above, this has nothing to do with markets vs. not-markets. It’s about how we choose to manage the markets we have, and modern governments forcing liberalised markets on us which we don’t want (with United Fruit as the classic example you haven’t yet answered).
Off Topic for Exholt, if you are crazy enough to still be reading this:
I am assuming you are the same exholt I have argued with before at feministing. I have put up a new post at my blog in connection with the Yasukuni Jinja and Japanese history, which I thought you might be interested in. I would be interested in your comments (there not here). The post is just below the post with the picture of the hornet. The address is hopefully on this comment, assuming I have gotten it right…
“I wonder if there is any actual evidence that
1. fresh food is soaring in price
2. our environment is decaying…because we need “market solutions”
3. our public spaces are becoming desolate and empty and dangerous
4. housing is becoming impossible to buy (should be the easiest to support, although ‘impossible’ is a big claim!)
Let alone that things would be better with “less private markets.””
You’re right, gator. There really is no evidence of anything wrong anywhere, especially in the sphere of economics.
Every man is a king, all the children are bright and shiny, all people everywhere are living in the highest state of peace and harmony, war is but a dim memory, mansions are available free for the asking, as are Porsches, Mercedes, BMWs, gasoline sells for $0.10 a gallon, farmers practically give food away - oh, and Rush Limbaugh just won the Nobel Peace Prize for his humanitarian work in bringing the truth about the Glorious Conservative Revolution to all of humanity.
If we could just capture and eliminate that counter revolutionary criminal
Emmanuel GoldsteinAl Gore, the world would be perfect…(gator, most people’s wank-fantasies involve imagining other people naked or something. I wonder why your’s seem to involve the supremacy of Reichwing talking points?…)
“modern governments forcing liberalised markets on us which we don’t want (with United Fruit as the classic example you haven’t yet answered).”
Hunh? You’re trying to use United Fruit as an example of a free market? The Government of a country goes to war with another country so as to establish a monopoly supplier in that second country? And you want to call this free markets? I’d call that one of the more military aspects of fascism personally.
Please try to understand me: there’s a huge difference between what business can get governments to do and free markets. As the classical liberal that I am I rail against producer capture of the powers of government just as much as I do anyone else capturing them. For exactly the reason you give: UFC.
Indeed, one of the major reasons I don’t want to have governments intervening in markets is because I am certain that such power will get captured and misused in that manner. Again, I’m not a conservative, thinking that business is good and can never do wrong, while the unions and the people are the baddies. I’m a liberal in the old sense meaning that I am extremely suspsicious of government having power over and above the most basic minimum: because I am certain that such power will get captured and then be misused.
“Tim, state intervention into markets for food with these new biofuel rules are new, and are having effects on food from now. The price rises pointed to above are older than that.”
Err, those are 2007 prices, or so the comment says. This is still 2007 isn’t it? The rises in corn prices have been over the past 12-18 months, haven’t they?
I should reemphasize that the prices I posted above were what we averaged paying for the listed items. In most cases the prices we pay for commodities and basics are below average market rate, because my partner and I are cheapskates who enjoy making the rounds of the closeout and odd-lot shops and getting the most for our dollar. (We pay full retail price for maybe 25% of what we buy, and only when there’s no better alternative.)
We also stock up on staples when we visit New Hampshire, because the same stuff is about 10% cheaper in Portsmouth NH (about 2 hours or so away) than here in central Maine. Part of our specific problem is geographical isolation: the northern half of the state is very rural so the further you get north of Portland, the more you pay for anything that has to be freighted there, because it’s a round trip to nowhere. I would expect similar factors in other isolated rural regions like the US mountain west (outside of the Denver and SLC metro areas) and also in Canada more than, say, 300km north of the US border.
Food price increases haven’t got exactly one cause. It’s not tidy. Part of it’s because oil has gone up, which raises the price of freight and also the production cost (tractor fuel, fertilizers). Part of it is the demand for ethanol raising corn prices. Part of it is freaky weather destroying the juice oranges in Florida a couple of years ago. (Why is the weather freaky? Not touching that. Weather is freaky. It’s 70 degrees outside today, which is unheard of in mid-October around here.) Part of it is contamination issues with produce grown in California that I think were water-related (and why the hell should a lettuce travel 3500 miles to get to my fridge, anyway?)
But the bottom line is that I’m paying around 40% more for food than I did two years ago, and I’m paying around 40% more for fuel than I did two years ago, and I not getting a 40% higher wage than I did two years ago, and forgive me for thinking that this does, in fact, present a real problem.
Tim fair enough re: your UFC comments, but this seems to be the central idea of the shock capitalism story - that Governments are being used to force on people markets they don’t want, and which ultimately are counter-productive to people’s well-being (e.g. water privatisation in England, private health in the US). Your defense rests on the idea that completely liberalised markets are so good that sometimes its worth governments forcing them down their own or other peoples’ throats. This is anti-democratic and in any case wrong.
As I understand it corn prices have only started rising in the last 6 months and the effects are expected to start flowing through food prices from now. But a lot of the prices quoted above are not in any case dependent on corn.
I note you have completely avoided my more “factual” comment about current inflation in Australia. Australia is insulated from these corn price rises (it is a food exporter), and the evidence of rapid price rises over the last 2 - 3 years is very strong. Inflation has been held in check by plummeting prices of imported goods while local essentials - fresh food and housing - have skyrocketed. Similarly NZ, with the developed world’s most open markets.
“and which ultimately are counter-productive to people’s well-being (e.g. water privatisation in England,”
As I think I mentioned above, water privatisation has been conducive to people’s well being. The privatised water companies in England provide cleaner water, with fewer leaks, with less environmental damage, more cheaply, than the Govt run company in Scotland or the directly Govt supplied service in Northern Ireland. We’re lucky in that we’ve been able to see the results of a controlled experiment there.
“Your defense rests on the idea that completely liberalised markets are so good that sometimes its worth governments forcing them down their own or other peoples’ throats.”
My defense rests partly on the fact that markets are so good, yes. Also on the fact that I don’t see them being forced down people’s throats. Further, that Klein’s basic thesis, that each crisis is taken as an opportunity to do so I regard as entirely wrong. In the western world each crisis has, as far as I can see, led to an increase in State power, not a decrease.
“Australia is insulated from these corn price rises (it is a food exporter),”
Err, how insulated? If global prices rise then as long as Australia is plugged into the global economy (which as you note, it is) then domestic prices will rise with global, surely?
For Thena: sure, some thingsw have gone up in price. Some have gone down. What matters, when calculating the inflation rate, is the average of all of those. Because that’s what “the” inflation rate is. An average of all of them.
Tim, my parents live in England in the new privatised system and they boil their water before they drink it.
The state power that ordinary people want to retain is the power of the state to manage crucial infrastructure and public space. This has been whittled away for years. The state power you see increasing with every crisis is the power of the police and security services - and it is being increased by people who claim to value “freedom” at the same time as they liberalise markets and remove our public infrastructure. Do you think this is a coincidence?
While the calculation of the inflation rate is done on a whole basket, Tim, the current situation is that cheap foreign goods are going down in price, while crucial basic goods - food, for example - are going up in price. For those of us who live lives that are not full of luxuries, this means a greater portion of our income is being chewed up. You also know full well that this current inflationary trend is leading people to use up capital, and some of us have a lot less of that than others. People who have capital can convert it into material goods which retain their value, while those of us who do not are doomed to a life of increasing service costs, reduced public services, and declining disposable income.
Finally, how do you reconcile your claim on the one hand that market liberalisation over the last 30 years has increased our standard of living, with your tendency to blame every rise in costs on government bungling. Surely as market liberalisation has proceeded there must be less government bungling, and a greater portion of those price rises are the responsibility of private agents….?
Thanks to Thena, who at least took the time to generate some actual data. (MikeEss, on the other hand, has sadly proven to be incapable of sustaining an argument, degenerating into a childish rant which avoids the point, and, tellingly, ending with a weird attempt at what I suppose was intended as an insult, referencing ‘wank-fantasies’ and ‘Reichwing talking points.’)
Thena, and others, are looking relatively short term. That is fine, but remember that this thread originated with the review of a book which seems to claim (I admit to not having read it, only the review) that capitalism is a malicious system which spreads poverty and misery, a point to which I took exception.
I pointed out a recent UN report citing significant reductions in poverty around the world, progress which I believe is attributable to the increasing numbers of people living under capitalist systems. Pointing out that there is progress is not the same as claiming that all our worries are over. But pointing out that all our worries are not over is also not the same as claiming that capitalism is bad.
I readily concede that prices of certain food items have increased in the past few years. But citing anecdotal prices for 5 items from Central Maine over a 3-year period is hardly conclusive. That doesn’t mean average prices haven’t in fact increased – you just haven’t demonstrated that.
But even if average food prices have increased in the last few years, it doesn’t change the long-term reality. It’s not as if the US just became capitalist in 2005, at which point the price of eggs went up 50 cents. The US has been capitalist since before it became independent. I didn’t hear anyone complaining when prices were dropping.
And living standards have inexorably improved over the years and decades Not in a straight line, we all know there have been ups and downs. But I doubt many people would want to trade our standard of living for that of 100 or 50 or even 25 years ago. Nor would many trade our standard of living for that of any non-capitalist country today.
The point about food prices was recently well made by Richard Fisher, President of the Dallas Federal Reserve Bank: “Look back in time and you’ll see food becoming less and less expensive relative to other goods and services, even as the number of mouths to feed around the globe has increased and consumption per capita has grown. The price of corn, for example, may have increased noticeably over the past year, but it remains a bargain from a historical perspective: In 1860, the price of a bushel of corn was about 50 cents; translated into today’s dollars, that is about $12 a bushel. The current price is a bit over $3.
It is true that the long decline in relative food prices has been punctuated by occasional reversals as the pace of technological advance has fluctuated or as demographics have changed. I remain optimistic about the very long-run trend of declining food prices, but I do recognize that we may be in the midst of one of those reversals as the world economy adjusts to recent changes in demand. Biofuels production may be playing a part in today’s rising agricultural prices, but I believe this is minor in comparison to the evolving eating habits of billions of Chinese and Indians, the Vietnamese and former captives of the Soviet Union, Brazilians and Mexicans and others who are becoming increasingly wealthy. This reversal may take several years to play out before technology and investment can respond with sufficient supplies to put food prices back on their long-run course. In the meantime, we are subject to “agri-flation” that may be more sustained than we would like.”
gator80, again you are arguing with a claim not made, the claim that capitalism is responsible for all these ills. The claim is that government strong-armed capitalism of the sort we now have is responsible for these ills. Not capitalism itself.
So when you look at these food price rises, for example (and remember they are much worse in the 3rd world); or health price rises in the US; or house price rises in the UK and Australia; the question is not “is it capitalism that is evil” but “is there a better version of capitalism which would not rob us?”
The contention here is that there is: social democratic, rather than radical neo-liberal capitalism. Capitalism in which governments were willing to fund major infrastructure projects to reduce infrastructure bottlenecks that drive up inflation; capitalism which supported the poor to prevent them being priced out of food or heating; Capitalism in which governments used their bargaining power to force down the cost of basic health care. The alternative we are being presented is a system where all these essentials are farmed out to private enterprise, and the cost of these essentials rises because they are all areas of the economy where market failure punishes some people.
You need to consider the counter-factual of a different sort of capitalism, not the counter-factual of monolithic socialism.
Excellent post, flashheart, thanks. I will accept that to you the claim was not that capitalism is responsible for all these ills. But read the other posts. It is clear that many of these people see no distinction between capitalism and “government strong-armed capitalism.”
My definition of capitalism is essentially free and voluntary exchange with minimal interference by government. So “government strong-armed capitalism” is to me an oxymoron, and is something I suspect we both would agree is “suboptimal.”
You are worried about “farming out” essentials to private enterprise, which is understandable. You list areas where the government should step in to invest in infrastructure, reduce the prices of food and heating, and “force down” the cost of health care. Are you not worried about the inefficiency which comes with virtually all government enterprises? (I’m not being facetious; I’m curious what you think.) The supply of food is certainly essential but I don’t see calls for government to take over the production of food. Same with clothing and most other “essentials.”
It’s easy to say that food prices should be lower. The devil is in the details! How would you do it? And beware of those unintended consequences!
Private enterprise, particularly in a truly competitive environment, tends to be more efficient than government – a LOT more efficient. I would in fact like to see government interference reduced to let the power of the market work. To me that is also the morally superior option. It leaves people free to make their own decisions while also raising living standards. Time and again the free market has generated lower prices, increased supplies and higher quality (see my prior quote from the Dallas Fed). We should be very cautious about doing anything to kill that golden goose! Those at the low-income end of the scale are the ones hurt the worst. I am not saying we shouldn’t have a “safety net” to help those truly in need. Of course that is also morally appropriate. But remember, the more wealth a society generates the better able it is to take care of the less fortunate.